ABSTRACT
This chapter discusses the planning and management of the Chinese economy. It describes reorganization of the economy with the aim of nationalization or collectivization of the means of production; mobilization of savings to finance industrial development; formulation and implementation of national economic planning; and the use of markets and prices in resource allocation. Reorganization of the economic structure and mobilization of savings were the major steps taken by the Communists toward state control over the economy. Resources diverted to the production of food, clothing, and other consumer goods were kept at a level barely sufficient to sustain the productive energies and morale of the population. Mobilization of savings, however, does not automatically lead to a high rate of capital formation, since the latter requires, among other things, stepping up the output of producer goods. One of the major purposes of the Communist regime in reorganizing the economy was to facilitate the mobilization of savings for fueling the development process.
