In China, state-owned
enterprises are the main support of the economy. Almost 91.9% of
large medium size enterprises are owned by government, which means the
relative government administrative bureaus appoint the manager of the enterprises
and audit the accounting status of the enterprises. But the government
does not control everything in the enterprises, which was the very typical
management style 10 years ago. Mostly, the government mainly focuses
on the profitability of the enterprises and the proper holding of the state-owned
assets and the value adding.
Source: NTDB 96; XingDao
Daily, May 1997
=======================================================================
The following is from:
Source: ntdb 96, USDOC, INTERNATIONAL TRADE ADMINISTRATION, COUNTRY COMMERCIAL
GUIDES
Chinese common people have freedom of speech, they can criticize the government policy, they can express their opposition to government leaders, they can speak anything they like as long as they do not try to agitate against the Chinese government.... But almost all the media, like TV, radio and film are under strict restrictions on criticizing the government or specific leaders and almost all the media actually are avoiding these kinds of issues. In China over 95% media are run by the government....
Banking
The hierarchical
structure yet has little change. At the top of the system is China's
central bank, the people's Bank of China(PBOC), which sets monetary and,
together with the State Administration for Exchange Control, foreign exchange
policies; and it is the legitimated upper management of all commercial
banks. According to the 1995 Central Bank law, the State Council
maintains oversight of PBOC policies. Below the central bank are
the state-owned specialized banks: Bank of China; People's Construction
Bank of China; Agricultural Bank of China; Industrial and Commercial Bank
of China; and, Bank of Communications. And three new government banks
were established since 1994: the State Development Bank of China, Agricultural
Development Bank, and the Export-Import Bank of China. These banks
will take much of the financial responsibility for financing economic and
trade development and state-invested projects included in the government's
five-year economic plans. Among these banks, the agricultural bank,
the Construction Bank , Bank of China, and the central bank hold 85% of
total bank assets. The Chinese authorities still use mostly direct
monetary instruments such as the credit plan--the centerpiece of its system
for controlling and allocating credit. The Chinese government started
its finance reform in 1992. The trend is to decentralize the structure
and operation decision making layout. But this is a considerably
slow process, because the banking system is the most important adjusting
and controlling aspect in the reform, it is the critical sector in the
reforming process.
=======================================================================
PRIVATE PROPERTY IN CHINA
Laws in China
encourage and protect the establishment and the development of the private
enterprises and property. Things have been changed a lot compared
with that over ten years ago, when private property was regarded as the
poison of capitalism.... As the pushing of the socialist marketing
system, private businesses are enjoying the boost, as the development of
the share holder system, more and more organizations are becoming private.
But in many areas, private access is not permitted, like television, broadcasting,
main transportation and telecommunications, etc.
Source: Blue Book,
US-China Trade Tie Grow Closer, Zhang Chong Qing, the executive director
of the Chinese Enterprises Management Association (CEMA).
=======================================================================
The following is from 1998-2002 SinoFile® Information Services Ltd. SinoFile is an independent media monitoring company covering Mainland China.
LABOR MARKETS
1. Rural labor market. In 1998, among the 700m employed laborers in China, 500m are rural laborers, 70% of the total.... China’s rural laborers’ marketization currently reaches 40%. In other words, it increased an average of 2% during the 20 years of reform and opening up. Based on this, by the end of the Ninth 5-Year Plan it may reach 45%, and 55% by the end of the Tenth 5-Year Plan.
2. Urban labor market. Currently there are 200m urban employees
in China, 30% of the total laborers. Among this 200m, state-owned
units’ employees dropped from the 80% of 1978 to 55% currently. Because
reform of state-owned enterprises has not been thorough, employees of state-owned
enterprises on the whole are not a marketized labor force, their marketization
degree is lower than 30% (this can be seen from the very low mobility rate).
...marketization of China’s urban labor is 50%. In other words, this
is a 2.5% increase during the 20 years of reform and opening up.
Based on this, it should reach 55% by end of the Ninth 5-Year Plan and
65% by end of the Tenth 5-Year Plan.
However, since China is still practicing an
urban/rural segregation residency-management system, and a cadre status
system still exists in China (in which the party manages mid-level cadres,
personnel departments manage common cadres, and the labor bureau manages
workers), laborers with higher degrees and position are less marketized.
