■China Macroeconomic Research Group, National Economic Research Center, Peking University
Although China's macro economy has officially entered the post-epidemic era in 2023 and its economic operation is recovering, it still faces many risks and challenges. Technological blockades, trade protection, and reshoring of industrial chains have occurred frequently, and anti-globalization has cast a heavy shadow on the recovery of the global economy. Focusing on the operation of the domestic economy, since 2013 into the new normal, the downward pressure on the economy has begun to become prominent, how to explore new economic growth points, improve the potential economic growth rate will still be a top priority in the near future.
In the face of the new stage, new environment and new changes in China's economic development, how to smooth the national economic cycle, give full play to the advantages of the domestic super-large-scale market, and form a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles promoting each other has become the focus of China's economic development. In April 2022, the "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market" was officially promulgated, pointing out that the construction of a national unified market is the basic support and internal requirement for building a new development pattern. From the perspective of China's economic development process, the role of exports in driving the economy has shown a gradual weakening trend, and the proportion of exports in GDP has dropped from 35.4% in 2006 to 18.9% in 2023, which means that the proportion of China's economy realized by domestic circulation in 2023 will reach 81.1%, of which domestic consumption will contribute as much as 82.5% to economic growth, becoming the main driving force for economic growth. It can be seen that with the continuous development of China's economy, the expansion of economic volume and the tilt of industrial structure to the service industry, the momentum of the international circulation at both ends of the market and resources has weakened significantly, the characteristics of the domestic economic cycle have become more and more obvious, and the demand for a unified national market has become more and more urgent.
The essence of the new development pattern is to give full play to the potential and advantages of the domestic super-large-scale market, based on the domestic market, and smooth the domestic cycle to promote the domestic and international dual circulation. Therefore, how to smooth the domestic circulation is a core part of this concept and strategy. However, there is a unique segmentation of China's domestic market, which is a product of the transition from a planned economy to a market economy, and stems from the pursuit of self-interest by local governments and officials. Market segmentation will not only lead to the restriction of the cross-regional flow of commodities and factor resources, and the obstruction of technological development and innovation, but also weaken the optimization efficiency of the market mechanism for resource allocation, resulting in regional duplication of construction and serious industrial isomorphism. Therefore, the construction of a unified national market will be one of the key measures to smooth the domestic circulation.
In view of this, this report focuses on the effectiveness of domestic market integration reform, and uses the relative price method to measure the segmentation index of the commodity market and labor market in 31 provinces, autonomous regions and municipalities in China from 2002 to 2022 (the smaller the index, the higher the degree of market integration), and then compares and analyzes the effectiveness of the integration reform of various markets from the national level, the four regional levels, the three major economic circles and the provincial level, in order to put forward targeted policy recommendations for the weak links in the current market integration reform in China. It provides a policy reference for opening up the domestic cycle and promoting the realization of a new development pattern.
Image source: Xinhua News Agency
01
The current situation of the integration of China's commodity market
(1) The current situation of the integration of the national commodity market
According to the results of this report, it can be found that since 2002, the degree of segmentation of China's domestic market has shown a downward trend, and the fluctuation range has gradually decreased, that is, the degree of segmentation of China's domestic commodity market has gradually weakened as a whole, and the reform measures of commodity market integration have achieved remarkable results, which have effectively promoted the construction of a unified national market. In terms of specific data, in the 21 years from 2002 to 2022, the overall domestic market segmentation index decreased from 0.001342 to 0.000164, a cumulative decrease of 87.78%, and an average annual decline of 4.18%, reflecting the remarkable results of the commodity market integration reform measures.
In addition, a special phenomenon can be found in Figure 1, that is, in 2009, the degree of segmentation of China's domestic market soared abnormally, with a month-on-month increase of 80.89%. 2009 is the first year after the 2008 international financial crisis, provinces, autonomous regions and municipalities are deeply affected by the financial crisis, in the context of the implementation of the 4 trillion economic stimulus policy in the country, local governments must give priority to supporting local enterprises, give priority to the development of the local economy, because this is directly related to the central government's assessment requirements for local governments, resulting in the deepening of market segmentation. After two years of economic policy stimulus in 2009 and 2010, China's and local economies withstood the impact of the financial crisis, economic development began to enter the normal track, and the degree of local market segmentation also declined sharply, with a month-on-month decline of 42.18% in 2011.
