The Historical Progress and Basic__ Trend of Reform in China

8/14/2019 The Historical Progress and Basic__ Trend of Reform in China

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The historical progress and basic trend of

reform in Chinas economic institutions

Hengshan Fan

(May, 2006)

Reform and opening up policy is a major and crucial choice that is shaping thedestiny of contemporary China. With this policy, China has taken on a new look and

made continued progress in economic and social development. We must continue to

unsewingly deepen the reform and open China wider to the outside world if we want

to fulfill the development task in the new stage and further advance socialist program

with Chinese characteristics.

The first section: The progress, achievement and

experience of Chinas economic system reform.

To some extent, China was forced to try the new way of developing socialist

market system under the objective the pubilic sector with market sector of economy.

Chinas reform not only brings great changes for China, but creats a new way of

developing human society.

First, The process system of the reform of Chinese

economies

The reform of Chinese economies started in 1978, which has a glorious history

of 28 years since then. The 28-year reform could be divided into four stages in

general.


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The first stage (1978-1984) the beginning period and partial experiment stage.

Marked by holding the Third Plenary Session of the CPC, the prologue of Chinese

reform was pulled open. Rural economic system reformed first, the household

contract responsibility system, the dual combination of Unification at the operating

system Cen instead of all three levels, team-based peoples commune system, had

been prevail all around the country. This reformation utimately stimulated the

peasants initiatives and greatly promoted the development of agriculture and rural

economy.

Simultaneously, the reform experiments of other aspects also have started. The

government added the experiment units to extend the autonomy of enterprises,

implemented the two-step of replacement of profit delivery by taxes, advanced the

reform of fiscal system about partition of income and expenditure as well as

classification and assignment of duties, abolished the monopoly for purchase and

marketing system of agricultural and sideline products, rejuvenated and developed the

falling collective economy and the rare individual economy, and established four

special economic zones ,including Shenzhen, Zhuhai, Shantou, Xiamen.The second stage: It is a stage of exploratory reform from all dimensions (1984

to 1992). The focus of the reform on the second stage was transferred from rural areas

to cities. In the October 1984, the CPC went through The Decision of the Economic

System in the Third Plenary Session of Twelve. It definite the socialism economy is "a

commodity economy, which is based on public ownership and precise plan. It also put

forward the objectives of the reform, which were the establishment of a vigorous

socialist economic structure with Chinese characteristics. In the October, 1987, we

further developed the theories, the "socialist planned commodity economy system, it

should be planned and market system of internal unity," and "new economic operating

mechanism for the whole country are regulating the market, market-led enterprise

"mechanism, at The Thirteenth National Congress of the CPC. Theoretically, we

confirmed the role of the market mechanism's central position, in order to further

deepen the reforms specified in the direction and to lay the theoretical basis.


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In the last October, the Fifth Plenary Session of the Sixteenth Central Committee

of the Communist Party of China passed the the development of the national economy

and social development of the tenth Five-Year Plan's recommendations. TheNational

Economic and Social Development Five-Year Plan outline , gave a comprehensive

explanation and the overall deployment to the present five-year economic the

economic system and the overall deployment that formulated according to

Proposal, discussed and passed by the Fourth Session of the Tenth National People's

Congress. The central requirements that to accelerate reform with greater

determination, so that the major system reform involved in the development of overall

economic and social, could achieve the breakthrough progress. Want to transform

government functions and deepening of enterprises, taxation, finance reform, focusing

on, speeding up the socialist market economic system, form in favor of changing the

mode of economic growth, and promote comprehensive, coordinated and sustainable

development of institutional mechanisms. Adapt to the new situation demands, the

next step should be to actively promote the following reform.

In the last October, the Fifth Plenary Session of the Sixteenth Central Committee

of the Communist Party of China passed the the development of the national economy

and social development of the tenth Five-Year Plan's recommendations. TheNational

Economic and Social Development Five-Year Plan outline , gave a comprehensive

explanation and the overall deployment to the present five-year economic the

economic system and the overall deployment that formulated according to

Proposal, discussed and passed by the Fourth Session of the Tenth National People's

Congress. The central requirements that to accelerate reform with greater

determination, so that the major system reform involved in the development of overall

economic and social, could achieve the breakthrough progress. Want to transform

government functions and deepening of enterprises, taxation, finance reform, focusing

on, speeding up the socialist market economic system, form in favor of changing the

mode of economic growth, and promote comprehensive, coordinated and sustainable

development of institutional mechanisms. Adapt to the new situation demands, the


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The reform practice takes the stimulation of the state-owned business as the

center link. Such practice focuses on the exploration of establishing an enterprisesystem, which operates independently, assumes self-financing and has rich vigor and

efficiency. By implementing a contracting system, a rental system and other measures,

the reform practice will further the expands of the enterprise autonomy. We should

also take the reform of management system such as factory manager responsibility

system, linking ergonomics and the labor contract system which concern the

enterprises leadership, assignment, employing labor reforms, etc, as a way to enhance

the enterprises intrinsic vigor.

