G.F. 326
CONFIDENTIAL #
10
leaders about the appropriate pace of further price
(12)
and the best way to solve the present
reforms
problems.
(12) At the Seventh National People's Congress in
March/April 1988, the newly appointed Premier Li Peng emphasized the need to consolidate economic activity in the short term and to redress the current imbalances in China's economy, which had resulted in a general shortage of many goods and high inflation. This might imply the pace of price reform would slow down. Subsequently a high-level price committee, chaired by Vice-Premier Yao Yilin, has been set up to
On devise a five-year plan for price reform.
25 July, the State Council made known to the public that the Chinese government has decided not to push ahead with new price reform measures in the second half of 1988. But on the other hand, Deng Xiao-ping, taking the advantage of two occasions when he was receiving foreign guests in May 1988, expressed his opinion that price reform had to proceed vigorous ly with a view to solving the price problem once and for all before the end of this century. This view was echoed in public by Party General Secretary Zhao Ziyang during the run-up to the Beidaihe conference which started on 20 July. Reportedly, issues concerning what should be the appropriate pace of price reform and how to proceed were hotly debated by the Chinese leaders at Beidaihe. The outcome of the 10th meeting of the Political Bureau of the Party Central Committee held in Beidaihe between 15 and 17 August 1988 agreed that the general orientation of the price reform in the next five years should be one of letting the state continue to control the prices of a few important commodities and labour while liberalising the prices for the majority of the commodities and subjecting them to market regulation. In the end it is intended that the state will regulate the market and the market will guide enterprises. The overall objective of wage reform is that the living standards of most wage earners do not drop in the course of the price reform and should improve somewhat along with the development of production, by regulating and raising wages while providing additional subsidies of an appropriate amount. Also at the end of August the State Council reiterated its decision of not pushing ahead with new price reform measures in the remaining months of 1988.
CONFIDENTIAL #
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