G.F. 326
CONFIDENTIAL **
11
those commodities allowed to have floating prices, the actual price levels must not move beyond the set limits. The circular stressed that the price of grain should be carefully controlled and maximum prices may be set for
At the important items of foodstuff in the large cities. same time, controls over the prices of raw materials will be strengthened and, for some raw materials used in the textiles and other light industries, higher prices for over-quota production will no longer be allowed. represented the latest round of "stop" measures adopted by the Chinese government with a view to consolidating the present situation and bringing under control the current
rate of inflation.
These
Implications of China's price reforms for its economy
23.
(i) Economic growth
Notwithstanding the many problems and difficulties associated with price reforms, the rapid growth rates experienced by the Chinese economy, at about 8.7% in real terms per annum in terms of national income and about 10% in real terms per annum in terms of industrial output during the eight years between 1978 and 1986, were at least partly attributable to the price reforms. The influence of price reforms were probably more important in the latter part of this eight year period i.e. 1983 to 1986. The average annual growth rates in real terms of national income and industrial output during these latter years were even faster, at 11% and
13.7% respectively.
24.
Price reforms can be regarded as a catalyst facilitating economic growth in China by first, improving
CONFIDENTIAL # *
No comments yet.
Private notes are available after approval.