We should focus on stimulating the enterprise, establishing the market system,

which is unity, opened and operated, reforming the macroscopic indirect supervision

system, which is mainly adjusted, be economic means. We should adopt such methods

as combining "adjust, let, manage" to straighten price ratio relations, reforming

business management system, developing the non-state-operated circulated

enterprises, diminishing the prescriptive plans, reforming the banking organization

system, implementing a variety of financial concluded system, changing a single tax

system to a complex tax system, implementing on a separate part of town, reducing

management layers and expanding local autonomy. At the same time, the reform of

such fields as politics, technology, education and culture has started to adjust to the

economic system restructure.

The opening to the outside world also stepped out an important step. The opened

14 port cities along the coast, which established economic development zones at the

Yangtse Delta, the Zhujiang Delta, southeast of Fijian province, and the district

around the Bohai Sea .The government authorizes Hainan to construct the province

and to become the economic development zone which carries on a beneficial attempt

to the usage of overseas funds, technology, managerial experience in developing the

Chinese economy.


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The third stage: the stage of preliminarily establishing the socialist market

economic system (from 1992 to 2000). Taking the reform goal of establishing a

socialist market economy which was decided on the Chinas Fourteenth National

Congress as the symbol, the China's economic structural reform enters a new stage, as

the system innovations were the primary coverage. Some decisions about several

problems during the establishment of socialist market economy, whichwas passed in

the Third Session of the Chinas Fourteenth National Congress, pointed out that to

establish socialist market economic system means that it must make the market under

the national macroeconomic regulation and control play a foundational role in the

resources deployment, and proposed the basic frame of the socialist market

economic system. In 1997, the Chinese Fifteenth National Congress established basic

economic system to keep public ownership in a dominant position and have diverse

forms of ownership develop side by side, realizing a series of new breakthroughs on

the ideology and theory, impelling the reform targeted at establishing a socialist

market economic system to develop further in depth.

The reform of this stage still took the State-owned business as the center link,

the systems innovations obviously enlarged. According to the direction of

establishing modern enterprise system, the central government and the local chose

certain representative state-owned enterprises to carry on the establishment of

modernization system for trial, one batch of state-owned large and middle scale

enterprises were re-organized into the state-owned sole ownership company, the

limited liability company or the joint stock system limited company; many nationwide

profession corporation was changed into the holding company, and developed one

batch of large enterprise groups which were inter-industry and inter-regional; the

numerous small state-owned businesses, through the reorganization, the combination,

the annexation, leasing and other forms such as contracted management and stock

cooperation system, carried on the reform. The government advanced positively and

encouraged to merger, standardize bankruptcy, lay off and reassign redundant

workers, streamline for higher efficiency and implement reemployment, promoting


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the formation of the mechanism of selection whereby superior enterprises will prosper

and inferior ones be eliminated.Adjust the distributions of the state-owned economy

in terms of the strategy, which makes the state-owned capitals concentrate on the

essential industries and vital fields, which relate to the lifeblood of national economy.

In order to match the need of state-owned enterprises revolution and state-owned

economys distribution of structure changing, various kinds of attempts on

supervising systems of state-owned assets have been successful conducted.

Revolutions in other fields are still put forward. Revolutions concerning systemsof finance, tax, banking, plan, investment and money aggregation have been deepened

further. The frame of new financial system paying attention to tax-sharing system is

established and the turnover tax system which depends on value added tax is built;

intensify the central banks functions of controlling monetary supply and finance

supervising begin to separate political banking from commercial banking; set up the

simplex, controlled, fluctuating exchange rate regulation which based on market

supply and demand and realize the exchange of RMB in checking account. National

planning management has been change from general mandating planning to general

guided planning; try to build the project legal person system, fund system and bidding

system, strengthen the restriction in investment risks. The revolution in market

circulation fields has been developed deeply. Commercial markets develop further,

while factor markets form gradually.

Fourth Stage The stage that perfects socialism marketing economy since

2000With the basis of achieved progress the Sixteenth National Congress in

2002 raised that the key mission of revolution at the two decades early in the century

is to improve the system of socialism marketing economyThat means it needs to

accomplish consummate socialism marketing economic system and more energetic


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and open economic setup in 2020.Policy decisions on perfecting some problems in

the system of socialism marketing economyapproved of by the Third Session of

Sixteenth National Congress makes arrangements in all aspects on how to build such

consummate economic systemThe Central Committee of Chinese Communist Party

claims vital strategy theory of setting up scientific developing ideas and building

socialism harmony societywhich provides theory guidance for improving socialism

marketing economic systemAccording to the request of planning the development

about city and townregionseconomyharmony between human and natureinternal

and externalrevolutions must be pushed aggressively in every field.

