- 7
Production of energy and key industrial materials by 1990
12.
Electricity generation
Coal
Petroleum
Rolled steel
: 550 billion k.w.h.
: 1 billion tonnes
: 150 million tonnes
: 44 million tonnes
The years covered by the Seventh Five-Year Plan are divided into two distinct stages. In the initial two years 1986 and 1987, the Plan calls for investment in fixed assets to be held at the 1985 level. -Such. consolidation is considered essential to redress the. serious imbalances caused by the very rapid growth in 1984 and 1985 (see paragraphs 6 and 7 above). Excessive expansion of investment spending causing shortages and inflation was a major source of imbalance. During this period, another important objective is to develop indirect control mechanisms like prices, interest rates, tax rates and exchange rates, and to strengthen the existing taxation and financial systems. Thus the emphasis is on stability and coordination rather than growth and reform.
13.
In the latter three years 1988 to 1990, the Plan calls for investment in fixed assets to be increased according to the circumstances. During this period, apart from further developing indirect control mechanisms, the Chinese Government will also aim at improving the tax structure, reforming the financial system and reforming the overall price structure in various sectors of the economy. Growth and reform will thus receive greater attention in these latter years.
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CONFIDENTIAL #3