To study the process of China's market-oriented domestic trade, we have to determine indices to be dealt with by combining China's actual condition. Under the traditional planned economy system, the domestic market was divided into several parts, some of which were brought into line with welfare. When reviewing the marketization of domestic trade, therefore, indices ought to be selected from different sides and described from different angles.

(I )Autonomous Trading Entity

The increase of autonomy and independence of trading entities (including enterprises, peasant households, individual businesses and consumers) and the decrease of dependence and reliance on government imply the extent of marketization has been deepened.

Studying trading entities was taken as a primary standard for the extent of development of market-oriented domestic trade, as most trading entities were state-owned circulation enterprises and cooperative enterprises under the traditional planned economy system. Those enterprises were characterized by an intensive administration and a high monopoly without any independence and power to make decision; business scope and commodity circulation determined by the administrative system; a trading method of planned purchase and supply and unified purchase and sale with a nature of "official commerce"; and the power of pricing in government' s hands rather than trading entities'. To judge China' s marketization of domestic trade, a trading entity's operational behavior has to be analyzed, so as to find out whether it makes its own managerial decision and takes full responsibilities for its own profits and losses and to investigate whether its reliance and dependence on government have been weakened or even disappeared.

With the deepening of reform in economy system, the domestic trading entities have gradually shaken off the government control. The following is a main manifestation in this regard: firstly, the traditional state-owned circulation enterprises and cooperative enterprises have been transformed into liability limited companies and joint stock limited companies in line with the provisions of Company Law of the People' s Republic of China, enjoying a full freedom in organizing circulation, determining price and conducting trading activities. Secondly, there are still a great number of individual businesses, who conduct their business strictly in line with market rule. Generally, the average life of such private businesses is comparatively short, while it is easy to for them to change their line of business. In addition, those individual businesses take an unlimited responsibility for their debts. Thirdly, by accumulating assets, some individual businesses have developed into modem trading enterprises with joint equity. Where the traditional state-owned circulation enterprises and cooperative enterprises may not become independent trading entities unless by means of transformation, these newly developed enterprises are autonomous trading entities at the very beginning of their establishment. Fourthly, a new sign accompanied with the reform is foreign capitals ' entry into China ' s domestic trade area, forming trading entities that can compete equally with the domestic enterprises. For example, in the field of retail, we may see such world-known enterprises as Wal-Mart of the U. S, Carrefour of France, Itoyokado & Hot-long of Japan, Pension of Malaya and Metro of Germany.

Table shows the fundamental condition of wholesale, retail, catering services of enterprises above certain specified size classified by type of registration in 2001. In the wholesale trade, the number of state-owned enterprises accounted for 57.7 percent of the total, the number in the retail trade 37.3 percent and the number in catering services 18.7 percent. It is noted that the state-owned enterprises hereby have been transformed towards joint equity companies in conformity with the provisions of Company Law of the People " s Republic of China.

(Ⅱ) Price

Price plays a vital role in a market economy. As an incentive factor impelling the producer to produce commodities demanded by the society, it reflects the degree of scarcity of resources. Moreover, price also serves as a significant bridge for participants in economic activities to exchange information. Due to the decentralized decision-making by the economic entities in market economy, price becomes an automatic signal to coordinate each decision-making entity ' s behavior. Consequently, we may never judge the development of market-oriented domestic trade without price, especially the price formation mechanism.

In the domestic trade, the most obvious sign for marketization is the shift in price formation from government to market, i.e. , price determined by the market supply and demand. Besides the marketization of product price (including means of consumption and production goods), here we can discover the more important the marketization of productive factor price. As inputs of production process, the prices of productive factors like labor, capital and land etc (respectively in the forms of wage, interest, land price and rent etc ) have a direct impact on product price, and their marketization shows that China has made an important step towards market-oriented economy.

For this reason, when studying the marketization of domestic trade, the stress ought to be laid on the proportion of product price determined by the market. As for the measurement of factor price, we can find the details in other relevant chapters. Specifically, the indices selected mainly include: percentage of market-oriented industrial product price in the total sales, and the percentage of market-oriented farm produce price in the total trades.

