ABSTRACT
The industrial output of southern Jiangsu province grew by over 12 percent in
the fi rst quarter of 1989, but State-operated industry grew by only 1 percent, while
town-and-village enterprises grew by more than 20 percent. The diffi culties of
State industry lie mainly in the shortages of power, coal, and raw materials. Many
factories have to close down for two days every week due to power outages and
nearly half the generators of State power plants are shut down because of the
shortage of coal. Small local power plants can generate power by purchasing coal
at a negotiated price, while State-operated plants, which rely on central alloca-
tions of power and coal, cannot afford such high negotiated prices. Township
industries usually purchase power at a negotiated price or generate power with
their own diesel engines if negotiated-price power is unavailable. There are many
sources of coal if you are purchasing at the negotiated prices however, product
prices rise as costs increase, and factories can barely afford it. Thus, economic
returns drop considerably.
