chapter  7
25 Pages

Material Distribution and Market Control

WithChu-yuan Cheng

This chapter reviews the control apparatus, analyses the control mechanisms for agricultural products, daily necessities, raw materials, and capital goods; studies the consequences of those control devices; and examines recent reforms in the field of material distribution. Prior to the March 1978 reorganization, the top-level government organ directly concerned with China’s material distribution was the office of finance and trade under the State Council, and there were four ministries under that office: commerce, foreign trade, finance, and food. The core of market control in China lies in the planned purchase and planned supply of major agricultural products and key consumer goods. In an underdeveloped, agrarian economy such as China’s, agriculture provides the bulk of the staple foods and raw materials. Stability of consumer prices and control over labor assignments have been achieved at a high cost. Since prices are artificially maintained, the system tends to create black markets.