The Failure of State-Owned Enterprise Reforms Under Market Socialism

The reforms that took place in China in the late 1990s were influenced by the market socialism that originated in Eastern Europe. They were characterized by the maintenance of the dominant role of the state-owned economy and the framework of the planned economy, but at the same time they gave enterprises increased autonomy and allowed more market influences. In the late 1970s, China “increased enterprise autonomy” in most of its state-owned enterprises. Unfortunately, as had occurred in the Soviet Union, these reforms failed to revitalize China’s economy. They resulted in increased debt and growing inflation. Therefore, by 1980, China was forced to end this experiment.