TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 161

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c) to control the purchasing power of organisations and

corporations;

to check economic crimes and to strengthen idealogical

work, and;

a)

el

to increase the support of the people for reform

measures.

Price reform was noticeable in its absence. The momentum for price reform was clearly slowing down.

4.

In September, in the face of the continued bank buying and bank runs, the State Council made an attempt to reassure the people by stating that beginning in 1989, price reform would take five years or even longer. Inflation would be lower

than in 1988. Localities should not introduce further

reforms. Interest rates on deposits on three years or more would keep pace with the rate of inflation or exceed it. Tighter control of capital construction and consumption by

social units should be exercised. Purchase on grain, cotton

and vegetable oils should be guaranteed. The wages of

intellectuals would be increased to the level of those paid to

blue collar workers.

5.

Decisions made at the meeting of the 3rd Plenum of the

Chinese Communist Party 13th Central Committee, held on 26 30

September, appear to have pushed the task of tackling price

reform into the middle distance. As the communique stated, the

focus was now to be placed on economic consolidation through

"improving the economic environment and rectifying the economic

order". The goals were to curb inflation, tighten the money

supply and scale back capital construction. The pace of price

reform would be slowed down in 1989 (indeed come to a stop).

The government, however, reaffirmed its commitment to

enterprise and management reform, especially where the

separation of government and business functions was concerned.

The importance of Party control was emphasised once again.

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