It can be seen that the abnormally high degree of market segmentation in 2009 and 2010 confirms the "princely economy" characteristics of China's economic system, and local governments usually increase the degree of market segmentation in response to the crisis to protect local interests as much as possible, such as Guangxi, Anhui, Zhejiang, Jiangsu and Guangdong have introduced a series of measures to "promote" local products, encouraging, guiding and even requiring local consumers to give priority to the purchase of products produced by local enterprises, but in the normal stage of economic development, Local governments have a tendency to loosen market segmentation.
(2) The current situation of the integration of the four regional commodity markets
Further dividing China into four regions: eastern, central, western and northeastern, it can also be found that the commodity market segmentation index of the four regions is showing a downward trend, which is not much different from the trend at the national level, indicating that the degree of market integration of the four regions is increasing year by year. By comparing the effectiveness of the integration reform of the four regional commodity markets, the commodity market segmentation index of the eastern, central, western and northeastern regions decreased by 88.98%, 88.18%, 86.31% and 89.22% respectively. It can be seen that the northeast region has achieved the most remarkable results in the process of promoting the integrated reform of the commodity market, followed by the eastern region, then the central region, and finally the western region.
(3) The current situation of commodity market integration in the three major economic circles
In the process of promoting the construction of a new development pattern, regional coordinated development plays a key role in the domestic circulation, so further observation and analysis of the three major economic circles of Beijing-Tianjin-Hebei, Yangtze River Delta and Chengdu-Chongqing can find that the commodity market segmentation index of the Beijing-Tianjin-Hebei Economic Circle and the Chengdu-Chongqing Economic Circle is significantly higher than the national level, while the market segmentation index of the Yangtze River Delta Economic Circle is lower than the national level for most of the time. Among them, the commodity market segmentation index in the Beijing-Tianjin-Hebei region is 27.02% higher than the national average, the commodity market segmentation index in the Chengdu-Chongqing region is 8.33% higher than the national average, and the commodity market segmentation index in the Yangtze River Delta region is 5.30% lower than the national average.
(4) The current situation of commodity market integration in various provinces, autonomous regions and municipalities
This report further examines the 31 provinces, autonomous regions and municipalities in China, and it can be found that the five provinces with the lowest commodity market segmentation index are Shandong, Hubei, Hebei, Henan and Anhui. The five provinces with the highest commodity market segmentation index are Chongqing, Shanghai, Hainan, Tibet and Tianjin. Through the analysis of the geographical distribution of these provinces, it can be seen that the provinces with a low degree of domestic commodity market segmentation are mainly concentrated in the central region, while the provinces with a high degree of commodity market segmentation are mainly composed of municipalities, special economic zones and autonomous regions. In addition, from the perspective of the overall effect of commodity market integration reform, Tibet, Tianjin, Liaoning, Hunan and Hainan are the five provinces with the greatest effect of commodity market integration reform, among which Tibet has the greatest effect of integration reform, and the commodity market segmentation index decreased by 96.98% during the sample period. Inner Mongolia, Chongqing, Shandong, Qinghai and Guangxi were the five provinces with the least results, but even Inner Mongolia, which achieved the least results, saw a 54.60% decline in the commodity market segmentation index during the sample period.
