Internal trade and distribution History of trade of the People's Republic of China

1 internal trade , distribution

1.1 agriculture
1.2 industry
1.3 lateral economic cooperation
1.4 retail sales

internal trade , distribution
agriculture

approximately 63 percent of population located in rural areas, majority of people worked in agriculture , rural industries. under responsibility system agriculture instituted in 1981, household replaced production team basic production unit. families contracted economic collective farm plot of land, delivered set amount of grain or other produce , agricultural tax state, , paid fee collective. after meeting these obligations, household free retain surplus produce or sell on free markets. restrictions on private plots , household sideline production lifted, , of produce these sold on free markets.

distribution of food , other agricultural goods urban consumers, industry , rural areas deficient in food carried out state , secondarily producers or cooperatives. state procured agricultural goods means of taxes in kind , purchases state commercial departments (state trading companies) under ministry of commerce. agricultural tax not large, falling 12 percent of total value of agricultural output in 1952 5 percent in 1979.

in 1984 number of agricultural , sideline products subject state planning , purchasing quotas reduced twenty-nine ten , included cereal grains, edible oil, cured tobacco, jute, hemp, , pigs. in 1985 system of state purchasing quotas agricultural products abolished. instead, state purchased grain , cotton under contract @ set price. once contracted quotas met, grain , cotton sold on market @ floating prices. if market prices fell below listed state price, state purchased available market grain @ state price protect interests of producers. vegetables, pigs, , aquatic products sold urban, mining, , industrial areas traded in local markets according demand. local commercial departments set prices of these goods according quality protect interests of urban consumers. other agricultural goods sold on market state, cooperatives, or other producers.

restrictions on private business activities reduced, permitting peasants cooperatives transport agricultural goods rural , urban markets. allowed rapid expansion of free markets in countryside , in cities. number of wholesale produce markets increased 450 percent between 1983 , 1986, reaching total of 1,100 , easing pressure on state produce distribution network, had been strained burgeoning agricultural production engendered rural reforms. in 1986 free markets, called commodity fairs, amounted 61,000 nationwide.

once food procured , transported urban areas, sold consumers state-owned stores , restaurants. in mid-1980s food items available in free markets, peasants sold produce, , in privately owned restaurants. noted previously, prices of pigs, aquatic products, , vegetables determined local authorities according quality , demand. prices of other products floated freely on market. except grain, edible oil, , few other rationed items, food items in supply.

industrial goods used in agricultural production sold agricultural units in 1980s. local cooperatives or state supply , marketing bureaus sold agricultural producer goods, including chemical fertilizers , insecticides, households @ set prices. state offered preferential prices agricultural inputs grain farmers encourage grain production. households permitted purchase agricultural machinery , vehicles transport goods market. in order ensure rural units cover costs of increasing quantities of industrial inputs required higher yields, government periodically reduced prices of industrial goods sold farmers, while raising procurement prices agricultural products. in mid-1980s, however, price gap between agricultural , industrial products widening disadvantage of farmers.

industry

after 1982, reforms moved china s economy mixed system based on mandatory planning, guidance planning (use of economic levers such taxes, prices, , credit instead of administrative fiat), , free market. in late 1984 further reforms of urban industrial economy , commerce reduced scope of mandatory planning, increased enterprise autonomy , authority of professional managers, loosened price controls rationalize prices, , cut subsidies enterprises. these changes created socialist planned commodity economy, dual economy in planned allocation , distribution supplemented market exchanges based on floating or free prices.

as result of these reforms, distribution of goods used in industrial production based on mandatory planning fixed prices, guidance planning floating prices, , free market. mandatory planning covered sixty industrial products, including coal, crude oil, rolled steel, nonferrous metals, timber, cement, electricity, basic industrial chemicals, chemical fertilizers, major machines , electrical equipment, chemical fibers, newsprint, cigarettes, , defense industry products. once enterprises under mandatory planning had met state s mandatory plans , supply contracts, sell surplus production commercial departments or other enterprises. prices of surplus industrial producer goods floated within limits set state. state had planned distribution system important materials such coal, iron , steel, timber, , cement. enterprise managers chose exceed planned production goals purchased additional materials on market. major cities established wholesale markets industrial producer goods supplement state s allocation system.

under guidance planning, enterprises try meet state s planned goals make own arrangements production , sales based on orientation of state s plans, availability of raw , unfinished materials , energy supplies, , demands on market. prices of products under guidance planning either unified prices or floating prices set state or prices negotiated between buyers , suppliers. production , distribution of products not included in state s plans regulated market conditions.

