ABSTRACT
This chapter examines the evolution and culmination of the “leftist” model of central planning, which fell from favor after 1976. Summarizing from the World Bank report, the main features of China’s state-run economy were as follows: exclusive public ownership of the means of production; central allocation of resources, including labor, industrial, and agricultural inputs, as well as consumer goods and strictly hierarchical planning and administration by command. It also includes the passive role of money and the limited role of prices in allocating resources and state monopoly of trade and the insulation of domestic prices from the world market price structure. From 1949 until 1978, the development of heavy industry was the major aim of Chinese economic policy. The basic outline of the Soviet model included high rates of capital formation, priority for heavy industry, concentrated investments in large plants, and the squeezing of agriculture through procurement of crops at below-market prices to support industry.