This period pays more attention to the revolution of administration setup, and

spears no efforts to promote it in terms of certain targets including building

administration systems which are good in behavior, go harmonic, keep

fairtransparenthonest and effective. The changing of government duty has gained

immense developments, and the obligation of social regulation and the public service

has been strengthened further; the government revolution runs continueously, and

State Council sets up and organizes a batch of institutions for conditioning and

supervising economywhich elevates administration levels of some departments and

makes managing systems of many departments like state-owned assets faculty


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betterCentering on perfecting administration system lower than province local

governments have intensified the strength of both country institution revolution and

expanding the authority ranges of country administrationThe reforming step of

administration examining and approving projects in three turns Advocate legal

administration in overalland then publish and manage many rules and laws about

administration just like The law of administration permission and The law of public

servant

Mean while, reforms in rural areas are still being pushed forward. The basic

economic regulations of such areas have been consolidated much more, the trail of tax

reforms begins all over the rural, and the whole state calls off the agricultural tax

which has continued for almost 2600 years absolutely. The revolution of foodcirculation systems has been deepened further. Cotton circulation system based on

market has been founded in general. Reforms of state-owned enterprises take on a

new look. Nationalized capital concentrates on some important industries and key

fields relating to national security and national economy lifeblood, and the power to

control and compete of nationalized economy is stronger than before. The reforming

force of share-holding system in national huge enterprise goes powerful, and progress

has been attained in the aspect of perfecting the work of administrating structure by

legal persons, also the revolution referring to how to elect and employ people strides a

great pace, the reforms about distribution of stock tight among national share-holding

enterprises on the market is stable to run.


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The government has set up a specialized state-owned assets supervision and

management institution improve the supervision to the operational condition of the

assets belongs to the state-owned enterprises, especially the large and the especially

large ones .the institutional environment in which the non-public economy develops

has been further improved. The restriction to the non-public economys market-enter

has been relaxed and the government has permitted the non-public capital to enter into

the industry and the field which the laws and regulations dont ban. The government

has cleaned and amended the legislationsregulations and political provisions which

limit the development of the non-public economy , set the laws to protect private

property rightsand provide an institutional guarantee for the development of non-

public economy. The structural reform of taxation, finance, and investment continues

to deepen. The public finance system is continuously improved, the transformation of

value-added tax and export tax rebate mechanism are steadily promoted. The reform

of the financial system is intensified, joint-stock reform of state-owned commercial

banks is accelerated. Exchange rate formation mechanism reform makes a major

stride forward. The scope of government investment is further narrow, the decision-making power of business investment gradually expands, and the Investment approval

system is constantly standardized. The pace of construction of the market system has

further accelerated. The variety and quantity have increased year by year in the

commodity markets, the factor markets of land labor technologyproperty

rightcapital have further developed, the pace of the marketization for the price of the

essential resources such as waterelectricityoil and gas and so on has accelerated.

The social security system has been constantly improved. The coverage of social

security system has expanded the urban basic old-age insurance system has been

established basically the reform of the basic medical insurance system has been

comprehensively pushed forward, the construction of the unemployment insurance

system has significantly speeded up. The reform of science, education ,culture and

hygiene system has steadily carried out . More than 1,200 scientific research institutes

that belong to the state and the locality convert in two batches. Promote the reform of

the fund security mechanism for rural compulsory education actively, and encourage

and support the development of private education. Promote the reform of the internalmechanism of the non-profit cultural institutions; launch the transformation to


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enterprises of the business cultural institutions. New rural cooperative medical system

reform has been steadily pushed forward.

Second, China's major achievements in economic system

reform

After 28 years of reform and opening up, the traditional planned economic system

has been broken, a new type of socialist market economic system has been

established, showing a new look.

As the result of Constant improvement of the ownership structure and the

establishment of basic economic system where Public ownership acts as the mainstay

and diversified economic elements develop together, structure and layout of the state-

owned economy has been significantly improved, state-owned capital keeps the

superiority and controlling status in the key industries which matter national security

and national economic lifelines.

Although the number of State-owned and state-holding enterprises reduced by 40

percent, the total operating incomes and the total net assets are increasing steadily.

In addition, plenty of changes take place in the forms of public ownership, the

continuous development of mixed ownership economy mutually participated by state-

owned capital, collective capital and non-public capital turn out to be the main

manifestations of public ownership.

At the same time, because of the development of the individual, private and

foreign investment and other non-public economy, the quantity and the size of non-

public economy had been rapidly expanded.

At present, 1 / 3 of GDP and 4 / 5 of the new jobs are provided by non-public

ownership economy.

The development of diversified economic elements contributes a lot to the

competition promotion, economic development, convenient living, and job

resettlement.

State-owned enterprise reform has made important breakthroughs, state-owned


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continuously improve the competitiveness of the economy. At present, more than 50%

of key state-owned enterprises carried out the standard corporate system reform, the

power of institutions, decision-making bodies, supervisory agencies and the operators

and managers of checks and balances between the gradually formed, the vast majority

of small and medium-sized state-owned enterprises in various forms of reform.

Electricity, telecommunications, civil aviation and other enterprises to break the

monopolistic situation of the basic, market competition shape. Competitive areas the

proportion of state-owned economy declined significantly, a group of left over by

history through difficult policy bankruptcy exit the market, through asset

reorganization to form a group with strong competitiveness of large group of large

companies. State-owned assets supervision and management of the institutional

framework has been established. In 2005, the national implementation of state-owned

enterprises amounted to 11.5 trillion Yuan sales income, up 19.2 percent; achieve

profit 904.72 billion Yuan, up 25.1 percent; achieve tax 995.71 billion Yuan, an

increase of 20%.

