ABSTRACT
The People’s Republic of China (PRC) was established in 1949, and the new government took control of the industrial enterprises belonging to the previous government of the Republic of China.1 Private enterprises were tolerated for a brief period, but soon became joint ventures with the owners and managers forced to surrender control to the government. Methods of central planning were adopted for key industries,2 and the government managed various state-owned enterprises through some twenty Ministries of the State Council. A State Planning Commission was established to coordinate and direct the Ministries. Output targets were set; inputs were centrally distributed; products of the state-owned enterprises were distributed by the State at predetermined prices; profits were mostly surrendered to the State; funds for capital construction and expansion had to be approved by the State. Agriculture too was operated essentially on central planning principles.
