4 The Formation and Evolution of the Unit System

The efforts of the Chinese leaders to establish socialism as they envisioned it and to promote industrialization led to the formation of a peculiar type of organization in the urban economy, especially in the state sector. The principal characteristics of this organizational form were as follows: 1. With the elimination of market relationships, state control over the allocation of resources through administrative means, and the requirement that the enterprise shoulder the responsibility for the workers' permanent employment and welfare, the working people became comprehensively dependent on the workplace, and in effect the individual became dependent on the state.