02
Current status of labour market integration
(1) The current situation of national labor market integration
In addition to the commodity market, the labor market is still the main front for the mainland to promote market integration. Under the influence of the household registration system and other factors, the level of integration of the domestic labor market has been low, which has hindered the process of building a unified national market. According to the results of this report, it can be found that from 2002 to 2022, the labor market segmentation index has been volatile and has not shown a significant downward trend as a whole, and has rebounded and risen several times. Among them, the first upward trend was during the international financial crisis from 2008 to 2009, a large number of companies collapsed, unemployment increased sharply, resulting in an increase in the labor market segmentation index, and after the financial crisis, the degree of labor market segmentation also appeared a second intensification trend, mainly in 2011 and 2012, which just confirmed the phenomenon of "labor shortage and difficulty in recruitment" in China during 2011 and 2012. The third upward trend was between 2019 and 2020, which may be due to the trade friction between China and the United States and the implementation of the social security system reform in China in the same year, which led to fluctuations in the job market. From the perspective of the effectiveness of labor market integration, the national labor market segmentation index has decreased by 66.16% from 2002 to 2022, with an average annual decline of 3.15%, and the degree of integration is relatively slow.
(2) The current situation of labor market integration in the four major regions
The trend of the labor market segmentation curve in the four major regions of the eastern, central, western and northeastern regions still shows sharp fluctuations, and does not show an obvious upward or downward trend, especially the fluctuation in the western region is significantly higher than that of the other three regions, and it is also the most similar to the labor market segmentation curve at the national level. In terms of the specificity of the four regions, the central region has the smallest labor market segmentation index, followed by the eastern region, the northeast region, and the western region. From the perspective of the effectiveness of labor market integration reform, the western region has achieved a cumulative reduction of 78.20% in the degree of market segmentation, which is the most significant integration effect among the four regions, followed by the central region, the eastern region and the northeast region, with a cumulative decline of 57.84%, 48.25% and 46.74% respectively.
(3) The current situation of labor market integration in the three major economic circles
Considering that the cross-regional flow of labor may be different due to the heterogeneity of the development characteristics of regional "hugging circles", the samples of the three major economic circles of Beijing-Tianjin-Hebei, Yangtze River Delta and Chengdu-Chongqing were selected. The data results show that the trend of labor market segmentation in the three major economic circles is basically consistent with the national level. If we look at the intensity of the curve fluctuations, the fluctuations of the labor market segmentation curve in the three major economic circles are always lower than the national level. Through more detailed data comparison, it can be seen that the average labor market segmentation index in the Beijing-Tianjin-Hebei region is lower than the national average of 16.28%, the average market segmentation index in the Yangtze River Delta region is lower than the national average of 22.51%, and the average market segmentation index in the Chengdu-Chongqing region is lower than the national average of 34.22%, indicating that the labor market segmentation level in the economic circle is much lower than that of the labor market segmentation level in the economic circle, that is, the cross-regional labor flow in the economic circle is relatively weak. The degree of market integration is relatively high.
(4) The current situation of labor market integration in various provinces, autonomous regions and municipalities
This report further examines the situation of 31 provinces, autonomous regions and municipalities in China, and can find that Guangdong, Sichuan, Shandong, Hunan and Anhui are the five provinces with the lowest degree of labor market segmentation, among which Shandong and Anhui are also the five provinces with the lowest degree of commodity market segmentation. Ningxia, Shanghai, Jilin, Guizhou and Tibet are the five provinces with the highest degree of labor market segmentation, among which Ningxia, Guizhou and Tibet are all western provinces, which confirms that the degree of labor market segmentation in the western region is higher than that of other regions. In addition, through comparison, it can be found that Shanghai and Tibet are not only the five provinces with the highest degree of labor market segmentation, but also the five provinces with the highest degree of commodity market segmentation. In addition, Tibet, Shanxi, Hunan, Qinghai and Ningxia are the five provinces with the greatest results in labor market integration reform, with the labor market segmentation index declining by 95.26%, 83.76%, 83.59%, 80.58% and 80.03% respectively during the sample period. Tianjin, Hebei, Hubei, Hainan and Jilin were the five provinces with the least success in labor integration reform, especially Tianjin and Hebei, whose labor market segmentation index increased by 18.34% and 3.60% respectively during the sample period.
03
Summary and policy recommendations
In the context of China's promotion of the formation of a new development pattern with the domestic cycle as the main body and the domestic and international circulations reinforcing each other, this report discusses the reform process of China's market integration from the perspective of market segmentation, uses relevant price data from 2002 to 2022 to measure the segmentation index of China's domestic commodity market and labor market, and analyzes the trend of market segmentation index from the national level, the four regional levels, the three major economic circle levels and the provincial level. The following six important conclusions have been drawn.