One can say that tens of millions of employees with cadre’s status are
basically not marketized. Though they are small in number, their influence
is great. Therefore, the condition for marketizing China’s laborers
is still not there....
Taking into consideration both urban and rural
laborers, China’s marketization has risen from almost zero in 1978 to 40%,
and is estimated to reach 45% by the end of the Ninth 5-Year Plan and 65%
by end of the Tenth 5-Year Plan (the estimate for the next two years is
based on the past, and the estimate for the Tenth 5-Year Plan is based
on accelerated reform)
BANKS
The marketization of China’s banking capital is 45% by end of
the Ninth 5-Year Plan, and 60% by end of the Tenth 5-Year Plan....
Among publicly owned banking institutions, over 75% of the employees are
employed in state-owned professional banks that are changing towards a
market (commercial) nature. These employees in status are equivalent
to government office workers. They all have corresponding administrative
ranks and cadre status. The majority of these employees are about
25% marketized and in the primary stage of transition. The Communications
Bank, Everbright Bank, CITIC Bank, and corporate financial companies as
well as rural credit unions are organized according to market principles;
their employees occupy about 25% of the total number of banking staff.
Because the reform of the state-owned system is not thorough, and because
of historical reasons, even these employees have not accomplished the transition
to the market system.
Their degree of marketization is around 50%.... Looking
at the banking industry as a whole, the degree of marketization of banking
staff and institutions is around 35%. This can also be seen from people’s
evaluation of banking services.
In terms of the market share of capital, though professional
or administrative banks have dropped from holding 80% of the funds to 70%,
loans truly operated according to market principles are estimated to be
only half. Looking at the structure of banks, the structure of funds,
and the structure of interest rates in China, one can say that the marketization
degree of China’s capital market is around 40%, i.e., in the middle of
transition. Based on this degree of marketization, by end of the
Ninth 5-Year Plan it may reach 45%, and 60% by end of the Tenth 5-Year
Plan, and enter the late transition period.
PRODUCTION
... if we take into
consideration the interference of governments in farmers’ production, for
instance, the control of cotton operations, then China’s agricultural production
is less than 50% marketized. Various levels of governments are still
very powerful in interfering with the production of industrial products;
for instance, over half of energy production is still monopolized by the
state. Railroad, telecom, cigarettes, salt, water works, power, pharmaceuticals,
books, automobiles, aircraft, shipbuilding, pipeline transmission, and
aviation are still basically monopolized by the state.
... Public utility
departments are basically operating according to non-market principles;
state-owned enterprises still have administrative ranks; enterprises are
involved in too many non-productive activities and use a fair part of energy
and funds on welfare and other activities that should be handled by the
government. Among product sales revenue, state-owned enterprises
still own over 45%. Therefore, the marketization degree of China's
non-agricultural production can’t be higher than 60%, and transition is
still not accomplished. Taking into consideration agricultural production
as well as the production in secondary and tertiary industries, the marketization
degree of China’s production is about 55%, belonging to the late transition
period. According to this, by the end of the Ninth 5-Year Plan it
can reach 60%, and 76% by end of the Tenth 5-Year Plan. At this point
a relatively mature market economy can begin.
CONTROLS
The government is still
determining prices or has control of prices of major commodities and labor,
for instance the purchase price of grain and cotton, railway and aviation
transportation prices, crude oil prices, refined oil prices, the gold price,
prices of pharmaceuticals, prices of books, prices of various public utilities,
and tuition. These prices have a great effect on other prices.
It is estimated that the marketization degree of these major commodity
prices is around 45%; these prices react slowly to market changes.
China’s urban land
is monopolized by the state. Distribution in the real estate market
is mainly conducted through administrative means. State-owned land,
which should take the lead in market operation, is only in very small part
transferred by open invitation of bids, while the majority is transferred
according to agreements. The majority of public housing has not truly
become a commodity; rent is only 2.9% of urban residents’ spending (in
normal market-economy countries, whether developed or developing, rent
usually occupies one-fourth to one-third of consumption). The official
prices of real estate can be 1 to 10 times that of the market price.
The field of urban real estate is...where the planned economy still dominates.
Urban land is occupied and used at no cost to their holders (excluding
illegal transfers); the marketization degree of land is estimated to be
only 30%.