A unified, open, competitive and orderly modern market system has taken shape,

the basic role of the market mechanism in resource allocation markedly increased. A

commodity market which is multi-level and has many categories and different forms

has taken shape. The modern circulation mode represented by chain operation,

logistics distribution, E-commerce has developed rapidly. The level of marketization

of the production elements market included capital, land, labor has obviously

improved. Multi-level capital market system is developing continuously. The system

in which laborers choose job by self-determination and by the adjustment of the

market has been established. The market of compensated transfer of land-use rights

developed rapidly, the scale of the exchange of intellectual property rights extends

rapidly. The price of products is primarily determined by the market.

At present,in total sales valume of goods retailing, acquisition of agricultural and

sideline products and the means of production.Market regulation percent has reached

to 95.6%,96.5% and 87.4%.Market play a basic role on resource deployment


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obviously.

The transform of government function makes an active progress.The socialist

market economy system which is related to administration system is taking form progressively.It is turning into economic regulation,market supervision,society

management and public service gradually.The economic regulation and control

system which is mainly by indirect means trends to be mature.The system that

national plans,financial policy and monetary policy cooperate mutually has initially

formed. Law enforcement administration, industry self-regulation,public opinion

supervision,public participation system has been built.The government supervises and

manages the main part of market,attacts the people who make fales goods and those

who sell them and also attacks business fraudulent conduct by the laws.The

government provides social security and creates conditions for social public life and

the participation of social economy,politics and culture activities .providing public

products and services such as education,technology,culture,health and physical

training by drafting social policy and regulation,managing and standardizing social

organisations and objects according to law ,resolve social contradiction ,defend social

justice,order and statement,as well as holding directly,franchise and so on.

The social security system building is strengthened gradually.The social system

that mostly includes urban old-age workers,medicine,unemployment insurance has

been built basically. On the aspect of old-age insurance,the old-age pension and

insurance systerms were formed which combining social plan with personel account

.On the aspect of unemployment insurance ,the unemployment insurance systerms

were built which facing town business staff,it achieved that make basic living

insurance of state-owned enterprises laid-off workers into unemployment

insurance.On the aspect of basic medical insurance,a series of insurance systerms

were built such as basic medical insurance ,enterpsise additional medical insurance

and commercial medical insurance .The lowest living insuance systerms of town

gained further improvement .By the end of 2005,the number of peple who took part in

town basic old-age pension and insurance ,unemployment insurance,town basic


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insurance was 17.4 million ,10.7million ,13.7million successively throughout the

country , the number of peple who received unemployment insurance was 3620

thousand ,so in total there are 22330 thousand town resident received the lowest living

insurance in the whole year.

The level of legal systerm of economic society increased obviously,laws and

regulations which in accordance with sociel market economy was set up initially.

Since reform and open, China has implemented a series of economic system and

enhanced the market main body, property system , market transaction system ,

economic adjustment and supervision and so on.. China has get down fixedly some

quite mature systems with laws and regulations forms. There have been formed more

than 200 steps of laws and 300 administrative rules and regulations and several

thousand local code and regulations and administrative regulations. They have

composed more complete laws and regulation systems.

Constantly improve the level of opening up an all-round multi-layered and wide

ranging opening pattern has been formed, continuous improvement of foreign trade

management system. All sectors of the economy in the formation of a common

foreign-funded enterprises to participate in the diversification of the pattern of import-

export operations, central and local governments set up a common burden of the

export tax rebate mechanism. Substantial reduction in foreign investment restrictions

on the formation of geographical and industry better foreign investment and foreign

investment management system; Trade integration with the steady progress of state-

owned enterprises in the regoranization and transformation of foreign trade and the

establishment of modern enterprise system have made positive progress. Established

in line with Chinas national conditions and international practices and WTO rules

and foreign policies and regulations to adapt to system. Including foreign-related

economic system reform, including the economy as a whole continues to advance

greatly promoted the development of Chinas rapid development of economy.

The transformation of he economy system has liberated and developed

productive forces dramatically and raised the living standard of the masses in material


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and spirtual life.From 1987 to 2005,the GDP of China ranked the fifth in the world

increasing from 36.24 billion to 18.23 trillion by more than 9.4percent per year,and

the fincial revenue arose from 113.2 billion to 3.16 trillion.The import and export

income of foreign trade totally up to 1.42 trillion dollors ranking third in the world.

Foreign exchange reserve at the end of the year reached to 818.9 billion ranking first

in the world,and Annual actual use amount of foreign investment was 60.3 billion

ranking 2nd all over the world. Since reform and open policy 28 years is the very

period that residentsincome rising dramatically and people favord most.During this

period,the income the township dwellers average per person may controled arose from

134 yuan to 10493 yuan .The countryside resident average per person net income

arose from 134 yuan to 3255 yuan. The city average per person residential building

area and country dweller even housing area was increased

from 6.7 square meter and 8.1square metre to 26 square metre and 29.7square

metre respectively,while the city and countryside residentsEngels coefficient was

down from 57.5% and 67.7% and 45.5% separately.

