This paper introduces and surveys the use and collection of productive funds in Mainland China. As regards the use, we estimate the demand for productive funds in agriculture, industry, and commerce. If Mainland China wishes to increase her agricultural gross output value to 606 billion Rmb by 1990, the total investment in fixed assets and circulating funds in production should reach totals of 302 billion Rmb and 133 billion Rmb respectively. At the same time, the demand for fixed assets and quota circulating funds in industry should also be increased to 737 billion Rmb and 369 billion Rmb respectively in order to result in a 1228 billion industrial gross output value. The majority of commercial funds are quota circulating funds which also should be increased to 560 billion in order to achieve the production target of 128 billion Rmb by 1990.
With regard to the collection channels, the structure of these has changed in recent years. Before 1979, the government budget fund was the main source of funds for the state-owned enterprise. Since the economic reforms, bank loans have become an important component in the fund supply side. Since 1983, all the circulating funds have been supplied by bank loans. So the government budget fund and bank loans are the two key channels used for the collection of funds. Owing to the trend towards decentralization in the enterprise ownership system, a new channel to collect funds by selling bonds or stock has been created. If this policy is maintained in the future, many new types of fund markets will be developed. Then the macroeconomic monetary policy will become more important for maintaining economic growth and stability.
