RETAIL PRICE INDEX IN THE PEOPLES' REPUBLIC OF CHINA.

The article presents information on retail price index in the peoples republic of China. There is lair agreement among scholars familiar with the economy of the Peoples' Republic of China that there is stability in the retail price index. It is admitted that this index is biased downward because there were years of high black-market prices. However, they say that such issues are not central because, the basic necessities were available and rationed at stable prices, the index is biased downward when prices are rising, and biased upward when prices are falling. There are two distinct problems with any price index, meaning and significance of prices and problems associated with choice of weights, scope, and bias in the index. China has had natural disasters (1956-1957, 1961, 1962) technological regressions (1958), capital flows abruptly cut (1960, 1961, 1962), social institutional upheavals (1955-1956, 1958) and several other disequilibrating shocks, along with a highly producers' goods production-oriented planning. Nevertheless, it has in the past been claimed that China has enjoyed a price stability maximum rate 1.3 per cent per year, 1952-1963, according to the official index that is almost unknown in any other developing country, let alone a huge developing country with several constraints. If this claim had been proved conclusively, then this achievement itself would be overwhelmingly impressive. Evidence, however, does not support the claim.