Date of Award:


Document Type:


Degree Name:

Master of Science (MS)


Economics and Finance

Department name when degree awarded



L. Dwight Israelsen


The central planning board in China issues orders to each economic agent mainly through two channels, ministries and provinces. These orders become the targets for every specific economic agent. The orders to the Foreign Trade Ministry become the targets for all import and export corporations, provincial foreign trade bureaus, and branch corporations. The activities of all branch corporations comprise China's foreign trade business.

The activities of the foreign trade sector are certainly influenced by features of the entire economy such as the domestic fixed-price system and labor immobility. These factors not only constrain foreign trade activities but also cause inefficiency in the activities. In the case of import sugar and export oil, these impacts are very obvious and they result in the loss of social welfare.

Since the targets in each import and export corporation lack rational relations among themselves, and to optimal economic goals, they stimulate the employees to pursue objectives and to create outcomes which the planners did not expect. Clearly, China must give up these irrational factors in order to develop the Chinese economy rapidly and efficiently. This is the only outlet for its economy.



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