An Analysis of Price Dynamics in China, 1952-82.

This dissertation provides a framework for analyzing administered prices in China. It brings together a great deal of new information and statistics from Chinese sources. It also explains the mechanisms that underlie the formation of prices in China, and the importance of the interaction between the Central Government, producers, and consumers in this process. The study deals primarily with agricultural procurement prices, industrial producer prices, and consumer retail prices under the control of the Government, and with the period 1952-82 because of the need to underst and how the price structure evolved in the past in order to comprehend how prices may change in the future. The first three chapters focus on the mechanisms for determining prices in China. In Chapter I, a diagrammatic approach, which draws partly upon the concept of externalities, is used to display how the authorities want to set prices, and how producers and consumers react to these prices. In Chapter II, the objectives and constraints that guide the Government in administering prices are placed in the broad context of economic policy and development in China. In Chapter III, trends in individual prices are analyzed. The levels at which the leadership initially set prices are detailed, but the emphasis is on the factors, often financial indicators, which prompted the Government to adjust prices, as well as on the ways in which it calculated the magnitude of price changes. All in all, price setting in China has not consisted of ad hoc measures as commonly believed. The next two chapters present an evaluation of the price system and resulting price structure and an outline of price and macroeconomic policies that could be used to address some of the current problems in pricing. As documented in Chapter IV, the pricing policies of the Government contributed to its macroeconomic goals of industrialization and price stability for basic necessities, but came at the expense of a sustained reduction in rural-urban inequalities and in allocative efficiency. In Chapter V, the case for price reform is made, with a discussion of the relevance of East European experience for China, the steps that have already been taken in China, and the pricing alternatives available to the Government of China.Ph.D.EconomicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/161127/1/8621325.pd