Price Distortions In Chinese Factor Markets

Since the reform and opening, the Chinese government has formulated a series of economic promotion policies, and have played a crucial role in the rapid economic development. After a series of market-oriented reforms, China’s commodity markets has been basically completed market-oriented, but limited to some of the historical and institutional reasons, the degree of marketization of productive inputs markets is still insufficient,especially compare to commodity makets. The main problems of the productive inputs markets in China are serious price distortions, these reflect that the price of factors of production are not equal to their real value.As the factors of production have a key position in the allocation of resources, the prices of the factors of production distortions will cause price volatility in the commodity markets through the inputs in production processes,resulting in the imbalance of entire industrial structure and allocation of resources.Finally, will destroy the healthy development of the national economy.This paper discusses the price distortions problems in the factors of production markets,and focus on the two factors of production markets:labor markets and resourcesmarket.Then estimates the degree of price distortions at these markets using theoretical and practical analytical methods.Finally,using input-output tables and input-output analysis method,discusses the influence of distortions to the commodity’s price,and give the true price after the distortionsare corrected.