A CHINESE WEEKLY OF NEWS AND VIEWS

, NO. 15 April 15-21, 1 LI PENG ON 10-YEAR PROGRAMME AND I 8TH IVE-YEAR PLAN

An Interview With Genera! Secretary Jiang Zemin

HIGHLIGHTS. OF THE WEEK BeijingRfvir

VOL. 34, NO. 15 APRIL 15-21,1991

Report on the Ten-Year Programme and the CONTENTS Eighth Fke-Year Plan • Chinese Premier Li Peng delivered the Report on the- Out• line of the Ten-Year Programme and of the Eighth Five-Year EVENTS/TRENDS 4-8 Plan for National Economic and Social Development at the New Faces in China's Top Fourth Session of the Seventh National People's Congress on Echelon March 25. Full text of the report (document). China to Enact Its Copyright Law Rioter Trials 'Basically Party Chief interviewed on World Situation Completed' Li Meets Soviet Foreign Minister n In a recent interview with Kato Miichiro, chairman of the Chinese Leaders Meet Douglas board of directors of a Japanese newspaper, Chunichi Shim- Kurd bun, General Secretary Jiang Zemin of the Central Committee of the Chinese Communist Party gave his views on the inter• INTERNATIONAL national situation. Topics included China's relations with the Soviet Union, the United States, Japan and China's Eighth Party Chief on International Five-Year Plan and Ten-Year Programme for social and eco• Situation 9 nomic development (p. 9). Japanese-Soviet Relations at Crossroads 11 Zou JIahua, Zhu Rongji Appointed Vice-Premiers CHINA • The 4th Session of the 7th National People's Congress, held March 25-April 9 in Beijing, appointed Zou Jiahua and Zhu China's Economic and Social Rongji vice-premiers and Qian Qichen state councillor on Progress of the 1980s 14 April 8 (p. 4). Economic Restructuring, Foreign Trade Reform Are Progressing 19 China's Soclo-Economic Achievements in the 1980s DOCUMENTS • According to statistics from the State Statistical Bureau, Report on the Outline of the China has made much economic and social progress in the past Ten-Year Programme and of decade as evidenced by the fulfilment of its first-step strategic the Eighth Five-Year Plan for goal of modernization, by the increase in its overall national National Economic and Social strength and the balanced development of various trades and Development professions. All the achievements are expressed in detailed (Delivered at the Fourth Session figures (p. 14). of the Seventh National People's Congress on March GorlMchev's Visit to Cement IMoscow-Tokyo 25,1991) (I-XXIV) Ties BUSINESS/TRADE 22-23 • As both the Soviet Union and Japan have softened their stance on the four northern islands, a long-standing sensitive CULTURE/SCIENCE 24-26 issue in bilateral relations, Soviet-Japanese relations are likely to enter a new phase of development beginning with Soviet COVER: Papercut. President Mikhail Gorbachev's visit to Tokyo (p. 11). Made by Teng Yingnan

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New Faces in China's Top Eclielon

ou Jiahua, minister post as state councillor but entirely to the central gov• J of the State Plan• will remain chief of the ernment's work. Qian, now z ning Commission, State Planning Commis• one of the nine state coun• and Zhu Rongji, mayor of sion. It is believed that cillors, will remain the for• Shanghai, were appointed eign minister. vice-premiers of the State 62-year-old Zhu will soon Council by the 4th Session be relieved of his commis• None of the four were of the 7th National Peo• sion in Shanghai, the coun• passed unanimously. Of ple's Congress (NPC) on try's number one metro• 2,673 deputies attending April 8. polis, and devote himself the April 8 meeting, Zou, The NPC also appointed 63-year-old Foreign Minis• Zhou Nan, newly-elected member of the Standing Committee of the NPC, meets ter Qian Qichen state the . press. xuE CHAO councillor. The three appointments, based on Premier Li Peng's nominations, were con• firmed a day before the curtain dropped on the NPC's annual session, held March 25-April 9. The session also elected Zhou Nan, head of the Xinhua News Agency Hong Kong branch, to the Standing Committee of the 7th NPC. Zou, 64, was at the same time removed from his

4 BEIJING REVIEW, APRIL 15-21, 1991 EVENTS/TRENDS for example, won 2,582 votes while Zhu got 2,547. The appointments did not surprise the press and the public. Many reporters at home and abroad had seen straws on the wall be• fore the curtain rose. The Shanghai mayor tried many times to shun the publicity showered on him, and he succeeded by pay• ing a pre-arranged official visit to Europe just before his nomination was con• firmed. Zhu left Beijing midway through the ses- Ye Xuanping, new vice-chairman of the CPPCC. XUE CHAO and of the Eighth Five- Year Plan for National Economic and Social De• velopment, China's blue• print for the last decade of this century. On April 4, the 13-day annual session of the 7th National Committee of the Chinese People's PoHtical Consuttative Conference (CPPCC) adjourned in Beijing, offering some 1,659 proposals for the government to consider over the coming months. During the closing cere• mony, the CPPCC, China's largest advisory body to An NPC deputy pressing the button to cast her vote. XUE CHAO the government, elected Ye Xuanping, current gov• sion early this month and minister Ji Pengfei and his ernor of Guandong Prov• wouldn't come back until successor, the late Qiao ince, to the post of mid-April, according to Guanhua. the CPPCC's vice- one of his assistants. The concluding meeting chairmanship, and voted Qian Qichen and Zhou of the congress on April 9 10 new members onto the Nan are regarded as repre• passed two laws — the In• CPPCC's Standing Com• sentatives of New China's come Tax Law of the Peo• mittee. third-generation diplom• ple's Republic of China for Ye, 67, an engineer and ats, noted for their diplom• Enterprises with Foreign a son of the late Marshal atic acumen and solid pro• Investment and Foreign Ye Jianying, said of his fessional knowledge. The Enterprises and the Civil new job, "CPPCC work is first generation of diplom• Procedure Law of the Peo• new to me and I have to ats were led by the late ple's Republic of China. learn a lot. I know how Premier Zhou Enlai and The meeting also endorsed, important it is and will do the late Marshal Chen Yi. among other documents, my best." And the second group in• the Report on the Outline by Staff Reporter Li Hai- cluded former foreign of the 10-Year Programme bo

BEIJING REVIEW, APRIL 15-21, 1991 5 EVENTS/TRENDS

rights and dealt with more than China to Enact Its Copyright Law 100 cases so far. For example, the local court in hina will enter the Interna• Software Copyright. China's first Shenzhen, a city in South China, tional Copyright Protec• piece of legislation concerning had fined a Shenzhen company C tion Conventions after the software protection will soon be US$70,000 and forced it to pay country's own copyright law be• issued, according to the Ministry the American 3M Company comes effective in June this year. of Machine-Building and Elec• US$50,000 in compensation for "We are making preparations tronics Industry on April 1. using its software illegally. to join the international copy• China has paid more attention The draft had been drawn up right protection system," said to protecting software copyrights within the framework of the Law Gao Hanling, deputy director of in recent years, and has already of Work Rights of the People's the National Copyright Admin• issued several laws and regula• Republic of China, which is also istration, April 2. tions in the field, including the to be issued soon. "The key to protecting the co• technology contract law, patent According to the ministry, pyrights of foreign owners in law and trademark law. China will step up the develop• ment of its software industry and China lies with the establishment The draft of the software copy• of our own effective legal sys• strengthen its management dur• right law was drawn up in 1988 ing the Eighth Five-Year Plan tem," he stressed. and was amended several times China's first copyright law be• period (1991-1995). to reflect the opinions of experts Meanwhile, the country will comes effective as of June 1, from a number of countries, in• 1991. The Copyright Admin• set up a system of software regis• cluding the United States and Ja• tration, arbitration and law en• istration and experts from other pan. government departments are ac• forcement so as to create a bet• tively preparing regulations to Middle-level courts have set ter environment for the develop• administer the new law. up law offices dealing with en• ment of the country's software croachment on software copy• industry. • These regulations will be im• plemented with the approval of the State Council. Rioter Trials ^Basically Completed' Earlier this year, the Copy• right Administration and the hina has "basically com• ies of court processes. National Copyright Society pleted" the adjudication of A major portion of the cri• jointly launched a quarterly ma• C the criminals involved in minals handled by the courts, he gazine entitled Copyright, to the 1989 anti-government riots, said, were serious offenders guil• promote research and education according to Duanmu Zheng, ty of beating, smashing, looting, in this field. vice-president of China's Su• burning and killing. There were The administration will an• preme People's Court. 490 such cases, involving 715 nounce observation of Copyright Duanmu, who is Law Publicity Week prior to its also deputy to the Na• Duanmu Zheng at the news briefing. effectiveness. tional People's Con• Every year since 1979, China has sent representatives to re• gress and standing ceive copyright protection train• committee member of ing from international organ• the Central Commit• izations or agencies in foreign tee of the China countries, according to Gao. Democatic League, China had drawn heavily from made the remark at a an international pool of similar news briefing in Bei• laws in drafting its own copy• jing on April 2. right law in conformity with in• Reporters learned ternational trends, Gao said. from him that public As a result, he said, the law security organs de• will not only satisfy China's tained some cirminals needs, but also help establish during the riots and China's place in the international that most of them copyright proctection commun• have been released in ity. succession after a ser•

6 BEIJING REVIEW, APRIL 15-21,1991 EVENTS/TRENDS people. to the young students who ran men Square to lay down the arms In addition, 72 people were in• afoul of law," he said. they had captured on the morn• volved in plots to subvert the "But it is not our policy of ing of June 4, 1989. As a re• government. giving leniency only to the stu• sult, a bloodbath was avoided. The judge noted that adjudica• dents while gitting tough with The court took into considera• tion is performd on the basis of the intellectuals," he noted, say• tion Liu's act and decided to give him lenient treatment by ex• facts and the law. "There is no ing that some intellectuals who empting him from criminal pun• double standard in punishing committed crimes in the riots ishment. have also received lenient treat• students and intellectuals in• It is still possible for all those volved in the riots," he added. ment. sentenced for involvement in the "Considering the specific con• He cited Liu Xiaobo, former anti-government riots to receive ditions, special historical back• lecturer with Beijing Normal further lenient treatment, de• ground and complicated situa• University, as an example. He pending on their performance tion they were facing, we tried told the reporters that Liu per• while serving their terms in pri• our best to give lenient treatment suaded the students in Tianan• son, the vice-president said. •

He said that he believed that Li Meets Soviet Foreign IVIinister the Soviet Union will continue to play its key role in the world as hina's top Party leader while also hoping that it will soon as the current difficulties Jiang Zemin's forthcoming enjoy political stability, nation• are overcome. C May visit to the Soviet al unity and economic develop• At the meeting, Bessmertnykh Union will be of great signific• ment. relayed Soviet President Gor• ance, said Premier Li Peng while "The Soviet Union is rich in bachev's verbal message to the meeting with Soviet Foreign resources and its comprehensive Chinese leader about his wish to Minister Alexander Bessmert• national strength is still very see further development of bila• nykh in Beijing April 1. strong," Li said. "The difficulties teral relations between the two Li told his guest that the now faced by your country are countries. Chinese Communist Party and only temporary." The Soviet foreign minister government attach great import• ance to Jiang's return visit mark• ing Soviet leader Mikhail Gor• bachev's tour of China two years ago. Bessmertnykh, who was on a two-day working visit to Beijing, said that the Soviet side is look• ing forward to Jiang's visit, which, according to him, the So• viets see as one of this year's most important events in the country's foreign affairs. Bessmertnykh's visit to China was his first since becaming the Soviet foreign minister in Janu• ary. Reaffirming the principle that the affairs of a country should be decided by its own people, Li told Bessmertnykh that the Chinese are concerned about the situation in the Soviet Union

BEIJING REVIEW, APRIL 15-21,1991 7 EVENTS/TRENDS

also expressed gratitude for the economic assistance in the early pean countries. Therefore, he commodity loan which China re• 1950s. said, the development of the bi• cently promised to extend. The premier said that there is lateral relationship will be con• Li said that the commodity great potential in economic co• ducive not only to the interests operation between the two na• of both sides, but also to world loan is but a gesture of the tions. Judging from the resources Chinese people's traditional and economic structure of the peace and development. friendship toward the Russian two countries, they can, through Upon Hurd's request, Li people. He recalled that the So• economic co-operation, help each briefed him on China's Eighth viet Union provided China with other in development. • Five-Year Plan (1991-95) and 10-Year Programme (1991-2000), saying that there Chinese Leaders Meet Douglas Hurd is great potential in Sino-British economic co-operation. ino-British co-operation tional period. Hurd said British entre• should be strengthened to "We should work together in preneurs are keenly interested S ensure a smooth transfer of order to overcome the difficul• in investing in China and en• power in Hong Kong to China in ties in the journey, and with such joy government encouragement 1997. an attitude there is no difficulty in this regard, because it is not This was expressed by top that cannot be solved," he said. only beneficial to China's moder• Chinese leaders and visiting Bri• Hurd agreed with Jiang's re• nization but is also a profit• tish Foreign Secretary Douglas mark and vowed to strengthen able opportunity for British en• Hurd during their meetings in the co-operation between the two trepreneurs. Beijing April 5. In their meet• countries. China's top legislator Wan Li ings, they also discussed the bila• On bilateral relations, Jiang expressed the same wish for more teral relations between the two said, "We should let bygones be exchanges between the parlia• countries, especially their co• bygones and look ahead into the ments, governments and person• operation during the years run• future." nel of the two countries. Speaking of the purpose of his ning up to the transfer of the Hurd said the shadows once five-day official visit at an April sovereignty of the Hong Kong cast over bilateral relations have region to China. 6 press conference before leaving disappeared. Now, he said, the Beijing for a tour of Shandong In his meeting with Hurd, Ge• two countries should concentrate and Guangdong, Hurd said, "We neral Secretary Jiang Zemin not• on developing relations. saw the need to consult close• ed that China and Britain "are in Premier Li Peng told his Bri• ly with China about the inter• the same boat" with regard to tish guest that there is no conflict national situation and the need ensuring prosperity and stability of interest between China and to move forward over the future in Hong Kong during the transi- Britain and other Western Euro• of Hong Kong." On the Hong Kong issue, Hurd said that both sides "clear• ly stand by the Joint Declara• tion," signed by the Chinese and British governments in 1984. Although no "full agreement" or "breakthrough" has been made, he said, the two sides have "cleared away some serious mis• understandings." In that sense, there was progress, he said, ad• ding that he would like that pro• gress "to be complete." Hurd also voiced his convic• tion that China has no desire to use the new airport project or any other projects to seek "con• trol" and "veto" over the decision-talking of the Hong Kong government during the transitional period. •

8 BEIJING REVIEW, APRIL 15-21, 1991 INTERNATIONAL

Party Chief on International Situation Hang Zemin, general secretary of the Central Committee of the Chinese Communist Party, was interviewed March 29 by Kato Miichiro, chairman of the board of directors of "Chunichi Shimbun," a Japanese newspaper, and answered his questions on international and domestic issues.—Ed.

International Situation world forward along the path of line as long as 7,300 km. We are peace and development. convinced that as long as China Kato; Since you assumed office and the Soviet Union abide by as the General Secretary of the the Five Principles of Peaceful Communist Party of China, the Sino-Soviet Relations co-existence, especially the prin• world has witnessed drastic dis• Kato: It is reported that you will ciple of non-interference in each turbances as manifested by con• visit the Soviet Union in May. other's internal affairs, we will fusion in Eastern Europe, the So• What is the date? How is China surely be able to further improve viet Union and in particular, the going to develop its relations our renewed relations. A good- Gulf war. How does China ana• with the Soviet Union? How are neighbourly relationship be• lyze and assess the current turbu• some of the pending issues going tween China and the Soviet lent international situation and to be solved between China and Union conforms with the funda• what are the future prospects? I the Soviet Union? mental interests of the two peo• would like to hear your personal Jiang: I will visit the Soviet ples and is also conducive to views. Union in mid-May as a return peace and stability in Asia and in Jiang: The current international visit to President Mikhail Gor• the world at large. situation is indeed complicated bachev's visit to China in May and volatile. When US-Soviet re• 1989. The specific date is to be lations began to ease and drastic formally announced after mu• Sino-US Relations changes took place in Europe a tual consultation. Kato: How does China evaluate year ago, some people predicted Sino-Soviet relations in the the current Sino-US relations? that tranquility would hence• past 40 years may be described How is China going to prom• forth prevail in the world. The in one sentence: They have fol• ote its relations with the Unit• reality, however, proves the inac• lowed a tortuous path. What hap• ed States? curacy of such a prediction. The pened are bygones. Since Presi• Jiang: Sino-US relations have Gulf war is a case in point. At dent Gorbachev's visit to China also experienced ups and downs. present, the world confronts nu• in May 1989, a new type of rela• President Richard Nixon's visit merous problems. Some regional tionship exists between the two to China in 1972 opened up the conflicts persist, and the possibil• countries; namely, bilateral rela• relations between China and the ity of the outbreak of unexpected tions based on the Five Prin• United States. The two countries events still exists. ciples of Peaceful Co-existence. established diplomatic relations However, the world needs During the past two years, our in 1979. During the ensuing de• peace and mankind needs the op• bilateral relations have made cade, bilateral relations were on portunity to develop. This is the sound progress in all fields. Of the whole good and developed general trend of the times. There course, this does not mean that normally. This, however, does is no doubt that reahzation of there are no problems between not mean that the two sides have world peace and development de• us. For example, the Sino-Soviet no differences. I believe that it is pends on the concerted efforts of boundary question has not yet normal for countries, particular• the whole world. I believe that as been completely resolved. The ly countries with different social long as we maintain this convic• Soviet Union is the largest neigh• systems, to have varied and dif• tion, we shall be able to move the bour of China with a boundary ferent views.

BEIJING REVIEW, APRIL 15-21, 1991 9 INTERNATIONAL After the "June 4" incident, changed non-governmental trade China welcomes an opportuni• Sino-US relations were not as representative offices. Japan- ty to play host to His Majesty the good as during the previous de• DPRK relations are improving Emperor of Japan. cade. We have made great efforts as the two sides hold talks on to restore and improve our re• establishing diplomatic relations. lations with the United States. The Prime Ministers of North * Japanese-Soviet However, it requires the efforts and South of Korea have al• Relations of both sides rather than just one ready held three meetings. These Kato: Soviet President Mikhail side to achieve this goal. We hold changes ease tensions and create Gorbachev is scheduled to visit that there exists no conflict of stability in Northeast Asia, a si• Japan in April. During this visit fundamental interests between tuation which will hopefully con• attention will focus on the north• China and the United States and tinue to develop. We will take a ern territories. Can you tell us believe that the development of positive approach and continue something about China's position our relations would be of mutual to develop friendly relations and on Japanese-Soviet relations in benefit. Men of vision in the Un• co-operation with DPRK. We general and the issue of northern ited States share my view. In my hope to see progress in Japan- territories in particular? opinion, as long as both China DPRK talks. Above all, China Jiang: At his press conference and the United States act in ac• and Japan should further their on March 27, Foreign Minister cordance with the Five Princi• relations and work together for Qian Qichen already answered ples of Peaceful Co-existence and the promotion of peace and de• this question. I do not have any• the three joint communiques, velopment in this region. thing more to add. We hope that Sino-US relations have a bright Japan and the Soviet Union can future. find an appropriate solution to Sino-Japanese Relations this question through negotia• Kato: Next year will mark tions. The Situation in 20 years of normalization of Northeast Asia Japanese-Chinese relations. How Kato: Recently, there have been do you recall and appraise the China's Ten-Year some changes in the situation in past 20 years? Will you visit Ja• Programme and Eighth East Asia, such as the establish• pan soon? What are your views Five-Year Plan ment of diplomatic relations be• towards the Emperor's visit to Kato: It has been 41 years since tween the Soviet Union and the China? the liberation of China. As we Republic of Korea, the develop• Jiang: Next year will be the 20th have observed, China has main• ment of relations between China anniversary of the normalization tained stability thanks to reform and the Republic of Korea, the of Sino-Japanese relations. The and the open policy. Now, the opening of talks between Japan past 20 years have witnessed Chinese National People's Con• and the Democratic People's Re• great progress in Sino-Japanese gress is deliberating the develop• public of Korea (DPRK) on the relations, both official and non• ment programme of the coming resumption of diplomatic re• governmental, on the basis of the decade. What political and eco• lations, and changes in Japan- Sino-Japanese Joint Statement nomic results are to be expected Soviet relations. How do you see and Treaty of Peace and Friend• from this NPC session? What the prospects of the East Asian ship. The two countries have basic ideas do you have on the regional co-operation? What are made very positive achievements further strengthening of the cen• your views on a new order in particularly in economic co• tral leadership? East Asia? operation in the past 11 years Jiang: The Fourth Session of the Jiang: We have followed closely since China adopted the policy of Seventh National People's Con• the situation in Northeast Asia reform and opening to the out• gress is under way. The Seventh and are very pleased at some pos• side world. Plenary Session of the 13th Com• itive changes which have taken After the "June 4" incident munist Party Centrail Commit• place recently in the regional si• of 1989, Sino-Japanese relations tee, held at the end of last year, tuation. China's relations with were adversely affected for some put forward its suggestions in Japan have by and large re• time. However, they have by and principle on the Ten-Year Pro• turned to normal. China's friend• large returned to normal. gramme and Eighth Five-Year ly relations and co-operation I have visited Japan twice. 1 Plan. The State Council, after with the DPRK have continued would be glad to pay yet another several months of work, has to expand, and China and the visit there in future if there is an produced two drafts on the pro• south side of Korea have ex• appropriate opportunity. gramme and plan, which have

