ABSTRACT
One characteristic of the very rapid economic growth since 1984 is the sharp expansion of investment by local authorities and enterprises, using funds from dispersed sources. As economic reform brings about changes in China's investment mechanism, the traditional means for achieving readjustment and control cease to be effective, while the new control methods of a mature commodity economy are not yet available. The key to carrying out reform of the mechanism of macroeconomic control is not to establish and improve macrocontrol machinery per se, but rather to reform even further the specific operational micro mechanisms, so as to smooth the way for macro control. As a summary of the results of this stage of our research, this report does not attempt to clarify all the problems that we face. Instead, we shall here discuss a few aspects of the investment mechanism and some ideas for further reform.
