China - an Economy in Transition

By Marsay, Helen | Teaching Business & Economics, Summer 1999 | Go to article overview

China - an Economy in Transition


Marsay, Helen, Teaching Business & Economics


The preceding article traces the transition of the Chinese economy from almost pure command economy to a mixed economy. It also draws an interesting comparison between progress in China and Russia, highlighting two diverse approaches to a similar issue with very different outcomes. Throughout the article there are ample opportunities for students to apply their knowledge of demand and supply analysis, external factors affecting the environment in which a business operates, the role of the government and the need for intervention. There follows a set of directions to help students explore the main issues.

TYPES OF ECONOMY

All economies, regardless of their structure, are tackling the same basic questions of what to produce, where and how this production will take place and who will receive the end result. We can view the structure of the economy on a spectrum running from a pure planned or command economy at one extreme where all decisions are made by a central planning body to a free market economy at the other, where the decisions are entirely the result of market forces; i.e. the interaction of demand and supply. Both systems have their advocates and both have theoretical advantages and disadvantages.

Using the article and any other knowledge you may have construct a list of the advantages and disadvantages to the population of living under a command economy.

A common feature of many planned economies is the control of prices so that all can afford the basic necessities. Even after reform, the price of grain sold to the state was controlled. In many cases this price control resulted in shortages; a key feature of which was queues for basic goods. Use a demand and supply diagram to show this situation and then discuss whether there would be a 'better' solution to the issue of basic goods being available for all.

Both China and Russia have moved from a command economy to a mixed economy. Thinking about the extent of the changes which have taken place position both countries on the spectrum described above. Think about the amount of freedom individual firms have been given, what proportion of the economy is now in private hands and what role the government still plays. Use the figures given in the article to create a pie chart showing the output from different sectors of ownership. A similar chart could be drawn up for the UK in order to help you to decide on their position on the spectrum.

THE MARKET MECHANISM

The Household Responsibility System implemented in China is one factor which indicates movement towards a market economy. Each household, previously part of a commune, was allocated a piece of land on a long term lease in return for payment of a tax and an agreement to sell a proportion of output to the state at an agreed price. The price for grain has been controlled but higher prices are commanded by other products. Given this pricing information how do you think each household will allocate their land to grain and non grain products? Show, using demand and supply analysis, how the price differentials between grain and non grain goods have led to a reallocation of resources.

Once the household has sold their quota to the government they are free to sell the remainder at the newly established local markets. Previously this group had been part of a commune, working together for the good of all, but a by product of the reforms was that people have become more protective over their plot of land. Why do you think this is? Does this create an extra issue which the Government must address?

ECONOMIC GROWTH

Growth is a valid aim in any economy. As with our own personal situation we would like to be moving forward and expanding our earnings potential. For an economy growth can result from an increase in the amount of or more efficient use of land, labour and capital. Although Mao Zedong stated economic growth as an aim from 1949 to 1976 "China remained materially poor". …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

China - an Economy in Transition
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.