TNAG-1457-FCO40-1981-Relations-between-Hong-Kong-and-China-1986 — Page 63

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improved. Third, direct state control of these

enterprises is to be replaced by indirect control through

economic levers like prices, tax rates, interest rates and exchange rates, and through statutory means. Regulations governing economic relations and economic activities are

to be coaified in the form of economic laws. Great

importance will be attached to the legislative and Judicial procedures related to these economic laws.

33.

Other economic reforms planned include reducing the scope of activities under mandatory planning, reforming the price structure of the means of productionTM by decontrolling prices, improving the taxation system and financial structure, and working towards an eventual separation of the functions of government from those of enterprises.

Comments on China's Seventh Five-Year Plan

34.

The planning objective of an average annual growth rate of 7% in national income, though ambitious by international standards, is quite moderate in comparison to actual experience during the years covered by China's Sixth Five-Year Plan (the last two years in particular). Growth during the years 1981-85 averaged about 8 to 9% p.a., and was higher in the last two years, 1984 and

1985. However, it is of interest to note that, insofar as

the planned growth rate of the economy is concerned, the Seventh Five-Year Plan is more optimistic than the Sixth Five-Year Plan, which envisaged a growth target of only 4%

p.a.

CONFIDENTIAL * *

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