Economy, Commerce

Before economic reforms began in the late 1970s, state-owned enterprises generally did not purchase their raw materials and equipment as commodities, but rather received them directly from the government. The enterprises then submitted their finished products to the government for distribution. The Supply and Marketing Cooperative, a state-run operation, distributed consumer goods to the rural population. Such essential items as grains, oil, meat, sugar, and cotton fabric were rationed because they were relatively scarce and because low fixed prices had to be ensured for everyone.

With the success of the economic reforms, the government abandoned the rationing of food and cotton fabric in the early and mid-1990s. Market forces now largely determine the circulation of commodities in China. State-owned enterprises are free to obtain some of their supplies and to sell a portion of their product on the market. Furthermore, in the mid-1990s nongovernmental enterprises accounted for nearly half the volume of retail sales, and that share is expected to rise. In urban centers, there has been a rapid growth of collectively and individually owned businesses such as restaurants, teahouses, inns, hair salons, photography studios, tailor shops, and businesses providing all types of repair and maintenance services. Rural markets, where individual farm households sell their surplus product or purchase supplies, are also growing.