 |
 |
|
Chen (2004)Management > Asian Management > Lectures > Independent Research > Chen - China > Issues with CSEs > Further issues > 1979 change
1979 ChangeIn 1979 a reform in China marked the lifting of government intervention in CSEs. For example, by 1984 only 30-40% of industrial production was attributed to central planning and by 1991 CSEs obtained 72% of their sources from the market. The state gradually separated ownership from control, keeping ownership of the CSEs, but allowing managers to manage their firms. The system of supply and demand has improved, with greater varieties and quantities of goods available on the market. It has become a buyer's market, as distribution channels are better managed and competition is becoming heated. Taxes came into play, with CSEs required to pay 55% in income tax, while smaller firms paid on a basis of an eight-grade progressive tax schedule. By the late 1990s these tax burdens were reduced to 33% for the large CSEs. This resulted in an incentive to create a better business, as firms had more money to invest in their businesses. In addition, the state was no longer the only investor, with CSEs getting funding from a variety of sources, such as bank credit. There have also been changes in labour policies, with the introduction of contracts for managers and workers and the weakening of the Iron Rice Bowl system. Wages are also more affected by performance.
|
|
