Briefly explain the dual pricing policy adopted by China.

Question

Accepted Answer

Dual pricing policy in China:

Definition: Fixing prices in two ways for same goods

Mechanism:
1. Government-fixed prices:
- For essential commodities
- Fixed quantities
- Based on government regulation

2. Market prices:
- For non-essential goods
- Based on demand and supply
- For remaining transactions

Purpose:
1. Ensure food security
2. Control inflation
3. Gradual market reforms
4. Balance planning and markets

This system allowed China to transition from planned to market economy while maintaining stability.