10 BEIJING REVIEW, APRIL 15-21,1991 INTERNATIONAL

been submitted to the NPC ses• on the agenda of the current leadership. Each of these lead• sion for deliberation. Over the NPC session. ers has his own characteristics. past few days, the NPC deputies I must learn from the strong have had very lively discussions Appraisal of China's points of all of them. on the drafts. I sincerely hope Great Personalities These leaders also have com• that with the consideration and mon characteristics — first and ratification by the Naional Peo• Kato: There have been many foremost, their firm conviction ple's Congress, which is the su• great statesmen in the history in Marxism-Leninism, their rich preme power organ, the pro• of your country. Contemporary experience gained in the long gramme and plan will become ones are Mao Zedong, Zhou En- years of practice, and their abili• the will of the people and that in lai and the present leader Deng ty to rally the whole Party and the coming decade we can make Xiaoping. Which one would you the whole people to fight for a even greater progress in our like to take as a role model? common cause. country's construction. Jiang: This year marks the 70th * * * We shall continue to imple• anniversary of the founding of While shaking hands with ment the policy.of reform and the Communist Party of China. opening to the outside world. To Many outstanding leaders have Kato to bid farewell at the end of ensure a sustained, stable and come to the fore in ihe course of the interview, Jiang congratulat• coordinated development of the 70 years of struggle. Mao Ze• ed him on good health and said, entire economy, higher efficien• dong, Zhou Enlai, Liu Shaoqi, "You are nine years older than L cy and adjustment to the indus• Zhu De as well as Deng Xiaoping I have words of advice at part• trial structure are required. This belong to the first generation of ing: China and Japan are close task is undoubtedly quite ar• leaders. After the Third Plenary neighbours. We of the older ge• duous. To accomplish it smooth• Session of the Party's Eleventh neration should educate our ly, there is need to reinforce the Central Committee Deng Xiaop• young people that China and Ja• leadership of the State Council. ing became the core of our se• pan must live in amity from ge• This question is already placed cond generation of collective neration to generation." •

Japanese-Soviet Relations at Crossroads

by Lin Xiaoguang

ecently, exchange of high- Soviet President Mikhail Gor• sides' position on the issue. level visits between Japan bachev's April 14-19 visit to Ja• The Soviet Union has advanced R and the Soviet Union has pan, a historic event in bilateral various formulas for the solution increased. Last November, Ana- relations. of the problem through academic toly Lukyanov, chairman of the symposiums. Gorbachev has sug• Supreme Soviet, attended the en• Delicate Changes gested that the sovereignty of the thronement ceremony of Japan's islands be set aside for the mo• new emperor. In January this The four northern islands ment. Recently, the Soviet side year, Japanese Foreign Minister —Habomai, Shikotan, Kunashiri proposed that two of the four Taro Nakayama paid a visit to and Etorofu—were occupied by islands—Habomai and Shikotan the Soviet Union. On March 25, the Soviets at the end of World —be returned to the Japanese Ichiro Ozawa, secretary-general War II. For years the Japanese first, a plan unveiled first in a of Japan's ruling Liberal Demo• have been demanding their re• Soviet-Japanese joint declaration cratic Party (LDP), tripped to turn. On public occasions now, in 1956 and discussed many times Moscow, and on March 29, Soviet both Japan and the Soviet Union later by Soviet scholars. This Foreign Minister Alexander Bess- still cling to their principled posi• time, it came from Sergei Akhro- mertnykh visited Japan. Both vis• tions. Privately, however, delicate meyev, presidential adviser and its were made to pave the way for changes have taken place in both former chief of general staff of

BEIJING REVIEW, APRIL 15-21, 1991 11 INTERNATIONAL the Soviet Armed Forces. It viet Union. This amount surpass• and Co-operation in Europe and seems that the Soviets want to es the US$17.6 billion aid provid• the signing of an agreement on make a compromise by renounc• ed to the Soviet Union by Ger• conventional disarmament, the ing the two islands, which occupy many. Although Moscow has Soviet Union believes its Euro• only 7 percent of the total area, in denied having made the "buying pean diplomacy has been accom• exchange for a breakthrough in back the territories" proposal, the plished and it is time to shift the Soviet-Japanese relations and the report cannot be totally ground• focus to the Asian-Pacific region. ensuing Japanese economic aid. less. At least it suggests that Ja• The Soviet Union has normal• According to Japanese newspa• pan is changing its policy towards ized relations with China and pers, the Soviets have informally the Soviet Union by softening its established diplomatic relations notified the Japanese that after tough position of a "packaged re• with South Korea. Therefore, the the signing of a peace treaty, the turn of the four islands." current need for improved Soviet- two islands can be returned. Japanese ties is more prominent. Japan, on its part, shifted from Furthermore, most anti-Soviet stressing the inseparability of pol• Reasons military treaties signed by the itics from economics to a willing• Economically, the Soviet United States with allies during ness to develop bilateral relations. Union, being troubled by an un• the cold-war period involved the Starting from late 1990, Japan stable domestic situation, econo• Asian-Pacific region. They, espe• has offered a series of aid to the mic recession, and serious shor• cially the Japanese-US security Soviets, including 2 billion Ja• tages of daily necessities, is in dire treaty, greatly restricted Soviet panese • yen for victims of the need of Japanese aid. In an inter• diplomatic strategy in this region Chernobyl nuclear accident, and view with the Japanese newspaper and in the whole world. In the 14 billion yen for emergency food Yomiuri Shimbun, Soviet Prime past the Soviet Union's cold-war and drug aid. Co-operative pro• Minister Valentin Pavlov pro• policy adversely promoted the jects under negotiation involve posed that Japan provide an unity of the other side and caused 450 billion yen for a natural gas emergency aid to alleviate the isolation. Now, influenced by the development programme in Yak• Soviet Union's foreign exchange diplomatic "new thinking" in the ut, 350 billion yen for an oil drill• shortage because foreign debts Asian-Pacific region, the Soviet ing programme in Sakhalin, and are falling due. Union no longer perceives the 100 billion yen for developing To vitalize its economy, the So• Japanese-US security treaty a forest resources in Siberia. The viet Union has to develop its rich threat or obstacle to the develop• Japanese government has decided resources in its Far Eastern area. ment of bilateral relations with to provide US$100 million as an The United States became one of Japan. The Soviet Union suggests official loan to the Soviet the world powers only after it de• a conference of foreign ministers Union and allowed five non• veloped resources in the Midwest. of Asian-Pacific countries in 1993 governmental banks to provide According to a 1987 comprehen• to discuss establishment of a another US$400 million in loans sive development programme for structure similar to the Con• to the Soviets. the Far East region, 232 billion ference on Security and Co• In his talks with Gorbachev, roubles are required for the pro• operation in Europe. It also Ichiro Ozawa indicated that Ja• ject, and the Soviet Union, ob• agreed to discuss what Japan pan wants the Soviet Union to viously, cannot go ahead by itself. calls the "Soviet military threat." return Hanomai and Shikotan Japanese capital and technology Thus, improving relations with and recognize Japan's "potential are needed, making it imperative Japan is not only a bilateral ques• sovereignty" over the other two; to improve relations with Tokyo. tion but also an important step the "administrative power" can The Asian-Pacific region has towards the Soviet Union's devel• be returned later. Upon the So• seen dynamic economic develop• opment of diplomatic relations in viet recognition of Japan's sov• ment in recent years. The Soviet the Asian-Pacific region, rebuild• ereignty over the islands, Tokyo Union hopes for participation ing its global strategy and con• will provide economic assistance in the regional economic co• tending with the United States. to the Soviet Union. A Japanese operation because three quarters Japan, however, pays more at• report says Japan has mapped out of its territory is situated in Asia. tention to its long-term strategy an aid package that includes 20 This, too, makes it necessary for on political, diplomatic and eco• programmes totalling 1.2 trillion Moscow to improve relations with nomic development. Wishing to yen. The report also says that if Japan, a "locomotive of the Asian play a role as a political power in the territorial dispute is settled, economy." international affairs, Japan needs the government and the ruling Politically, in the wake of Ger• a stable environment. The tense LDP will provide US$28 billion man reunification, the convening Japanese-Soviet relationship is in economic assistance to the So• of the Conference on Security undoubtedly an unstable factor in

12 BEIJING REVIEW, APRIL 15-21,1991 INTERNATIONAL

Northeast Asia and has become a mic assistance produced no re• itary towards the territorial ques• trouble spot to Japan. In addition, sults. Rather, it reduced Tokyo's tion. Japan has not signed a peace trea• diplomatic choices and drove bi• On the Japanese side, poli• ty with the Soviet Union since lateral relations into deadlock. ticians of the LDP are enthusias• World War II; technically there Other countries entered Soviet tic about improving bilateral re• is still a state of war between the market before Japan—Germany lations, but officials of Foreign two countries. And within the provided US$17.6 billion, the Ministry respond coldly. Co• UN Charter remains the clause United States invested US$3.8 ordination of both parties is need• about defeated nations, restrict• billion and South Korea provid• ed. Moreover, the Japanese peo• ing Japan from playing the role of ed US$2.5 billion. Japan sudden• ple have launched campaigns de• a major world power. Also, in or• ly found that its economic card manding the return of the north• der to become a permanent mem• had lightened, that without its ern islands. It will be difficult for ber of the UN Security Council, participation the Soviet Union them to accept not regaining all Japan must improve its relations can also gain the capital and tech• four islands through a package with the Soviet Union to win sup• nology to develop economically. plan. In addition, Japanese bank• port from Moscow. At present there are only 33 ing and enterprise circles are In the past, Japan pursued a Japanese-Soviet joint ventures not optimistic over prospects of diplomatic strategy of relying on among more than 1,400 joint ven• Japanese-Soviet relations. tures in the Soviet Union. The the United States, uniting with Some experts observe that the danger of losing the Soviet mar• China and restricting the Soviet Soviet Union will not make major ket prompts Japan to consider the Union, but detente of US-Soviet concessions on territorial ques• bilateral relations and territorial relations and the improvement of tions because of domestic politi• Sino-Soviet relations have made question more practically and cal instability and ethnic prob• the strategy out of date. Japan flexibly. lems. And Japan will not change must draft its new diplomatic stand. Others, however, say that strategy through improving its re• Difficulties the Soviet Union will take a flex• lations with the Soviet Union. ible attitude on concrete issues Meanwhile, with the reduction Before the Japanese-Soviet re• due to its economic troubles. of US military strength in the lations can fundamentally im• In general, at present it is the Asian-Pacific region, Japan will prove, a series of questions needs domestic factors of Japan and the rely on itself to guarantee nation• to be resolved, including the sign• al security, thus making it unwise ing of a peace treaty, disarma• Soviet Union themselves, not in• to have a powerful enemy in the ment in Far East, economic co• ternational ones, that restrict the north. In 1990, Japan cut the operation, personnel exchange development of Japanese-Soviet words of "Soviet threat" out of and so on. But the focus remains relations and the settlement of the some diplomatic and defence do• on the territorial question. Of territorial dispute. But because cuments. course, the territorial question the two sides have tended to sof• Furthermore, Japan regards will not be settled through Gor• ten their stands on the territorial the current Soviet foreign policy bachev's visit alone. In fact, many issue, it is possible for them to directed by Gorbachev's "new factors still restrict its settlement. make an arrangement acceptable thinking" as a favourable condi• On the Soviet side, the border to both sides during Gorbachev's tion to improve Japanese-Soviet issue is one of the most sensitive visit. Relatively, it is more possi• relations. Should Gorbachev questions, and any change will ble for them to reach agreement leave office, the Soviet foreign probably lead to a chain reaction on a peace treaty, disarmament policy would unavoidably be• along its border established after in Far East and economic co• come inflexible and there would World War II. To give the four operation. The key will be what be an uncertain prospect on the islands up means the loss of a concessions can be made by the northern islands. Therefore, Ja• natural defence to its nuclear- Soviet Union and what response pan hopes to support Gorbachev submarine base in Ochotsk Sea will be made by Japan. The So• by showing diplomatic flexibility and to its Pacific Fleet passage. viet concessions, on the one hand, and providing emergency assist• Domestic ethnic questions and should satisfy the Japanese side, ance in order not to lose the op• the current political situation also and on the other hand, will not portunity to improve bilateral re• make it unlikely that Gorbachev affect its domestic situation and lations. will make any major concessions. diplomatic strategy. In brief, Gor• Japan's past diplomatic tactic Soviet Defence Minister Dmitry bachev's visit will start a new pro• attempting to force the Soviet Yazov once indicated that it is cess rather than a complete set• Union to make concessions on not time to re-establish borders, tlement of the northern islands territorial questions with econo• reflecting the attitude of the mil• problem. •

BEIJING REVIEW, APRIL 15-21,1991 13 CHINA

China's Economic and Social Progress Of the i980s

hina achieved unprece• data. During this period, the with a growth rate of 6-8 dented economic and so• world registered an average rate percent. The average annual C cial progress and smooth• of economic growth of 3-4 per• growth rate of China during the ly fulfilled its first-step strateg• cent. In Asia, the "four small decade, however, was 9 percent. ic objective for modernization dragons" (Singapore, South Ko• Comprehensive National during the last decade, accord• rea, Taiwan and Hong Kong) Strength Increased. During the ing to State Statistical Bureau underwent an economic boom past decade, China jumped

Economic and Social Development in the 1980s

(State Statistical Bureau)

Chart!:

Gross national product National income ^!v-,r'3"* (billion yuan) (billion yuan) (billion yuan) 1,740 (budget number) Calculated in f^f^: Calculated in terms terms of of comparable price, comparable increase of 130.7 ice, an increase percent in 1990 of 136.0 percent over 1980 in 1990 over 1980 108.52

1980 1990 1980 1990 1980 1990

Pork, 1 o Crude Cereals Cotton beef and Steel Coal Electric! £• mutton oil

.5 £ 1980 2 2 3 5 3 6 6 (1981) (1981) (1981) 5

1 1989 1 1 1 4 1 6 4

14 BEIJING REVIEW, APRIL 15-21,1991 DOCUMENTS

Report on the Outline of the Ten-Year Programme and of the Eighth Five-Year Plan for National Economic and Social Development

(Delivered at the Fourth Session of the Seventh National People's Congress On March 25, 1991)

Li Peng

Premier of the State Council Fellow Deputies, 6.3 percent. During the past On behalf of the State decade the total grain output Council, I now submit a re• first topped 350 and then 400 port on the Outline of the Ten- million metric tons, reaching Year Programme and of the over 435 million tons in 1990. Eighth Five-Year Plan togeth• The output of cotton, oil- er with the Draft Outline for yielding crops, meat, aquatic your examination and approv• products, fruit and other farm al, and also for suggestions and sideline products also in• and comments from the mem• creased by a wide margin. All bers of the National Commit• this has provided the materi• tee of the Chinese People's als to guarantee that people Political Consultative Confer• can get adequate food and clo• ence and other observers. thing. There was a marked Premier Li Peng. growth in agriculture, fores• I. The Basis for the try, animal husbandry, side• Ten-Year Programme and the Eighth line occupations and fishery, and the structure of the rural economy was noticeably improved. The proportion Five-Year Plan of non-agricultural undertakings in the total rural out• The 1980s, the decade which followed the Third Plen• put value rose from 31.1 percent in 1980 to 54.6 percent ary Session of the Eleventh Central Committee of the in 1990. Village and township enterprises thrived, em• Chinese Communist Party (December 1978), saw the ploying over 90 million rural workers, thereby helping people of all our nationalities, under the leadership of to expand the commodity economy. A path consistent the Party, make great strides in their efforts to build with China's actual conditions was thus mapped out for socialism with Chinese characteristics. Over these ten the gradual modernization of agriculture. years, by maintaining economic development as the —Industrial production increased rapidly. In 1990 the central task, adhering to the Four Cardinal Principles total industrial output value increased by 230 percent and continuing the reform and the opening of China to over that in 1980, rising at an average annual rate of the outside world, we attained new heights in our mod• 12.6 percent during the decade. The output of major ernization drive. We fulfilled the Sixth and Seventh industrial products grew substantially. Between 1980 Five-Year Plans and achieved the first-step strategic and 1990, the output of coal rose from 620 million to objective of doubling the 1980 gross national product 1,080 million tons, that of crude oil from 106 million to ahead of schedule, thus laying a solid foundation for 138 million tons, electricity from 300.6 billion to 618 national economic and social development in the 1990s. billion kwh, steel from 37.12 million to 66.04 million —All sectors of the rural economy have grown. The tons and cement from 80 million to 203 million tons. 1990 total agricultural output value grew 84.6 percent Consumer goods were updated and upgraded more over the 1980 figure, with an. average annual growth of quickly, there was an increase in product variety and DOCUMENTS design, and supplies were ample, in contrast to previous electron-positron collider, heavy-ion accelerator and years when there was a limited variety and short supply synchronous radiation laboratory were completed and of such goods. Industrial technology was improved and put on line. Development of the Galaxy supercomputer our capacity for conducting research in science and met with success, and the submarine-based missiles, the technology increased markedly, so that some Chinese Long March 2E heavy thrust cluster carrier rocket and products and industries were ranked among the most the Asiasat I telecommunications satellite were success• advanced in the world. fully launched. All this signals a breakthrough in Chi• —Capital construction and updating of technology were na's high energy physics, computer technology, carrier carried out at a faster pace. Over the past 10 years rocket technology, satellite telecommunications technol• China's total investment in fixed assets amounted to ogy, and other areas. Much headway was made in re• 2,770 billion yuan, a figure greater than that of the search in many areas of the social sciences. By 1990 previous 30 years totalled. Of this, 1,080 billion yuan primary education had been made universal in over 76 went to public sector capital construction projects, in• percent of the counties across the country and junior cluding more than 1,000 large and medium-sized pro• middle school education was universal in most cities. jects that were completed and put into operation in such Secondary vocational and technical education, adult areas as energy, raw and semi-finished materials, trans• education and technical training developed rapidly. In• port and post and telecommunications. Five hundred stitutions of higher education appeared in new forms, forty-seven billion yuan was invested in updating tech• offering a comprehensive list of courses at different nology, with 409,000 projects completed. A great num• levels. Over the past ten years regular universities and ber of key projects in basic industries and infrastructure colleges have educated more than 4.35 million under• development were completed and put into operation, graduates and about 200,000 postgraduates, and institu• which helped strengthen the weak links in the nation• tions of higher education for adults trained 370,000 al economy, facilitated readjustment of the industrial students, providing a large number of people for moder• structure and product mix, brought about significant nization. Progress was also registered in the fields of successes in urban and rural construction and added culture, art, the press and publishing, broadcasting, film, strength to the sustained development of the national television, sports, public health, family planning, envi• economy. ronmental protection and so forth, promoting the build• —There was a sharp increase in economic and technol• ing of a socialist society which is advanced materially as ogical exchange with other countries. In 1990 the total well as culturally and ideologically. volume of foreign trade reached US$ 115.4 billion, —People's living standards improved markedly. People compared with $38.1 billion in 1980, representing an in most parts of the country now have adequate food increase of over 200 percent. The volume of exports and clothing and are moving towards a relatively com• increased from $18.1 billion to $62.1 billion, up about fortable life; people in a few areas are already leading 240 percent. There was a great change in the export mix, such a life. The living standards of people in certain with the proportion of manufactured goods increasing parts of the country who still do not have enough food from 49.7 percent in 1980 to 74.5 percent in 1990. Since and clothing have also improved to some extent. This is we began the reform and opening to the rest of the world an historic achievement. In 1990 the average per capita in 1979, $18.98 billion worth of direct foreign invest• cost of living for urban residents reached 1,387 yuan, an ment has actually been absorbed and invested to create increase of 68.1 percent over 1980 after allowing for more than 20,000 enterprises. In addition, we took on price rises. The per capita net income of farmers was 630 $45.82 billion worth of foreign loans to make up for our yuan, representing an increase of 123.9 percent after sliortage of construction funds, financing the construc• allowing for price rises. Between 1980 and 1990 the tion of 550 projects, including civilian airports, railways, average per capita living space of urban residents in• highways, ports and docks, oil fields, electricity power creased from 3.9 sq m to 7.1 sq m and that of rural stations, chemical plants and so on. A large amount residents from 9.4 sq m to 17.8 sq m. The number of of advanced technology was introduced from abroad, urban and rural households that owned durable consu• which helped to improve China's production techniques. mer goods such as television sets, refrigerators and wash• Contracting of projects, provision of labour services ing machines increased noticeably. At the end of 1980 abroad, and international tourism increased consider• the average per capita bank savings for both urban and ably. rural residents was only 40 yuan, but it reached 615 —Science and technology, education and culture, and yuan at the end of 1990, indicating greater improvement other social undertakings flourished. Over the past ten in the people's living standards than in any other pre• years we achieved significant results in more than vious decade. 110,000 science and technology research projects, in• —National economic strength grew enormously. Over cluding nearly 10,000 inventions which won state the past ten years the gross national product (GNP) awards, and the results in some areas approached or grew at an average annual rate of 9 percent, reaching attained advanced world standards. Over 50,000 inven• 1,740 billion yuan in 1990, compared to 447 billion yuan tions were granted patent rights, broadening the use of in 1980, representing an increase of 136 percent at a great number of major innovations in science and constant prices. National income increased from 368.8 technology, which served to improve the techniques billion yuan to 1,430 billion yuan, or 131 percent at used in traditional industries and their economic per• constant prices, for an average annual rate of 8.7 per• formance. Large-scale research projects including the cent. Manufacturers provided a much wider variety of DOCUMENTS established the Shenzhen, Zhuhai, Shantou, Xiamen and Hainan spe• cial economic zones, opened 14 coas• tal cities including Dalian, Tianjin, Shanghai and Guangzhou, set up 13 economic and technology develop• ment areas, and opened economic regions such as the Yangtze River Delta, the Pearl River Delta, the Triangle Area in Southern Fujian Province, and the Shandong and Liaodong peninsulas. In 1990 the Central Committee decided to devel• op and open the New Pudong Dis• trict in Shanghai. Efforts to open to countries bordering on China are under way. Our open policy has put vitality into China's economy. Jiang Zemin and Li Peng confer. Our achievements in the 1980s were great, but that is no reason for products and tiieir capacity to exploit natural resources us to become complacent. In the course of this profound, increased tremendously. The output of some major in• historic reform and opening to the outside world, it has dustrial and agricultural products reached advanced taken us a long time to understand the objective laws, world levels. Steel and chemical fibre moved from 5th and accumulate practical experience, so some shortcom• to 4th place in the world, nonferrous metals from 7th to ings and mistakes in our work were unavoidable. Chief 4th, electricity from 6th to 4th, coal and cement from among these are as follows. For a long time we over• 3rd to 1st and ethylene from 15th to 8th, while the looked ideological and political education and promoted outputs of grain, cotton, meat and cloth were already the material progress to the neglect of cultural and ideolog• highest. Because of China's large population, the average ical progress. Our attempts to obtain quick results in per capita output of products is still relatively low, but economic development and reform led to overheated the increase in economic strength of the country as a economic growth and inflation. Some sectors of the whole is truly remarkable. economy were so decentralized that the state's ability to Among our country's social and economic activities exercise macro-control was weakened. However, since during the 1980s, economic restructuring and the open the Fourth Plenary Session of the Thirteenth Party policy attracted the most attention, signaled the most Central Committee held in June 1989, we have been profound changes, and provided the basic motivation for analysing our experience, persisting in what is right, the magnificent achievements mentioned above. Success making improvements where necessary and correcting in rural reform, mainly involving the household con• our mistakes under the leadership of the Party Central tract responsibility system with remuneration linked to Committee with Comrade Jiang Zemin at its core. As a output, facilitated development of agricultural produc• result, there has been a turn for the better in the ideo• tion, the national economy as a whole and reform in logical and political spheres and notable success has other fields. In the cities, we focused on invigorating the been achieved in our efforts to rectify the economic enterprises, while also carrying out reform in such areas order and improve the economic environment. Inflation as planning, finance, taxation, banking, supply of mater• has been brought under control, the index of commodity ials, commerce, foreign trade, pricing, and labour prices has dropped sharply, there have been good har• and wages. Along with economic restructuring, which vests in agriculture for two consecutive years, the changed the economic structure considerably, we re• growth rate of industrial production has by and large formed the management system for science, technology returned to normal, exports have continued to increase, and education, as well as the political structure. The and the economic order has shown some improvement. single-sector system of public ownership was gradually While improving the economic environment and recti• replaced by a system containing diverse economic sec• fying the economic order, reform and opening to the tors with public ownership as the main body. The single- outside world did not come to a standstill; on the con• mode system of wealth distribution was systematically trary, they continued to deepen, creating favourable replaced by a system which is mainly "to each according conditions for their further progress. to his work," supplemented by other modes. The exces• The national economy maintained an appropriate rate sively centralized system of a planned economy was of growth under difficult conditions. In 1990 the GNP gradually replaced by a system that combines a planned increased by five percent over 1989, total agricultural economy with market regulation. Economic restructur• output value by 6.9 percent and that of industry by 7.6 ing has stimulated people in all walks of life, promoting percent. These were hard-won achievements, which were development of the productive forces. The open policy made possible by the people of the country after they helped China's economy stride onto the world arena. We had surmounted all difficulties through concerted ef-