China has not formed
a medical market yet. On the one hand are hospitals run by organizations,
on the other hand are hospitals run by governments; the proportion of private
hospitals is still very small. Employees have no right to choose
hospitals, and the proportion of medical bills born by employees themselves
is decided by administrative rules. Medical reform is the slowest
among all reforms in China, and the public is most dissatisfied with it.
On the one hand many employees have no money to go to hospitals, and on
the other hand a small number of people seriously squander public medical
funds. Medical institutions in China are still non-profit organizations.
Even though hospitals are surviving mostly on their own incomes, their
degree of marketization is not high, far lower than the banking sector.
The national average is estimated at 35%.
China’s foreign currency
prices are still controlled by the government; the exchange rate is monopolized
by a government department (the Foreign Currency Management Bureau). Because
China’s import-export total has already reached ¥320b, the exchange
rate is playing a more and more important role.
China’s stock market
prices are only freed up in terms of public shares and a small number of
corporate shares, while the bit part, the state shares, have not entered
the market, and there is not a true market price.
Prices of bonds are
also basically not freed up.
Royalties from intellectual property are not close to their actual
value. Therefore the marketization degree of prices of this type
of commodity is estimated around 40%....
ANALYSIS
The general degree
of marketization of China's economy cannot be over 50% when summing up
the previous analysis of the marketization degree of labor, capital, production,
and prices, and taking into consideration the huge government interference
on economic activities in China: management by superior agencies, the management
of cash, monopolized trade, and management of personnel and labor, the
management of the, militia, the involvement of various social groups, the
management of international income and expenditures, the administrative
management of industry and commerce, the management of technology supervision,
the management of hygiene and quarantine, the management of birth control,
the involvement of street committees, the management of urban capacity,
the management of traffic, the management of urban planning, and the management
of planning.
QUESTION: What is the marketization degree of economies in developed countries?
ANSWER: Since it is publicly recognized that developed countries
have mature market economies, their degree of marketization can be confirmed
to surpass 80%. Here we can do a reverse analysis, namely analyze
their non-marketized factors. Currently, the non-marketized sector
of economies in developed countries are basically affected by the following
two factors:
(1) state interference in economies in the
form of government management of military supplies and strategic resources,
state acquisition and protection of certain industries by formulating laws
and regulations; state adjustment and control of financial and monetary
policies, the freezing of certain prices during special periods, and governments’
effect on the market through state-owned enterprises. It is estimated
that this accounts for a 5% to 15% non-marketized degree of economies in
developed countries.
(2) Effect of the distribution of revenue
by non-market means, such as payment transfers. This is conducted
through inheritance taxes, guarantees of the livelihoods of citizens living
under the poverty line (issuance of food coupons and housing perks, etc),
private donations, development of non-profit organizations, policies for
relief for the elderly, sick, and handicapped, free universal education,
and so forth. According to statistics, 20% to 40% of the social security
funds in developed countries come from public funds; half of the income
of American states come from donations; 28% of American budget expenses
are used in insurance and welfare; and 30% to 50% of agricultural enterprises'
income in developed countries come from government subsidies. Therefore,
the transferal of payments may account for 10% to 25% of the visible and
invisible income of individuals.
...the non-marketized degree
of economies in developed countries account for 10% to 20%, meaning their
marketization degree is 80% to 90%.... China's marketization degree
is no more than 50%,...
CONCLUSION
International scholars
in general believe that China is still a country in transition and should
not be considered a market economy, but maybe it can be considered a semi-market
economy. Some consider China still a planned economy. As for
domestic scholars, Prof. Chang Xiuze of the State Planning Commission Macro
Economy Institute pointed out that there are two extreme judgments on China's
degree of marketization: some say it is under 40%, while others say its
above 60%, or already approaching a "market economy." Chang's own
judgment is in the middle, namely 50%. We should point out the following
points in Prof. Chang's analysis:
(1) China is still in transition from
a planned economy to a market economy; this process has by far not concluded,
but is still difficult.
(2) Considering rural China's natural economy,
considering the several thousand years of a feudal economy and the 40 years
of a planned economy (1952-1992), considering the various welfare benefits
of urban employees, considering the special cadre system in China, then
it is not appropriate to say China's marketization degree has already surpassed
50%.
