Question

Briefly explain the dual pricing policy adopted by China.

Answer 1

China’s dual pricing policy was a temporary economic policy introduced in the 1980s to help it shift from a centrally planned to a market-based system.

Features of the dual pricing policy adopted by China are as follows:

1. Plan Prices: It is important for stability that the government controls the prices of basic things like food and energy.
2. Market Prices: Surplus production prices are established by the market, providing flexibility and incentives.
   • Purpose: Agriculture and industry will benefit from increased productivity and liberalisation as a result of this program.
   • Outcomes of this policy: Increased rural income and market access are favorable effects, but it also has negative consequences, such as corruption, resale, and regional inequities.

Hence, this strategy highlighted China’s pragmatic approach to economic reform, which balanced state authority with market forces.