/// DOCUMENTS forts. At the same time, we are soberly aware of the a relatively comfortable life. numerous contradictions and problems remaining in our —To develop education, promote progress in science society and the economy. There are still many products and technology, improve economic management, and manufactured goods which are overstocked and readjust the economic structure and give priority to circulation in the economy is not smooth. We have yet key construction projects, in order to lay a material to fundamentally improve our poor economic perform• and technological foundation for sustained econo• ance and rationalize the industrial structure. mic and social development into the next century. The state is experiencing financial difficulties, with a —To establish the initial phase of an economic conspicuous imbalance between revenue and expendi• structure and operating mechanism that is appro• ture. Many aspects of the economic structure remain to priate for developing a planned socialist commodity be rectified, and there are still some factors that could economy based on public,ownership and that com• lead to instability in spite of the fact that we have bines a planned economy with market regulation. achieved political stability and unity. We must take —To raise sociaUst culture and ideology to a new these problems seriously and try our best to solve them, high and further improve socialist democracy and not lowering our guard for a minute. the legal system. In conducting reform, opening to the outside world and carrying out modernization during the 1980s, we These requirements reflect the future course in Chi• gained a wealth of experience. To put it in a nutshell, we na's economic and social development and summarize should integrate the universal truth of Marxism with the aspirations and ambitions of the people of all our China's actual conditions, following the path we have nationalities to reinvigorate China and make it a power• blazed in building socialism with Chinese characteris• ful country where people can enjoy a prosperous life. tics. During the 1980s we experienced tremendous suc- The requirements for this boil down to two points: 9pss and during the last two years we have continued to First, they emphasize the need for economic develop• make progress, even in the face of foreign pressure and ment to remain as the central task with economic growth domestic problems, enabling socialist China to stand as the foundation for improving people's living stan• rock solid in the East. The fundamental reason for this dards and promoting social progress. While presenting is that we have been following the road of building clear-cut requirements for the rate and amount of eco• socialism with Chinese characteristics. Facts have once nomic growth, they put more stress on the quality of again convincingly proved the creativeness of Marxism growth and improvement in the quality of the economy and the vitality of socialism. It is most likely that we as a whole. Second, they emphasize the need to continue shall encounter various difficulties along the way ahead, deepening reform of the economic structure and opening but we confidently expect that China will succeed in its to the outside world, to promote socialist cultural and drive for socialist modernization as long as we firmly ideological progress and strengthen socialist democracy follow this correct road. and the legal system. In addition to an economic struc• ture these requirements provide political, ideological and other types of guarantee for attaining the second- II. Major Objectives and Basic Guiding step strategic objective and maintaining sustained devel• Principles opment into the next century. The three-step strategic plan for our socialist moder• As is set out in the Draft Outline, the GNP should nization drive correctly reflects the objective process for increase at an average annual rate of about six percent achieving modernization in China, a country which is in the next decade. This figure is optimistic and there is underdeveloped economically and culturally. The fact some leeway. Although the growth rate is a little lower that China has basically solved the problem of inade• than that of the last decade, the scale of the economy is quate food and clothing shows that it has gone through much larger than it was in the last decade, so an increase an important period of development in socialist moder• of one percentage point will translate into a much bigger nization. In the next ten years we shall complete the absolute volume. If the economy does grow at this rate, second-step strategic objective by going still further in we shall be able to quadruple 1980's GNP by the end of economic and social development. This will be a still this century. If we can continue to expand our economy more important period in our modernization pro• on the basis of the rapid economic growth of the 1980s gramme. and maintain an annual rate of six percent in the 1990s, In line with the spirit of the CPC Central Committee's by 2000 our economic and social development will have Proposal for Formulating the Ten-Year Programme and assuredly entered a new stage. Although the per capita the Eighth Five-Year Plan for National Economic and GNP will still be comparatively low, the Chinese as a Social Development, the Draft Outline provides the whole will be able to lead a relatively comfortable life, basic requirements for reaching the second-step strategic owing to our rationalization of the system of distribu• objective. Chief among them are: tion, prevention of the polarization of society and per• —To quadruple 1980's GNP in terms of constant severance in achieving common prosperity. It has taken prices by the end of this century by greatly improv• us 40 years since the founding of New China to basically ing economic performance and optimizing the eco• solve the problem of inadequate food and clothing. Now nomic structure. it will take the coming ten years to achieve a relatively —To raise the living standards of the people from comfortable life for the citizenry. This is unquestionably simply having enough food and clothing to leading a magnificent and huge historic mission.

IV DOCUMENTS Because China is economically underdeveloped and —Continue to improve the socialist economic and weighed down by a growing population, if the economy political structures and the managerial systems in other fails to grow at a reasonable rate, it will be impossible fields through reform and fully awaken the initiative, for China to solve its various economic and social prob• enthusiasm and creativeness of the central and local lems, improve people's lives and carry out gradual authorities, enterprises and the working people. modernization. Therefore, where conditions permit, we —Keep opening more widely to the rest of the world should try to develop our economy at a relatively rapid by expanding economic relations and trade with other rate. On the other hand, we should not be impatient for countries, utilizing foreign funds, introducing advanced quick results in the course of development, because an technology, establishing special economic zones and excessively high growth rate is liable to end up destabil• open economic areas and adopting other necessary poli• izing the economy. cies and flexible measures. Past experience and the recent economic situation —Uphold an ownership structure embracing diverse have shown that the key to China's economic develop• economic sectors with socialist public ownership as the ment is to optimize the industrial structure and improve main one, encourage the complementary role of indivi• economic performance. By keeping the growth rate at a dual eeonomic activity as well as the private and other moderate six percent in the next decade we hope to avoid economic sectors beneficial to the public sector, and the tendency to go after quantity and growth rate alone strengthen administration and provide correct guidance in order to create favourable conditions for achieving a for them all. proper balance between the major sectors of the econo• —Vigorously develop a socialist planned commodity my, promoting progress in science and technology and economy, combine a planned economy with market re• improving the quality of growth and of the national gulation, and promote sustained, stable and co-ordinated economy as a whole. Maintaining this growth'rate is the development of the economy. only practical and realistic way to guarantee sustaining —Apply the system of distribution with "to each power. Only by maintaining an appropriate growth rate according to his work" as the mainstay, supplemented by over a long period of time and by avoiding drastic other modes of distribution; allow and help some people fluctuations will it be possible for us to create a more and areas to prosper before others through honest labour relaxed environment in which to further straighten out and lawful operations, and encourage them to help oth• economic relationships, which is also indispensable to ers to thrive, so that all people and all parts of the our efforts to deepen the reform. country will gradually prosper. The basic guiding principles for the Ten-Year Pro• —Uphold Marxism-Leninism and Mao Zedong gramme and the Eighth Five-Year Plan are clearly Thought as the guiding doctrine; carry on and develop defined in the Party Central Committee's Proposal. We China's fine cultural heritage, draw on and assimilate should firmly carry them out in conducting economic the fine cultural achievements of all the other countries and social development in the coming decade. Chiefly, in the world, in order to constantly raise the ideological they are as follows. and ethical standards and scientific and cultural levels 1. We must unswervingly take the road of building of the nation and promote socialist cultural and ideolog• socialism with Chinese characteristics. ical progress. After analysing our past and more recent practical —Establish and develop relationships of equality, mu• experience at the Third Plenary Session of the Eleventh tual assistance, unity, co-operation and common pros• Central Committee and at the Party's Twelfth and Thir• perity in line with socialism among all our nationalities, teenth National Congresses, the Party has formed its uphold and improve the system of regional national basic line for the primary stage of socialism. This is to autonomy and oppose ethnic discrimination and separa• make economic development the central task, adhere to tion of nationalities. the Four Cardinal Principles and persist in carrying out —Promote the systematic realization of the great reform and the open policy, as well as a series of other cause of reunifying the motherland in accordance with effective principles and policies. In its Proposal, the the concept and practice of "one country, two systems." Party Central Committee has drawn up 12 succinct —Adhere to an independent foreign policy of peace, major principles concerning the basic theory and prac• develop friendly relations with all other countries on the tice for building socialism with Chinese characteristics. basis of the Five Principles of Peaceful Coexistence, —Uphold the people's democratic dictatorship led by oppose hegemonism and power politics; support the just the working class and based on the alliance of workers struggles of oppressed nations and peoples, preserve and farmers, constantly improve the system of people's world peace and promote the progress of mankind. congresses and the system of multi-party co-operation —Uphold the leadership of the Communist Party, and poUtical consultation under the leadership of the constantly improve the Party's leadership system, style Communist Party, constantly consolidate the patriotic and methods, and strengthen the Party politically, ideo• united front and expand it to the broadest possible logically, theoretically and organizationally, so that it extent and strengthen socialist democracy and the social• remains the staunch leading core of the socialist cause. ist legal system. Some of these are basic principles that we have been —Develop the productive forces, the fundamental pursuing for several decades and have been refined and task of socialism, concentrate on modernization, and enriched under changing historical conditions; others constantly improve the material and cultural life of the represent the summation of more recent experience in people. reform, opening up to the outside world and moderniza-

V DOCUMENTS tion over the past ten years or so. All of them represent growth and, on the other hand, prevent excessive distri• the crystallization of the wisdom of the entire Party bution of national income to avoid inflation. We should membership and all our nationalities and embody work to connect growth rate to economic results and the outstanding contribution made by Comrade Deng always make improved economic performance the first Xiaoping in carrying on and developing Mao Zedong priority in all our economic work. Thought under the changing historical conditions. Fol• 4. We must firmly implement the principle of maintain• lowing the basic guidelines of these principles, we have ing independence and self-reliance, working hard and been building socialism with Chinese characteristics building the country through diligence and thrift. Self- since the Third Plenary Session of the Eleventh Party reliance is not in contradiction to the open policy; the Central Committee and have made achievements which two harmonize perfectly. Opening to the outside world have attracted worldwide attention. The fundamental and using foreign technology, expertise and funds will guarantee for reaching our objective for the 1990s will enable us to rely more on ourselves. Conversely, only by be following this road. relying on our own strength can we open more widely to 2. We must resolutely promote reform and opening to the rest of the world. In the 1990s we shall open China the outside world. This is crucial for implementing all the more widely to other countries and make greater head• principles and policies concerning the building of social• way in foreign trade, the use of foreign funds and ism with Chinese characteristics. Thanks to our efforts introduction of technology and intellectual resources in the 1980s, significant progress has been made in from abroad. Moreover, we shall try to develop the economic restructuring, and a pattern for opening to the economy mostly with domestic funds and our own outside world has taken shape. However, before all the strength. To make up for our relative shortage of re• drawbacks of the old systems could be eliminated, new sources and funds, it is most important for us to econ• irregularities and problems emerged.-In order to proper• omize as much as possible on the use of financial, ly set right the many irregularities in current economic material and human resources, and try our best to stop activities, attain the second-step strategic objective with• serious waste in production, construction, circulation, out a hitch and remain invincible in the face of intense consumption and other fields. In this next decade and coijipetition in the world, we must continue to deepen even during the entire period of modernization, we must the reform and open China more widely to the rest of be fully prepared to work hard and build up the country the world. Our reform is one where the socialist system through diligence and thrift. is refining and developing itself, and it is designed to 5. We must firmly promote material progress and cul• promote the development of the productive forces and tural and ideological progress simultaneously. We should comprehensive social progress and to constantly increase never forget that it is a socialist modernization pro• the vitality and dynamic nature of socialism. The inte• gramme under which we are working. In promoting gration of reform and the open policy with ceaseless material progress we must also promote cultural and consolidation and refinement of the socialist system has ideological progress, and overcome the tendency to pay been our most important experience. Facts have shown more attention to the former than to the latter. In that neither China nor any other country can do without addition to being one of our major objectives, the latter reform and opening up nor can they succeed if they do provides an important guarantee for the former. Only not proceed in a correct direction. Therefore, in future when we have succeeded in making progress culturally we should continue adhering to the socialist orientation, and ideologically will our people have a correct direction exploring ways to deepen the reform and making the to follow, gain greater confidence in socialism and be• open policy more fruitful. come closely united. This is where our real advantage 3. We must firmly adhere to the principle of maintain• lies. To accelerate socialist cultural and ideological pro• ing sustained, stable and coordinated development of the gress, all departments should work together and do all national economy. This principle is the product of our they can to get the masses involved in this endeavour, so analysis of positive and negative experiences gathered that this task can be carried out at the grass-roots level. over many years, and it provides an important guarantee The basic guiding principles just listed chart the di• for attaining our objective by the end of the century. By rection for our advancement and define the correct way sustained development we mean keeping an appropriate of attaining the second-step strategic objective. In all our growth rate each year. By stable development we mean work over the next decade we should therefore always moving steadily forward and avoiding violent fluctua• see to it that our basic line, principles and policies are tions. By co-ordinated development we mean propor• continued, kept stable and are comprehensively execut• tionate development. These three characteristics of ed. While no change will be made in these basic princi• development are closely related. Co-ordinated propor• ples and policies, specific policy measures should con• tioning of the economy is the basis for sustained and stantly be improved and developed. The major task stable development, and only proportionate growth can confronting us now is to work very hard to implement be rational, yield good results and guarantee sustained these principles, policies and measures. and stable development. In order to ensure sustained, In the Draft Outline submitted for examination and stable and co-ordinated development of the economy, it approval by the session, the Eighth Five-Year Plan and is vital that we work hard to maintain a basic balance the Ten-Year Programme are presented together for between total demand and total supply and avoid the consideration. This is because many questions relating tendency to seek quick results. We should tap the poten• to economic and social development, and some major tial of all our resources for the benefit of economic construction projects, key scientific and technological

VI DOCUMENTS projects and the training of qualified personnel will still ning for the Eighth Five-Year Plan. be relevant issues after the period of one five-year plan. By drafting the Five-Year Plan with the general trends and objectives of economic development for the next III. Economic Development ten years in perspective, we were able to maintain a Our general point of departure for economic develop• broader view. Since there are many factors that make ment in the next ten years is to maintain sustained, economic and social development unpredictable, it was stable and co-ordinated development of the national impossible to formulate too many specifics in the Ten- economy in line with the requirements of the second- Year Programme in the Draft Outline, excepting chief step strategic objective, while focusing on improving objectives, basic tasks, important policies and some im• economic performance. In the Draft Outline the follow• portant targets. The Eighth Five-Year Plan is to be ing major questions are considered. implemented soon and we have set more targets and 1. Making continued efforts to maintain a balance worked out more detailed projects in it, but its priorities between total supply and total demand. are still on maintaining a correct orientation, and on In the next ten years and during the Eighth Five-Year accomplishing the tasks and carrying out policies and the overall plan for reform and opening up in economic Plan period we shall be confronted with many contrad• and social development. Still more details may be found ictions in trying to strike a balance between total supply in the annual plan. and total demand because we not only have to satisfy the need of construction funds for all areas but also have to In the course of carrying out this Plan we will need steadily raise people's living standards. Therefore, main• to readjust or expand the set targets as necessary. To• taining a basic balance between total supply and total wards the end of the Plan period, we shall start drafting demand and preventing inflation and excessive distribu• the Ninth Five-Year Plan. Since we have not succeeded tion of national income constitute an extremely impor• in improving the economic environment and rectifying tant task. Experience has shown that the main reason for the economic order, we shall have to ontinue this task the sharp fluctuations in past economic development through the first year of the Eighth Five-Year Plan or was impatience for high growth rates as was manifested longer while simultaneously working for economic evel- opment. When economic development returns to nor• in our guidelines. Exceedingly large-scale development mal, we hall still continue our efforts to fulfill the tasks and excessive demands for consumer funds caused an that have been left unfulfilled in this field. imbalance between total supply and total demand and between major sectors of the economy. Finally, we were The year 1991 is the first year for implementing the forced to make adjustments in the economy. In the past Ten-Year Programme and the Eighth Five-Year Plan, two years we have achieved marked success in our and it is also a year in which we must continue to efforts to improve the economic environment and rec• improve the economic environment, rectify the econo• mic order and deepen the reform. Therefore, making a tify the economic order precisely because we have struck success of this year's work is of great ignificance. We a balance between total supply and total demand. should focus on economic work and, while maintaining To maintain sustained, stable and co-ordinated devel• a balance between total demand and total supply, read• opment of the economy and to avoid major setbacks in justing the economic structure and improving economic the coming ten years, it is crucial that we maintain a performance, make sure that the economy grows at an balance between total supply and total demand, in par• appropriate rate. We should guard against repeating the ticular we must maintain a balance in finance, credit, mistake of relaxing efforts in agriculture after a good foreign exchange payments and materials supply and harvest and instead redouble our efforts to develop demand, as well as a proper relationship among them. agriculture. We should take effective measures to bring We should do what we can for economic development about substantial progress in revitalizing large and and people's wellbeing. Investment in fixed assets should medium-sized state-run enterprises as quickly as possi• be compatible with our national strength and the growth ble. We should organize a campaign for the "Year of rate of consumption should be compatible with that of Quality, Variety and Efficiency," carry it out year after production. Because it may take a long time to improve year and make it a success. We should improve financial economic performance markedly, the contracted finan• and taxation work, control institutional purchases, in• cial responsibility system will remain the major finan• crease production and practise economy, raise revenues cial system during the Eighth Five-Year Plan period. and reduce expenditures, and reduce the imbalance be• This should restrict the growth in state revenue and in tween revenue and expenditure. We should continue revenue of the central financial authorities. In addition, deepening the reform in accordance with the require• investment in key construction projects, national def• ment to combine a planned economy with market regu• ence expenditures and operating expenses for science lation. While striving to do the economic work well, we and education need to be increased appropriately. As for should improve political and ideological work and expe• the enormous amount of subsidies paid out to compen• dite cultural and ideological progress in the cities and sate for enterprise losses and price rises each year plus countryside. We should strengthen overall control of certain other expenditures, they can only be cut back public security, maintain social stability and normal gradually. Therefore, it will be hard to strike a balance order, so that our people can work and live in a favour• between revenue and expenditure every year; there will able environment. We must do our best to make every be a certain amount of deficit. We must try to do field of endeavour a success and ensure a good begin• everything we can to increase revenues and reduce ex-

