Unlike the EEFSU, where the centre played the critical role in coordinating the economy, regional governments in China have had considerable responsibility for regional economic coordination.
In sharp contrast, during their transition, the EEFSU economies apparently suffered dramatic and persistent declines in measured output by 30 per cent or more, over a period of four, or more, years.
Chinese local governments were given greater incentives (together with autonomous power) to introduce reforms(8) than their counterparts in EEFSU, prior to the transition in the latter.
Moreover, the development of the TVE is the most important feature distinguishing the Chinese transition path from those of the EEFSU.
Since the central government had relied on such surpluses as its revenue base, this led to a swift erosion of revenue as a per cent of GDP, as severe in China as elsewhere in EEFSU, (Table 3.
on education, the weakness of fiscal revenues has led the government to run overall deficits in recent years, albeit nothing like as large as in many other countries in EEFSU.
Moreover, in so far as the credit controls are redirected to bite at the SOEs, this has typically just led to a countervailing expansion of inter-company debt (unpaid bills), the notorious triangular debt, again as in EEFSU.
This fall in velocity in China is in sharp contrast to its rapid rise in most of EEFSU, where a flight from money has exacerbated inflationary problems.
Many countries in transition in EEFSU have found their economic and political problems greatly exacerbated by massive inflation.
There is no parallel in the EEFSU - East Germany's reabsorption being a different process.
This was by further weakening the powers of the central bureaucracy, thereby limiting the development of a centralised and functionally specialised (U form) EEFSU style economic planning system.
Thus what China has had over the last few decades, in considerable contrast to EEFSU, was competition, increased scope for individual initiative, notably in agriculture, and for an increasing share of the economy, in particular the TVE sector, a hard budget constraint.