First, from a national perspective, from 2002 to 2022, China's overall commodity market segmentation did show a downward trend of convergence, and the process of commodity market integration reform has achieved positive results, while the labor market segmentation index fluctuated sharply, and the overall integration process did not show a significant downward or upward trend, and the integration process was relatively slow.
Second, from the perspective of the commodity markets in the four major regions, whether it is the eastern, central, western or northeastern regions, the commodity market segmentation index shows a downward trend of shocks, which is not much different from the trend at the national level, and the trend between regions is not much different. In terms of the degree of segmentation of commodity markets in each region, the central region has the smallest degree of market segmentation, followed by the northeast region, the western region, and finally the eastern region. In addition, from the perspective of the effectiveness of market integration reform in the sample period, the Northeast region has achieved the most significant results in the process of promoting commodity market integration reform, followed by the eastern region, then the central region, and finally the western region.
Third, from the perspective of the labor markets in the four regions, the segmentation of the labor markets in the four regions is still in a state of sharp fluctuations, and there is no obvious upward or downward trend. Specifically, the four regions have similar fluctuations, all of which have experienced multiple rebounds and upward movements, but the sharp fluctuations in the degree of segmentation of the labor market in the western region are significantly higher than those in the other three regions. The specific values of labor market segmentation by region show that the average labor market segmentation is the lowest in the central region, followed by the eastern region, the northeast region, and the western region. In the process of labor market integration reform, the western region has achieved particularly remarkable results, followed by the central region, the eastern region and the northeastern region.
Fourth, from the perspective of the commodity markets of the three major economic circles, the commodity market segmentation in the economic circles before 2014 showed a clear downward trend of shocks, but after 2014, it almost showed a stable fluctuation state, with no obvious upward or downward trend. Further comparison of the commodity market segmentation index of the Beijing-Tianjin-Hebei, Yangtze River Delta and Chengdu-Chongqing economic circles with the national level shows that the average value of the commodity market segmentation index in the Beijing-Tianjin-Hebei and Chengdu-Chongqing economic circles is higher than the national level, while the average value of the commodity market segmentation index in the Yangtze River Delta region is lower than the national level.
Fifth, from the perspective of the labor market in the three major economic circles, the trend is basically consistent with the national level, but the degree of market segmentation in the economic circle is basically lower than the national level. Through data comparison, it can be seen that the average labor market segmentation index of the Beijing-Tianjin-Hebei, Yangtze River Delta and Chengdu-Chongqing economic circles is lower than the national average of 16.28%, 22.51% and 34.22%, respectively, indicating that the labor market segmentation index of the regions outside the economic circle will be generally higher than that of the regions within the economic circle.
Sixth, from the perspective of provinces, autonomous regions and municipalities, the reform of commodity market integration has achieved remarkable results, among which Inner Mongolia, which has achieved the smallest results, also has a 54.60% decrease in the degree of commodity market segmentation during the sample period. The effectiveness of labor market integration reform is lower than that of commodity market integration reform. Although most provinces have achieved remarkable results in the integrated reform of the labor market, there are also a few provinces that have experienced negative growth in the integrated reform of the labor market. For example, Guangdong, Sichuan and Hunan provinces are among the top five in the ranking of labor market segmentation, but they are relatively backward in the ranking of commodity market segmentation, so more attention can be paid to commodity market segmentation.
Based on the above research conclusions, in the context of promoting the formation of a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles reinforcing each other, this report believes that the construction of a unified national market can be further improved from the following four aspects, so as to provide important support for the construction of a new development pattern.
