ABSTRACT

“Three breakouts” stymied state hiring, wages, and grain procurements by the early 1970s. Inflation plagued planning after 1980. Shanghai was a “price basin” (jiage pendi). Officially, prices were of three kinds: fixed (dingjia), negotiated (yijia), and floating (fujia). Legal prices were usually set on a “cost plus” basis. Expenses and taxes for any good at a major producing location, often Shanghai, were added to other outlays (e.g., for transport). As reforms progressed, cost-plus calculations to fix prices became less enforceable. Fixed low prices hindered the stream of goods into Shanghai, where materials purchasing departments by the 1980s were said to be “poor” and lack cash – because Shanghai suffered China’s highest state extraction rate. Its factories had to find more of their own inputs. Sometimes inland jurisdictions took money from Shanghai firms to produce raw materials – but later kept the inputs to process themselves. Journalists, for example, bartered for newsprint. They editorialized that “[d]eveloping the commodity economy without commodities is a major vexation for many enterprises in Shanghai.” By 1990, and up to the present, the state reacted with efforts to centralize an economy that reforms had localized.