Before the reform and opening
was introduced, most commodities on the Chinese market were priced
by the state. But since the start of the reform and opening, along
with the expansion of the commodity market scale and the change
of the relations between commodity supply and demand, the state
has carried out price reform step by step and according to plan.
The fixing of prices by the state follows three forms: the fixing
of price by the state, state guiding prices and market regulatory
prices. The market regulatory price has been gradually relaxed¡ªBy
1999 the pricing of 95 percent of consumer goods and 80 percent
of investment goods had been relaxed. These prices were regulated
mainly through the relations between market supply and demand. A
socialist market pricing mechanism is gradually taking shape.
In the pricing system
the irrational state of basic product prices being too low has been
improved, and the pricing structure is becoming more rational, step
by step. Comparing 1998 with 1978, the index of the retail sales prices
of rural industrial products increased by 3.88 times; and the index
of the synthetic relative prices between industrial and agricultural
commodities was 59.7 percent. Besides, the price scissors in the exchange
of industrial products for agricultural products were alleviated.
In 1998, the prices of agricultural products increased by 5.83 times,
compared with those of 1978, and the prices of industrial products
by 2.95 times, and their price ratio was 0.6 : 1. In accordance with
the requirements of the socialist market economy, China has been establishing
a pricing mechanism macro-regulated and controlled by the government,
and fixing prices through the market.