AUTONOMY IN CHINESE STATE ENTERPRISES 191 production autonomy, the state delivery plan is a compulsory contract, rather than the basis for surveillance and control of firm activity by government superiors. In other respects, the firms achieved a measure of "autonomy"very early in the reform process. By the early 1980s nearly all firms were retaining a share of profits and had the authority to sell some portion of their output outside the plan. We hypothesize that, in such an environment, the grant of output autonomy was a crucial component required for a qualitative increase in overall autonomy, since it allowed firms to integrate incentives, sales, and production.(Conversely, most firms by the end of the 1980s still did not have clear rights to fire ermanent workers .) There is considerable diversity across the firms in the CASS chey were granted output autonomy The number of firms in the sample receiving output autonomy in each year is shown in Figure I In each year between 1980 and 1989 some firms were granted output autonomy but it occurred most commonly between 1984 and 1988. While a few of the firms had output autonomy before 1980, some had not received it by the end Firms with output autonomy still operate with a number of obligations to bureaucratic superiors. Firms must deliver output at 100 60 SNN 6978 982984 1990 FIGURE I Output Autonomy