In China's domestic trade, the commodity price takes three forms: government-valorized price, government-guided price and market-determined price based on various commodities. Government-valorized price means the commodity price and charge standard formulated by price administration authorities and competent business departments above the county level (inclusive ) within the extent of power authorized by the government, mainly involved in key production goods and necessities related to the national economy and the people's livelihood. Government-guided price refers to the product price and charge standard formulated by enterprises under the guidance of price administration authorities and competent business departments above the county level (inclusive) by means of stipulating basic price, floating range, price difference, profit margin, ceiling price and lowest price limit within the extent of power authorized by the government. Market-determined price means the product price and charge standard formulated by the producer and operator, covering the liberalized prices for petty commodities and product prices at country fairs. Government-guided price was formed on the basis of market price.

To be specific, the total percentage of government-valorized price in 2001 accounted for 2.7 percent of total retail sales of consumer goods, 0.5 percent down compared to that in 2000. This decrease contributed to the control over prices of domestic agricultural film materials and pure gold ornaments etc having been lifted, the considerable drop in some drugs' prices, and the cut of items that needed to be approved by the government in pricing and consequently the control over prices lifted at localities. The total percentage of government-guided price accounted for 1.3 percent, 0.3 percent higher than that in 2000. This was mainly owning to the price for partial consumer goods having been shifted from government-valorized to government-guided. The percentage of market-determined price took up 96.0 percent, 0.2 percent higher than that in 2000.

Among the total purchases of farm and sideline products, the total percentage of government-valorized price accounted for 2.7 percent, 2 percent lower than that in 2000. This was resulted from the control over prices of grain in key grain selling areas having been lifted and consequently the percentage of government-valorized price was shrunk. The total percentage of government-guided price took up 3.4 percent, 0.3 percent higher than that in 2000, among which the percentage of central government-guided price 0.1 percent, 0.7 percent down than that in 2000; the percentage of government-guided prices at the provincial level or below 3.3 percent, 1.3 percent up than that in 2000. The main reason for this change was that the central government delegated the power of valorizing silkworm cocoon and sugar to the local authorities for guiding price, resulting in a decrease in the percentage of government-guided price and an increase in the percentage of local government-guided price. The percentage of market-determined price occupied 93.9 percent, 1.4 percent higher than that in 2000.

In the total sales of production goods, the total percentage of government-valorized price took up 9.5 percent, 1.1 percent down than that in 2000, among which the percentage of the central government-valorized price 6.8 percent, 1.1 percent up than that in 2000. The main reason for this change was that after urban and rural areas shared the same price in electricity, the power consumption went up, thus resulting in an increase in the percentage of government-valorized price. The percentage of government-valorized prices at the provincial level or below accounted for 2.7 percent, almost the same as that in 2000. In addition, the total percentage of government-guided price accounted for 2.9 percent, 1.3 percent down than that in 2000, among which the percentage of central government-guided price 2.0 percent, 1.5 percent down than that in 2000; the percentage of government-guided prices at the provincial level o1" below 0.9 percent, 0.2 percent up than that in 2000. This contributed to the control over prices of coal for power generation and natural rubber etc, thus resulting in a decrease in the percentage of government-guided price. The percentage of market-determined price accounted for 87.6 percent , 0.2 percent higher than that in 2000.

It deserves to be mentioned that the provinces and municipalities with 100 percent market-determined price in the total purchases of farm and sideline products in 2000 included Beijing, Tianjin, and Qinghai; while in 2001 there were Beijing, Tianjin, Hebei, Hainan and Qinghai.

By the end of 2001, the categories valorized by the government have been reduced to 13 from 141 in 1992.

In consideration of the above mentioned, the commodities and services valorized by the government only accounted for a small fraction of domestic trade, and the overwhelming majority were market-oriented. The market-determined price was in a dominant position. This shows that the government ought to lay more emphasis on strengthening the legal construction of price, formulating price policies, regulating pricing activities and maintaining market order for fair competition while trying to do a good job in valorization.

