Why the quantity theory of money is not applicable to China, together with a tested theory that is

Using data for the period 1952-88, this paper argues that any statistical relationship between money and prices is not evidence of causation running from money to prices but is due to the consistent nature of planners' reactions to purchasing power imbalances. This is not an econometric study. Historical, institutional, and simple statistical analysis is used. An outline, descriptive picture of money development for this period in China is offered.in the light of the simple theory applied here. Parallels with post-Keynesian monetary theory are suggested. Two appendixes explain the narrow money supply process and present all the data used.