The Inflationary Spiral: The Experience in China, 1939-1950

By Kia-Ngau Chang | Go to book overview
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Chapter 14
Price and Wage Controls


China's price and wage control policies during and after the war did not constitute a comprehensive program to combat inflation; in fact, some individual measures were at cross-purposes with others. Besides these shortcomings in principle, price control measures were sporadic in nature, and the rules and orders which were promulgated were not implemented by efficient, impartial, and universal enforcement. Moreover, whenever one particular measure failed to produce the desired results, either because it was ill-conceived or because of insufficient or improper enforcement, or because insufficient time was allowed for its effect to be felt, an alternative measure--sometimes contrary in spirit--was hastily substituted.

Consequently, the attempt made in the following pages to set out the various controls in an orderly fashion may unwittingly impute a higher degree of rationality to government planning than actually existed. For the reasons set forth, the measures discussed below were not components of a sophisticated plan such as might be employed in a modern industrial society, but were the crude resort of a government faced with an intricate problem of economic cause and effect which was not fully understood.

From the very beginning, the weight of thinking within government circles seemed to oppose price controls as a desirable policy. It was thought that price fixing and physical controls on distribution of commodities would spread fear of scarcity and lead to hoarding, speculation, and other inflationary practices. Government officials who had no previous experience in applying such controls were particularly concerned about the administrative problems involved and endeavored to evade the responsibility of undertaking price stabilization.


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