ABSTRACT
A complete market system includes not only the market of products or goods but also that of factors like capital, labor, land, and resource. The factor price regulation supports high growth as it can not only stimulate enterprise investment but also increase the international competitiveness of the products and significantly promote export growth. The fundamental reason for China to be mentioned as a “world factory” is that the low cost of production has created the price advantage of export products. China’s consumption demand resulted in the recession of consumption due to ultra-low disposable income, excessive preventive savings, as well as the consumption transfer from overseas market to domestic market. China’s reforms include the reforms of economy system and the government and legal system. The loan interest rate after the reforms is higher than that before the reforms, which has an adverse impact on the state-owned enterprises that have obtained cheap loans.
