IV. Government and Market: Encouragement and Promotion for Development

    The evolution of history has proved that building and perfecting the market and its system can optimize the distribution of essential factors of production and promote the flow of manpower, merchandise, capital and services, in order to achieve a better division of specialized labor, update concepts and boost economic development. While stressing the market's fundamental role in development, we should also recognize that the government should play the role of a night watcher to maintain order, property rights and social stability, as well as institute strategies for economic development, provide public services, encourage competition, prevent monopoly, minimize negative external economic effects, promote fair distribution, alleviate and decrease poverty, and so on.

    1. Market and Resource Distribution

    Now, the market system has been established primarily in Tibet, and the market's function in regulating local economic life is obvious.

    Government control on prices of consumer goods, including the prices of farm produce and many other products, has been lifted. The free flow of manpower, materials and capital in Tibet has been realized. Today, Tibet's markets are full of commercial goods from all over China and the rest of the world. During the time of the planned economy daily foodstuffs like vegetables were in short supply, and many Tibetan residents would bring vegetables from inland areas on their flights back to Tibet. After the market mechanism was introduced the unreasonable price gap between consumer goods and agricultural goods created by the planned economy vanished. The price rise of most agricultural and livestock products far exceeds that of consumer goods, and farmers and herdsmen have profited greatly from the market. For instance, in the time of the planned economy a kilo of yak meat cost less than one yuan but now people have to pay more than 20 yuan for the same amount of meat. A robust yak could even swap for a walking tractor.

    Various markets of different nature have been established. Besides commodities markets that have sprung up all over Tibet, specialized markets of means of production, human resources and securities have emerged in Lhasa and other medium- and large-size cities and towns. The market is beginning to play the fundamental role in resource distribution. Enterprises have become major players in the market who have the final say over their production and operation. In a period of 25 years from the democratic reform in 1959 to the introduction of the reform and opening-up policies in 1984, Tibet's industrial development was dominated by state-owned and collectively-owned enterprises. Not until 1985 did industrial enterprises of a different nature emerge in Tibet. By 2007, there were 148 non-state-owned and non-collectively-owned industrial enterprises, whose output value accounted for nearly 60percent of the total industrial output value, playing a significant role among the industrial enterprises in Tibet. The businesses of these enterprises are completely directed by the need of the market. Even the production and operation of state-owned enterprises follow the market laws and are regulated by the market rather than by government instructions (see Figs. 19 and 20).[23]

    According to an on-the-spot survey, farmers who remained self-sufficient for long periods with low levels of marketization have begun to tailor their production to the needs of the market. The following are two representative examples. Example one: many farmers are increasing the acreage of rape and high-quality highland barley, for which there is a growing demand and price rise, but at the same time reducing the area of winter wheat. Example two: farmers are beginning to buy modern machines like tractors and automobiles and at the same time reducing the number of horses, which rely on large areas of grassland and a lot of feedstuffs but are of not much use nowadays. Furthermore, more and more farmers and herdsmen are transferring extra products and labor to where the needs of the market lie.

    Many farmers and herdsmen are selling their surplus agricultural and animal products at fairs and farmer's markets in medium and large cities like Lhasa and Shigatse, especially at the morning fairs in Shigatse and other county seats. Besides, labor markets for farmers and herdsman have been formed in many cities and towns in Tibet. For example, in the slack seasons labor markets of considerable size can be found in Lhasa, where farmers and herdsmen congregate and wait for people to employ them.

    Because farmers and herdsmen make up an overwhelming proportion of Tibet's total population, and because their income level is an important index to measure their quality of life and the degree of economic development in rural areas, scholars from the China Tibetology Research Center have conducted three successive research projects in three villages[24] in Tibet in 1996. In 2008,the latest research findings showed that the proportion of farmers at the medium-income level was on the rise, while that of those at the high- and low-income levels had decreased. This kind of income structure is widely considered to be rational. The function of the market in optimizing farmers' income structure should not be neglected. In the early days of the reform and opening-up, there were no other means to increase farmers' incomes except traditional agriculture, animal husbandry and the small handicrafts industry. At present, one of three sources of income of over half of Tibet's farmers and herdsmen comes from the market; two of three sources of income of the top ten percent farmers and herdsmen come from the market. So, the market and market economy have indeed boosted the development of the farming and pastoral areas. This also shows that the socialist market economy with Chinese characteristics and in line with the Tibetan situation advocated by the central government well suits Tibet's development, and fuels its economic growth (see Figs. 21 and 22).

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