ABSTRACT
China differs from the countries of Eastern Europe in many ways. The most salient differences are apparent from even the most superficial observation. China dwarfs the whole of Eastern Europe in size and population - many Chinese provinces are larger than most Eastern European countries. In China the national market is larger, but regional and even local "administrative protectionism" appears to be the rule, creating tiny markets which in many cases may not approach the minimum efficient scale of a single firm in size. China has recognized the harmful effects of excessive liquidity in the possession of enterprises. China learned of the problems associated with foreign indebtedness from its experience with the Soviet Union in the 1950s and early 1960s. Modes of thinking about the economy in the countries started out from a similar foundation of Marxism-Leninism combined with conventional wisdom learned from practical experience in the Soviet Union.
