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under mandatory planning because these enterprises will
try all means to circumvent their quota obligations.
This, in turn, results in a further shrinkage in the
share of output under central distribution.
41.
The growth in the relative importance of the
non-planned sector in the Chinese economy should have、
prepared the way for further price reforms after the
effects of the reforms so far enacted have been fully
digested and filtered through. Given that China has
probably reached the point at which a return to the old
system of complete control over production and distribution of goods would be almost impossible, price control has become increasingly difficult and
ineffective. Huge costs are involved in monitoring transactions in the market and it is highly likely that black market activities will emerge once excess demand
builds up. It follows therefore that China's recent
policy to stabilize prices may not be effective, in so far as it has not been accompanied by stringent
measures to re-centralize production and distribution
activities.
42.
Notwithstanding the challenge posed by the
"non-planned" sector, a further rapid transformation in
China's price system involving the scrapping of all
state-fixed prices is highly unlikely. Any such change
would draw strong opposition from those protected
sectors which are used to obtaining supplies of low-priced inputs. It appears that the "double-track
price system" for industrial raw materials and
machinery will continue to exist in near future.
likely development pattern of price reforms in the
years to come is a continuation of the alternate
"stop-go" measures experienced in the past eight
A
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