VII DOCUMENTS penditures in order to cut the deficit. All departments or is undergoing reorganization and upgrading world• are now asking the treasury for additional financial wide. Whether or not we can seize every opportunity to support and preferential treatment. We must be deter• expedite the adjustment and our industrial structure will mined to offer no more such support or treatment, make have a direct bearing on the attainment of the second- no further reduction of taxes on enterprises and allow step strategic objective and exert a long-term influence the enterprises no greater amount of profit. In issuing on the progress of China's modernization. credit and loans, banks should continue to adhere to the Therefore, the Draft Outline gives top priority in policy of working to stabilize the value, control the total economic development in the next ten years to readjust• issue and readjust the structure, issuing currency and ing the industrial structure. The major tasks involved loans in accordance with the rational needs of economic include the following: development in order to avoid inflation. We should —Redoubling our efforts to improve and expand agri• make timely settlement of foreign exchange accounts culture to promote all-round growth of the rural economy. payable, and increase foreign exchange receipts from Confronting us in the 1990s are a number of problems. both visible and invisible trade and keep imports and On the one hand, an increasing population and the foreign loans to a reasonable level. transition to a relatively comfortable life will mean an Various regions and departments have set forth pro• ever-growing demand for farm products. On the other jects to be built in the next ten years and during the hand, «he overall production capacity of our agriculture Eighth Five-Year Plan period. The overall scope of cannot be increased rapidly enough in the near future. these projects greatly exceeds the potential supply of Because the amount of farmland per capita continues to funds and materials. It is true that from the point of diminish and the weather and other elements are un• view of an individual region or department certain predictable, agricultural development could be very dif• projects are necessary and, moreover, some of them ficult. The Draft Outline requires that grain output first have already been assessed for feasibihty. But looking at tops 450 million and then 500 million tons in the 1990s.' the situation as a whole, and in light of our limited Specific quotas are set for the output of other major financial and material resources, we have to approve farm products such as cotton, oil-yielding crops and some and disapprove others on the basis of importance sugar-yielding crops and for the development of fores• and urgency. Since the construction projects listed in the try, animal husbandry and fishery. The Draft Outline Draft Outline are to be launched within five to ten contains a series of important measures designed to years, the proportion of annual investment should be expand agricultural production. These include; deepen• specifically set on the basis of available funds and ing reform m the rural areas, stabilizing and improving should remain basically constant. When launching pro• the responsibility system with the household contract jects we should go about it systematically; we cannot all hnking remuneration to output as the main form, esta• rush headlong into battle with no sense of priority. blishing all types of social services and improving the 2. Vigorously readjusting the industrial structure to system of unified management combined with inde• make it more rational and modern. pendent management in order to boost the economic Economic development, reform and opening to the strength of the collective; increasing investment in agri• outside world during the 1980s brought about favour• culture, doing more harnessing of major rivers, increas• able changes in the industrial structure. The situation ing irrigation and water-conservation construction in agriculture and consumer goods industries has im• projects, continuing afforestation, and effectively con• proved; the service sector has been growing more rapid• trolling flood and drought; invigorating agriculture ly; and new industries have been created. Nevertheless, through application of scientific and technological adv• there has been no fundamental change in the irrational ances and promotion of education; working hard to industrial structure. Besides, new contradictions and reform and improve the circulation pattern of farm problems have cropped up in the course of economic products; and promoting the sound development of vil• development. The main problems in the industrial struc• lage and township enterprises. Strengthening manage• ture are as follows: agriculture, the foundation of our ment and using land and water resources economically economy, remains weak; basic industries and infrastruc• and rationally are essential to agricultural production ture lag behind other fields of endeavour; the overall and to the economic growth of the entire society and, scale of processing industries is too large and the level therefore, must be carried out. Governments at all levels of technical expertise and degree of specialized division are expected to diligently organize the execution of these of labour in them are low; and the service sector cannot measures. meet the needs of economic development nor of people's —Building more basic industry and infrastructure pro• daily lives. With the rise in people's incomes and living jects is an important task for the next ten years. In the standards in the next ten years there will be an increased past two years, thanks to economic improvement and demand for greater quantity and variety in consumer rectification and structural readjustment, the strain on goods. In addition, the increase in industrialization and basic industries and the infrastructure has been eased to the increase in the number of people leaving agricultur• some extent. Although some products have even been al production, plus expanded trade and economic rela• overstocked in some places, this is a temporary pheno• tions with other countries, require that we work even menon resulting from our retrenchment measures. How• harder to readjust the industrial structure. We should ever, in the long run basic industries and the infrastruc• also note that, in the wake of the revolution in science ture will remain weak links in the development of the and technology, the industrial structure has undergone national economy. Since they take a long time and

VlII DOCUMENTS require huge investment to develop and the return on view of the fact that this industry has a very important investment is low, we must lose no time in arranging for role -in economic development and people's lives and their development, adopting measures which favour in• that it still lags behind other industries, the Draft Out• vestment in them, and raising funds for them in various line has laid great emphasis on it. In its development, ways. In the Draft Outline specific arrangements are priority shall be given to trades serving production and made for the development of the energy, transport, people's needs, in areas such as commerce, materials post and telecommunications and major raw and semi• supply, banking, insurance and tourism. Growth of the finished materials industries. We need to muster all our service sector will substantially help to ease the pressure resources and make a concerted effort, paying close on employment, accumulate funds, enliven the urban attention to quality and efficiency, to complete a num• and rural economies, readjust the economic structure ber of key projects on time and form a comprehensive and improve the overall efficiency of the national econ• production capacity much in the same way as when we omy and the living standards of the people. However, in successfully built 156 major projects during the First the course of development in the 1980s some confusion Five-Year Plan period. Our banks should grant more arose owing to lack of experience and poor management. loans to these projects. Construction funds should be This has been or is being overcome thanks to our efforts allocated for the coal, power, oil and railway industries to improve the economic environment and rectify the to guarantee the financial needs of key projects. The economic order. We should provide support and guid• prices of their products or their charges should be grad• ance in this area and improve management so that this ually rationalized, so that our basic industries can con• sector can develop relatively quickly and on a sound tinue to expand. We should improve geological survey basis. work so that its development is coordinated with the 3. Promoting rational division of work among various construction of key projects. In ensuring enough funds regional economies and their co-ordinated development. for the key projects of the state, governments at all levels Rational geographical distribution of the productive should raise funds from all sectors of society in accord• forces and co-ordinated development of the regional ance with state policies to develop basic industries and economies are vital to China's economic and social de• the infrastructure in their regions in light of their local velopment. The development of the regional economies conditions. and the geographical distribution of resources are unev• —Reorganizing, upgrading and improving the process• en across the vast territory of our country. Correct ing industries. The scope of China's processing industries handling of the relationship between national and re• is large enough. In the next ten years the stress should gional economic development and the relationships be placed on fully tapping the potential of existing among the regional economies has a great bearing not enterprises and raising their production capacity by only on the full exploitation of all kinds of advantages deepening reform, readjusting structures, improving and rational economic development but also on unifica• management and updating technology. To this end, we tion of the country and unity of all our nationalities. In shall have to cut back all excessive production capacity the 1980s both the national and regional economies grew of and put a stop to the manufacture of inferior outdat• significantly and there were also some changes for the ed products or products whose manufacture consumes better in the geographical distribution of the productive large amounts of materia] or pollutes the environment. forces. Nevertheless, there still are some irrationalities Enterprises whose output is small and whose products and glaring problems as well. The main problems in• cost too much to manufacture and yield poor returns clude too many duplicated construction projects, too should be reorganized. In line with large-scale produc• many similar industrial complexes, irrational allocation tion, they should be urged to introduce division of of resources and barriers between the regions and mar• labour based on specialization or to set up associations kets. These problems hinder rationally co-ordinated among themselves. We should encourage the wide use of production and commodity circulation. In the coming new technologies and techniques, develop new products ten years we shall gradually rationalize the geographical and improve product quality to better meet the needs of distribution of the productive forces in line with the the domestic and international markets. principles of overall planning, rational division of work, —Dereloping the construction industry. A relatively taking advantage of each other's strengths, co-ordinated comfortable life and higher living standards are reflect• growth, consideration of the interests of all concerned, ed in improved housing. According to the Draft Outline, and common prosperity. For this purpose, we must in order to meet the needs of economic development and satisfactorily handle the following three relationships: people's lives in the next ten years, the construction First, we must correctly handle the relationship be• industry will be developed considerably. The experience tween taking advantage of the strengths of various re• of China and other countries shows that the construction gions and making comprehensive plans for the economic industry can become one of the major pillars of econo• development of the whole country. The state will en• mic development. We must adhere to the principle of courage and support the various regions in making the putting quality first and raise technical and managerial most of their strengths by improving guidance and co• levels in the industry. In all construction work quality ordination. Meanwhile, in order to raise the overall should be stressed and costs held down. Use of new efficiency of the national economy, the state will prom• building materials manufactured by our own country ote rational division of work among the regional econ• should be encouraged. omies. A unified national economic network and market —Accelerating the development of the service sector. In are objective requirements for a commodity economy

IX DOCUMENTS and large-scale production, as well as a prerequisite for and other infrastructure projects, and develop some exploiting regional advantages. Barriers between regions processing industries in order to become more self- and markets hinder rational geographical distribution of reliant and improve their production and living condi• the productive forces and the most appropriate distribu• tions. tion of resources, in addition to hindering the exploita• 4. Always keeping improved economic performance the tion of regional advantages. Regional economies should first priority of ail our economic work. develop in accordance with the industrial policies of the Improving economic performance will be a major task state. In formulating the state industrial policies, consi• in economic development in the coming decade. We deration should be given to the exploitation of each have stressed this task for many years, and progress has region's strong points. This will facilitate the simul• been made in quite a few areas. However, generally taneous development of the national and regional econ• speaking, there has been no fundamental change. Exces• omies. sive consumption in production, inferior quality, enor• Second, we must correctly handle the relationship mous waste in construction, slow capital turnover, low between areas richly endowed with resources and areas labour productivity and serious enterprise losses are to with a large number of processing enterprises. Particu• be found everywhere. Many technological and economic larly in the economically developed coastal areas, efforts indexes obviously lag behind those of the economically should be made to develop high-technology industries, developed countries. Worse still, some are even lower manufacture products that can earn foreign exchange, than our own past records. The gap between backward and economize on the use of resources. Industrial enter• and advanced enterprises within trades is also very wide. prises that consume large amounts of materials and Poor performance is at the crux of many difficulties in energy and require extensive transport services should China's economy. Due to the fact that during the coming be rapidly developed in areas with sufficient energy and decade and throughout the period of the modernization abundant resources. While accelerating the exploitation drive we shall continue to be plagued by a huge popula• of natural resources, these areas should also develop tion, heavy construction tasks, shortage of funds, outdat• some processing enterprises as appropriate. Attention ed basic industries and infrastructure, and relatively should be given to accelerating construction of the inadequate resources in terms of average per-capita eastwest railroad trunk line to benefit exchange between amount, we shall get nowhere relying on poor manage• coastal and interior areas of commodities, funds, tech• ment which wastes resources. We have no choice but to nology and talent. work our hardest to improve economic performance by Third, we must correctly handle the relationship be• intensifying management. Among the indexes set in the tween developed areas and developing areas. The uneven Draft Outline for improving economic performance dur• development of the economy and differences in living ing the Eighth Five-Year Plan period are: the amount standards have historical and geographical causes. As of standard coal consumed for every 10,000 yuan of the economy develops, the state and economically devel• GNP is to be decreased from 9.3 to 8.5 tons, labour oped areas should do their best to bring change to the productivity of the community as a whole is to be raised less developed areas, so that each and every area can at an average of 3.5 percent per annum, and the turnov• make progress and achieve prosperity. We shall continue er period for working capital in state-run industrial to implement the current policies of assisting minority enterprises covered by the budget is to be shortened nationality areas, poverty-stricken areas, old revolution• from 127 to 95 days. ary base areas and outlying districts in obtaining ade• We should take practical measures and do solid work quate food and clothing in the next ten years so that to attain these targets so that we can gradually remedy marked progress can be made there in the economy and our poor economic performance. people's living standards. The state will continue to Upgrading technology is the chief means we have provide these areas with financial, material and techni• for improving economic performance. China now has a cal aid and build mines, water conservation and trans• large industrial foundation with numerous enterprises, port projects and other industrial projects there, to sti• which will shoulder most of the production and con• mulate their economic development. In the next ten struction tasks for the coming decade. Many enterprises years, the state will continue to carry out the policy are using obsolete equipment and backward technology of providing relief in exchange for work in poverty- which need to be upgraded immediately. During the stricken areas, encouraging peasants to take part in Eighth Five-Year Plan period and the coming decade, improving sloping fields and low- and medium-yield we must update existing enterprises with advanced tech• farmlands so as to create the necessary conditions for nology, equipment and production techniques, and tac• people there to have adequate food and clothing. More kle key problems in scientific research and production, developed provinces and cities along the coast are ex• focusing on production technology and modern equip• pected to conclude agreements or contracts with less ment. We must work hard to raise the level of the developed provinces and areas and, on the basis of machine-building industry to better meet the require• mutual benefit, share their successful experiences, trans• ments of all sectors of the national economy for technol• fer technology, exchange talent and supply financial and ogy and equipment. During the Eighth Five-Year Plan material aid to help accelerate their economic develop• period the state will select a group of large and medium- ment. People in less developed areas should work hard sized key enterprises and manufacturers of important to develop farming, forestry and animal husbandry, products to be the vanguard in upgrading technology, so build highways, electric power stations, irrigation works that they may approach or reach advanced international

X DOCUMENTS standards. All local authorities and departments should tive force. In the present-day world, the growth of the similarly select a group of enterprises for technological productive forces and the increase in the overall nation• upgrading in order to give an impetus to technological al strength depend to a large extent on a country's level progress in small and medium-sized enterprises and of science and technology. International economic com• village and township enterprises. Upgrading technology petition in science and technology and for trained per• should be focused on conserving energy, reducing con• sonnel is becoming more prevalent. If we are to sumption of raw and semi-finished materials and prod• markedly improve economic performance, increase uction costs, improving the quality of products, increas• overall national strength and systematically narrow the ing the production capacity of brand-name, high-quality gap between our country and the developed countries, new products plus those for export. It should also em• we need to fully realize the strategic importance of phasize preventing and controlling pollution, and in• science, technology and education, relying on scientific creasing the multi-purpose use of resources. We should and technological progress and improving the quality of expand the application of advances in science and tech• the work force for economic development. nology that require less input, yield greater economic In developing science and technology, we should con• results and promise quick returns, continue to imple• tinue to implement the principle that "economic devel• ment the "Spark Programme" and the "Harvest Pro• opment must rely on science and technology, while gramme," and speed up the application of advances in development of science and technology must be geared technology to production. While improving technolo• to the needs of economic development." This is not only gy in traditional industries at an accelerated pace, we good for economic growth, but is also the only way for should continue to implement the "Torch Programme," science and technology to prosper and advance. We shall successfully manage the new- and high-technology de• continue to deepen reform of the science and technology velopment areas, promote commercialization and indus• management system and gradually set up a scientific trialization of new and high technologies and widely research mechanism in which importing technology is apply them to traditional industries. Now that the elec• combined with innovation while application is com• tronics industry is playing an increasingly prominent bined with dissemination for mutual promotion. We role in overall economic and social development, we shall make economic development a main objective of should recognize the strategic importance of its rapid work in science and technology, and speed up the trans• development, closely integrate it with the manufacture formation of scientific and technological achievements of precision machine tools and other equipment and into practical productive forces. promote wide application of electronic technology to We should do overall planning for the work in science economic and social activities. We should also continue and technology on three levels: at the top, applied tech• to introduce advanced technologies from other coun• nology research; second, high-technology research; and tries, try to make good use of them and make our own third, basic research. We should rationally allocate our innovations based on them. resources in order to promote China's comprehensive Improving management is an important way of im• economic, scientific and technological development. We proving economic performance. At present, financial, should closely watch the advances in technology now material and human resources are recklessly wasted in going on in the world and do our best to make new gains production, construction and circulation, and the devel• in high-technology areas, such as bioengineering, elec• opment potential in these areas is far from being fully tronic information technology, automation technology, tapped. Therefore, we must make tighter management new materials, new energy sources, aeronautics and the key link in improving economic performance. We space, oceanographic engineering, lasers, superconduc• should improve macro-management, try to make state tivity and communications. The key to accelerating pro• plans more scientific and productive, and rationalize gress in science and technology is to stabilize and perfect overall allocation of resources. We need to exercise the policies for promoting such progress and to increase rigorous management in the enterprises, especially prov• investment through practical and effective means. We ide more effective leadership and guidance on the prod• should establish and gradually improve a protection uction lines, strictly implement the contract responsibil• system for intellectual property rights and widen the ity system, make a success of work at the basic units, and role of the patent system in the development of science improve the overall quality of the work force. The and technology. experience of many advanced enterprises shows that this Developing education and raising the overall quality enables the same people with the same equipment to of the populace is of fundamental importance to the turn out more and better products. We should persistent• socialist modernization drive. China's modernization ly and earnestly conduct the campaign to increase prod• programme requires a large number of skilled techni• uction, practise economy, raise revenues and reduce cians as well as a contingent of hundreds of millions of expenditures in all fields of endeavour, and do careful educated workers. To serve this programme, we should budgeting and fight waste, working to spend less money continue to deepen the reform of the management sys• to accomplish more things. tem of education, promote research in the science of 5. Promoting progress in science and technology, ex• education, work hard to implement the educational pol• panding education, improving the overall quality of the icies of the Communist Party and the slate and bring up national economy and promoting all-round social pro• morally, intellectually and physically developed build• gress. ers and successors of socialism. We should focus on Science and technology constitute a primary produc• improving the quality of instruction and increasing the DOCUMENTS efficiency of school management, in accordance with the system; encouraging family planning to strictly control actual requirements of the modernization drive. population growth; promoting cultural activities to en• By the year 2000, we plan to make compulsory pri• rich people's lives; and developing public health and mary education universal throughout China and make sports activities to improve the people's health. After ten compulsory junior middle school education universal in years of steady improvement, the Chinese people's living most of the urban areas as well as in some rural areas standards will register a noticeable rise at the end of this where the economy is fairly advanced, and eliminate century. illiteracy among most young and middle-aged people The relatively comfortable life mentioned above is throughout the country. By greatly expanding vocation• compatible with the projected growth in China's produc• al and technical education and training, we shall enable tive forces and reflects basic socialist principles. A rise the overwhelming majority of urban and rural labourers in people's living standards includes both material im• to have needed technical knowledge and skills, as well provement and cultural enrichment and, both a rise in as give skilled workers improved abilities and more individual consumption level and improvement in the knowledge of specialized techniques. While basically areas of social welfare and working conditions. As far as maintaining the present scope of higher education and material comforts are concerned, the patterns and styles rationalizing the structure, we shall concentrate on help• of consumption should agree with China's conditions ing a number of universities and colleges to markedly and national traditions. We should readjust the industri• improve the quality of instruction and efficiency of al structure and product mix as necessary to make them school management, bringing a number of key branches compatible with the improved quality of people's daily of learning up to advanced world standards. We shall lives and changes in consumption patterns as people continue to implement and improve the policies con• move from subsistence living to a relatively comfortable cerning students studying abroad, encouraging them to life. At the same time, we should guide consumption and come back to work after finishing their studies. We shall establish rational consumption patterns and healthy, also increase promotion of international exchange and beneficial consumption styles that are suited to China's cooperation in education. We must try hard to streng• conditions. then the training of teachers so that they will become Since China is a big country with very uneven econo• more competent professionally, ideologically and politi• mic and cultural development, the goal of enabling the cally. The various types of schools at all levels should people throughout the country to lead a relatively com• effectively improve moral education and ideological and fortable life can only be achieved gradually region by political work to raise the socialist consciousness and region. No unified nationwide timetable in this regard moral standards of both educators and those receiving should, or could, be formulated. However, we can be an education. In the Draft Outline, governments at all certain of one thing and that is that the prevalence of levels are required to gradually increase investment in such a life and common prosperity will be attained by education along with economic growth and, at the same 2000. We shall continue to implement the policy of time, raise funds for education through various chan• allowing and helping some people and some regions to nels, urge and help all sectors of society to operate prosper earlier than others through honest labour and schools and encourage self-education, in order to prom• lawful operations. Nevertheless, we must never lose ote co-ordinated educational and economic growth. sight of the aim of this policy, which is to help the people 6. Improving the people's living standards on the basis in all parts of the country move towards common pros• of expanded production. perity. Therefore, we should not only oppose egalitari- The purpose of economic, development is to satisfy anism but also guard against the development of too people's ever-growing material and cultural needs. The wide an income gap in society. One of the most essential general objective for the coming decade is to enable all advantages of the socialist system lies in common pros• the people to lead a relatively comfortable life. Accord• perity. ing to the Draft Outline, during the period of the Eighth A relatively comfortable life can be realized only Five-Year Plan both workers and office staff as well as through the hard work of the entire nation. China is now the peasants of our country should register some growth on the threshold of a new undertaking and a thousand in their income after adjustment for price rises. The things remain to be done. Therefore, in the next ten principal measures for raising the people's consumption years and even throughout the course of the moderniza• level and quality of their daily lives include increasing tion drive, we must properly handle the relationships production of textiles and other light industry and farm between accumulation and consumption and between and sideline products and continuing to carry out and building up the country and raising people's living stan• improve the "shopping basket" programme in urban dards. We must see to it that the growth of actual total areas; effectively organizing market supply; expanding wages does not exceed that of the national income and the service sector which caters to the needs of both that the increase in real average income does not outs• urban and rural residents; speeding up the construction trip that of labour productivity. For a long time from of urban and rural housing and public utilities; prevent• now, we need to persistently maintain our independence, ing environmental pollution and improving the environ• rely on our own strength and work hard to build up the ment; taking full advantage of both the urban and rural country using diligence and thrift, so we can accomplish collective economic undertakings and other economic socialist modernization through our intelligence, wis• sectors to provide more job opportunities for the work dom and untiring hands. force, and systematically perfecting the social security Fellow Deputies,

