Inflation and the Real Price of Grain in China

The rapid increase in the nominal prices of grain in free markets in China that began in late 1993, and continued throughout 1994 and into 1995 has been the subject of considerable discussion and debate. More importantly, the rapid increase in nominal prices resulted in the government of China abandoning the important grain market reforms it had instituted in 1993. These reforms were the culmination of more than a decade of efforts to reduce governmental intervention in the production and marketing of grain, and would have made considerable progress in completing the necessary conditions for a national market for grain.