In the twenty years since the Cultural Revolution, China has maintained fast real growth. This occurred despite China having
similar problems to other transitional economies, e.g. loss-making State Owned Enterprises (SOEs), eroding fiscal revenues and
inflation, (Section 3).
Although China initially adopted the Soviet central planning model, after the 1950s break Chinese planning changed towards a
regionally-based system with local planning (Section 2). In contrast to the centrally-based, functionally-specialised (U-form or
unitary structure) Soviet model, the Chinese economy is organised on a multi-layer-multi-regional (M-form) basis. This encour
aged development of small size township and village enterprises (TVEs), the main engine of Chinese growth.
Power and control remained with the Party and the State, but was diffused much more widely, regionally and locally. This allowed
initiatives at lower (political) levels to establish institutions, both in agriculture (the 'household responsibility system') and industry
(TVEs), without state protection. Even among regionally controlled SOEs, 'tournament rivalry' between regions, etc., and
between SOEs and TVEs provided competition.
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