ABSTRACT
China’s economic reform has been a process of redefining the relationship between the state and economic enterprises. In the pre-reform Chinese economy, the state was a direct administrator of economic enterprises through application of comprehensive economic plans. This resulted in huge technical and allocative inefficiency. The objective of reform was to improve economic efficiency and generate the momentum for growth. This was partly to be achieved through withdrawal of the state from commercial decisions and transformation of enterprises and banks into truly independent identities.