Third,China economic restructuring basic experience

China's reform and open policy is unprecedented, we explore boldly, advances

with steady steps, passes through 28 years endeavor, not only has realized in the

economic system significant transformation and the economic society huge

development, moreover has formed about the socialist market economy rich

understanding, accumulated construction socialist market economy some important

experiences.Mainly has:

Firstly, innovates unceasingly the reform theory, by science theory instruction

reform practice.The reform first is to the traditional theory and the thought idea

revolution, must liberate people's thought through the theory innovation, the unified

people's understanding, provides the thought guarantee for the reform and open policy

practice.The reform practice proof, each important reform practice motion, all take the

thought theory unceasing development and the innovation as a forerunner.Thought


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theory each innovation, has all brought the reform practice unprecedented

progress.The correct reform theory, not impossible not to have had the successful

reform practice.

Secondly, threads up economic development this center, unifies closely the reform

and open policy and the economical development.The reform goal is in order to

liberate with the development productive forces, we specially take the union which

reforms and develops, throughout take the economic development as the center, is

whether advantageous to the productive forces development, the promotion economy

reaches a new level, takes the choice reform measure the most basic basis.Uses the

productive forces development the standard to examine the reform throughout the

overall strategy and the concrete policy success or failure success and failure, and

unceasingly carries on the adjustment according to this kind of standard to the reform

measure and the policy.

Thirdly, respects the people fully the creativity, maintains the people benefit

throughout.In reform process a series of influence huge reform measure extrusion, all

is the concrete reform experience and the procedure which creates by basic unit's

people for the foundation and the basis.Not only that, the reform advancement pays

great attention to throughout maintains and promotes people's benefit, wants the

people, to satisfy, to comply to take the reform measure choice and the adjustment

datum and the rod.

Fourthly, take actions step by step from easier part first, making organic

integration of major breakthrough and overall promotion during the implementation.

Due to the complication and the obviously difficulty of the Chinese reform, the

government take the progressive overall reform strategy, which includes actions

basing on the reality, starting step by step from easier part. At the meanwhile, in order

to shorten the period in construction of the new economic system and to carry out the

reform measures smoothly as well, we focus on the breakthrough of some critical

aspects which promote a comprehensive reform. The reform strategy taken step by

step and the measures taken by overall promotion and breakthrough make the reform


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both be kept with the necessary strength, speed, and continuity and gradually be

adapted to the bearing of the society, avoiding any big social unrest.

Fifthly, pilot projects should be launched in advance in order to ensure public

stability while breakthroughs in the reform being promoted. Since the reform is an

unprecedented cause and is thus explorative, selecting several representative regions,

trades, and enterprises to conduct reform related test is of assistance in precluding

serious zigzags and mistakes that may arise from reforming. In addition, the reform is

also a complicated systematic project, with the problem of pursuing harmony of

interests of different sides involved. If this problem, however, could not be dealt well

with, social turmoil and public instability are readily to occur. Therefore, launching

pilot projects is supposed to be the most effective method to confine the negative

effects caused by reformation within a minimum range. All in all, one of the most

significant reasons for the achievement of the reform is establishing pilot projects.

Sixthly, we should grasp the variation of social economic circumstance and

conditions, and adjust the measure of reform with good flexibility. When a reform is

carried out, particularly much attention should be paid to the social economic

circumstance. When it is better, we should seize the opportunity to carry out important

measures of the reform. While when the circumstance varies, we should

correspondingly regulate and perfect the published reform measures. Conversely,

when considering promoting reform measures, the government should also make

every effort to take effective methods to create advantageous social economic

circumstance.

Seventhly, the goverment administrates the regulation of market,and combine

basic action of effective disposal resource of the market with the strengthening and

improvement of the macro-control .Take the effective actions and manage the

relationship between the macro-control and the market effectively .Nothing take the

active action of the market ,make the economic activities to follow the law of value

,and present the principle of conpetitemt but also enhance and improve the macro-

control ,and promote the balance of the inventory of economy and optimise the


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strutane ,hold the civil economy to develop healthy .The action make socilist market

system present the special superiority that is different of the other economic schema

and assure the procession that the planned economy turn into the market economy.

Eighthly, combine internal reform and opening to the outside world with

scientific absorb and use the resources and culture of the world .When we reform the

traditional planned economy ,we must carry out the policy of opening to the outside

world . Opening to the outside world not only combine internal economy with world

market and economy managing with run policy but also make new system cast off

old and closed-door policy .In othersides ,new policy ,new system reform promote the

develop of opening to the outside world in depth and scope .They are promote each

other ,complement each other .

Ninthly, regulating should be along with reformtion .Through making economy

law stimulates the institusons' of reform measures that economy legislation strengthen

the effect of reform is a most important step which ensure the economy reform to be

successed .In the reform exploring it is strengthen the weak step that ignore in the

early reform and pay attention to some reform measures which have good effect and

more grown-up .Their measures confirm with standard and system and law in time in

order to avoiding the change of good measure and build found ation for introducing

new reforms and developing new system.

