The correct option is 1 and 3 only.
Explanation
The "Dual Pricing" system was a transitional economic mechanism implemented by China during its economic reforms starting in 1978. It was designed to gradually shift the economy from a centrally planned command economy to a "socialist market economy" by allowing market forces to operate alongside state planning.
Statement-wise Analysis:
- Statement 1 is Correct: The dual pricing system was a core component of China's industrial and agricultural reform process. It allowed the state to maintain stability while introducing market incentives without a sudden "shock therapy" approach.
- Statement 2 is Incorrect: As the name suggests, the system involved two distinct pricing tracks, not just market prices. Farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs at government-fixed prices. Only the production exceeding these mandatory quotas could be sold at market prices.
- Statement 3 is Correct: The system was dynamic. Over time, the state gradually reduced the proportion of goods covered under mandatory quotas (fixed prices) and increased the proportion of goods traded at market prices. This facilitated a smooth transition to a full market-based pricing mechanism.
Key Takeaway:
China's Dual Pricing System involved a two-track approach: a planned track (state-set prices for quotas) and a market track (market prices for surplus), allowing a gradual transition from a command to a market economy.