THE ROLE OF THE STATE AND THE PLANNED-MARKET SYSTEM IN MAINLAND CHINA

The economic structural reform advocated by Teng Hsiao-p'ing (Deng Xia oping) in 1978, which appears to be a pragmatic method of economic dev elopment, is fundamentally different from Mao's centralized planning m odel. The most important of the differences in Teng's strategy is the change in the role of the state in mainland China's economic developme nt. Through reform, governmental institutions have given industrial en terprises greater power overproduction and income distribution in orde r to increase efficiency. Detailed decision-making power has gradually been entrusted to production units, thus decreasing the role of centr alized planning while emphasizing market mechanisms. Peking (Beijing) has created a new development model which can be called a ''planned-ma rket'' system. In this new system, the introduction of market mechanis ms has, however, not entirely ruled out the role of state planning in the economy. Instead, the new system is a mixture of state planning an d market mechanisms with the market taking precedence. Despite the fac t that Peking has labeled its new system a ''socialist market economy, '' this paper generalizes the new planned-market model as a ''third w ay of development, '' distinguishable from the ''socialist way'' or '' capitalist way'' of development.