Editor's Introduction

George C. Wang

Chinese Economy, 1980, vol. 14, issue 1, 3-5

Abstract: Beginning in 1978 the People's Republic of China has embarked on a revolutionary reform of its economic system and rectified some of the gross blunders in its policy. Patterned after the Soviet model in the 1950s, the Chinese economy is tightly controlled by the central government. The 360,000 state-owned enterprises have little freedom of action with regard to setting prices and disposing profits and losses. Instead, they are treated just like other nonproducing government agencies which turn in all their revenues to the state and receive appropriations from the state's general budget. Such a system in which there is no penalty for inefficiency or compensation for efficiency provides no incentive, and thus it breeds built-in bureaucratization and waste.

Date: 1980
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