Otherwise ,we take some efficiency measures in economic system reform ,such

as pay particular attention to reform village economic system and administration

because there are amounts of farmers in China, connect the economic system reform

with politics ,technology, education ,civilzation'sreform with politics ,technology

,education ,civilzation's reform ,in order to making essential progress in economic

reform ,when emphasize one new reform pay attention to unitary coordination and

harmony.All the above it's very important for the next reform.

The Second Section: New situation and new tasks and


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new requirements of China'economic reform

The reform of China has achieved a great success,but the final goal of the reform

hasn't come true .Catering to the future ,It is still very onerous to improve socialist

market ecomomy system.

First,The new situation of reform

Totally ,setting up a developed socialist market ecomomy system is at a critical

stage .In this stage ,the reform face a new situatinon and new features,its difficulty

,complexity,systemic and risks are greatly increased.

In addition, the solutions of many problems, including the deep self-reform

economic system, has been linked with the reform in political,cultural and social

aspects;and this has made the reform become a huge system engineering.

In terms of the driver of the reform ,at the beginning of reform ,the cupidity of

change and the well-expectation, which have made people enthuse over the revolution.Also the closing combination between the social driving of the government has led

the reform moving rapidly .However, with the progressingly deep reform and the

existence of differences in sharing the reforms fruits, to some degree, civilians have

been affected to apply their enthusiasm fully into work ,just attributed to some merits

and irregular behaviors during the progression of the reform .On the other hand ,with

the depth of the reform ,the government regarded as the organizer and driver of the

reform it has become the principal target .To rebuild oneself ,even to give up the

rights and benefits of their own ,its not only uneasy to reach ,but the initativity would

be affected.

From the way of reform ,at the beginning ,because there are differences in

advancing at the time and on geographical, the spaces of reform and policy

application are comparatively large ,the government can push forward reform by

giving preferential policies and authority to explore to some areas on the whole or in


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certain aspects, the governments dominant is strong. With wide range of reform

areas and universalization of the right to explore, with the diversity of socio-economic

composition, forms of organization, means of employment ,interests and mode of

distribution, the space of reform put forward by governments preferential policies is

limited ,the governments ability to dominate reform by means of administration is

facing challenges too.

From the request of reform ,peoples anticipation for the effect of reform has

improved universally ,the request to share fruits of reform has increased obviously

,the aim of the reform is becoming chear and strong .at this stage ,reform has changed

from mainly focus on break to focus on the balance between break and set and

resides break in set, its constructive requirements has increased obviously; has

changed from adjusting benefits mainly to adjusting and increasing benefits both

,from benefits lean to benefits cater , require to make all people can share the fruits of

the development of reform.

That the new trend of the reform confronting and the fresh characteristics arising

,requires us to hold the key aspects tightly ,to push the process of the reform rigidlyand stilly ;and it also requires us to perfect the modes to reform continurously , to

improve the science and the target of the reform.

Second , The main task in deepening reform

Last October the "the development of the national economy and social

development of the tenth Five-Year Plan's recommendations" was passed in the Fifth

Plenary Session of the Sixteenth Central Committee of the Communist Party of

China The " National Economic and Social Development Five-Year Plan outline ",

had given the comprehensive explanation and the overall deployment to the present

five-year economic system and the overall deploymentthat formulated according to

"Proposal" , discussed and passed by the Fourth Session of the Tenth National


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People's Congress.

Central Committee requirements that to accelerate reform with greater

determination, so that the major system reform involved in the development of overalleconomic and society, could achieve breakthrough . To focus on transforming

government functions and deepening enterprises, taxation, finance reform ,speeding

up the socialist market economic system, forming in favor of changing the mode of

economic growth, and promote comprehensive, coordinated and sustainable

development of institutional mechanisms. Adapt to the new situations demands, the


First, focusing on the innovation of promoting the administrative system. To

start with, to promote the transformation of government functions. In accordance

with the principles, namely the separation of government from enterprises, the

separation of government from funds, separation of government from public affairs

as well as the separation of government and the marketable intermediary

organizations, to definite the scope of the government responsibilities reasonably, to

strengthen the social management and public service functions of governments at all

levels. At the same time, further promote the reform of administrative examination

and approval system, to reduce and standardize administrative examination and

approval, and continue to improve government management. Second is to deepen the

reform of government institutions. Further adjust setting of government institutions,

strengthen and improve public services and social management institutions, reduce or

merge those agencies which interfere with microeconomic activity and social affairs.

Distribute power and duty between central and local government agencies at all levels

rationally, optimize organizational structure, reduce administrative level. Third is to

consummate government decision-making mechanism. To consummate scientific and

democratic decision-making mechanism, to improve collective decision-making on

important matters, expert advice, public proclaim and hearing of witness and

accountability system of errors in decision-making. To promote openness in

government affairs, to improve the government news release system, to improve


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transparency of government work.

We should fully improve the legality of government work, comprehensively

implement law enforcement and introduce the Accountability System. Fourth, deepenthe reform of the system for investment. Implement and give enterprises more

decision-making power about investment, narrow gradually the licensed extension.