lateral economic cooperation

china undertook measures develop lateral economic ties, is, economic cooperation across regional , institutional boundaries. until late 1970s, china s planned economy had encouraged regional , organizational autarky, whereby enterprises controlled local authority found impossible business other enterprises not controlled same institution, practice resulted in economic waste , inefficiency. lateral economic cooperation broke down barriers in sectors of personnel, resources, capital, technical expertise, , procurement , marketing of commodities. in order promote increased , more efficient production , distribution of goods among regions , across institutional divisions, ties encouraged among producers of raw , semi-finished materials , processing enterprises, production enterprises , research units (including colleges , universities), civilian , military enterprises, various transportation entities, , industrial, agricultural, commercial, , foreign trade enterprises.

a multitiered network of transregional economic cooperation associations established. seventh five-year plan (1986–90) divided china 3 regions — eastern, central, , western, each own economic development plans. in addition 3 major regions, 3 echelons of economic cooperation zones created. first echelon — national-level economic development zones — cut across several provincial-level boundaries , linked major economic areas. among these shanghai economic zone, northeastern economic zone, energy production bases centering on shanxi province, beijing-tianjin-tangshan economic zone, , southwestern economic zone. second-echelon network linked provincial-level capitals designated ports , cities along vital communication lines , included huaihai economic zone (consisting of fifteen coastal prefectures , cities in jiangsu, anhui, henan, , shandong provinces) , pearl river delta economic zone centered on southern city of guangzhou. third tier of zones centered on provincial-level capitals , included nanjing regional economic cooperation association. smaller-scale lateral economic ties below provincial level, among prefectures, counties, , cities, formed.

retail sales

retail sales in china changed dramatically in late 1970s , 1980s economic reforms increased supply of food items , consumer goods, allowed state retail stores freedom purchase goods on own, , permitted individuals , collectives greater freedom engage in retail, service, , catering trades in rural , urban areas. retail sales increased 300 percent 1977 1985, rising @ average yearly rate of 13.9 percent — 10.5 percent when adjusted inflation. in 1980s retail sales rural areas increased @ annual rate of 15.6 percent, outpacing 9.7 percent increase in retail sales urban areas , reflecting more rapid rise in rural incomes. in 1977 sales rural areas comprised 52 percent of total retail sales; in 1984 rural sales accounted 59.2 percent of total. consumer goods comprised approximately 88 percent of retail sales in 1985, remaining 12 percent consisting of farming materials , equipment.

the number of retail sales enterprises expanded rapidly in 1980s. in 1985 there 10.7 million retail, catering, , service establishments, rise of 850 percent on 1976. remarkable in expansion of retail sales rapid rise of collective , individually owned retail establishments. individuals engaged in businesses numbered 12.2 million in 1985, more 40 times 1976 figure. furthermore, state-owned businesses either leased or turned on collective ownership or leased individuals, share of state-owned commerce in total retail sales dropped 90.3 percent in 1976 40.5 percent in 1985.

in 1987 urban retail , service establishments, including state, collective, , private businesses or vendors, located either in major downtown commercial districts or in small neighborhood shopping areas. neighborhood shopping areas numerous , situated @ least 1 within easy walking distance of every household. able supply daily needs of customers. typical neighborhood shopping area in beijing contain one-story department store, bookstore, hardware store, bicycle repair shop, combined tea shop , bakery, restaurant, theater, laundry, bank, post office, barbershop, photography studio, , electrical appliance repair shop. department stores had small pharmacies , carried substantial range of housewares, appliances, bicycles, toys, sporting goods, fabrics, , clothing. major shopping districts in big cities contained larger versions of neighborhood stores numerous specialty shops, selling such items musical instruments, sporting goods, hats, stationery, handicrafts, cameras, , clocks.

supplementing these retail establishments free markets in private , collective businesses provided services, hawked wares, or sold food , drinks. peasants surrounding rural areas marketed surplus produce or sideline production in these markets. in 1980s urban areas saw revival of night markets, free markets operated in evening , offered extended service hours more formal establishments not match.

in rural areas, supply , marketing cooperatives operated general stores , small shopping complexes near village , township administrative headquarters. these businesses supplemented collective , individual businesses , free markets appeared across countryside in 1980s result of rural reforms. speaking, smaller variety of consumer goods available in countryside in cities. lack partially offset increased access of peasants urban areas purchase consumer goods , market agricultural items.

a number of important consumer goods, including grain, cotton cloth, meat, eggs, edible oil, sugar, , bicycles, rationed during 1960s , 1970s. purchase these items, workers had use coupons received work units. mid-1980s rationing of on seventy items had been eliminated; production of consumer goods had increased, , items in supply. grain, edible oil, , few other items still required coupons. in 1985 pork rationing reinstated in twenty-one cities supplies ran low. pork available @ higher prices in supermarkets , free markets.