ABSTRACT
The Chinese price reform aimed at breaking up the highly centralized price control system, adjusting and freeing prices, and introduced the ‘dual-track’ price system for means of production. Stabilization of the prices of the means of production is a major goal of present Chinese economic planning. In implementing price reforms, maintenance of a relatively stable general price level is a major goal of Chinese economic planning. Before the economic reform, the Chinese economy was a closed economy with a few ties with the world economy. 30% of Chinese industry relies on farm produce as raw materials. According to William A. Byrd, Chinese gradual reforms, has shifted planning from direct resource allocation to redistribution of rents. The Chinese reform strategy centers on the two-tier system, which means dual price system in the goods market, in the narrow sense, and plan and market coexist and the market grows out of plan, in the broader sense.
