Chan (2018) writes:

Implementing such a strategy, the state siphoned off resources in the rural sector for capital accumulation in industry through the well-known process of "scissors prices".

What was the well-known process of "scissors prices"?


Under Mao the Chinese government was a planned economy, prices were set by the party, not by the free market. Procurement prices of agricultural produce, what the government payed to farmers, were lower than consumer prices of the same produce, what the government got from selling the produce to the consumers. The difference in prices becomes state revenue. The widening of the gap between the two prices is likened to the opening of a pair of scissors, hence the name.

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    $\begingroup$ Thanks for your answer! Could you perhaps add some references/sources? $\endgroup$ – user54743 Feb 10 at 0:51
  • $\begingroup$ @user54743 Part of the next sentence of the text you quoted from the "Urbanization with Chinese Characteristics: The Hukou System and Migration" is "the compulsory procurement and monopoly of sales of farm produce, the rural collective (commune) system". $\endgroup$ – Giskard Feb 14 at 7:23
  • $\begingroup$ I also found some other sources by googling "Mao scissors prices". Unfortunately I can't copy text from google books, so I will just type in one, from "China's Economy: A Collection of Surveys". It goes "the monopolistic rent between the two scissors prices served as a stealth tax. Only the rural sector bore that tax." A reference for the phrase price scissors: Scissors Crisis. $\endgroup$ – Giskard Feb 14 at 7:24

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