In China, the Communist party built prison camps on two principles: first, forced labor would turn inmates into productive citizens and second, the profits from the inmates’ work in factories and farms would fund the prison operations. With the advent of market reforms in China, however, the prison camps are forced to compete with businesses for customers and resources. The result has been deficits for prison camps, whose inferior products fare poorly in the market economy, but also deteriorating conditions for inmates who suffer from the lack of prison funding.
See "China’s Prison Laborers Pay Price for Market Reforms", Philip P. Pan, The Washington Post, June 13, 2001