Better and improve the rules and procedures of policy decisions, establish the system

of accountability for decision-making on government investment programme.

Second, stick to and improve the basic economic system. The first is to further

consolidate and develop unswervingly the public sector of the economy. Continue to

promote government capital to concentrate on the fields relating to the state security

and lifeline of the nation economy on important and key sectors, perfect the state-

owned capital to advance and retreat properly and the rational flow mechanism.

Quicken the reform of the state-owned large and medium enterprises, focus on

improving the share capital structure the company management structure and

incentive and restraining mechanism, we should establish lots of large, competitive

companies or enterprise groups. Increase the reform momentum of the wholly state-

funded companies and monopoly industries, wider market access, and push forward

the diversification of investors and property rights. Promote collective-owned

enterprise innovation, and develop multiform collective economy. The second is to

continue to develop and actively guide non-public sectors of the economy (NPSOE).

Conscientiously implement all policies and measures that encourage support and

guide the development of NPSOE, encourage and support NPSOS to participate in the

reforms of state-owned enterprises, enter the fields of finance public utility

enterprise, etc. Strengthen and improve the service and regulation of non-public

sectors companies.

Third, push forward the reform of the government financial system and taxation:


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The first is to improve the government financial system in which to adjust the

structure of financial expenditure, to quicken the development of public financial

system, to improve the system of financial transfer-pay both in the central and

provincial governments, to arrange financial management system in under-provinces.

And go on deepening the reform of the budget of department, the concentration on

revenue and expenditure in national treasury, the two aspects of the government

purchasing and revenue-expenditure. And establish the performance appraisal of

financial budget, strengthen the government debts management, improve the system

of revenue except tax. The second is to improve the taxation. Push forward the reform

of value-added tax (VAT) from the type of production to the pattern of consumption,

the regulation of resources and the study and integration of the taxation.

Fourth, speeds up the reform of monetary system. First, deepened finance

enterprise reform. Advances the state-owned Commercial bank comprehensive

reform, determined reasonably the policy-type bank function localization, develops in

with steady steps many kinds of systems of ownership the small financial enterprise,

the positive safe advancement financial industry comprehensive management

experiment site, speeds up the financial asset management company to reform the

step, the deepened insurance utilization of capital management system reform.

Second, speeds up the development direct finance. Develops capital markets

positively and so on stock, bond, develops the futures market with steady steps,

establishes multi-layered the capital inferior market system, the development

undertaking investment, enhances the direct finance proportion. Third, perfect

financial regulation system. Establishes the sound money market, the capital market,

the insurance market organic synthesis, the coordinated development mechanism, the

advancement interest rates liberalization reform, the consummation has the

management floating exchange rate system. Fourth, perfect financial supervision

system. The establishment finance risk recognition, the early warning and the control

system, raise the financial supervision level, establishes the perfect bank, the

negotiable securities insurance supervision organization as well as with the


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macroeconomic regulation and control department's coordinated mechanism.

Fifth, perfect modern market system. Firstly, perfect national unification

opening market, make a progress of breaking the administrative monopoly and the

local blockade ,and perfect commodity market while develop capital technology and

labor force and so on production elements markets largely. Secondly, improve the

resource product price redorm safely and positively, and perfect the resource product

price forming mechanism. Third ,standard the market order .standard the behavior of

major players in market and the market competition order, and clean up unreasonable

service while strengthen the price supervision .concentrating attention on perfecting

the credit record of the credit ,the tax payment keeping a contract and the product

quality, prompt the construction of society credit system and perfect the punishment

disciplinary of breaking a promise.

Sixth, comprehensive deepening rural reform. First, comprehensive

advancement countryside grand total reform carries on the villages and towns

organization safely and positively ,speeds up the countryside compulsory education

organizational reform, a-dvancement country township financial control

organizational reform.Second,perfect land system .Stable and perfectly management

system taking household responsibility system as foundation , combination of

centralization and decentralization.Safeguards the farmer's each right to land

contracting management.The place has the condition can circulation the land

management right of legally ,developing many kinds of moderate large-scale

managements ,according to voluntarily, the paid principle .Third, deeping rural

financial reform. Standard develop the financial organization suits the countryside

characteristic ,establishes the perfect rural finance system .

Seventh, increase employment, social security and income distribution system.

Firstly, we should deepen the reform of the employment system. Continuing to

improve the employment environment and encouraging self-employment and expand


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employment are also needed. All kinds of employment monopoly must be further

broken. We also should guarantee the right of the members of society to fair

employment . It is important to carry out an active policy of employment ,make a

unified plan for rural and urban employment and try our best to bring the

unemployment scale under control. Secondly, we will expand the urban basic pension

insurance coverage, gradually fully fund Personal accounts and improve the level of

Social co-ordination, to advance Government organizations and institutions Pension

insurance system reform and improve the multi-level medical security system. We

will perfect the subsistence security system for urban residents and set up a special

social relief system for citizens who are in extraordinarily straitened

circumstances Thirdly, development of the reform of the income distribution system

shall be accelerated. We should rectify and standardize the order of income

distribution, pay more attention to make adjustment to income distribution and

maintain the process of distribution and fair opportunity. We should intensify efforts

to establish the standard wage system of civil servants at the same time rigorouslystandardize duty consumption. We will perfect the state-owned enterprises income

distribution regulationand supervision mechanism and control and regulate the

income level of some monopoly industries .