First, we need to further reduce the degree of segmentation of the commodity market and deepen the integrated reform of the commodity market. First of all, develop and improve infrastructure such as transportation and logistics, public facilities, and business platforms. Vigorously develop intelligent transportation, establish a modern comprehensive transportation system, strengthen the effective connection between transportation infrastructure and important ports and air transportation, accelerate transportation interconnection between regions, and lay a good foundation for market circulation; By opening up the regional market, reducing the fees of various circulation links, forming a large-scale logistics group, docking local commodity circulation policies, and building a regional public logistics information service platform, we will improve the efficiency of commodity circulation and reduce the circulation cost of consumer goods. Secondly, deepen the reform of the circulation system, strengthen the construction of the whole chain standard system, develop "Internet + circulation", and reduce the logistics cost of the whole society. Encourage circulation enterprises to give full play to the unique services and experience advantages of offline physical stores, and gradually build a new business model that integrates online and offline resources; Make full use of the e-commerce exchange platform to promote the innovation and development of e-commerce in various regions, such as the establishment of e-commerce industry funds, and the development of the entire e-commerce industry chain in various regions. Finally, strengthen the protection of consumer rights and interests. Implement the enterprise product quality commitment system, establish a full traceability system for food, drugs and other commodities that have a significant impact on consumer health, and strengthen market supervision in the circulation field; Explore the establishment of a class action system to balance the litigation capacity of both parties to the conflict, ensure equal litigation rights while minimizing the cost of protecting consumers' rights.
Second, it is necessary to establish and improve a unified and open labor market and vigorously promote the integration of the labor market. Specifically, it includes: deepening the reform of the household registration system and promoting the orderly flow of labor; Promote the reform of the urban and rural land system, and establish and improve a unified land management system. In terms of the reform of the household registration system, a unified national household registration system will be established to promote the free flow of labor between regions; Establish and improve a unified social security system and public services, break the inevitable link between household registration and various social welfare, and enable the labor force to equally enjoy the social security system such as basic medical insurance, pension insurance, and social assistance, as well as basic public services such as medical care and education; Establish and improve a unified employment management system to eliminate restrictions and unequal treatment of migrant workers in urban employment; Establish interconnected labor and employment policies and talent policies to promote the rational flow of human resources between regions. In terms of land system reform, we will improve the unified land registration and urban and rural construction land system, and standardize the circulation of collectively operated construction land; Establish a unified land market and land trading platform in urban and rural areas, and standardize transaction procedures; standardize and improve the land policy linked to the increase and decrease of urban and rural construction land; Promote the linkage reform of the land system and the household registration system, and allow the rural household registration population who go to the city to work in exchange for the construction land index corresponding to their homestead land for the household registration, social security and public services in the place of employment, so as to realize the flow of labor and land indicators in the same direction.
Third, on the basis of paying attention to the commodity market and the labor market, we should explore and improve the market mechanism of emerging factors such as data, so as to achieve the coordinated development of multiple factors. With the increasingly close relationship between information technology and people's production activities, the value of data is gradually improving. Specific measures include: systematically building a regional integrated development perception service network to promote data-based cross-regional and distributed production and operation; Encourage the provision of specialized services based on the Internet of Things, big data, and artificial intelligence, promote the open sharing of regional government affairs data, and deepen the application of big data in key areas, such as the construction of information integration in the field of social security, and the strengthening of data and information sharing on environmental governance.
Fourth, it is necessary to focus on promoting the integrated reform of factor markets in the eastern and western regions. In the process of promoting the marketization of factors based on the principle of neutral competition, we should also pay attention to regional differences. There are obvious differences in the economic development stage and resource endowment of the four regions of China, namely the eastern, western, central and northeastern regions. Due to the early start of economic development in the eastern region, it has long been attracting labor from the central and western regions to pour in, on the surface it seems that there is already a surplus of labor, in fact, the economic benefits brought by the inflow of labor force have not disappeared, and the integration reform of the factor market in the eastern region still has a large room for improvement compared with other regions, and the eastern region should follow the principle of marketization, reduce the restrictions on the inflow of labor, and rationally and effectively allocate resources to maximize economic benefits. In addition, due to the historical lack of capital in the western region, the marginal return on capital is relatively high, and the inflow of capital makes a greater contribution to the economic development of the western region.
Chief Producer丨Wang Hui Che Haigang
Producer丨Li Piguang, Wang Yu, Liu Weimin
Editor-in-Chief丨Mao Jinghui Editor丨Cao Yang