Some Important Issues in the Reform of China’s Planning System

Abstract

A decade has passed since the reform of the economic system began in China. The decade-long reform has had universally acknowledged achievements, but at the same time has met with many difficulties and contradictions. The ideal of China’s economic reform is to transform the old, mainly producer-oriented, system into a new planned commodity economy. Inherent in the new system of a planned commodity economy is the integration of planning and the market. Under this system, the formulation and implementation of the state plan would respect and apply the law of value and the laws of supply and demand so as to reflect the needs of the market. At the same time the operation of the market would be conditioned and guided by the state plan. This is a new mechanism of economic operation: ‘the state regulating the market while the market guides the enterprise’. With this type of mechanism, the multilayered and closed product economy will gradually be replaced by the commodity economy, with a variety of economic forms and management patterns. The market system will be perfected step by step and the positive benefits of market processes will be fully exploited.