Q: Recently, some countries have accepted China's market
economy status. But why haven't many other countries accepted this
status? What is the basis of China's proposal to become a market
economy country?
A: China used to practice a planned economy. However, after more
than 20 years of reform and opening-up, especially after entering
the World Trade Organization (WTO), China has gradually built up a
market economy with Chinese characteristics and become a developing
market economy country. The following five aspects are the main
bases:
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Firstly, Though State-owned enterprises still hold the dominating
position in the national economy, the non-State sector, which has
experienced unprecedented development, now claims one third of the
overall GDP. The non-State sector has become an important pillar of
the national economy.
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Secondly, a comprehensive commodity market system has been
basically established. At present, the market allocates more than
95 percent of commodity resources. All mandatory plans for
agricultural production have been cancelled and mandatory plans for
industrial production have been limited within the five trades of
timber, gold, cigarettes, salt and natural gas.
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Thirdly, the macro management of the national economy has
transformed from depending on administrative means to the use of
economic and market means, such as taxes, interest rates, and price
and investment policies. The focus of government management has
been shifted from interfering in the production of individual
enterprises to adjusting aggregate social supply and demand.
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Fourthly, a new distribution system based on a combination of
production factors such as capital and technique input, management
and labor is coming into being. Incomes from various sources have
been accepted by the society and put under the production of
law.
Fifthly, a comprehensive social security system has been
established which covers retirement, unemployment, medical
insurance and minimum living guarantee for the urban population.
The system plays an important role in shaping a market-oriented
employment system, deepening enterprise reform and maintaining
social stabilization.
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According to international criteria, if 60 percent of a nation's
economy is market-oriented, it should be considered a market
economy. China's market-oriented level reached 69 percent in 2001,
no lower than that of many other market economy countries. Of
course, the 69 percent also indicates that China is still a primary
market economy. The remaining 31 percent is the part that China
needs to further reform.