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Production

 

The degree of marketization of production will reach 60% by end of the Ninth 5-Year Plan, 75% by end of the Tenth 5-Year Plan, and thereby turn from late transition to a relatively mature market economy.

Only about 30% of China’s grain output is processed into commodities, and grain cultivation occupies over 73% of the total area under cultivation.

In terms of production value, grain occupies 40% (actually higher than 40%, because the price of grain is low) of the crops. According to statistics, 70% of Chinese farmers’ basic income is in cash; 30% is still in goods. But if we calculate according to true farmers’ income (excluding non-agricultural income), then income in goods would not be lower than 45%. And 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.

The majority of managers of state-owned enterprises are still appointed by superior government agencies; enterprises are responsible for their profits but not their losses; over 40% of state-owned enterprises are in deficit but still under government support; and overstocking is becoming worse.

According to estimates, the total overstock in China has already reached ¥3tr. 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.

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