ABSTRACT
In the early period of reform, we first released price controls on the production of an enterprise that exceeded the output required by the plan. That amount could be sold by the producer at non-controlled prices. That was the start of a “dual track” pricing system. Since we began reform of enterprises fairly early, it was understandable that this phenomenon might occur naturally when price distortions had not yet been eliminated. However, at the end of 1984 we took the initiative in formally implementing a two-track pricing system. We said that it was a transitional method, but in fact it was done to avoid price reform. Not only did it then lead to tremendous changes and
differences of opinion within government but it brought new distortions into our economic structure. They were so extreme that it became hard to use any systematic measures to address the conflicts.
