Recent Chinese Economic Reforms: Studies of Two Industrial Enterprises

摘要

This paper consists of two studies of Chinese industrial enterprises and their response to national policies of adjustment and reform in recent years. 'Adjustment and Reform in the Chongqing Clock and Watch Company' analyzes the effect of economic reforms and adjustment policies on a consumer durables producer in 1980-82. The incentives created by reforms are analyzed in the light of the enterprise's objective function, with particular attention to the interaction between changes in incentives and changes in market conditions. The main conclusions are that the dominant influence on the enterprise has been the market. Reforms achieved their aims only after the 'seller's market' for the enterprise's output had been transformed into a 'buyer's market.' 'Management Reforms in the Quingdao Forging Machinery Plant' analyzes the effect of adjustment and reform policies on a medium-sized machinery producer. This factory was given financial incentives and made responsible for sales at the same time that demand for its products fell sharply as a result of a reduction in national investment and heavy industry output. In this crisis the enterprise responded by initiating an economic responsibility system of management, making an intensive sales effort, drastically changing its product mix, and attempting to improve the quality of and diversify its products. It is argued that conflicting directives from overlapping supervisory agencies, a largely unreformed labor and wage system, and price controls which hold down profit margins have hurt the plant's performance despite considerable improvements resulting from the reforms that have been implemented.