Explain the concept of ‘Dual Pricing’ adopted by China.

Question

Accepted Answer

Dual Pricing concept in China:

Definition: Fixing prices in two ways for same goods

Mechanism:
1. Government-fixed prices:
- Farmers and industrial units buy/sell fixed quantities
- Based on government-set prices
- For essential commodities

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

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 gradually.