xn DOCUMENTS The Chinese People's Liberation Army, the Armed situation in which foreign hostile forces will continue Police and the Public Security Police constitute a solid their attempts to effect peaceful evolution in China. In pillar in the people's democratic dictatorship. In the addition, we shall be charged with the formidable and 1980s, the people's armed forces made tremendous pro• complicated tasks of domestic development and reform. gress in their own development and contributed signifi• Therefore, we must steadfastly carry out the principle of cantly to the defence of our motherland and the safe• working for material, and at the same time, cultural and guarding of our modernization drive. ideological progress, while also stressing the building of In the coming decade, under a complicated and rap• a culturally and ideologically advanced socialist society. idly changing international situation, we may have to The basic task in advancing socialist culture and cope with a variety of unpredictable possibilities. To ideology is to develop a socialist citizenry who have high safeguard state security and ensure a stable environment ideals and moral integrity, who are better educated and for economic development, we must further modernize have a strong sense of discipline, as well as to raise the our national defence forces. In line with the country's ideological, moral, scientific and cultural standards of financial capability, we should appropriately increase the Chinese nation as a whole. Centring on this basic the outlay on national defence and work hard to develop task is the need to raise people's ideological and moral defence science and technology, focusing on research in standards and their educational, scientific and cultural and manufacture of new weapons and equipment to levels. Advanced ideological and moral standards are modernize our army's armaments. We should continue the soul of our socialist culture and ideology; they to readjust the structures of defence-related science and determine the nature and orientation of the latter. When technology and the defence industry, implement the we call for rectifying the tendency of stressing material policy of appropriately converting military-industrial progress to the neglect of cultural and ideological pro• production capacity to manufacture of civilian products, gress, we mean raising these standards. We must relent• strengthening unified planning and enhancing coordina• lessly urge our people to adhere to the Four Cardinal tion, to improve both military and civilian products. We Principles and resist and oppose bourgeois liberalization, should continue to augment the construction of key in order to ensure a correct orientation for economic defence projects. We must strive to broaden education development, reform and opening to the outside world. in national defence to enhance all our people's awareness It is necessary to carry on the fine traditions of ideolog• of its importance. We should extensively carry out ac• ical and political work. We must carefully study this tivities to support the army and give preferential treat• work's characteristics and the laws governing it under ment to families of revolutionary armymen and mar• the current conditions of reform and opening China to tyrs, and we should also carry out activities to support the outside world and conduct more effective ideological the government and cherish the people, so as to further and political training in lively forms that attract the strengthen the unity between the army and the govern• people's interest so that they will take it to heart. We ment and between the army and the people. The people's should conduct intensive and persistent training in pa• armed forces should further intensify their revolution• triotism, community spirit and socialism, making use of ary zeal, continue their modernization drive and stan• our common ideals to mobilize and unite the people of dardization, and enhance their political consciousness, all our nationalities in the great cause of building up our military proficiency and combat capability, in order to motherland and rejuvenating China. We must arouse safeguard the smooth progress of socialist moderniza• and attract hundreds of millions of people to participate tion. in the development of socialist culture and ideology to help foster an active, healthy and cultured citizenry. China's young people, numbering more than 500 mil• iV. Social Development lion, represent the generation which spans this century In the Draft Outline of the Ten-Year Programme and and the next, and they are the hope and future of our Eighth Five-Year Plan, economic development is pre• motherland. We must fully recognize the extreme im• sented as the first priority, co-ordinated development of portance and urgency of fostering people to be builders the economy and social undertakings is emphasized and and successors for our socialist cause, and closely co• comprehensive requirements are proposed for cultural ordinate education in the schools with education at and ideological progress and all types of social undertak• home and in society, to bring up new generations of ings. Here I should like to explain a few points. socialist builders. 1. The need to promote progress in socialist culture and The development of education, science and culture ideology. promotes and depends on ideological and moral pro• Advancing socialist culture and ideology is an impor• gress, and both help to advance material progress. There tant goal in building socialism with Chinese characteris• can be no socialist modernization without enhancing the tics, as well as an important guarantee for promoting scientific awareness and educational level of the entire material progress. Over the past ten years, great strides nation. Therefore, we should adhere to the policy of were made in culture and ideology. But some serious "letting a hundred flowers blossom and a hundred deficiencies have also shown up, mainly the weakening schools of thought contend" and, while promoting of ideological and political work, which led to an un• science, technology and education, we should conduct checked flood of bourgeois liberalization and brought more effective research in the social sciences and further about grave consequences to society. Over the next ten develop all cultural undertakings including the press years, China will be faced with a volatile international and publishing, broadcasting, film, television, and liter- xni DOCUMENTS ature and art. On the basis of the fundamental experi• duce the number of levels and administrative staff, ence and all effective principles and policies from the improve work styles and increase efficiency. It is also 1980s, specific arrangements have been made in the necessary to further encourage democratic activities at Draft Outline for the development of science and tech• the grass-roots level, improve democratic management nology, education and culture. Governments at all levels in enterprises as well as self-government among both are required to give top priority to these arrangements urban and rural residents, increase the citizens' aware• and do a good job carrying them out. ness of the need and their ability to particiate in the It is essential that we pay more attention to the vast administration and discussion of state affairs, and ar• number of intellectuals and let them play their role in ouse the people to become involved in building social• promoting progress in socialist culture and ideology and ism. in the modernization drive. Since the founding of the It is essential, through building the legal system, to People's Republic, and especially since the Third Plen• put socialist democracy on an institutional and legal ary Session of the Eleventh Central Committee of the basis to safeguard the people's right to be masters of the Communist Party, China's intellectuals have made sig• country and to guarantee stability, unity and long-term nificant contribution to every aspect of national econo• peace in China. At the same time, we must standardize mic and social development. Accomplishing the arduous economic relations and social activities through the law, task set for the second step of our strategic objective in in order to maintain public order and to solidify the the next ten years urgently requires the intellectuals to results of reform and opening to the outside world. Now fully display their initiative and inventiveness and to that we have attained the initial stage in forming a whole take on the tasks which history bestows on them. We system of socialist law in China based on the Constitu• should continue to develop a feeling of respect in society tion, our political and economic activities and govern• for knowledge and for talented people. We should grad• ment work are being gradually put on a legal footing. ually improve poUcies and systems which are designed However, some important laws and statutes relating to to bring out talented people, so that people can fully economic affairs and to administration and management utilize their talents and abilities. Along with economic have yet to be worked out. While promoting reform and growth, we shall take practical measures to improve the opening to the outside world, we should speed up the intellectuals working and living conditions. We should drafting of such important laws as a planning law, encourage intellectuals to become more a part of the real budget law, banking law, investment law, corporation world, to better understand China's actual conditions, law, pricing law, labour law and auditing law. At the and to achieve more successes in the great socialist same time, we should also formulate more administra• modernization drive, reform and opening to the outside tive statutes, regulations and rules consistent with the world. requirements of reform, the open policy, administration and management, so as to further standardize and in• 2. The need to strengthen socialist democracy and the stitutionalize government administration and manage• socialist legal system. ment. Socialist modernization is an undertaking of all the people. Only by strengthening socialist democracy can One outstanding problem is the prevailing tendency to we mobilize and rely on the people to the greatest not enforce the law strictly enough. It must be emphas• possible extent. In furthering the economic restructur• ized that once a law is promulgated, all organizations ing, we must also actively and steadily promote corres• and individuals must abide by it. We must protect the ponding progress in political restructuring, establish and authority of the Constitution and the law, uphold the improve procedures and systems for democratic super• principle of equality before the law, and work towards vision, set up a system of leadership that will help raise the point where when there is a law it is obeyed, enforce• efficiency and develop a socialist democracy suited to ment is strict and lawbreakers are prosecuted. We shall Chinese conditions. continue to publicize and explain the legal system, mak• Governments at all levels should emphasize and sup• ing legal knowledge common among all of China's citi• port research and consultancy before making policy zens, and enhance their awareness of the need to obey decisions and make decision-making more democratic the law. All government personnel should study and and scientific. They should also readily accept supervi• understand the law, increase their awareness of the law, sion by the people's congresses or their standing commit• and set an example in observing and enforcing the law. tees at the corresponding levels, respect and enable the 3. The need to strengthen procuratorial and judicial people's political consultative conferences, the demo• work and maintain social stability. cratic parties, and mass organizations to play their role Under the present situation of stability and unity, in political consultation and democratic supervision, there are still some factors which could lead to instabil• and listen to opinions from all quarters with an open ity in China. Attempts at subversion, dismemberment mind, so that the will and interests of all the people can and sabotage by foreign hostile forces working against be fully embodied in state affairs and social activities. China still continue. Therefore, we must always be on It is important to further strengthen the state's polit• guard to firmly preserve political and social stability and ical power, reform the administration and management unity. We uphold the Four Cardinal Principles, one of systems and straighten out the relationships between which is to uphold the people's democratic dictatorship functional departments of governments at all levels. It and this one carries the same importance as the other is necessary to continue to reform the cadre and person• three. We must severely crack down on serious criminal nel systems, streamline government organizations, re• activities and major economic crimes. We must launch

XIV DOCUMENTS a thorough campaign to eliminate the "six evils" (name• charge of industrial and commercial administration, ly, prostitution; manufacture, sale or dissemination of financial affairs, taxation, pricing, public security, cus• pornography; and abduction and sale of women or child• toms, auditing and supervision, and encourage and sup• ren; illicit drug cultivation, abuse or trafficking; gam• port the democratic parties, the media and the masses in bling; and cheating or harming people through feudal or exerting supervision, if we want to resolutely combat all superstitious practices), stop and outlaw all organiza• violations of the law or rules of discipline. We must tions and activities which endanger public security or persist and achieve marked success in the effort to build upset public order. a clean and honest government and correct malpractices It is essential to follow the principle of combining in all trades and professions during the Eighth Five- efforts made by specialized organs with those by the Year Plan period. masses, and bring out the strength of every sector in 5. The need to firmly carry out the basic national society to improve all facets of public security and policies of family planning and of environmental protec• maintain normal public order through political, fin• tion. ancial, administrative, legal, cultural and educational Having rich manpower resources is definitely an ad• means. We should urge all the people to observe the laws vantage for China. However, the fact that China has a and rules of discipline, to help maintain public order, large population base and its population over the past and to bravely combat all phenomena that undermine few years has grown by over 16 million annually, equi• public order. It is imperative for the public security, valent to the population of a medium-sized country, has state security and justice departments as well as the strained and complicated economic and social develop• people's police and the officers and men of the armed ment and the effort to improve people's living standards. police to be able to meet the requirements of new situa• Furthermore, a baby boom will occur during the Eighth tions, continuously increase their political awareness Five-Year Plan period. The population situation is, and professional competence, honestly perform their therefore, very grim. According to the Draft Outline, duties, strictly enforce the law, and fully exercise their China's average natural population growth rate is to be function as part of the people's democratic dictatorship, held below 1.25 percent over the next ten years. Even if in order to further contribute to the strengthening of our efforts are successful, China's population will still public security and the maintenance of social stability. be large, and about one-fourth of the increased national 4. The need to continue combatting corruption and do a income will be consumed by the growth in population. better job in building a clean and honest government. If population growth exceeds the planned figure, the As the reform deepens, China opens more widely to burden will be even heavier. Governments at all levels the outside world and the economy grows more prosper• must, therefore, give top priority to family planning and ous, there will be all the more need for us to build a keep constant tabs on this work. They have done a great clean and honest government and combat corruption, if deal in birth control and met with some success over the the government wants to maintain close and enduring past decade, with the cities of Beijing, Tianjin and ties with the people. For this purpose, go^rnment per• Shanghai and the provinces of Zhejiang, Liaoning, Si• sonnel and all other public servants should be honest chuan, Heilongjiang and Jilin doing particularly well. In and clean, live a plain life, serve the people wholeheart• the coming decade the population problem will have a edly and resist all unhealthy practices. The building of still greater bearing on China's overall economic and a clean and honest government must start, first of all, social development. We must continue to widely and with government organs at all levels, particularly de• intensively publicize the basic state policy for family partments under the State Council, and with leading planning in order to increase the nation's awareness of cadres at all levels, especially the high-ranking cadres. the population problem. The success of family planning They must be strict with themselves and set an example should be an important criterion for appraising the work for others. Those who take part in economic or other results of governments at all levels. They should contin• crimes, abuse power for their personal gain or practise ue to implement the current policies on family planning, favouritism in violation of the law, no matter how high encouraging late marriage, late birth, prenatal and post• their position is, must be resolutely punished in accord• natal care and only one child for each couple, while ance with the law once their activities are verified; discouraging early marriage, early birth and couples under no circumstance can we tolerate or abet their having more children than what the plan allows, severe• wrongdoing. Those who are guilty of serious bureaucra• ly cracking down on criminal violations of the family tism or commit the crime of dereliction or neglect of planning policy. Governments at all levels should focus duty must be investigated to determine their culpability their attention on rural areas, speeding up the establish• in accordance with the law. Those who violate the law ment of service networks for family planning in coun• or norms of administrative discipline, going their own ties, townships and villages, providing adequate techni• way in disregard of orders or prohibitions, must be dealt cal services and guaranteeing necessary funding so that with severely. We should concentrate on investigating relevant policy measures can be carried out at the basic- and prosecuting major cases. We must vigorously rectify level units. and resolutely overcome unhealthy practices in all de• Another basic policy of China is to protect the envi• partments, trades and professions, including violations ronment. In the next ten years and during the Eighth of the law or rules of discipline by law-enforcing depart• Five-Year Plan period, we must try to prevent and ments and supervisory institutions. We should fully control environmental pollution to improve the environ• exploit law-enforcement and supervisory departments in ment in many cities and other areas. We need to redou-

XV DOCUMENTS ble our efforts to publicize and explain the environmen• jective, we must resolutely continue to deepen the re• tal protection policy, universalize and push forward form and open more widely to the outside world. The environmental science and technology, and enhance the Draft Outline stipulates that during the next ten years, whole nation's awareness of the need to protect the we must adhere to the principle of combining a planned environment. Governments at all levels, various depart• economy with market regulation, and carry out compre• ments and enterprises and institutions concerned should hensive reform in a guided and systematic manner in strictly enforce the laws, statutes and policies relating to order to solve the major problems in social and econo• environmental protection, appropriately increase their mic activities and establish a preliminary, new structure investment in this area, and improve environmental for a planned socialist commodity economy. Basically management to meet the requirements of the transition we need to do the following: to a relatively comfortable life. —Preserve the socialist form of public ownership as 6. The need to consolidate and develop the great unity the main form of ownership, appropriately develop in• among China's nationalities. dividual economic activity and the private and other China is a unified, multi-ethnic country. The nation's economic sectors, and improve the ownership structure long-term stability and prosperity depend on the equal• consistent with the requirements of the development of ity, mutual assistance, unity, co-operation and common the productive forces. development of all its nationalities. For one reason or —Separate the functions and responsibilities of ad• another, most of the minority nationality regions remain ministration from those of management and ap• comparatively underdeveloped economically and cultur• propriately separate ownership of enterprises from their ally. To promote the common prosperity of all national• management; gtadually make the management in the ities, we should assist the minority nationality regions in overwhelming majority of the state enterprises socialist their economic and cultural development. At present, commodity producers as well as managers who are truly our nationalities are united, maintaining harmonious responsible for their own management decisions, profits relations among themselves. The specific problems that and losses, who practise self-restraint and develop on have cropped up in certain areas are primarily contrad• their own initiative; explore various effective ways to ictions among people who share identical fundamental realize an economy based on public ownership; and interests. They should be properly solved through demo• establish dynamic management systems and operating cratic consultation and by implementing and publicizing mechanisms. policies relating to minority nationalities. The Law on —Further improve the market for consumer goods, Regional National Autonomy must be unfailingly car• expand the market for the means of production and ried out and the rights of the autonomous areas to develop markets for funds, technology, information, self-government and the equal rights of minority nation• housing and labour services in order to set up and alities must be fully guaranteed and their customs and improve a unified market mechanism under the guid• habits respected. In addition, we must diligently carry ance and management of the state. —Straight^ out the distribution relationships be• out the policy of freedom of religious belief. We should tween the sfate, the collective and the individual and continue to imbue people with the importance of unity between the central and local authorities, in order to among nationalities through education, pay attention to form a rational pattern for the distribution of the na• overcoming and eliminating tendencies towards ethnic tional income, continue to use the income distribution chauvinism and regionalism, oppose efforts to divide the system with "to each according to his work" as the main Chinese nation and safeguard the unity of our mother• element, supplemented by other forms, and gradually land. improve personal income distribution system. This year marks the 40th anniversary of the peaceful —Make comprehensive use of economic, administra• liberation of Tibet. Democratic reform has been carried tive and legal means, especially price control, taxation, out in Tibet over the past 40 years and the seamy feudal interest rates and exchange rates, to regulate economic serf system overthrown. As a result, vast numbers of operation, and establish and improve an economic regu• serfs and slaves were emancipated, and world-shaking lating system which combines direct and indirect regu• changes took place in Tibet's society and economy. In lation and which is divided into two levels: that of the the next ten years, with the vigorous support of the central authorities and that of the provinces, autonom• whole nation, the people of all nationalities in Tibet will ous regions and municipalities directly under the Cen• work together to attain still greater success in developing tral Government. their economy and culture. Certain foreign forces have In line with these basic requirements, we should co• been trying to intervene in China's internal affairs in the ordinate the reform of enterprises, circulation, pricing, name of preserving Tibetan "human rights" in their vain finance, taxation, banking, foreign trade, planning, in• attempt to divide China. This is something absolutely vestment, labour and the wage system, housing, medical unacceptable to the Chinese nation, including the Tibe• care and social security. tan people. The Draft Outline proposes that we take another ten years to set up the initial form of a new economic structure. This is longer than we had originally planned. V. Economic Restructuring and However, this does not mean that we can relax our Opening to tlie Outside World reform efforts in the slightest. Instead, it shows that In order to accomplish our second-step strategic ob• after analysing our experience gained over the past ten xri DOCUMENTS years or so we have arrived at a clearer and deeper have by and large arrived at a common understanding understanding of the complications and difficulties in• about the combination of a planned economy with mar• volved in carrying out the reform. We cannot copy the ket regulation. model or experience of other countries in reform. We 1. Planning can help maintain proportionate develop• have to proceed from the actual conditions of our coun• ment of the national economy with respect to the differ• try to seek a realistic road to improve and .develop the ent sectors and a rational allocation of resources and socialist system through practice. This reform will have avoid anarchy. It serves to mobilize and muster the to undergo repeated experimentation, supplementation financial and material resources necessary for the con• and improvement before it can succeed in the end. We struction of important projects and prevent wasteful, may make mistakes along the way, but we must correct duplicated construction of major projects. And, it can them without delay and then continue our advance. For better regulate the distribution of income so that social this purpose, we have to constantly review our experi• justice can be maintained on the way to common pros• ence. We must carry forward the enterprising spirit and perity. be courageous to explore new ways, make use of every Market regulation facilitates competition, allows su• minute to push forward the reform, yet we must not do perior quality to triumph over inferior quality, and it haphazardly or become impatient for quick results. encourages enterprises to produce what the market We should continue to apply the experiences and tradi• needs and to upgrade their technology and managerial tional ways which have worked out successfully before skills. The purpose of combining a planned economy and, at the same time, keep making innovations and with market regulation is precisely to fully exploit the breakthroughs. In future, we must combine reform with advantages and strong points of both elements and development more satisfactorily. The methods we use or further develop the productive forces. Since the introd• the steps we take must serve to solve the outstanding uction of reform and the open policy, China has been problems and contradictions for the benefit of imme• exploring ways to handle this combination. Practice has diate and future economic growth, laying a foundation demonstrated that this principle is consistent with con• for sustained, stable and co-ordinated development of ditions in China and therefore is correct. A planned the national economy. economy and market regulation must and can be com• At the same time, when planning economic develop• bined. We should not have any more misgivings or ment, we should also have in mind the need to create a hesitation about this when we formulate or implement favourable environment for deepening the reform. The policies. The question now is not whether we are able to various reforms should be based on an overall plan. or should combine them, but how better we can combine While the emphasis may be laid on one particular field them. for a certain period of time, others area should not be 2. We should not assume that a planned economy neglected, so that no single area proceeds too far beyond utilizes only mandatory plans. Both mandatory and the rest. Before we decide to take any reform measures, guidance plans are concrete elements of a planned econ• we must consider whether the country, the enterprises omy. As economic restructuring deepens, the economic and the people can bear them, in order to avoid a violent structure improves and the market matures, we should shock in the community. They are not to be judged on appropriately reduce the items covered by mandatory abstract principles or models but on whether they can plans and expand those covered by guidance plans, promote the development of the productive forces or giving more reign to market forces. The planning and contribute to social stability and progress. We already management departments must act in line with the laws have a wealth of experience from the 1980s and have governing proportionate economic development and the acquired a clear understanding of the general objectives law of value, take into account the relationship between and basic policies and principles for reform. If we can market supply and demand and make market regulation proceed vigorously and steadily over the next ten years, function in agreement with the overall plan of the state, it is very likely we will be able to establish an initial its statutes and regulations. economic structure and operating mechanism that com• 3. Generally speaking, planning plays the major role bine a planned economy with market regulation and in setting targets for economic growth, controlling total meet the requirements for development of a planned supply and total demand, readjusting economic struc• socialist commodity economy. This is a historic mission, ture and geographical distribution of major sectors of which has a bearing on the destiny and success of our the economy, and controlling other important economic socialist cause and which we have the resolve and ability activities which have a bearing on the overall situation. to accomplish. Most production activities and operations in enterprises, Now, I wish to discuss a few problems which we ordinary technological upgrading and small-scale con• should concentrate on solving in the course of economic struction projects are to be regulated by market forces. restructuring. 4. The main tasks for the state in making plans for First, we must continue to seek concrete ways to com• exercising management and providing guidance are ra• bine the planned economy with market regulation. As tionally defining the orientation for national economic required by a planned commodity economy, establishing development, devising plans and setting targets for a mechanism that combines a planned economy with macro-control, establishing the correct policies for in• market regulation represents our basic orientation for dustrial production in various regions and for other deepening economic restructuring. From our many economic activities, ensuring a good balance in the na• years of theoretical study and practical experience, we tional economy, co-ordinating proportionate develop-

