In 2002, the total retail sales of consumer goods topped 4 trillion yuan to reach 4,091.1 billion yuan, up 8.8 percent over the previous year. The real growth of total retail sales of consumer goods was 10.2 percent if price factor was taken into consideration.
The annual per capita disposable income of urban households was 7,703 yuan in 2002, a real increase of 13.4 percent with decline in prices taken into consideration. The per capita net income of rural households was 2,476 yuan, a real increase of 4.8 percent. The Engel coefficients were 37.7% for the urban households and 46.2% for the rural households, down by 0.2 percentage points and 1.5 percentage points respectively over the previous year.
I. Pricing Policies
China currently applied a mechanism of market-based pricing under macro-economic adjustment. There were presently three types of prices: government price, government guidance price and market-regulated price.
The government price was set by price administration authorities and could not be changed without the approval of these authorities. Products and services subject to government pricing were those having a direct bearing on the national economy and the basic needs of the people‘s livelihood, including those products that were scarce in China. Meanwhile, government pricing was product- or service-specific, regardless of the ownership of the enterprises concerned. National treatment was applied in the areas of government pricing for all imported goods.
The government guidance price mechanism was a more flexible form of pricing. The price administration authorities stipulated either a basic price or floating ranges. The floating range of guidance pricing was generally 5 per cent to 15 percent. Enterprises could, within the limits of the guidance and taking into account the market situation, make their own decisions on prices. With market-regulated prices, enterprises were free to set prices in accordance with supply and demand to the extent permitted by generally applicable laws, regulations and policies concerning prices.
Due to the continued reform of China‘s price system, the share of government prices had dropped substantially and that of market-regulated prices had increased; of social retailing products, the share of government prices was about 4 per cent, that of government guidance prices 1.2 percent, and that of market-regulated prices 94.7 percent. For agricultural products, the share of government prices was 9.1 percent, government guidance prices 7.1 percent, and market-regulated 83.3 percent. For production inputs, the share of government prices was 9.6 percent, that of government guidance prices 4.4 percent, and market-regulated prices 86 percent. The share of directly government-controlled prices had been much reduced. China‘s price system was becoming increasingly rationalized, creating a relatively fair marketplace for all enterprises to compete on an equal footing.
China would apply its current price controls and any other price controls upon accession in a WTO‑consistent fashion, and would take account of the interests of exporting WTO Members as provided for in Article III: 9 of the GATT 1994.
II. Competition Policy
The Government of China encouraged fair competition and was against acts of unfair competition of all kinds. The Law of the People‘s Republic of China on Combating Unfair Competition, promulgated on 2 September 1993 and implemented on 1 December 1993, was the basic law to maintain the order of competition in the market. In addition, the Price Law, the Law on Tendering and Bidding, the Criminal Law and other relevant laws also contained provisions on anti-monopoly and unfair competition. China was now formulating the Law on Anti-Monopoly.
III. State-Owned and State-Invested Enterprises
The state-owned enterprises of China basically operated in accordance with rules of market economy. The government would no longer directly administer the human, finance and material resources, and operational activities such as production, supply and marketing. The prices of commodities produced by state-owned enterprises were decided by the market and resources in operational areas were fundamentally allocated by the market. The state-owned banks had been commercialized and lending to state-owned enterprises took place exclusively under market conditions. China was furthering its reform of state-owned enterprises and establishing a modern enterprise system.