By Anjali Kumar
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Extra resources for China: internal market development and regulation
Provincial authorities responded with the erection of export embargoes. With further relaxations in price and quantity controls, as well as the decline in the short-lived demand boom, export embargoes became less significant. The downward trend in interprovincial trade, relative to output, continuing until the present, cannot be explained only by these considerations and requires other explanations. Some relative reduction may be due to an increase in intraprovincial production as well as consumption, due to the rapid growth in township and village enterprises.
A key issue which China must confront in its experiments with new market forms, and specifically in the area of establishing commodities markets, is that the present large numbers of such exchanges will probably diminish over time due to a number of factors; the improvement in internal communications, closer integration with the world economy and consequently closer links with exchanges outside the country. Speculative activity will fall as the 'zero-sum' nature of such trade is better understood.
The 'dual track' pricing, introduced in 1985, permitted output above certain target levels to be sold on the free market. The proportion of goods in total domestic retail trade subject to planned prices fell dramatically between 1978 and 1991, in favor of 'guidance prices' and free market prices. Goods subject to planned prices have fallen considerably further, with recent announcements in early 1993 of the relaxation of controls on prices of grain and edible oils. (2) The allocation of goods moved progressively out of the mandatory plan.