Through its savvy economic planning efforts, China succeeded both
in controlling inflation and maintaining a stable price level during
the ninth Five Year Plan Period (1996-2000), according to official
A nationwide market-oriented pricing system has taken shape under
the government's macroeconomic control, which has helped improve
the general economic structure while also sustaining sound economic
During the eighth Five Year Plan Period (1991-95), China faced
some of the worst inflation in recent memory. In 1994 and 1995,
retail price levels soared by 21.7 percent and 14.8 percent respectively,
slowing national economic growth.
The central government immediately made inflation control a priority
and encouraged price administration departments at various levels
to keep a constant eye on rising prices - a move which ultimately
helped stabilize the costs of basic necessities in major cities.
These efforts limited inflation to 6.1 percent in 1996, enabling
the nation to achieve an economic soft landing.
In 1997, China's gross domestic product (GDP) increased by 8.8
percent, while the retail price level only inched up by 0.8 percent.
In 1998, however, retail price levels and consumption price levels
saw negative growth due mostly to the economic meltdown in Southeast
The government reacted promptly by shifting its focus from inflation
control to the stimulation of domestic consumption.
The government began to carry out this pro-active fiscal policy
and consumption price indices responded by rebounding significantly,
putting an end to the year-long deflation.
During the ninth Five Year Plan period, the government continued
to pursue price reform.
Price competition started to appear in power, petroleum, medicine,
railway transportation and other public service sectors that had
formerly been monopolized by the government.
The pending World Trade Organization entry further pushed the government
to set up a sophisticated legal framework centering on the Price
In response to changing circumstances, the government adjusted
the price of agricultural products during the ninth Five Year Plan
Period and made efforts to promote agriculture development and increase
The government also used price leverage to accumulate funds for
infrastructure construction and to develop tertiary industry.
Efforts aimed at clamping down on economic crimes and regulating
price disorder also contributed to the present stability of price
During 1996-99 period, the government solved more than 2.3 million
price-related economic cases involving 18.2 billion yuan (US$2 billion).
(China Daily 10/07/2000)