CONFIDENTIAL #3
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Price reforms in 1984 and thereafter
17.
Price reform as an important constituent of the economic reform programme was officially declared at the Third Plenary session of the Twelfth Central Committee of the Chinese Communist Party in October 1984. Price reforms were to take place step-by-step and flexibility (greater use of the market mechanism) was to be combined with readjustment. Provisions were made for the prices of farm products, small articles of daily use, and services and repair trades to be largely determined by market forces. It was also stated that mandatory plans had to
observe the "law of value" (implying that greater attention should be given to supply and demand conditions
in the course of planning).
18.
Following the Third Plenary Session in 1984, it was made explicit that China expected the price reforms to be completed by the end of the Seventh Five Year Plan i.e. by 1990(2).
A major breakthrough in the price reforms came in January 1985 when the State Administration of Commodity Prices and the State Bureau of Materials and Equipment jointly issued a circular to abolish the previous regulation on range prices for intermediate
(2) See, for example, an article by Vice Premier Tian
Jiyun on price reform in the People's Daily dated 8 Jan 1985.
G.F. 326
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