This article examines interactions between markets and state commercial planning in the context of China's agricultural sector. It begins with a discussion of recent trends in agricultural planning and commerce in China and then presents a theoretical model that analyzes the way that a mixed commercial system of the sort observed in China functions. The theoretical analysis suggests that a mixed system is sustainable and can have desirable efficiency and distributional effects. Markets, however, limit the range of sustainable plans, and in the presence of markets, state planning may no longer directly influence production and consumption behavior.

This article examines interactions between markets and state commercial planning in the context of China's agricultural sector. It begins with a discussion of recent trends in agricultural planning and commerce in China and then presents a theoretical model that analyzes the way that a mixed commercial system of the sort observed in China functions. The theoretical analysis suggests that a mixed system is sustainable and can have desirable efficiency and distributional effects. Markets, however, limit the range of sustainable plans, and in the presence of markets, state planning may no longer directly influence production and consumption behavior.

Economic reform in China, slowed after the Tianamen Square incident in 1989, may be resuming. The Chinese Academy of Social Sciences has been asked by the central government to suggest further economic reforms in the distribution sector. Here we discuss this topic, noting first the role of distribution in the economic development process, then the changes in China's goods distribution process since economic reform was instituted. We conclude with observations about an ideal distribution system for China.