XVII DOCUMENTS ment of the major sectors of the economy, and systemat• system. The relationships between the state, the enter• ically guiding and regulating the operation of the econ• prise and the individual and the relationship between omy by financial, legal and administrative means. accumulation and consumption need to be handled suc• The above is a general observation. The combination cessfully, so that the enterprises are able to reinvest of a planned economy with market regulation will take more of their funds in upgrading technology. We also different forms and cover different items in different need to improve the depreciation system and the system areas or facets of economic activities. For example, in relating to retained profits. During the period of the the areas of production and circulation, guidance plans Eighth Five-Year Plan we should continue to use or market regulation should apply to the manufacture and improve the present contract responsibility sys• and distribution of the large amount of ordinary indus• tem, while experimenting with the system which re• trial and agricultural products. Mandatory plans are quires payment of tax plus a percentage of profits to the adopted only to cover the manufacture and circulation state, and payment of tax before loan repayment or any of a few major products that have a bearing on the retention of profit. national economy and people's livelihood and thus must (2) Persist in separating the functions of administra• be allocated and distributed by the state, whereas the tion from those of management and appropriately se• rest should be subject to guidance plans or market parating ownership from management authority. Pro• regulation. claimed laws, statutes and policies which are designed To give another example, the amount and pattern of to reinvigorate the large and medium-sized enterprises fixed assets investment in construction and the construc• must be further implemented and the decision-making tion of key projects and their locations are to be deter• power of the enterprises must be fully respected and mined by the decisions and plans of the central and local guaranteed. The actual methods for separating owner• governments, while the use of investment, project design ship from management may vary in line with the nature and construction management should be subject to the of the industry in question and the scale and technical competitive forces of the market. Under the guidance of characteristics of a particular enterprise. We should the state plan and industrial policies, other projects for continue to carefully experiment with the leasing and upgrading technology and small-scale construction pro• share-holding systems which have emerged during the jects should be regulated by the market. reform and constantly evaluate our experience. In par• For still another example, while the prices of a few ticular, this should be done in enterprises whose shares important commodities and labour services are fixed by are under state control or whose shares are purchased by the state, any price adjustment should be consistent with government departments, local authorities or other en• the law of value and the changes in market supply and terprises. We should also improve the management of demand; the prices of many other commodities and state-owned assets and systematically establish a man• labour services should be subject to market regulation. agement system and methods compatible with a planned In short, neither the composition nor the scope of the socialist commodity economy. combination of a planned economy with market regula• (3) Develop enterprise groups. It is necessary to for• tion are immutable. Both are subject to constant read• mulate concrete policies and measures to promote reor• justment and improvement in light of changes in the ganization and grouping of enterprises in order to practical situation for the purpose of further promoting achieve a rational enterprise structure. On the basis of the reform. equality, mutual benefit and voluntary participation, a Second, we must further revitalize state-owned large number of inter-regional and inter-departmental compe• and medium-sized enterprises. This is a key link in our titive groups of enterprises should be established, and effort to deepen economic restructuring. The state- tightly organized groups should be encouraged. owned large and medium-sized enterprises provide the (4) Deepen the reforms of the leadership structure main source of revenue for the state and form the most and operating mechanisms of enterprises and improve important pillar or backbone for China's modernization enterprise management. It is essential to uphold and programme. At present, they are carrying a heavy bur• improve the contract system, under which the factory den and are beset by many difficulties, and many rela• director assumes full responsibility, and correctly han• tionships remain to be straightened out. Our ability to dle the relationships between the factory director (man• revitalize these enterprises, make the best of their lead• ager) on the one hand and the Party committee and ing role and arouse the workers' interest in production workers conferences on the other. We should ensure that has a direct impact on the growth of the national econ• the director exercises his functions and powers in oper• omy and the consolidation of the socialist system. Suc• ation and management, make the Party organization cess in economic restructuring will also largely depend function as a political nucleus, wholeheartedly rely on on the results of the reforms in these enterprises. There• the working class and strengthen the supervisory role of fore, beginning this year we must concentrate all our the workers conference in an enterprise. We should efforts on this area, taking effective measures for im• improve democratic management and the personnel, proving the external environment and internal manage• labour, wage, distribution of retained profits, account• ment, so as to help the enterprises to overcome their ing and auditing systems, discontinue the practices of practical difficulties and enable them to become notice• "everyone eating from the same big pot" in distribution ably more vigorous in a relatively short time. This and of allowing the larger part of retained profits to go requires that we first do the following: to individuals, and overcome lax discipline. (1) Improve and develop the contract responsibility (5) Lighten the burden on enterprises and forbid xvin DOCUMENTS saddling them with indiscriminate charges or fees. must be able to concentrate an appropriate amount of Third, we must actively promote reforms in housing and financial and material resources to tackle major prob• the social security system. During the Eighth Five-Year lems of nationwide concern. This does not at all mean a Plan period, we should speed up these reforms in line return to the old practice excessive centralization. It with the principle of sharing the burden among the state, means instead a proper combination of necessary cen• the collective and the individual. We should gradually tralization with appropriate decentralization. The cen• reform the practice of providing low rent and free tral authorities should consider and co-ordinate the in• distribution and urge all sectors of society to help acce• terests of the local authorities which in turn should lerate the construction of residential units, with a view consider the interests of the whole country—both aim to to improving the people's living conditions. We shall give more play to the superiority of the socialist system systematically set up a pension system for different and accelerate the modernization process. types of workers and office staff as well as self-employed We should continue to implement and improve the pol• workers in cities and towns. Employment-pending insur• icy of opening to the outside world. After ten years of ance will be broadened. In light of different conditions work, China has established an overall pattern for open• in different rural areas, we should provide guidance for ing to the outside world in every way. In our effort to the gradual establishment of a scheme consisting of expand economic and technology exchanges with other different types of old-age pensions. The systems of free countries in a more and more complicated international medical care and workers benefits including medical environment and increasingly more competitive world care should be reformed and perfected in order to im• economy, the most important thing for us to do is to pay prove the quality of medical care and reduce waste and greater attention to quality and efficiency and do a losses. We should continue to encourage all sectors to better job in the areas of foreign trade, utilization of raise funds to run hospitals and to carry out the system foreign capital and the introduction of technology and of community-sponsored medical insurance in the coun• intellectual resources, while at the same time maintain• tryside. Industrial injury insurance and welfare systems ing steady growth. should be established and improved, and the legitimate We should focus on improving the mix and quality of rights and interests of the handicapped should be pro• exports. We have started to change our main exports tected. from primary products like raw materials to manufac• Successful reform of the housing and social insurance tured goods, with manufactured industrial products now systems is essential to guiding rational consumption, comprising more than 70 percent of the total export deepening enterprise reform and guaranteeing people's volume. Our future task is to gradually change the main wellbeing. Thus it is also essential to adjusting the unfair exports from extensively processed products to inten• distribution of wealth, maintaining social stability and sively processed products. We must increase the export promoting reforms in other fields of endeavour. Reform of machinery and electronic, light industrial, textile and of these two systems will involve thousands upon thou• high-technology products, which have higher added val• sands of families and will directly affect people's imme• ue. We must encourage the export of competitive prod• diate interests. Therefore, we should analyse our exper• ucts which have good prospects for development on the ience gained in running the current pilot cases, take into world market. We must earn more foreign exchange account local conditions and give detailed guidance in mainly by raising the quality, world standing and repu• order to make steady progress. tation of our exports. We should vigorously expand Fourth, we must increase the state's capacity for macro- international tourism, increase the export of labour ser• economic regulation and control and correctly manage the vices, undertake contracted projects and make overseas relationship between the central and local authorities. investments to earn more foreign exchange from invisi• Since the introduction of reforms, we have altered the ble trade. Efforts should be made to consolidate the once excessive centralization of the central authorities existing markets, develop new ones and extend economic by delegating power to lower levels and letting them and technological co-operation and exchange with neigh• retain a proportion of profits. This has proved to be a bouring countries. To meet the needs of our develop• correct approach since it has helped arouse the enthu• ment and sustain normal trade ties with other countries, siasm of the local authorities, enterprises and working we should maintain an appropriate volume of imports individuals for production. However, because power and readjust the mix of imports, spending our limited was not delegated appropriately in some areas, macro- foreign exchange earnings on importing advanced tech• control was not introduced early enough, some reform nology and key equipment. measures were not introduced in a well-planned manner, To better utilize foreign funds, we must improve and power over some economic activities was overly existing laws and statutes and the investment environ• decentralized, the state's share of total national income ment . We should provide proper guidance for foreign and the central financial departments' share of total investment and encourage the establishment of export- revenue have decreased, causing a weakening of the oriented, foreign-exchange-earning enterprises and en• state's ability to exercise macro-control. This trend is terprises using advanced technology and the con• still evident, and the imbalance between revenue and struction of large and medium-sized projects in basic expenditure continues to worsen. industries and infrastructure-all in line with the state's For the sake of both developing the economy and industrial policies. We should see to it that foreip deepening the reform, we need to formulate any neces• investment is absorbed for accelerating the updating of sary policies and measures, and the central authorities enterprises, in order to promote technological progress

XIX DOCUMENTS in China's traditional industries and the updating and continue to grow, some political, economic and ethnic upgrading of products. contradictions, which had been hidden from the eyes of We shall take full advantage of the superior position the world, are becoming more pronounced and new of the coastal regions in opening to the outside world power imbalances have given rise to new strife. Further• and further develop the export-oriented economy to more, the gap between North and South in terms of stimulate the economic growth of the country as a wealth is still widening. With the old and new troubles whole. During the period of the Eighth Five-Year Plan, in the world being intertwined, the international situa• while improving management of the existing special tion has become all the more turbulent and volatile. economic zones, open cities and regions, we should con• The Gulf situation exerts a heavy influence on the centrate on developing and opening up the New Pudong entire world situation. In August last year Iraq invaded District in Shanghai. We must maintain the stability and and annexed Kuwait, after which the US-led multina• continuity of the open policy and policies which have tional forces were immediately deployed in the Gulf. been introduced, except for making small improve• The world community did its best to find a peaceful ments. Taking into consideration both the overall condi• solution to the Gulf crisis and prevent the outbreak of tion of the national economy and local advantages, war, but regrettably, all efforts failed, and the war the local authorities should define the proper direc• finally became a reality. tion, priorities and pattern for economic development in The Chinese government has taken a consistent, clear- their regions. They should develop their special indus• cut and responsible stand on the Gulf crisis. We have tries, helping bring about a rational geographical divi• expressed our resolute opposition to Iraq's invasion and sion of labour. annexation of Kuwait, and demanded unconditional withdrawal of the Iraqi troops and restoration of Ku• We have made major reforms in the management wait's independence, sovereignty, territorial integrity system of foreign trade to meet the needs of the open and legitimate government. In addition, we called for a policy and the development of foreign trade. While peaceful solution to the crisis because war would bring continuing to take advantage of the initiative of the nothing but calamity to the Gulf and Middle East, central and local authorities and of enterprises, we shall plunging the people in the region into an abyss of misery gradually introduce unified policies, fair competition, and death and inflicting enormous damage on their independent management, profit and loss responsibility, economy. After the Gulf war broke out, we strongly production coordinated with marketing, a system of urged the parties concerned to exercise the greatest export and import agents and a unified approach to possible restraint and expressed our support for all the trade relations with foreign countries. This reform, endeavours of the international community to find a which is of great significance to the stable development peaceful settlement to the Gulf crisis in order to prevent of our foreign trade, must be implemented in a carefully the spread and escalation of the war. We feel pleased organized way. with Iraq's unconditional withdrawal of its troops from Kuwait and the restoration of Kuwait's independence, sovereignty, territorial integrity and legitimate govern• VI. The International Situation and Our ment. Hereby we extend our congratulations to our Diplomatic Work friends; the Kuwaiti people, and we hope that they can Along with our tremendous achievements in reform, soon heal their war wounds and succeed in rebuilding opening to the outside world and our modernization their homeland. For now, the Gulf war flames have died drive, we have also made significant progress in our out, but the realization of final peace still requires relations with other countries. Persisting in our indepen• enormous efforts. China holds that matters in the Gulf dent foreign policy of peace, we have helped to create an should be addressed mainly by the countries in the external environment favourable to our socialist moder• region through consultation, that the independence, sov• nization drive and have done our share to contribute to ereignty and territorial integrity of the Gulf countries world peace and stability. should be respected and that the internal affairs of each The first year of this decade witnessed a sudden country should be handled by the country's people them• change in the international situation. The old world selves. We also believe that all foreign troops should be structure, which had lasted for over four decades, disin• withdrawn from the Gulf and that the UN Security tegrated and a new one has yet to take shape. The world Council should play its due role in making post-war is now in a period in which the old world pattern is being arrangements for the Gulf. China is ready to join the replaced by a new one. international community in a continued effort to realize Over the past year, US-Soviet relations have become peace in the region and is willing to expand friendly more relaxed, military confrontations have eased some• relations and co-operation with all Gulf countries. what, and the world is moving towards multi- Tension in the occupied territories of Palestine has polarization. Some regional conflicts have dissolved or also been a major concern to the international commun• hold out the prospect of political settlement. These are ity. Developments in the Gulf situation have had a welcome developments. However, the harsh reality is serious impact on the political settlement of the Middle that the world we live in is not trouble-free, and the East question. The Chinese government and people have peace and development that the people in the world have always supported the just cause of the Palestinian and been longing for are still facing serious challenges. In Arab people. It is our view that since the Gulf war has addition, hegemonism and the use of power politics ended, the Middle East question should be put on the XX DOCUMENTS agenda and an early, just and reasonable solution to the traditional ties of friendship with the South Asian coun• issue should be worked out, so that a long-lasting peace tries of Pakistan, Bangladesh, Nepal and Sri Lanka can be realized in the Middle East. Israel should with• have been developing and areas of co-operation between draw from all Arab territories under its occupation. China and these countries are continuously expanding. The legitimate national rights of the Palestinian people Relations between China and India have noticeably should be restored. The State of Palestine and the State improved; the establishment of sustained and stable of Israel should recognize each other. All Middle East friendly relations not only conforms to the fundamental countries, including Palestine and Israel, should coexist interests of our two peoples but contributes to peace and in peace and harmony. We support the convocation of stability in the whole region. an international conference on the Middle East question The international community has made major pro• under the auspices of the United Nations with the gress in its efforts to bring about political settlement of participation of the five permanent members of the the Cambodian question, which is now moving towards Security Council and all the parties concerned. We also final settlement. However, there are still bound to be support all forms of dialogue by the parties concerned some difficulties and complications ahead. It is our hope in seeking a political settlement of the question. that Hanoi and Phnom Penh will consider regional Fellow Deputies, peace and stability and the fundamental interests of the Over the past year we have made some progress in the Cambodian people and follow the trend of recent devel• area of foreign relations, bringing about a better situa• opments to adopt a realistic attitude favourable to the tion and further enhancing our international standing. settlement of the Cambodian question at the earliest We have restored diplomatic relations with the Re- date. China is ready to join the international community pubhc of Indonesia and have established diplomatic ties in continued efforts to find an early, fair, reasonable and with the Republic of Namibia, the Kingdom of Saudi /comprehensive political solution to this question within Arabia, the Republic of Singapore and the Republic of the framework of relevant UN resolutions. Along with the Marshall Islands. the progress in the political settlement of the Cambodian Placing the focus of its diplomatic work on the devel• question, the relations between China and Viet Nam, opment of r^'lations with the surrounding countries, the which have already begun to thaw, will be gradually Chinese government has done a great deal towards esta• restored. blishing and consolidating friendly relations with Chi• Since their relations were normalized, China and the na's neighbours, thus ushering in one of China's finest Soviet Union have made progress in their relations. The periods in terms of its overall relations with its neigh• Sino-Soviet border negotiations have made some head• bours since the founding of the People's Republic. way and negotiations on mutual reduction of military The traditional friendship between China and the forces in Sino-Soviet border areas and confidence- Democratic People's Republic of Korea has been further building in the military field have produced positive consolidated and developed. We support the proposals results. China and the Soviet Union are close neighbours put forward by the Democratic People's Republic of sharing about 7,000 kilometres of border. To main• Korea for the self-determined and peaceful reunifica• tain a normal bilateral relationship and develop good- tion of Korea. The talks between the premiers of North neighbourly and friendly relations between the two and South of Korea should help improve the relations countries is of vital importance to both countries. On the between the two sides. We hope that the parties con• question of how we should build our respective nations, cerned will continue their positive efforts for the relax• the two countries should adopt an attitude of non• ation of tension and the promotion of stability on interference, respecting the choice made by the people the Korean peninsula. China's exchange of non• of each country. As long as we abide by the spirit governmental trade offices with South Korea will facil• embodied in the Sino-Soviet Joint Communique, friend• itate the development of non-governmental trade and ly relations and co-operation between the two countries economic relations between the two sides. Since China's will continue to develop. relations with the People's Republic of Mongolia and The Chinese government has always attached great Laos were normalized, our bilateral exchange and co• importance to developing friendly relations and operation with these two countries have expanded. We co-operation with Japan. It views as positive Japan's have maintained good-neighbourly and friendly rela• move to take the lead in resuming economic co• tions with Myanmar. We have continued our policy of operation with China. Sino-Japanese relations have now developing friendly relations with the ASEAN countries been basically returned to normal. Continued con• and strengthened our co-operation with them for the tact, enhanced mutual understanding and expanded maintenance of peace in the region. China's friendly co-operation and exchange between our two countries in relations with Thailand, Malaysia and the Philippines all areas conform to the fundamental interests of our have undergone considerable development. In restoring two peoples and will contribute to peace and develop• and establishing diplomatic relations with Indonesia and ment in the Asia-Pacific region. It is our belief that as Singapore, China has not only broadened friendly rela• long as the two sides strictly observe all the principles tions with these two countries, but brought its relation• contained in the Sino-Japanese Joint Statement and ship with the ASEAN countries into a new stage of Friendship Treaty, friendly relations and co-operation comprehensive development. We are hoping to establish between the two countries will develop smoothly. Both and develop friendly relations with Brunei on the basis the Chinese and Japanese peoples should maintain their of the Five Principles of Peaceful Coexistence. Our vigilance against the attempts of a handful of people to

XXI DOCUMENTS revive militarism in Japan. Peaceful and friendly coex• affairs, and equality and mutual benefit. istence from generation to generation conforms to the The Chinese government has always considered rela• fundamental interests of the two peoples. tions between China and the United States to be impor• The XI Asian Games held in Beijing last year was a tant. A normal and sound relationship is not only bene• crowning success. This not only served to increase the ficial to the two countries but also instrumental in cohesion of the Chinese nation, display the people's enhancing stability in the Asia-Pacific region and the patriotic spirit and demonstrate the advantages of the whole world. Both China and the United States benefit socialist system but also helped cement the friendship from the development of trade relations between the two and unity between the athletes and peoples of China and countries. Should the United States unilaterally revoke other Asian countries and enhance China's international China's most-favoured-nation status, it would not only reputation. be detrimental to Sino-American trade relations, but One of the key elements of our foreign policy is to also harm the interests of a number of other countries continuously strengthen the friendship, unity and co• and regions. We would not want to see this happen. Last operation between China and the rest of the third world. year the foreign ministers of the two countries met more The past year has seen a frequent exchange of visits than once to discuss major international issues and between the leaders of China and other third world bilateral relations. Such contacts have helped enhance countries, and there has been marked progress in our mutual understanding and restore bilateral relations. traditional friendship, unity and co-operation with We hope that both sides will abide by the principles Arab, African and Latin American countries. We sup• contained in the three Sino-US Joint Communiques and port African countries in their efforts to safeguard state bring Sino-US relations back to normal at the earliest sovereignty against external interference and to choose date possible. their own political systems and course of development China's relations with Canada, Australia and New in the light of their respective national conditions. We Zealand have improved, with increased political con• support their joining together for strength and promo• tacts and growing co-operation in trade and economic tion of economic integration in Africa. We support the development. We believe that through joint efforts, just struggle of the South African people and welcome friendship and co-operation between China and these the recent positive developments in South Africa. We three countries will develop steadily. hope to see an early abolition of apartheid, achievement The Chinese people and the people of the East Euro• of a political settlement and establishment of a new, pean countries have maintained their traditional friend• unified and democratic South Africa where people enjoy ship and long-standing co-operation, and normal con• racial equality. We also hope that national reconciliation tacts and exchanges continued in the political and eco• and unity can be achieved in Angola and Mozambique. nomic fields and in science and technology and culture. In light of the changed international situation, Latin We are willing to continue to maintain and promote our American countries have continued their efforts to find relations with them on the basis of the Five Principles a way of development suited to their respective national of Peaceful Coexistence. conditions and to jointly promote regional unity, in Over the past year, China, as a permanent member of addition to playing an important role in international the UN Security Council and an important member of affairs. We support the reasonable propositions and just the international community, has played a unique role demands of these countries. The state visit by Chinese in securing the political settlement of regional conflicts President Yang Shangkun to five Latin American coun• and promoting international co-operation. It has taken tries last May marked a new stage in the development an active part in the international conferences and ac• of relations between China and Latin American coun• tivities in the field of disarmament and has done its tries. share to deter the arms race and promote arms reduc• China's relations with the European Community and tion. The draft resolutions on "nuclear disarmament" the West European countries are moving towards nor• and "conventional disarmament" which China has sub• malization, with political contacts and co-operation in mitted to the UN Gerif'-al Assembly each year for the fields of economy, trade, science and technology, five consecutive years have been adopted by consen• education and culture being gradually resumed. As sus. China has increased its participation in and contri• there is no conflict of fundamental interests between bution to international co-operation aimed at preserving China and the West European countries, there are broad the ecological environment, protecting the interests of prospects for the development of long-term and stable disabled people and preventing drug abuse. On the ques• friendly relations. This will be particularly true in the tion of human rights, we have succeeded in safeguarding coming decade when China will be undertaking large- China's sovereignty and dignity by adhering to correct scale economic construction. There is much that China principles. In their attempt to interfere in the internal and the West European countries can do in economic affairs of other states and impose pressure on small and co-operation and technology exchange. The Chinese gov• weak countries under the pretext of their so-called hu• ernment is willing to contribute its share to further man rights issues, a handful of countries have severely restoring and developing its friendly relations and co• disrupted international co-operation in the field of hu• operation with the European Community and all West man rights, deteriorated international relations and European countries on the basis of seeking common impeded efforts to protect human rights. These irregular ground while maintaining differences, mutual respect practices must be rectified. for sovereignty, non-interference in each other's internal North-South imbalances have become more and more

