ABSTRACT
Rather than survey the characteristics of the individual economic reform policies, the problems they have encountered, their impact on economic performance, and their probable fate in the future which is the purpose of many of the other articles in these volumes, this article attempts to critique the results of a new Chinese economic system that is well-defined, dynamically feasible, consistent, and efficient. For this purpose the paper relies on the work that has been done by others in the field of comparative economic systems within the discipline of economics, focusing on three key aspects of any economic system—the degree to which decision-making is decentralized and liberalized from the constraints imposed by political authorities; the role played by markets and market prices in the allocation of resources, goods, and incomes; and how "hard" or "soft" the budget constraints are on the economic decision-making units in the system. It is concluded that the current Chinese economy today, after a decade of economic reform, is not a well-defined, dynamically feasible, consistent, or very efficient economic system.
In the conclusion to the article, the question is raised, what are the more desirable or more probable alternatives open to the Chinese? On the one hand, the objective of the more radical economic reformers, a socialist economy that relied mainly on markets for determining the allocation of resources, goods, and incomes, has been ruled out by the post-Tiananmen, more conservative leadership. On the other hand, contrary to popular reports in the Western press that more conservative leadership has publicly ruled out a return to a traditional Soviet-type economy, a Chinese policy po 90sition consistent with actual policy implementation in the post-Tiananmen (mid-1989) period. This would leave the Chinese with the choice between muddling through with the existing, incompletely reformed economic system or a better defined and more consistent mixed system, i.e. a rationalization of the existing system to restore a greater role for central planning, administrative controls, and the state-owned sector, while reducing the role of the non-state, local, and market sectors. The current Chinese leadership is experiencing considerable difficulty in its attempt to make the latter succeed before either age or popular discontent creates a new leadership that may well broaden the scope of alternative economic systems being considered.
