China's Economic Reform: Two Levels of Dual Economic Institutions in the Market Socialism

The economic reform in China led by Deng was to form an economy based on a marketed socialist economy system. Yet the system cannot guarantee the success of the reform. In regards to the specific character of the economic reform in China, J?nos Komai suggests the so-called "dual economic systems." During the transition period, China not only retains the state-run enterprises to some extent, but also improves the mixed-ownership system openly and gradually. Moreover, it also establishes the two levels of dual economic institutions, which adjust the operation of the state-run enterprises by the market system and the planned economy. In doing so, the retained state-run enterprises can reduce the impact of the reform, while the private ones can seek for a higher efficiency of the market productivity. The major logic concerning the two levels of dual economic institutions lies on the state's dominant position during the transition period. The intention of the government is to look for a stable economic growth through the establishment of the dual systems. This article will focus on the logic of the two levels of dual economic institutions as well as the state role in the new institutions. I will also discuss the influence of the two levels of dual economic institutions on the economic reform.