chapter  8
28 Pages

China's Economy in the Transition from Plan to Market

WithChristopher J. Smith

This chapter investigates and evaluate China's economic restructuring, which some observers have called the "Chinese perestroika”. The major problems were political; in that the move toward expanding market mechanisms would present a direct challenge to the bureaucrats who administered China's industry at all levels. China's economic planners realized that additional elements of a market economy were needed to complement the experiments with enterprise and locality autonomy; the most visible new development was the re-emergence of private enterprise. China also began to develop much of the economic infrastructure needed to support the transition from a centrally planned to a market-dominated economy. The other arm of the reform process was the consolidation and expansion of the dual-track pricing and marketing system. Most of the nonstate enterprises operated solely with the market prices, but those in the state sector were free to sell goods and services at market prices after fulfilling their plan responsibilities.