Economic Growth and Distribution in China

This book is an attempt to extend our knowledge of the character of the resource allocation system in the People's Republic of China. Over the past few years, economists outside of China have been able to reach a considerable degree of consensus concerning quantitative measures of China's aggregate economic performance. While further research will certainly lead to a more refined understanding of the pattern of structural change of the Chinese economy, the broad picture of growth of agriculture, industry, and gross national product has now been fairly well established. Much less is known, however, about the structure and operation of the system of resource allocation and, in particular, how this system has influenced the distributive characteristics of China's economic development.

While economists have studied intensively the interrelationships between economic growth and income distribution in market economies, little attention has been given to examining these relations in the context of planned economic systems. Beyond the reduction or elimination of property income in the modern sector, there is no a priori expectation that planned systems will necessarily mitigate the unfavorable trade-offs between economic growth and income distribution that frequently have been found in the early stages of economic development in market-oriented systems. This study seeks to explain how the complex evolution of China's bureaucratic, administrative system of resource allocation since 1949 has been constrained by distributive and equity goals held by the leadership.