CONFIDENTIAL
3. Attempts at industrial reform have been made over the same period but this has proved more difficult and progress has not been so smooth. The reform strategy was set out more programmatically and authoritatively than ever before
a Party plenum in October 1984 and despite problems which arose in 1985, the leadership remains committed to reform. Among measures which have been or are scheduled to be implemented are:
a) the scope and rigidity of State plans which bind industrial enterprises have been reduced and the freedom of enterprises to respond to market forces increased. Only the most important products (which nonetheless account for a large proportion of output value) will be governed by mandatory plans. Other products will be subject to guidance plans which use economic levers rather than administrative commands to direct enterprise operations. Large enterprises will be able to market output in excess of planned quotas at reasonably flexible prices. Only small enterprises are likely to be solely subject to market regulation;
b) since enterprise production is to be influenced much more by market forces, prices will need to be determined by supply and demand. At present this is far from the case so prices are no guide to the relative scarcity of products. Some price readjustments have already been made but the bulk of this crucial task remains to be tackled;
c)
enterprises are to be given greater incentive to be profitable. They are to become independent accounting units free from economic interference by administrative bodies. Losses are no longer simply met by the State and profits handed over to it. Enterprises now pay taxes on profits and can retain the remainder for their own use;
a)
enterprises are to have more control over their internal organisation. Enterprise directors will have more authority in deciding bonus payments, the size of the work force and appointments and dismissals. The role of the Party committee is to be curtailed;
e) wages and bonus payments are to be based more on the need to provide material incentives than on egalitarianism. Expertise, length of service and degree of responsibility as well as productivity are also to be rewarded.
4. An open door' policy aimed at increasing foreign trade, importing advanced technology and encouraging foreign investment has been pursued alongside this 'enlivening' of
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