The impact of the economic system upon human resource management practices in China

Presently, China's economic reform is undergoing an unprecedented transition from a centrally planned economy to a "socialist market economy": a market economy with Chinese characteristics. Under this new market-oriented system, both management practices, especially in terms of human resource management (HRM), and employee behavior are experiencing rapid revision. This paper examines one of the major problems of China's centrally planned economy-the low productivity levels in enterprises. This examination highlights the necessity to shift from a planned economy to a market economy. Through comparisons of the different management practices of a planned economy and of a market economy, this paper analyses the impact of the changed economy upon HRM practices in China and demonstrates that HRM will play an important role in helping Chinese enterprises to become more productive under a market economy.