On Building a Socialist Capital Market in China

Since the Third Plenary Session of the party's Eleventh Central Committee, the reform of the ownership system and the shift in economic policy have brought about profound changes in the capital market. Peasants are getting richer and are expanding the scale of their production after the introduction of the system of contracted responsibility for production and the adjustment in procurement prices of farm and subsidiary products. Tens of millions of workers and employees got raises and bonuses and have more money in their pockets. Enterprises, imbued with more autonomy, were allowed to keep a portion of their depreciation funds and retain a percentage of the profits. Now that the [new] system requires the payment of income taxes to the state, the enterprises have begun to have funds of their own. Since local governments are allowed to run their own financial affairs, localities, departments, and units each have some extrabudgetary funds. Central financial departments can no longer take over without compensation those portions of the national income allocated to farmers, workers, employees, enterprises, and localities. The function of fundraising has gradually been transferred to the banks.