First Quarter Sees Good Beginning in Commodities
Market,  Sales Growth and Low Price,But Greater
Efforts Are Still Needed To Expand Urban
And Rural Markets in Order to Meet
This Year's Targets

by Ding Junfa, deputy director of the State Administration of Internal Trade
April 28, 1999

        The first quarter of this year saw a steady growth in the nation's commodities market and a good start. The main characteristics are as follows:

        (1) There was a marked rise in the growth rate of the consumer goods market sales. In the first quarter, the total retail sales volume of consumer goods of the whole society came to 760.4 billion yuan, up by 7.4 percent over last year's same period, when price fluctuation is factored in, it was 10.6 percent increase in real terms, with the growth rate standing at 2.1 percentage points. Brisk market sales were concentrated in food, household electrical appliances, beverage and clothing. According to statistics from the nation's 150 large markets, in the first quarter the sales of color TV sets of 25 inches and above grew by 49.5 percent, cold and hot water machines by 161.1 percent, gas stove by 62.1 percent, household sterilizing cabinet by 39.5 percent, dish-washing machine by 50.3 percent, humidifying chamber by 54.7 percent, electric water-heater by 21.9 percent, T-shirt by 439.5 percent, Western-style trousers by 31.5 percent, women's clothing by 27.8 percent. In addition, various other products, such as quick-frozen and instant food, beverage, wine, telephone, mobile telephone, pager and health food, all witnessed fairly rapid growth.

        (2) As a result of efforts intensified in various aspects to expand the rural market, rural market sales grew basically in step with urban market sales. In the first quarter, among the total value of retail sales of consumer goods, the retail sale value of urban consumer goods came to 467.3 billion yuan, up by 7.6 percent over the same period of the previous year; that of rural consumer goods to 293.1 billion yuan, by 7.1 percent, the difference between the growth rate of retail sales value of rural consumer goods and that of urban consumer goods was only 0.5 percentage point.

        (3) Because the state increased fixed assets investment in infrastructure facilities, positive change has taken place in the capital goods market, demand has continued to pick up, market sales have become notably brisk. According to calculation, in the first quarter, the total value of sales of capital goods came to 858.4 billion yuan, up by 7 percent over last year's same period, when price fluctuation is factored in, the actual growth was about 10 percent in real terms. Boosted by increased investment, the growth rate of sales of a group of products that represent final consumption demand, such as machine tools, power generators, locomotives, automobiles, computers, engineering machinery and farm machinery and implements has picked up notably, the prices of raw and semi-finished materials such as sheets, welded tubes, lead, zinc and timber have begun to rebound.

        (4) The catering trade continues to keep a rapid growth. In the first quarter, the nation's catering trade registered a business volume of 73.7 billion yuan, up 15.8 percent over last year's same period. During the Spring Festival, the growth rate of the business volume of the catering trade in 10 major cities, including Beijing, Shanghai and Tianjin, came to 25 percent and more. Popular banquets, snack, take-out food and beverage became the hot areas of festival, popular business became the mainstream of the market.

        (5) The buyer's market pattern becomes further conspicuous, price continues to fall. According to the queuing analysis of 606 kinds of commodities made by the All-China Commercial Information Center, in the first half of this year the supply-demand balanced and oversupplied commodities accounted for 98.3 percent, of which 87.2 percent of industrial consumer goods were in excess supply, the situation of oversupplied farm and sideline products further expanded, although the total value of retail sales of social consumer goods and the total sale value of the means of production witnessed a fairly large increase over last year's same period, due to aggregate supply outdoing aggregate demand, however, in the first quarter the nation's commodity retail price index dropped by 2.9 percent, residents' consumer price fell by 1.4 percent, the price of the means of production continued to fall. The price of vegetable, aquatic products, meat, poultry and egg decreased respectively by 17.3 percent, 8.1 percent and 7.9 percent from last year's same period. Particularly noteworthy is the fact that pig production increased, but demand was sluggish, price had gone down by a large margin,so it is therefore necessary to adopt active regulatory and control measures, so as to prevent major fluctuations and protect farmers' pig-raising enthusiasm. In the first quarter, the producer price of industrial goods slipped by 5.9 percent from last year's same period, the purchase price of raw and semi-finished materials declined by 6.9 percent.

        The gratifying changes appeared in the first quarter in China's commodities market has made a good beginning in boosting domestic consumption demand and continuing to make contribution to the national economic development. But it should also be clearly noticed that in the development of the current commodities market, there exist three outstanding difficulties: First, unstable factors affecting the supply and demand of major commodities such as meat, vegetable and sugar have increased, regulatory and control difficulties expanded; second, factors affecting urban and rural residents' consumption have not been alleviated, sluggish demand remains the principal problem in the operation of China's economy; third, the market prices of consumer goods and capital goods continue to fall, and are lacking in strength for a pick-up.

        To deal with the outstanding problems existing in the commodities market mentioned above, in the next three quarters, the State Administration of Internal Trade will seize the opportunity, give prominence to key points, reinforce confidence and adopt practical and effective measures to further explore urban and rural markets to expand consumption. Concrete measures are as follows:

        (1) Continuing to expand urban and rural markets. stepped-up effort will be made to tackle the  exploration of the rural market, in particular, as the most important aspect in the work of internal trade. A national on-the-spot experience exchange meeting on the exploration of the rural market will be held together with relevant departments, conscientious effort will be made to grasp the experimental work of expanding rural markets in the five major associated regions of Weifang, Baoding, Mianyang, Suzhou and Luohe in order to explore and accumulate work experiences in opening up the rural market. Through drawing experience from selected units to promote overall work, strenuous efforts will be made to achieve new progress in the work of opening up rural markets, and to promote the role of rural consumption in giving a fillip to the nation's commodities market.

        (2) Working actively with relevant departments to study reform of the consumption system, readjust the consumption policy, intensify efforts in the practice and publicity of credit, leasing and service consumption, and do a good job in the connection and implementation of various policies.

        (3) Grasping the opportunity offered by the central government's effort to increase investment in infrastructure facilities and in the light of the major investment orientations, including the transformation of urban and rural power grids, construction of small towns, reconstruction of flood-hit areas and the harness of major rivers and lakes, endeavor will be made to provide service, engage in innovation and expand sales.

        (4) Industrial and commercial departments join hands to continue to promote the use of such methods as chain store, agency, distribution and second-hand shop, to give full play to modern selling method's active role in opening up urban and rural markets and expanding sales, perfect and improve various types of central wholesale markets, properly organize various types of commodity fairs, so as to better satisfy different demands of urban and rural consumers.

        (5) Exerting great efforts to expand the service consumption area, this year's focus will be placed on pushing forward the "kitchen project" and the "community service project", vigorously developing popular catering service markets, guiding traditional service trades to extend toward family, community and organizational and departmental services; vividly and dramatically organizing serial activities to advance "service consumption to the new century".

        (6) Further standardizing circulation order and purifying the circulation environment. Efforts will be made to prevent a new round of price war, various local governments should be determined to stop examining and approving new, large markets, strengthening planning and distribution guidance to the construction of wholesale markets, and preventing redundant construction. They should join the Publicity Department of the CPC Central Committee, the State Bureau of Quality Technical Supervision and the State Administration for Industry and Commerce in carrying out in-depth activity to ensure there are no counterfeit goods in tens of thousands of shops in one hundred cities, properly grasp 100 exemplary stores and 30 demonstration streets, five exemplary specialized wholesale markets will be set up by the end of this year.

        It is estimated that a situation of steady development will be maintained in the commodities market this year, there will unlikely be major fluctuation, the price falling tendency will gradually be relieved.