ABSTRACT
This chapter introduces the Communists’ 1940s fight for price stabilization as an experience of market creation immediately connected with China’s 1980s reform debate. In the 1940s, China experienced one of its most intense and prolonged periods of hyperinflation. The Nationalists’ failure to gain control over prices was important for the Communists’ victory in the revolutionary war. The lessons of the wartime struggle exerted a direct and explicit influence on the ways in which Chinese economists and reformers have thought about market creation in the reform era. Many of China’s most prominent reform leaders and economists of the 1980s participated in the revolutionary war. Overcoming hyperinflation and reintegrating the economy were key to the material base of the Communists’ revolutionary struggle. The Communists employed a strategy of economic warfare that relied on re-creating markets through state commerce in order to reestablish the value of money. The techniques of economic warfare, which resembled elements of the traditional practice of price regulation (see Chapter 1), were revived in the early stages of economic reform in the 1980s as part of the efforts toward gradual marketization.
