Double Constraint: An Analysis of Fluctuations in the Chinese Commodity Market

Author: Chen Leyi
Publisher:
Publish Date: 1999-08-01
Features: The research object of this book is the fluctuations in China's commodity market during the transition period since the reform. The central argument is that the sustained prosperity of the commodity market, when a certain extent, becomes unsustainable and inevitably leads to decline and sluggishness. This transformation is due to dual constraints from both supply and demand, especially as the marketization process deepens, demand constraints gradually intensify and exert an increasingly dominant influence. Supply constraints are primarily manifested in an imbalance in product structure, mismatched quality and variety, particularly the tight supply of agricultural products. The intensification of demand constraints is evident in a new phenomenon in the economy since the late 1980s: the shift from a seller's market to a buyer's market due to overproduction. The emergence of demand constraints, overproduction, and a buyer's market (although these concepts have distinct meanings) in China, long plagued by supply constraints, is undeniably a major event with profound historical significance. Their appearance is the result of China's economic development and social progress, a reflection and marker of increasing marketization, yet they also represent a huge pressure. From the current reality, overproduction poses a greater challenge than product shortages, and the harm caused by overproduction is by no means inferior to that of product shortages. Therefore, to achieve a healthy cycle of commodity market development and smooth out fluctuations, it is essential to attach great importance to demand constraints and overproduction; at the same time, supply constraints and product shortages must absolutely not be ignored. Based on these two aspects, the book proposes several policy recommendations to control the fluctuations of China's commodity market within a "operational range."