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6. The decision of the leadership not to retain the system
introduced during the 1950s, perhaps with some modifications,
is on the face of it less easy to understand. China had done
well during the period of the First Five Year Plan (1953 to 1957),
when the system was consolidated, and had not done too badly at
other times when it had been made, or allowed to, function.
During the period of the First Five Year Plan, the economy grew
at an average rate of 9%. It grew at an average rate of about
6% during the 11 years from 1965 to 1975.
7. The fullest explanation I know for the rejection of the
system is the one given by Huan Xiang, an Adviser to the Chinese
Academy for Social Sciences (and a graduate of the London School
of Economics), in an article published during the summer of 1985.
He wrote:
"Owing to the fact that, in the period immediately after
the founding of the People's Republic, the level of China's
development was low, and the economic structure was extremely
brittle and irrational, the establishment of this system did
play a positive role. However, with the development of the
productive forces and the increase in the level of complexity
of economic life, this system became more and more out of
step with the needs of socialist construction. It became
extremely rigid
There was no clear line of demarcation
between the functions of the government and the functions of
enterprises
There was excessive control by government
agencies over enterprises ....There was disregard for the
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