The Emergence, Expansion, Functioning, and Impact of Economic Reform in China

Author

Peili Mao, Fontbonne College

Year of Award

1993

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business Administration

Department

Business Administration

Keywords

Asia, consumer, manufacturing, Soviet, trade

Abstract

The main characteristics of Chinese economic planning were: (1) not comprehensive at any level of government; (2) covers a small fraction of industrial output; (3) highly aggregated; (4) a bargaining or negotiated process; and (5) subject to timing problems. Markets for industrial goods did not have an opportunity to fully develop due to administrative control over resource allocation, decision-making, and price. There were no financial incentives at the enterprise and individual levels. The problems include: (1) poor product quality; (2) inefficiency and waste; and (3) little or no growth in total factor productivity.

The initial package of reforms in the late 1970s consisted mainly of increased enterprise autonomy, financial incentives, and replacing planning and - administrative allocation with the market mechanism.

In 1981-1982, the economic responsibility system was adopted, but was subsequently replaced by the profit tax system. After 1984, there was increased autonomy of enterprise managers.

The major changes in economic planning include: (1) a sharp reduction in the number of commodities subject to central planning; (2) reductions in the shares of output subject to allocation; (3) loosening of product mix targets; (4) greater independence for the state commercial and material supply systems; (5) increasing scope for enterprises to arrange activities and sell output outside the plan; and (6) related shift in the focus of planning from production to distribution of inputs and outputs.

Although development of markets was one of the goals of economic reform, progress was slow and uneven in the beginning years of reform. Beginning in 1984, market allocation was able to increase due to new government policies.

Three case studies were summarized. These involve the extent of decentralization, impact of reform on performance of the enterprise, and allocative efficiency and total factor productivity. The thesis concludes with an evaluation of the reform and a discussion of the future of reform.

Document Type

Restricted Thesis

Recommended Citation

Mao, Peili, "The Emergence, Expansion, Functioning, and Impact of Economic Reform in China" (1993). All Theses, Dissertations, and Capstone Projects. 295.
https://griffinshare.fontbonne.edu/all-etds/295