<P> There was no clear solution to the price policy dilemma . The approach of the government was to encourage the growth of nonplanned economic activity and thereby expand the proportion of prices determined by market forces . These market prices could then serve as a guide for more accurate pricing of planned items . It was likely that the Chinese economy would continue to operate with a dual price system for some years to come . </P> <P> One of the most striking manifestations of economic instability in China in the 1930s and 1940s was runaway inflation . Inflation peaked during the Chinese civil war of the late 1940s, when wholesale prices in Shanghai increased 7.5 million times in the space of 3 years . In the early 1950s, stopping inflation was a major government objective, accomplished through currency reform, unification and nationalization of the banks, and tight control over prices and the money supply . These measures were continued until 1979, and China achieved a remarkable record of price stability . Between 1952 and 1978, retail prices for consumer goods grew at an average rate of only 0.6 percent a year . </P> <P> During the reform period, higher levels of inflation appeared when government controls were reduced . The first serious jump in the cost of living for urban residents occurred in 1980, when consumer prices rose by 7.5 percent . In 1985 the increase was 11.9 percent, and in 1986 it was 7.6 percent . There were several basic reasons for this burst of inflation after thirty years of steady prices . First, the years before the reform saw a generally high rate of investment and concentration on the manufacture of producer goods . The resultant shortage of consumer commodities caused a gradual accumulation of excess demand: personal savings were relatively large, and, in the late 1970s and early 1980s, there was a booming market for such expensive consumer durables as watches and television sets . Second, the real value of many items changed as some resources became more scarce and as technology altered both manufacturing processes and products . The real cost of producing agricultural products rose with the increased use of modern inputs . Manufactured consumer goods that were more technologically advanced and more expensive than those previously on the market - such as washing machines and color television sets - became available . </P> <P> During the early 1980s, both consumer incomes and the amount of money in circulation increased fairly rapidly and, at times, unexpectedly . Consumer incomes grew because of the reform program's emphasis on material incentives and because of the overall expansion in productivity and income - earning possibilities . The higher profits earned and retained by enterprises were passed on to workers, in many cases, in the form of wage hikes, bonuses, and higher subsidies . At the same time, the expanded and diversified role of the banking system caused the amounts of loans and deposits to increase at times beyond officially sanctioned levels, injecting unplanned new quantities of currency into the economy . </P>

By the mid 1990s in china had a total membership