TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 128

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(ii) Re-establishing economic order

Speculative and illegal trading activities

undertaken by enterprises, individuals and

officials are a serious problem and the

speculators should be punished. Some sort

of price discipline has to be imposed on the enterprises and traders. Price reform

in 1989 (and probably also in 1990) will

be limited to "relatively small steps" and

"efforts must be made to ensure that the

rate of inflation in 1989 will be lower

than in 1988′′.

11.

(iii) Enterprise reform has to be deepened

comprehensively

In this context, the frequently mentioned

strategies of separating enterprises from

bureaucracy and furthering as well as

perfecting the contract responsibility

system in state enterprises and

collectives are repeated. The development

of a share-holding system centered on

public ownership of enterprises is also touched upon briefly.

(i) and (iii) are not new, and represent some general guidelines which few are likely to dispute. Of

greater concern is (ii). There is obviously a need to devise some controls over those enterprises enjoying

monopoly power so as to protect the consumers from

excessive prices. But if too stern administrative

measures are imposed to re-establish economic order and to re-introduce price discipline (either in form of price

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