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Abstract

After the death of Mao Zedong it became clear that the Chinese economy needed to be reformed. The need arose from the economy's serious quality problems: chronic shortages, waste, low factor productivity, and technological backwardness. By 1979 it had been decided that reform must be structural and consist of decentralization of decision making that involves marketization of transactions and privatization of property rights. For the centrally planned system's quality problems to be solved successfully, reform must be comprehensive, that is, systemwide, not partial and selective. China, however, opted for the latter. By mid-1988 it was clear that incomplete reform did not do the quality-improvement job expected of it and that it produced some additional problems. There were distinct signs of regression as the reform momentum fizzled out.

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References

1. Adam Smith , The Theory of Moral Sentiments, ed. D. D. Raphael and A. L. Macfie (New York: Oxford University Press, Clarendon Press, 1976), p. 96.

2. Wang Jiye , “The State, the Market and the Enterprise,” Beijing Review, 10-16 Apr. 1989, p. 20. Wang is director of the State Planning Commission's Economic Research Institute.

3. Jan S. Prybyla , “China's Economic Experiment: Back from the Market?” Problems of Communism, Jan.-Feb. 1989, p. 9.

4. Li Yining, professor of economic management, Beijing University, quoted by Adi Ignatius , “Chinese Policies Run at Cross Purposes in Fumbled Attempt to End Farm Crisis,” Wall Street Journal, 1 Feb. 1989.

5. “Privatising China,” Economist (London), 11 Feb. 1989, p. 36.

6. Quoted by Julia Leung , “Energy Crisis Shuts Factories in China: Fast Growth, Policy Confusion Blamed,” Wall Street Journal, 6 Jan. 1989.

Economic Reform of Socialism: The Dengist Course in China

Abstract

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