In a centrally planned economy, as China's was for 40-odd years, the government has a relatively easy job in managing things: It only has to make a decision and pray that it's the right decision and the decision is carried out without opposition from anyone.

In a market economy, the government also has a relatively easy job: It only has to maintain law and order and leave the economy to the corporate sector.

In an economy in transition, however, the government has its hands full.

Last week, China's National Development and Reform Commission "suggested" raising the price of both electricity and coal at the annual "National Coal-Ordering Conference." That put an end to the tug-of-war over coal prices between the coal mines and the power plants.

Ten years ago, China let the price of coal be decided by market forces but it kept control of the price of electricity. To shield power plants from the effects of increased costs, the government tried its best every year to persuade coal mines to give a friendly price to power plants. The artificially low product was referred to as "electricity coal."

For the first few years, the problem did not seem so serious because the coal output was immense, so the market price could not get too high.

In the past two or three years, however, the closing of some polluting mines, growing demand for fuel, and miners' desire for improved living conditions have pushed up the price of coal. So, coal mines wanted to break the "electricity coal" price barrier.

Last year's annual conference ended in stalemate with most coal mines refusing to observe the price cap. The problem was only solved when authorities intervened on behalf of major power plants.

Last week's coal and power price increases seemed a fair way to settle the dispute but, it appears neither side was fully satisfied, according to reports.

The power industry said the electricity price increase was not big enough to cover costs. The coal industry shot back that the power industry had already profited too much from its monopoly, and pointed to the fact that the average salary in their business was five times that of a miner.

The point is that, all the conflicts and controversies that have surfaced during the shift from a planned to a market economy were related to the re-distribution of benefits.

We often heard such comments like: "All these problems will be settled once ours is a mature market economy."

Well, things are not really that simple.

We cannot expect the market to just mature overnight; nor can we expect it to mature all by itself. Somewhere, an effort has to be made.

The government has done a lot to balance the interests of different sectors. However, having the government act as mediator is not enough. There has to be more research or studies on the proper distribution mix of resources and benefits.

That slogan about "letting part of the population become rich before the rest" may have been okay for the first stage of the reform drive, but we can no longer depend on that thinking at this stage of reform. Finding a final, workable solution to the problem of distribution of benefits is an urgent matter. If not, there will be more conflicts.

(Business Weekly 01/13/2004 page1)