since its independence. China: After the establishment of People’s Republic of China under one- party rule, all the critical sectors of the economy, enterprises and lands owned and operated by individuals were brought under government control. The Great Leap Forward (GLF) campaign initiated in aimed at industrialising the country on a massive scale. People were encouraged to set up industries in their backyards.
In rural areas, communes were started. Under the Commune system, people collectively cultivated lands. In , there were , communes covering almost all the farm population. GLF campaign met with many problems.
A severe drought caused havoc in China killing about million people. When Russia had conflicts with China, it withdrew its professionals who had earlier been sent to China to help in the industrialisation process. In , Mao introduced the Great Proletarian Cultural Revolution ( - ) under which students and professionals were sent to work and learn from the countryside. The present-day fast industrial growth in China can be traced back to the reforms introduced in .
China introduced reforms in phases. In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors. In agriculture, for instance, commune lands were divided into small plots which were allocated (for use not ownership) to individual households. They were allowed to keep all income from the land after paying stipulated taxes.
In the later phase, reforms were initiated in the industrial sector. Private sector firms, in general, and township and village enterprises, i.e. those enterprises which were owned and operated by local collectives, in particular, were allowed to produce goods. At this stage, enterprises owned by government (known as State Owned Enterprises—SOEs), which we, in India, call public sector enterprises, were made to face competition.
The reform process also involved dual pricing. This means fixing the prices in two ways; farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs on the basis of prices fixed by the government and the rest were purchased and sold at market prices. Over the years, as production increased, the proportion of