CONFIDENTIAL
PRINCESS MARGARET'S VISIT TO CHINA: 18-27 MAY 1987
BRIEF B (b)
THE CHINESE ECONOMY
1. The aim of China's economic reforms begun in the late
1970s, is to modernise the economy, quadruple gross
output value by the year 2000, and catch up with the West
by 2050. The 7th Five-Year Plan (1986-1991) reflects
these goals. The strategy has been to decentralise
decision-making, reduce the role of mandatory planning
and encourage trade and technological co-operation with
the West and Japan.
2.
Decentralised decision-making will give enterprises
greater responsibility and allow them to use material
incentives to improve performance in response to the
market. Successful enterprises are just starting to
raise funds by issuing stock. A few loss-making
enterprises have been allowed to go bankrupt but this is
a controversial area and progress has been slow.
Horizontal commercial links between enterprises and
between regions are encouraged to offset the stifling
effects of vertical administrative control by centralised
ministries. These measures will be supplemented by
taxation, wage, price and employment reforms.
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CONFIDENTIAL