XXII. DOCUMENTS glaring as a result of the irrational international econo• weak or poor countries. International affairs should mic order and the recent drastic changes in the world be handled by all countries through consultation on situation. Many third world countries are facing such an equal fooling, and their handling should not be pressing problems as unprecedented crushing debt, wor• monopolized by one or a few big powers. No coun• sening terms of trade and capital flight. China has tries shall seek hegemonism or practise power poli• consistently supported developing countries in their ef• tics. forts to strengthen South-South co-operation and prom• —The old international economic order must be ote North-South dialogue. We hold that the developed replaced by a new one characterized by fairness, countries should also take on their responsibilities and reasonableness, equality, mutual benefit and ex• contribute their share towards improving the interna• change of equal values. tional economic environment, and in particular towards resolving the issue of external debt in developing coun• Needless to say, such an international order, which tries. conforms to the aspirations and fundamental interests of As the old world structure gives way to a new one, the people of all countries, will help bring about a lasting people are increasingly concerned about peace and de• world peace and facilitate the development of all coun• velopment in the world of the future, and the establish• tries through their own efforts. ment of a new world order in partictilar. The more than The establishment of a new international political and four decades since World War II have demonstrated and economic order is a great, arduous and history-making the future will continue to demonstrate that hegemon- event. The Chinese government and people are ready to ism and the use of power politics are doomed to fail. work persistently with the governments and peoples of Comrade Deng Xiaoping pointed out as early as 1988 all other countries for the gradual accomplishment of that it was necessary to establish a new international this historic mission. economic order as well as a new international political The next decade will be one of vicissitudes in the order. The Chinese government holds that the Five international situation. It is also a pivotal decade in Principles of mutual respect for sovereignty and territo• history, as mankind marches into the 21st century. Pro• rial integrity, mutual non-aggression, non-interference ceeding from the fundamental interests of the people of in each other's internal affairs, equality and mutual China and the world, the Chinese government will, as benefit and peaceful coexistence summarize the basic always, steadfastly commit itself to creating a peaceful norms governing international relations. They conform international environment favourable to China's moder• to the purposes and principles of the United Nations nization drive. We will continue to develop friendly Charter and reflect the essential characteristics of inter• relations and co-operation with all other countries. We national relations. We are of the view that a new inter• firmly believe that the world wants peace, that mankind national order should be established on the basis of the wants development and that our era will continuously Five Principles of Peaceful Coexistence. It should com• witness advancement in a direction favourable to man• prise a new political order and a new economic order, kind. which form an integral whole, the two being closely Fellow Deputies, interrelated and complementary. In essence, the new We shall firmly promote economic and cultural ex• international order means that all countries, big or change between the two sides of the Taiwan Straits and small, strong or weak, rich or poor should all be inde• work to advance the great cause of peaceful reunifica• pendent and sovereign states and equal members of the tion of the motherland in accordance with the principle international community. It should be entirely different of "peaceful reunification, and one country, two sys• from the old order based on a very few big countries' tems." hegemonism and power politics. It is our view that the Recently, the Taiwan authorities have, on more than essential contents of the new international order should one occasion, made remarks concerning reunification of include the following conditions: the motherland and prepared to adopt some concrete —Each and every country has the right to indepen• measures to help develop relations between the two dently choose its social, political and economic sys• sides. All this we welcome. However, we could not fail tems and course of development in light of its to notice that the Taiwan authorities have not yet aban• domestic conditions. No country, especially none of doned their position of "one country, two governments," the big powers, should interfere in the internal af- that they have continued to pursue "elastic diplomacy" • fairs of another country, nor should it seek to impose in the international arena and that they still restrict its own values, ideology or development model on direct links for postal, air and shipping services and others. trade, as well as bilateral exchanges. Compatriots on —All countries must show mutual respect for sover• both sides of the Straits are eager to see further devel• eignty and territorial integrity. No country should opment of the laudable tendency towards increased ex• invade or annex another country under any pretext. change between the two sides, which has been occurring International disputes should be resolved rationally in recent years, and an earlier elimination of man-made through peaceful negotiation rather than the use or obstacles to these "three links." We hope that the Taiwan threat of force. No international disputes are to be authorities will continue to do more practical things to settled by means of war. facilitate direct links for postal, air and shipping services —In international relations, no big, strong or rich and trade, bilateral exchange, and reunification of the countries should coerce, humiliate or bully small. motherland. The Chinese Communist Party has long

XXIII DOCUMENTS expressed its willingness to hold talks with the Chinese We should resolve to safeguard the unity of the people Kuomintang on an equal footing at the earliest possible of all our nationalities as well as the hard-won political date. The two parties may discuss the country's reunifi• stability and unity. These are basic guarantees for our cation or hold consultation on questions concerning the economic growth and social progress. Unity creates relationship between the two sides of the Taiwan Straits, strength. We must work to preserve our unity and stabil• including any issue of concern to the Taiwan authorities. ity the way we protect our eyes. The CPC is also ready to communicate with all parties, We should resolve to carry on our fine tradition of organizations, and public figures from all circles in hard work and devote ourselves to all our undertakings. Taiwan in order to increase mutual understanding and We should overcome all the difficulties in a firm, in• discuss the administration of state affairs. We welcome domitable, unyielding and pioneering spirit while we our Taiwan compatriots' enthusiastic participation in continue to forge ahead. the mainland's modernization programme and shall con• We must always bear in mind the overall situation tinue to make this convenient' for them. For projects and interests of the country, courageously undertake our covered by the mainland's industrial policies, they will commitments and responsibilities and make greater con• enjoy preferential treatment as stipulated in those poli• tributions than ever before. In everything we think and cies. do, we should proceed from the overall and long-term Hong Kong and Macao will return to the motherland interests of China's more than one billion people, consi• in 1997 and 1999 respectively. In the Basic Law of the dering both the immediate interests and the long-term Hong Kong Special Administrative Region of the Peo• interests, and both the local interests and the overall ple's Republic of China, the principles and policies of interests. the Chinese Government towards Hong Kong are insti• We should resolve to enhance our sense of discipline, tutionalized in the form of law. The law provides a strictly enforcing all orders and prohibitions. We should fun(lamental guarantee for the region's stability and also ensure that all laws, statutes, principles, policies, prosperity after China's resumption of sovereignty over plans and measures which have proved effective, be the region. The drafting of the Basic Law of the Macao implemented to the letter and spirit, so that our work in Special Administrative Region is underway and is ex• every field can proceed in an orderly and sound manner. pected to be completed in 1993. It will then be submitted In order to fulfil the Ten-Year Development Pro• to the National People's Congress for examination and gramme and the Eighth Five-Year Plan and reach the approval. The Chinese Government has been taking second-step strategic objective, all functionaries, espe• positive steps to ensure stability and prosperity in Hong cially the leading cadres at the various levels of govern• Kong and Macao and has been making earnest efforts to ments, including first and foremost the State Council effect a smooth transition and a smooth transfer of and its subordinate ministries and commissions, must power in the two regions. Towards this end, it is ready try hard to perform their duties hoaestly, work assi• to foster its co-operation with the British and Portuguese duously and conscientiously for the pubUc interests and governments on the basis of the Sino-British Joint De• effectively improve their work styles. They must whole• claration and the Sino-Portuguese Joint Declaration res• heartedly serve the people and completely rely on the pectively. people, and carry out all their assignments to the best of We are convinced that our compatriots in Taiwan, their abilities. Hong Kong and Macao and those living abroad also love Reviewing the past and looking to the future, Chinese China and are willing to contribute to the peaceful people of all nationalities are full of confidence and reunification and modernization of their motherland. hope. We must rally more closely around the CPC Let us all join hands and work for this purpose. Central Committee with Comrade Jiang Zemin at its Fellow Deputies, core, unite and work with one heart and one mind in Though it represents an arduous task, the national accomplishing the magnificent tasks laid out in the economic and social development planned for the next Ten-Year Development Programme and the Eighth decade can be attained through our diligent efforts. Five-Year Plan and in making China prosperous and Fulfilment of the Ten-Year Development Programme strong. and the Eighth Five-Year Plan is a historic mission Our objectives must be attained! entrusted to us by the times. Our objectives shall be attained!

XIV CHINA from second place in the output capacity, technical level and tion. During the decade, China of cereals and cotton to fiht scientific development capacity completed more than 100,000 place; from third place in the of industrial goods increased important state-level scientific output of coal, pork, beef and dramatically. As the investment and technological projects and mutton to first place; from fifth in fixed assets totalled 2,774.3 1,700 of the nation's inventions place in the output of steel to billion yuan, a large number of won state awards. New break• fourth place; and from sixth key projects were finished, ad• throughs were made in high- place in power output to fourth ding a reserve force to the de• energy physics, computer tech• place. velopment of the national econ• nology, carrier rocket and satel• Every economic sector in omy. lite communication technology, China had a more balanced de• Breakthroughs in China's For• some of which met or ap• velopment. China's total rur• eign Economic and Technologi• proached advanced world level. al social output increased cal Exchange. During this de• The rate of universal primary 3.6 times, an average annual cade, China rose from its 2Sth school education rose from 20 growth rate of 13.7 percent, position in world export value to 76 percent. A total of 4.23 while the output of chief farm to 14th place, establishing trade million university and college produce registered an all-time relations with more than 180 students and 198,000 postgrad• high. The rapid growth of rur• countries and regions through• uate students were trained dur• al non-agricultural businesses out the world. In the past de• ing the decade. In addition, centred around township enter• cade, it used a total of US$68 there was rapid development in prises blazed a road of indus• billion in foreign capital arid other forms of education. trialization and modernization imported more than 10,000 adv• Living Standards Improved Not• in rural areas. The country's to• anced technological items. iceably. During the decade, the tal industrial output value rose Marked Progress in Science, real level of consumption in• 3.3 times, and the productive Technology, Culture and Educa• creased on an average of 5.9

Chart 2: Total rural output value Composition of total rural Total agricultural (billion )Tian) i^25.3 output value (%) output value (billion yuanK

Agricultural 192.3 Non-agricultural^

1980 1990 1980 1990 Grain j- (million tons) Cotton Oil-bearing ^ (million tons crops . 1980 1990 (million tons) 325.02 2.707 7.691

1980 1990 1980 1990 1980 1990 Sugar-bearing Aquatic crops Pork, beef and 55 products (million tons); mutton, (million tons) (million tons)

29.112 12.054 4.5 1980 1990 1980 1990 1980 1990

BEIJING REVIEW, APRIL 15-21, 1991 15 CHINA Chart 3: Total industrial output value (billion yuan) 2,385.1 Output of Major Industrial Products (billion metres) Machine-made Bicycles Television Washing machine Cloth paper and paper (million (million sets): (thousand)^ 18 board 13.47 31.41 26.62 6,526 5.35 13.02 2.49 245 (million tons) Household Camera Ra coal Crude oil Electricity (million tons)3 refrigerator^ (thousand)! (million tons)! (billion lcwl))3 Proportion of Light industry 1,080 138 4,754 372.8 1,899 105.95 618.0 and heavy industry 49 620 300.6^ (thousand) 1980 m Steel m Cement Chemical Generating Motor vehicles fertilizer? equipment^p (milUon tons)| (million tons)J (thousand)^ 1990 r-— [ 203 n.43 509.1 12.32 222.3 37.12 79.86','^ m 4.193 Light industry heavy industry u I I (million19.1 tons2 ) (million l(w)

Chart 4; percent annually, notice• Apace. The transportation Passenger transportation ably higher than the aver• capacity developed rapid• (billion people/km) age rate of 2.6 percent dur• ly and the volume of both ing the previous 28 years. passenger and cargo trans• In 1990, the per-capita liv• port increased by several ing income of city and fold. Post and telecom• town residents averaged munication services devel• 1,387 yuan while the per- oped vigorously and the capita net income of farm• mileage of multiple- ers was 630 yuan. Allow• tracked and electrified 1980 1990 ing for price rises, these railway lines increased 2,632.2 represent a 68.1 and 124 considerably. A number Freight Transportation percent increase respec• of expressways were built (billion tons/km) tively, higher than the fi• and opened to traffic, al• gures for ten years before. though there were no ex• Compared with 1980, the pressways in China a de• per-capita average living cade ago. Both the han• space in the cities in dling capacity of harbours 1980 1990 1990 rose from 3.9 square and the air transport in• Composition of freight volume (%) metres to 7.1 square metres creased considerably. The while that of rural areas business of the country's 1980 47.5 r 42. 0 jumped from 9.4 square post and telecommunica• / metres to 17.8 square tions rose on the average 1990 40. 2 13 1 44. 3 2.4 metres. 20 percent annually, grow• Railway Others Transport and Telecom• ing more than five times munications Developed over the total of the pre-

16 BEIJING REVIEW, APRIL 15-21,1991 CHINA Chart 5: Total fixed asset investment and composition (billion yuan) Total investment in capital Composition (%) construction 170.3 157.4 made b^^ 55.2-1 364.1 134.3 State 117.6 302 254.3 owned 65.8 107.4 81.9 183.3 units 74.3 ,59.4. Collective 44.3 .55.6 A total of 2,774.33 owned •12.3' A total of 1,075.835 <^—I—I billion yuan anits — 21.9 billion yuan (of investment) I I I—I I I I—L- Individual TXT 8182 83 84 85 86 87 88 89 90. '"" iqan £. investment 1990 81 82 83 84 85 86 87 88 89 90 Power generation Coal mined: 205.01 Crude Oil extracted: New railway mileage 2-2 capacity: 66.513 million tons 68.439 million 3,801.9 km O 00 million kw tons Electrified railway mileage: 5,322.2 km .^2 a- s s Handling capacity of Steel: 5.418 Cement: 31.889 Iron ore mined: •s i coastal harbours: million tons million tons 36.825 million tons 260.317 million tons

Chart 6: 10.1 2.22 Negotiated value Business Volume ^ Number of tourists Tourist income of Foreign of coniracted (million people) (USS billion) Capital Used projects and Labour Service (USS billion) under taken abroad (USS billion) 0.451 0.617 1.981 5.7025

1983 1990 1990 1980 1990 1980 1990

Total Import and Export value {US$ billion)

•38.14 Total value 18, I I Export value Ein2 Import value 1980 1990

BEIJING REVIEW, APRIL 15-21, 1991 17 CHINA

Chart?: vious 30 years. Key Construction Stepped Up. Urban per-capita income for Rural per-capita income (yuan) During the reform and readjust• living expenses (yuan) ment, the scale of investment in capital construction has contin• 439 ued to expand and the structure of investment improved. The technical transformation in ex• 1980 isting enterprises advanced steadily. Between 1981 and 1990, social investment in fixed assets 1990 grew on an average of 19.6 per• cent annually. Investment made by units owned by the whole people in energy and raw ma• Balance of savings terial industries and transport, deposits of urban post and telecommunication fa• and rural residents cilities rose on an average of (billion yuan) 22.3 percent annually, exceed• ing the growth rate for the to• tal investment made by units owned by the whole people dur• ing the same period of time. In 39.95 ten years, the investment in key construction projects made up 1980 around one-third of the nation's total investment in fixed assets. Of the 338 key projects con• structed during the decade, 150 have been completed and put into operation. Chart 8: Total Retail Sales Value of Readjustment and Reform of the Commodities (billion yuan) Circulation System. A market 825.5 system which involves multiple economic sectors, many circu• lation channels and suitable to China's conditions has taken shape and been improved dur• ing the reform. The supply of commodities was ample. In Social 1989, the purchasing value of institutions k farm and sideline products was Agricultural four times that in 1980 to reach means of production 1980 1990 338.6 billion yuan. The scale of the market was expanded and the sales were brisk. The social purchasing power in 1990 to• talled 1,045 billion yuan, up 4.5 times that in 1980. The following charts indicate China's economic and social de• velopment in the 1980s: •

18 BEIJING REVIEW, APRIL 15-21,1991 CHINA

gnomic Restructuring, Foreign Trade Reform Are Progressing

by Our Staff Reporter Yang Xiaobing

uring the Fourth Session of the market for capital goods, and tury." In carrying out the afore• the Seventh National Peo• to develop additional markets for said reforms, he said, "we will Dple's Congress (NPC), various commodities and produc• continue to properly deal with Chen Jinhua, minister in charge tion factors; fourth, to ration• the relationship between reform of the State Commission for Eco• alize the distributive relations and development. We will pursue nomic Structural Reform, and among the state, collectives and reform, development and an ex• Li Lanqing, minister of Foreign individuals, and between the cen• pansion of the opening-up so as to Economic Relations and Trade, tral government and local au• promote a sustained, steady and briefed Chinese and foreign re• thorities, bringing into existence co-ordinated development of the porters on the development of a rational distribution structure entire economy." China's economic restructuring of national income which can ful• When asked how to handle the and the reform of the country's ly reflect the principle of "toieach relationship between the central foreign trade system and an• according to his work"; swered questions raised by them. and fifth, to regulate and Chen Jinhua told reporters adjust the economy by ap• that the objective of China's eco• plying economic, adminis• nomic restructuring during the trative and legal means 1990s was to initially establish a in a comprehensive way, new socialist planned commodity especially by applying system based on public owner• such economic leverages ship and an economic operating as price, taxation, interest mechanism integrating planning rate and exchange rate, and market forces. Centred on this general goal, he said, "We and to establish a regula• will focus on promoting five as• tory system of the cen• pects of reform: first, to improve tral government, prov• the ownership structure by re• inces, municipalities and taining socialist public ownership autonomous regions. Jinhua. as the mainstay while proper• From this year onward, ly developing individual entre- we will, in the spirit of unified government and the localities preneurship, private business and planning and accomplishing cer• during the reform, Chen Jinhua other economic components; se• tain tasks within a given period, said that legislative, economic cond, to separate administration focus on the reform of the hous• and administrative measures from business and appropriately ing and social security systems, in would be taken to properly han• separate ownership from man• a bid to reduce enterprises' social dle the relationship between agement, gradually enabling a burden, and to create an external them. In the past, the over- majority of state-owned enter• environment necessary for furth• centralization and rigorous con• prises to become, in a real sense, er enterprise reform." trol of the central government socialist businesses and commod• In the meantime, Chen added, dampened the enthusiasm of lo• ity producers endowed with man• "we will gradually reduce state calities and during the past de• agerial autonomy, responsible for subsidies, enabling both the state cade, a series of policies and mea• their own profits and losses, and localities to accumulate sures were taken to adjust the and with, the capability of self- funds for economic development relationship between the central restraint and self-development; in order to lay a new material government and localities. The third, to further improve the con• and technological foundation for problem was that in the process sumer goods markets, to enlarge the country to enter the next cen• of delegating powers to localities.

