How China Escaped Shock Therapy by Isabella M. Weber;

Author:Isabella M. Weber;
Language: eng
Format: epub
ISBN: 9780429953958
Publisher: Taylor & Francis (Unlimited)
Published: 2021-03-30T00:00:00+00:00

The 1984 “Decision”

On October 20, 1984, the Central Committee adopted the “Decision on Reform of the Economic Structure.” This marked a breakthrough for economic system reform. Famously, China’s socialist planned economy was redefined as “a planned commodity economy based on public ownership, in which the law of value must be consciously followed and applied” (The Research Department of Party Literature, 1991, 406). This meant that the aim was that prices should no longer be set in a voluntary fashion, but that market conditions should be systematically integrated in the price-fixing practice. Similarly, most goods were to be traded as ­commodities—that is to say, they should capture exchange value. In other words, production should be for the market and governed by exchange values and profitability considerations as far as possible in light of China’s concrete conditions.

The core of this new model was essentially to “grasp what is heavy and to let go of what is light”—to borrow the Guanzi’s terminology (see Chapter 1):

Mandatory planning will be applied to major products which have a close bearing on the national economy and the people’s livelihood and which have to be allocated and distributed by the state, as well as major economic activities that affect the overall situation. Other products and economic activities which are far more numerous should either come under guidance planning or be left entirely to the operation of the market, as the case may require.

(ibid., 407)

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