( Ⅲ ) Commercialization Rate of Urban Housing

The commercialization rate of urban housing will be enumerated separately to serve as the index for studying the marketization of domestic trade, as under the planned economy system urban housing were distributed in kind to residents as a welfare. The rural housing is not to be discussed here due to the fact that it was basically under market domination, apart from some distributed in the Land Reform Period (from late 1940s to early 1950s). With the speeding up of the reform mad commercialization of housing, the expenses that the resident spends in purchasing housing will see a remarkable increase. Therefore, the research of commercialization rate of urban housing is of great significance in judging the marketization of domestic trade.

For this reason, our selected indices are: the commercialization rate of urban housing and the percentage of urban residents ' housing expenses in their total consumption expenditures etc. An important symbol of file marketization of domestic trade is tile increased commercialization rate of urban housing. This will be explained in two aspects.

Firstly, among the sales of urban dwelling houses, the proportion of urban dwelling houses purchased by individuals has had a notable increase. In 1992, the sold dwelling houses were 38,120,000 square meters, including the dwelling houses purchased by individuals 14,560,000 square meters, accounting for 38.2 percent ; while in 2001 the dwelling houses were 199,380,000 square meters, covering the dwelling houses purchased by individuals 182,500,000 square meters, accounting for 91.5 percent.

Secondly, the percentage of housing expenses that urban residents spend saw a continuous growth in their total consumption expenditures. This means that with the reform of the housing system, urban residents have to take more money out of their pocket to pay housing bills. In 1990, the urban consumption expenditures per head per annum reached 1,278.89 yuan, including the housing expenses 60.86 percent, accounting for 4.79 percent ; in 1995, the urban consumption expenditures per head per annum were 3,537.57 yuan, including the housing expenses 250.18 yuan, accounting for 7.07 percent ; in 2000, the urban consumption expenditures per head per annum were up to 4,998.00 yuan, including the housing expenses 500.49 yuan, accounting for 10.01 percent ; in 2001, the urban consumption expenditures per head per annum reached 5, 309.01 yuan, including the hosing expenses 547.96 yuan, accounting for 10.32 percent . The changes in the years of 1990, 1995, 2000 and 2001 are shown in Figure 6 - 2.

(Ⅳ) Expansion of Private Consumption

Besides the commercialization of urban housing, many fields that used to be recognized as welfare areas (e.g., medical and health care, non-compulsory education etc) have been progressively pushed into market, and the extent of private consumption has been enlarged constantly. These consumptions have a very close relation with the change of labor' s occupation (flow of labor forces) and the development of labor market, as those characterized by welfare may fail to push into market unless labors no longer attach themselves to a single fixed work unit.

In these consumptions, some products pertained to quasi-public goods. When consumers reach the point of congestion, competition emerges. In addition, in other fields of consumptions such as medical and health care, they imply not only a market relation, but also are involved in human health and social civilization. For these masons, when judging the marketization by means of studying the expansion of private consumption, factors other than market also need to be considered. The index we mainly selected here is the increase in expenditures of medical and health care and education for urban residents.

As one of the important aspects in marketization of domestic trade, the percentage of medical and health care expenditures of urban residents in their total expenditures witnessed a continuous increase year after year. In 1993, urban families ' medical and health expenses accounted for 2.61 percent of the total consumption expenditures. In the following years, it remained a constant growth, up to 6.36 percent in 2000 and 6.47 percent in 2001.

Meanwhile, the percentage of tuition mad miscellaneous fees in China's total education funds was also on a continuous increase. In 1991, the ratio of tuition mad miscellaneous fees was 4.42 percent of the total education funds, and 5.06 percent in 1992. In 2000, the ratio hit 15.45 percent. Figure 6- 4 shows the changed condition in the percentage of tuition and miscellaneous fees from 1991 to 2000.

(China.org.cn November 7, 2003)