(3) We should allow all kinds of views on
this issue, but they must be consistent in their logic. Some arguments
in Prof. Chang's article require further discussion. For instance,
on the one hand Chang believes that marketization of the capital market
is only 17.2%, and the land market only 22.5%, but he considers the marketization
of products to have already reached 61.71%, and labor 70%. Obviously,
such a contrasting situation is not in keeping with reality. In addition,
Chang believes that the marketization of agricultural products is higher
than industrial products, this is not in keeping with the development of
productive forces.
======================================================================
THE POLITICAL SITUATION AND OPPOSITION
While China signed the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1998 and1997 respectively, to date it has failed to ratify either of these core instruments, and has committed blatant violations of the rights they contain. These violations include extensive use of detention, imprisonment of political and religious dissidents, ill-treatment of detainees, deprivation of the rights to freedom of expression, association and assembly, suppression of religious freedom... Restrictions have reached such alarming proportions since late 1998 that HRIC believes that the Government of China is currently conducting the most ruthless suppression of dissent since the crackdown on the 1989 demonstrations.
DETENTION AND IMPRISONMENT
The current submission includes a list of documented cases of individuals who have been detained because of the efforts to publicize and organize around their political opinions, their religious beliefs or their promotion of labor rights.
THE CHINA DEMOCRACY PARTY (CDP)
Since CDP leaders publicly
announced the creation of this organization two years ago, scores of CDP
members and sympathizers have been detained across the country, usually
for applying to register the CDP with the authorities as a legal and independent
political party at local or provincial levels. Prominent CDP leaders
whose arrest signalled the launching of the repression in October 1998
are Xu Wenli, Qin Yongmin and Wang Youcai, who were sentenced to 13, 12
and 11 years respectively. All were convicted of crimes “endangering
state security.”
In August 1999, Liu
Xianbin, a CDP activist in Sichuan, was sentenced to 13 years in prison
for "conspiracy to endanger state security." In the same month, CDP
members She Wanbao, Zha Jianguo. and Gao Hongming received prison terms
of 12, 9 and 8 years, respectively, also for subversion. In December
1999, Hunan University Professor Tong Shidong received a ten-year sentence,
also for trying to set up a CDP section. ...
FALUNGONG
The Chinese government
continues to step up its fight against the Falungong spiritual movement
and to prevent protests by practitioners reacting to the ongoing wave against
Falungong members. Tens of thousands of followers are reported to
have been detained, while thousands have been administratively sentenced
to labor camps. Some practitioners have been sent to psychiatric
hospitals for “education” aimed at ending their belief in Falungong, while
many others have been detained for long periods. Control of the Falungong
began in July 1999 when some 70 leaders were detained after the group was
banned as an “illegal organization.” In April 1999, more than 10,000
Falungong members had staged a demonstration in Beijing to demand official
recognition. Some of the sentences meted out to Falungong practitioners
are the harshest known to have been handed down to people since the prosecution
of 1989 demonstrators: 18 years in the case of Li Chang, an official in
the Public Security Ministry, and 16 years in the case of Wang Zhiwen,...;
17 years in the case of 74-year-old Yu Changxin, tried in January 2000.
The government’s resolution did not create any new legal standards to pursue
its anti-Falungong campaign, but called for a political campaign reminiscent
of the methods of the past using the tools already available in the Criminal
Code’s provisions allowing for the prosecution of those who use “secret
societies and heretical religious groups” to “disturb social order.”
The NPC Decision was a political order to the country’s entire law enforcement
apparatus to give priority to “smashing” the Falungong and other “heretical”
organizations.
The campaign against
Falungong is part of a wider effort to restrict freedom of association
by ensuring that all “legal” groups are strictly monitored to make sure
their activities conform with the leadership’s objectives and concerns
and by ruthlessly suppressing any efforts to organize independently, whether
around issues of religion, politics, human rights, or protecting workers.
For more information
about the 1998 regulations affecting freedom of association, passed in
the same month as China signed the ICCPR, see HRIC’s report: “China: Freedom
of Association Regulated Away.”
=======================================================================
Human Rights Watch
has documented increasing human rights violations in China over the past
year, fuelled by Beijing's preoccupation with stability in the face of
social and economic upheaval. China launched a massive anti-crime
campaign last April, leading to arrests and executions; new restrictions
on the Internet have been imposed; efforts to organize independent trade
unions have been crushed; and officials have carried out an intense crackdown
on Falun Gong and unofficial religious groups of all kinds.
Source: Human Rights
Watch Document