BEIJING REVIEW, APRIL 15-21, IMl 19 CHINA the central government went too Jinhua agreed that some large mandatory plan, properly in• far in some areas and the admin• state-owned enterprises did not crease the depreciation rate, pro• istration became lopsided. This operate well but said the situa• perly increase funds for the resulted in overlapping construc• tion was quite complicated and development of new products, tion, for example, in auto and caused by many factors. For ex• reinforce circulating funds electronic industries. In the com• ample, in the last two years of through opening more channels, ing ten years, while continuing to economic rectification and re• reduce the interest rates of bank give play to the enthusiasm of trenchment, the market has be• loans properly and, at the right localities, attention will be paid come sluggish. In addition, there moment, introduce differential to proper centralization. China is are also problems in their man• interest rates, expand enterprises' a vast country and to realize a agement. But a majority of en• autonomy in foreign trade, con• relatively comfortable life, it terprises operate normally, and tinue to carry on those policies is necessary to concentrate its which are favourable to them, strength on major projects. For further clean up those mutually example, the Shanghai Baoshan entangled debts, organize 100 or Iron and Steel Complex requires so large enterprise groups, and a total investment of 30 billion reduce enterprises' burdens yuan during two stages of its con• wrought by various levies—Ed.). struction. When commissioned, it Speaking of the Bankruptcy will have an annual capacity of Law, Chen Jinhua said that ac• more than 4 million tons of hot- cording to incomplete statistics rolled steel plates, 2.1 million by the end of 1990, about 170 tons of cold-rolled steel plates enterprises had gone bankrupt and 500,000 tons of seamless steel and, in addition, some other en• tubes, an output equal to the en• terprises that have declared tire nation's present output of bankruptcy are being examined cold-rolled steel plates. When Li Laiiqjng. by the economic courts. commissioned, it will play a big Li Lanqing briefed Chinese role in various aspects of the na• some have done quite well. Chen and foreign reporters on the re• tional economy. If the central said that the state would adopt 11 form of China's foreign trade sys• government had not concentrat• measures to further strengthen tem. He said that this year China ed the financial might and mater• the vitality of large and medium- would continue to reform its for• ials needed for constructing such sized enterprises (the 11 mea• eign trade system with the stress a major project, the project sures can be boiled down into the on ensuring that foreign trade en• would not have been possible. following: increase input in en• terprises are responsible for their When asked whether large terprises' technical transforma• own profits and losses. On the state-owned enterprises would tion, reduce the proportion of basis of the adjusted exchange continue to run in the red, Chen production that falls within the rate of RMB, China's foreign trade will be brought into the or• Chinese and foreign reporters. bit of unified, policies, with en• terprises assuming responsibili• ties for their own profits and loss• es, with Ihe accomplishment of equal competition, self- management and the integration of industry and trade, and with the introduction of an agency system. The current reform has the following obvious character• istics: First, the system that "ev• eryone eats from the same big pot" has been shattered and, by following standard international practice, foreign trade enterpris• es are responsible for their own profits and losses, thus exerting more pressures on foreign trade

20 BEIJING REVIEW, APRIL 15-21. 1991 CHINA

Hong Kong. All this is not what China wishes to happen. It has not been easy for Sino-US econo• mic and trade ties to reach their current state—a product of the common effort by governmental and business circles of both coun• tries by overcoming a variety of difficulties. Therefore, the rela• tions should be cherished by both sides. China appreciates the US government's stand on this ques• tion and hopes that US congress• men will take the two nations' overall interests into account and avoid any non-trade factor af• fecting Sino-US trade relations. Discussing how to better answer reporters' questions. As a Chinese saying goes, "It is Pholos i>y XU£ CHAO better to see something once than to hear about it one hundred enterprises to improve tlieir man• nomic co-operation and ex• times" and so, Li said, "I'd like to agement and enhance their ini• change. Since the new system" was avail myself of this opportunity tiative and ability for self- put into practice two months ago, to express my hope that more US management. Second, the varied China has maintained a fairly congressmen will come to have foreign exchange retention rates good development momentum of a look, to know more of China. This will help them make the cor• for different regions have been imports and exports. This shows rect decisions on Sino-US rela• changed. This has provided en• that the direction of reform is tions." terprises with equal conditions correct. for competition and helped im• When asked what the impact When asked about the cancel• prove the foreign trade manage• would be on China's foreign lation of subsidies for foreign ment order. Third, the macro- trade if the United States would trade enterprises, Li Lanqing said management of foreign trade has cancel China's "most-favoured• that cancellation of subsidies for been improved. Fourth, China's nation" (MFN) status next year, foreign trade enterprises is an im• trading partners are mainly cap• Li Lanqing said that the mutual portant measure to enable trade italist countries, so the govern• granting of MFN status between to be conducted according to in• ternational practice. "But this ment has attached importance to the two countries is an important does not mean that China will giving full play to market forces part of the Sino-US trade agree• commit itself to cancel all subsi• under the principle of integrating ment and is regarded as the cor• dies in its international trade," Li the planned economy with mar• nerstone of economic relations said. "This is because that even ket regulation. Fifth, the foreign and trade between the two coun• the developed countries also sub• exchange which enterprises can tries. If the United States sus• sidize their foreign trade, and the spend has been increased, thus pends or conditionally maintains amount greatly outstrips ours. In providing more opportunities for China's MFN status, such a step so doing, we aim to make Chi• foreign products to enter the would harm bilateral relations, na's foreign trade system meet Chinese market. Sixth, policies especially economic and trade the GATT requirements. As for encouraging export and measures ties. It would, of course, seriously the overall cancellation of subsi• for foreign trade management affect China's export to the Unit• dies, it should be discussed with• have remained consistent. In ed States and also harm the in• in multi-lateral trade agreements short, the reform reflects China's terests of American consumers so that all parties are committed. determination to further open to and American investors in Since the foreign trade system be• the outside world and make Chi• China. This is because the United gan to be reformed on January 1 na's foreign trade structure more States is the biggest provider of this year, China's exports have compatible with the international capital to China, with signed in• been in good conditions. Of trade norms required by the Ge• vestments amounting to about course, some high-cost products neral Agreement on Tariffs and US$4.36 billion. Meanwhile, the need to be adjusted. Why, howev• Trade (GATT). These steps suspension of the MFN status er, are they exported if their costs make it easier for China to in• would also have a serious impact are higher than their foreign counterparts?" • volve itself in international eco• on the prosperity and stability of

BEIJING REVIEW, APRIL 15-21, 1991 21 BUSINESS/TRADE shortened the forecasting time cial preferential treatment will Foreign Aid for Water by eight hours for the flood- be given to agriculture, forestry Projects threatened areas, from the San- and other undertakings. men Gorge to Huayuankou of The new tax law stipulates the Yellow River, and provided that the enterprise income tax China has greatly streng• the means by which the lower for enterprises in the special eco• thened its economic and technol• reaches can avoid flood damage. nomic zones and productive en• ogical co-operation with foreign In addition, China's insti• terprises in the economic and countries in its water conservan- tutions of higher learning have technological development zones Cy construction in recent years. trained a great number of talent• will be levied at a reduced rate According to an official from ed personnel with foreign aids of 15 percent and those of the the foreign affairs department of and loans. The first batch of coastal open economic zones at a the Ministry of Water Resources loans for education and scientif• reduced rate of 24 percent. and Electric Power, the ministry ic research of water projects al• Yu Xiaosong, director of the has established scientific and lowed China to have 76 masters Foreign Investment Manage• technological co-operation rela• and doctoral candidates trained ment Department under the tions with 28 countries. Of the abroad and over 300 managerial Ministry of Foreign Economic projects built with financial aids personnel of water conservancy Relations and Trade, said that and loans from the United Na• equipment and instruments at the measures China adopted to tions and various countries, home. encourage foreign investment some 23 projects worth more by Li Rongxia will meet the needs of foreign than US$130 million are near investors in running their en• completion. terprises. Moreover, China will The official said that the batch continue to improve its policy of of economic and technological NewlMeasureson opening to the outside world. All co-operation projects include the this will guarantee profits for Three Gorges key water control Foreign Investment foreign businessmen. project of the Yangtze River, a In fact, foreign-funded enter• feasibility study on Xiaolangdi The Income Tax Law for prises in China enjoy full water control project of the Yel• Foreign-Funded Enterprises and decision-making power involv• low River, flood forecasting sys• for Foreign Enterprises (Draft) ing plans for production and op• tems for the Yellow, Huaihe and has been examined by the eration, wage and subsidy stan• Hanjiang rivers, development of Standing Committee of the Na• dards and their systems, the pur• a water-saving pilot irrigated tional People's Congress and ap• chase of raw materials and zone, economic research of wat• proved by the Fourth Session of equipment they needed from er resources and helping the Seventh National People's domestic and foreign markets poverty-stricken areas develop Congress. The law will be soon and sales of products as well as water conservancy, know-how implemented. the establishment of a financial education and scientific re• The Income Tax Law Con• system. search. cerning Sino-Foreign Joint Ven• In addition, China has created Economic and technological tures and the Income Tax Law many favourable conditions for co-operation and exchanges with Concerning Foreign Enterprises foreign investors in construction foreign countries have greatly carried out in the early 1980s of infrastructure facilities, sale stimulated China's water project will be merged into a new tax of products, the system of for• construction. Through the -in• law. The two types of enterprises eign exchange balance and la• troduction of foreign capital, will use the unified tax rate. bour wage, materials supply and China can now construct more The income tax rate for land-use fee. key water conservancy projects foreign-funded enterprises stipu• Last year, China revised the which affect the national econo• lated in the draft will be slight• Sino-Foreign Joint Venture Law my and people's livelihood. The ly lower than that of any other and adopted measures for im• advanced technology and equip• country and the draft will, ac• provement. For example, joint ment introduced from abroad cording to different areas, stipu• ventures will not be nation• have greatly improved China's late different duty rates in order alized, its chairman of the board traditional water conservancy to encourage the establishment will be elected by the board of construction ways. An Italian of productive and high-tech en• directors through the consulta• flood forecasting system has terprises. At the same time, spe• tion of both sides of the venture.

22 BEIJING REVIEW, APRIL 15-21,1991 BUSINESS/TRADE and the term of co-operation will percent of the total contract's sides of the Taiwan Straits held be set in line with different un• value. a meeting in Shanghai on March dertakings and conditions. All The Guangzhou Peugeot Auto 16 to discuss how to encourage this has had a positive impact Co. Ltd. is one of the largest bus two-way economic and trade ex• both at home and abroad. producers in China. Upon com• changes between the mainland Since China began import of pletion, the company will be the and Taiwan. The meeting also foreign funds in 1979, it has largest producer of Peugeot 505 decided to jointly hold a meeting adopted policies to encourage cars in the world. • to research into trade and invest• foreign investors and formulated ment on both sides of the Straits a number of foreign economic News in Brief in Shanghai this September and laws and regulations including begin class lectures on invest• the Economic Contract Law, the • The large JT6120 coach ment policies, trade and invest• Patent Law, the Law on Chinese- checked and approved by the ment environment on the main• Foreign Joint Ventures, the Law government in February of this land in Hong Kong in the second on Foreign Enterprise and oth• year has good market prospects. half of this year. er laws for the special economic In March, a Singapore business• Both co-ordination commit• zones, signed agreements with man signed a letter of intent tees were established in Hong with the relevant Chinese de• more than 20 countries on prov• Kong by economic and trade cir• partments to first purchase 60 iding protection of insurance for cles on the mainland and Tai• investment and avoiding double and then later 300 such coaches. wan on December 17, 1989. taxation. • The JT6120 coach was one of • A high-quality computer China's Seventh Five-Year Plan programme called the "highly (1986-90) key technical projects. compressed Chinese font li• The Mechanical and Electrical brary," instrumental for the wid• French Loans for Products Co. of the China Inter• er application of computers, was Equipment national Trust and Investment Corp. is responsible for manu• recently developed and patent• facturing the chassis, and the ed in China. This achievement marks a new era for China's The China Guangzhou Peu• Dalian, Yangzhou and Chang- computer font industry. geot Auto Co. Ltd. signed a buy• sha bus factories are responsible The Chinese font library was er's credit agreement with the for assembling the whole coach. a collaboration of Professor Xie China Trust and Investment In• This year they will produce 50 Kezhong of the Department of dustrial Bank in Guangzhou on coaches, next year 300-500 and Computer Science of the Central March 18 on purchasing equip• by 1995 the annual output is ex• ment worth 102 million French pected to reach 3,000. Various South China Engineering Insti• francs. The loan will be provided tests prove that the technical tute in Hunan Province and by the Paris National Bank of standard is of advanced interna• the Beijing Xianfeng (Pioneer) France. tional level of the 1980s. Corp. By compiling the Chinese The majority of credit will • China and the UN Devel• font step by step, the programme be used to purchase production opment Programme signed an has compressed 6,700 Chinese lines and equipment imported agreement in Beijing March 22 characters, four typefaces and from France for the machining on the two projects of passing on 16 fonts into a set of character workshop producing generators technology by returned overseas codes that is stored on three in• and for the punching workshop Chinese and inviting senior ex• tegrated chips, each the size of a manufacturing punching parts. perts. stick of chewing gum. The com• Some of the loans will be used According to the three-year puter programme is capable of to expand paint production lines projects, the UN Development creating 100 characters per se• and strengthen examination of Programme will provide China cond. The font library is compa• product quality. with about US$4.5 million for tible with all kinds of computers, The equipment is worth 120 introducing and training talent• and can do the whole process million French francs and the ed personnel. from operation to display to out• contract for the supply of goods • The mainland co-ordination put in Chinese. Compared with has been signed by the Peugeot committee and representatives similar programmes, the capaci• Auto Co. of France and the of the Taiwan co-ordination ty of the font library is three to Guangzhou Peugeot Auto Co. committee of economic and four times greater while the cost Ltd. The credit accounts for 85 trade exchanges between both is two-thirds less. •

BEIJING REVIEW, APRIL 15-21,1991 23 CULTURE/SCIENCE Outstanding Geologist Remembered ome international comme• River, was the third longest river morative activities to mark in the world. Xu was also the first S tlie 350th anniversary of the in the world to make a systematic death of geologist Xu Xiake will investigation of karst formations. be held in October in Guilin, Gu- Xu studied karst formations angxi Zhuang Autonomous Re• and caves carefully. He visited the gion, southwest China. Sponsored caves of the Seven-Star Rocks in by the International Cultural Ex• Guilin twice and took detailed change Centre of China, the notes about his findings. His dia• Chinese Society of Travel Culture, grams and plane drawings of the Dramn hy XIE NINCGAO the Chinese Society of Geography Seven-Star Rocks were similar to and the Western Returned Stu• Portraia famout ofs Xwateu Xiaker projec. t built in dents' Association, the activities those made by scientists of 223 BC; Guizhou's capital city will include an international aca• the Geological Institute of the Guiyang; Huangguoshu Falls in demic symposium, a study of Xu's Chinese Academy of Sciences in Guizhou Province; a flower city travels and a painting, calligraphy the 1950s using modern instru• and Yunnan's capital, Kunming; ments and methods. Dianchi Lake on the Yunnan- and photo exhibition. His great achievements of 350 Xu Xiake was a prominent Guizhou Plateau; Dah, Lijiang Chinese geologist, explorer- years ago were possible because he and the Stone Forest in Yunnan traveller and travel writer of the made breakthroughs in geological Province. late 16th century. Before his research methods. He used many Topics to be discussed at the death, he left to his friend a modern geological methods in• academic symposium will include 100,000-character manuscript of stead of classical ones. He was a the life of Xu Xiake, his travel his life-long journeys to most parts world pioneer of karst formations notes, his geological and liter• of the country. Travel Notes by Xu and cave research, and also a for• ary achievements, his explorato• Xiake includes most of his origin• erunner in the development of ry spirit, the importance of de• al manuscript and is about 60,000 geological history. His achieve• veloped tourism to the national characters long. A record of his ments attained a high scientific economy, and tourist and cultural travels and investigations, the level of sophistication at that time. exchanges between China and oth• book is of great geological and Ut- The study of Xu's travel will er countries. erary value. Both Xu and his trav• include visits to the Lingqu Canal, by Wei Liming el notes are wonders of Chinese history. Xu Xiake was born in 1587 in Ceramic Worlcshop 1,000 Years Old what is known today as Jiangyin County, Jiangsu Province. Unlike rare ancient ceramic work• into the production process and his contemporaries who attended shop was recently discov• the clear division of labour. Ev• schools, sat for imperial examina• A ered in Jiangxi Province idence of the more than 20 tions and became officials, Xu de• —famous for its ceramics. procedures involved in ceramic- cided to study the country his The discovery was made in making in ancient China as re• whole life and started his travel Tianyu Township, Jian city corded in Chinese historical career at 22 years of age. Xu came where a railway line was being books can be found. Such large- back to his hometown because of constructed. After investigation, scale workshop remains have poor health at 54, a year before his experts claimed that the work• never been discovered in any death. He experienced all kinds shop had been in use between other famous ceramic kiln of hardships while probing the se• The Five Dynasties (907-960) crets of the mountains and rivers. and the Ming Dynasty throughout China. He took notes every day and left (1368-1644), and had a history of Scientists agree that this is a China this valuable treasure. more than 1,000 years. The re• rare example of a comprehensive His complete and accurate mains include broken walls, a ceramic workshop and the two notes include studies of mountain brick ceramic clay processing pit, hoof-shaped kiln beds are the ranges, water systems, water flow a rectangular storage area, drain• first discovered in China. On the and karst formations. Based on his age ditches and sites of other ac• backside of the kiln three com• investigations, he was the first per• tivities. These site remains form plete chimney holes are still visi• son to point out that the Jinsha into a large complex and are in ble. River, the source of the Yangtze good condition. They give insight by Hong Lanxing

24 BEIJING REVIEW, APRIL 15-21, 1991 CULTURE/SCIENCE

A Geoscience Transect Shaped for the Qinghai-Tibet Plateau map providing a transec- tional view and describing A the geological evolution of the Qinghai-Tibet Plateau, the world's highest, has been pre• pared and will soon be published. More than 60 Chinese geol• ogists and geophysicists from eight academic institutions in• cluding the Chinese Academy of Geological Sciences participated in the research and drafting of the highly specialized map. After the draft of the map was first exhibited at the 28th Interna• tional Geology Conference in J Washington D.C. in 1989, it was Chinese geophysicist Wu Gongjian and his colleagues at the press conference present considered as a valuable geologi• the geological transect map of the Qinghai-Tibet Plateau. cal research aid that internation• al assistance for publication was provided. The English edition of the map has been prepared by the American Geophysical Union (AGU) and is due to be published in Vienna later this year. The Qinghai-Tibet Plateau has long been a contentious area of research among internation• al geologists. The uplift of the plateau and the orogenic move• ment of the Himalayas, the youngest in the world, are geo• logical events of great signific• ance to the survival of human beings and have continued to im• pose an enormous impact on the m evolution of the environment in Asia and the world since the Quanternary Period. With its Professor H.Z. Gotze and J. Monger, both specialists of GGT, hold a discussion rich geological phenomenon, with the geoscientists of the Yadong-Golmud Geoscience Transect project at the unique geological activities and International GGT Conference of East Asia in April, 1989. distinctive lithospheric structure, the plateau has received the at• geological maps. The Qinghai- ritory, they contend, will not tention of geologists and geo• Tibet Plateau was listed as one only help scientists further un• physicists for generations. key area of research in the pro• derstand the working of the Following a proposal by Pro• ject. earth's core but have great pract• fessor M. Barazangi of Cornell Chinese geologists are fully ical implications for locating new University (USA), the Global committed to the international resources, alleviating geological Geoscience Transectional Com• project. A comprehensive and disasters and protecting the envi• mittee of the Inter-Union Com• systematic study of the plateau's ronment. mission on the 'Lithosphere de• geology, an area which accounts The project, begun three years cided to compile 200 specialized for one-third of China's total ter• ago in 1987, is essentially fin-

BEUING REVIEW, APRIL 15-21,1991 25 CULTURE / SCIENCE

study, its focus is geo• gradual process with the Indian logical, geophysical Plate subducted to the Eurasia and geochemical in• Plate, and the resulting compres• formation. The cross- sion formed the Himalayan oto• sectional view of the genic zone; different from the plateau area accurate• process of subduction of the ly displays the crustal Andes and the nappe type of the formation and prov• Alps, the Himalayan range is a ides a basis for under• unique orogenic zone; and that standing the plateau's the plateau has four uneven tec• geological evolution. tonic belts. These recently devel• the map, appraised oped hypotheses have improved by Chinese and for• our scientific understanding of eign geologists, is the plateau. of international stan• The scientists from various in• The map shows a compressional deformation in a dard. It not only adds stitutions' are now drawing a crystalline schist of the Himalayan ductile thrust new geological infor• sketch of the last area of the Pla• zone. mation in its presen• teau to be mapped-from Gol• tation, drafted and mud to Ejin Qi. After its comple• edited in the most up-to-date ished. It covers an area of more tion, the map will connect with manner, but also further ex• than 1,400 km, from Yadong of the Indian transect map in the Tibet to Golmud in Qinghai in a plores and provides new answers south and the Mongol-Siberian north-north-east to south-south• to some key geological problems. west direction. The map, consist• After completing their research, transect map in the north, prov• ing of 12 smaller ones, is the first for example, the drafters now iding a view of the geological of its kind developed in China. contend that the plateau resulted evolution of the entire Eurasian Though necessarily the out• from the drifting together of six continent. growth of various disciplines of terranes; that the uplift was a by Cui Lili

Changhai County consists of An Art Troupe for Fishermen 112 islands. In the past 30 years, the county art troupe has staged he Art Troupe from gers that the two were having an 34 operas and plays and 15 mus• Changhai County, Liaon- affair. Ironically the gossip dee• ical and dance productions. Car• T ing Province, northeastern pened their love for each other. rying their luggage and stage sets, China, recently performed the After the implementation of the they bring their productions to light opera, Sea Flower, in Bei• reform and open policy in 1979, every island. Altogether they jing. Audiences acclaimed the Old Hai got rich through hard have given over 650 perform• work which was produced by a labour. His son and Aunt Happi• ances, entertaining 250,000 audi• small county art troupe with ness' daughter had grown up and only ences. Wherever the art troupe 32 performers and stage workers. had their own lovers. But Old Hai goes, a festive mood erupted. Pos• The opera won awards for best and Aunt Happiness still lived ters and broadcasts begin to pub• script and best director at last separately, keeping their love licize the event days before the year's National Opera Festival. deep in their hearts. The son and daughter began to make various coming of the troupe. Women The opera tells the love story of and children put on their new a widow and a widower in a sea• attempts to bring their father and clothes for the occasion. The vil• side village. Twenty years ago. mother together. lagers usually begin placing their Old Hai's wife died of illness and This light opera is human, lyr• stools in front of the stage as ear• his neighbour, Aunt Happiness' ical and rich in national flavour. ly as at 2 o'clock in the afternoon husband, was drowned in a sea After seeing the opera, He Jing- for the evening performance. A disaster. Since then the window zhi, acting minister of culture, village has to wait their turn on a and widower began to help each said, "The opera is sweet, beauti• other in everyday life. However, ful and full of the feeling of new long list if they want to invite the gossip circulated among the villa• life." art troupe to perform there. •

BEIJING REVIEW, APRIL 15-21,1991 ART PAQE

4k

A Village.

Cloth Prints by Xi Hu

Xi Hu, born in Wuhu, Anhui Province in 1958, is now an art designer with a company in Zhanjiang City, Guang• dong Province. The pictures and patterns, after being cut out on a piece of cloth, are printed using a new technique Xi created.

1/ Kil A Mountain Village.

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