ABSTRACT
In December 1978, roughly two years after the death of Mao Zedong, the leaders of the People’s Republic of China (PRC) initiated an ambitious program of economic “adjustment and reform.” Two major objectives characterized the reform program. The first goal was to decentralize—to shift to lower levels—responsibility for most economic decisions. In industry, this meant transfering economic and financial authority to local governments and (more importantly) to enterprises, as well as expanding the role of the marketplace in allocating industrial output. In agriculture, decentralization meant dismantling the people’s communes, restoring household agriculture, and giving peasants some choice in the crops they could produce. The second and related objective of Chinese reforms was to expand economic and technological cooperation with the West, including, of course, Japan. The opening to the West was seen as critical to building a modern industrial base; it resulted in a sharp expansion of Sino-Western trade and a large flow of foreign technology and capital into China.