Eighth, we should deepen structural reform in the social field.First, reform of the

system for science and technology. we accelerate the step of the application research

and development institutions foundation to modern corporate system,drive non-profit

research institutions building and improving the research academies and institutes

system, drive to establish a enterprises as the mainstay, market-oriented employment ,

combination of industrial research mechanism.Second, we should intensify the

reform of the management education system . Establishing and improving the

management system for rural compulsory education in which the county authorities

play the principal role, under governments at all levels ,fiscal system with division of

revenue, enhanced financial stability . We will strengthen and consolidate compulsory


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education. Advance the dual management system at both central and provincial levels

, the system for managing colleges and universities with the provincial government

playing the principal role, continue the establishment of a modern schools system

Improve the vocational education system, vigorously develop vocational education.

Continue to push forward the reform of the educational administrative system,

change management approach.Third, we will expedite the reform of the education

system. Drive the enterprise-oriented reforms of the profit-making cultural units

,drive the internal personnel of labour of the public cultural institutions, the

establishment of income distribution system ,drive the readjustment of ownership

structure in culture field, drive the change functions and improve the methods of

management of cultural administrative department . Forth, we will expedite the

reform of basic medical insurance system.Reform the hospital system classifically ,

Strengthen the main of public health care services ,promote the public hospital

system of property rights and the internal management system, promote the social

capital and the medical resources to organize the medical institutions of various

nature Deepen the reform of the circulation system of drugs, separate of the

progressive realization of medicine, further control the drug prices; devote energetic

efforts to develop the rural health service, promote the new rural cooperative medical

scheme actively.

Besides, we would also like to further expand opening-up efforts, Speed up the

political system, social aspects of the management system reform.

Third, the new requirements of reform

Overall, more and more emphasis on the task of reform, the requirement

become higher and higher the difficulties become higher and higher the risk

become very great . This new situation calls for further innovation and improve the

reform of the way, push forward reform actively and steadily. Mainly:


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First , We should pay attention to the effect , base on the "pragmatic" to promote

the reform process, touched on areas of reform, the more difficult ,more requirements

should put focus on the achieve tangible results . In order to achieve tangible results,

we must pay more attention to the promotion of pragmatic reform.more attention

should be paid to those:First, while we bring forward the general approach and the

principles for the reform, we should clearly define the responsible entities the

objectives and requirements and the finishing time .And strengthen tracking

supervision and check up on evaluation.Second, while we bring forward the guiding

principles and basic principle for the reform,we should offer the Concrete

substantialmaneuverable reform measures.Third while we offer the Concrete

reform measures.We should offer or establish the convertibility and the system to

ensure deepening the measuresreform.

Second, we will divert effectively, relying on coordinationto enhance the

Reform.When the reform drive deeper and deeper ,It will ask the stronger

impetus.Based on Current situation, increasing the impetus reform, accelerating the

process of reform.We should focus on revolving around interest between Institutional

coordination and Policies guidance.The impetus to the current: Frist , we should lose

no time in tackling the problems which the broad masses of the people are concerned

about most, most direct and most real,Especially, we should effectively do the works

such as employmentsocial securitymedical care and safety in production.We should

resolutely remove the problem which is harmful to the benefits of publics happened in

land transferhouse demolitionrestructuring of enterprise related and enable the

people to constantly obtain tangible reform and development benefits. Especially, to

enjoy the equal rights and fair opportunities. Second, through strong and clear

constraint rules and pragmatic and effective coordination mechanisms, we will

promote all aspects. In particular, the relevant government functional departments

stand in a high state of social development and fairness, actively scheming and

steadily advancing all parts of reform. Third, we will take effective measures, keeping

our eyes on increment and the structure in order to improve and adjust the interest

patterns. We will resistance transmute into impetus so that mobilize all positive

factors as much as possible.
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At last, we should reasonably consider all the aspects,be established in beneficial

concept in all parts of the life to achieve the breakthrough of reformation.Take care of

the existing basic of benefit aptly and,guiding a matter along its course of

development to put forward some plans of reform where the shoe pinches.By this

way,it can not only gain the purpose of deeping the reformation,but also reduce the

cost and venture of the reformation largely,and avoid the social shake which cause by

the extremely reform.When the reformation coming into the most important time,the

beneficial relationship become more and more complicated and,the reaction to the

beneficial relationship adjustion become more and more intensively.All of these cause

by changing of the social economic composition,the form of organization,and

identity of citizen.Reform needs considering the recent interest basic fully and

regulating the relationship between authority and interests on the basic of benefiting

each side,so that material breakthrough of reform could come ture.

During the past28 years,we overcomed many difficulties, and created a reform

way step by step.Today,the condition of reform is much better than what it is in past

28 years.Though there are many difficulties in future reform ,we have confidence and

power to overcome new difficulties and to make the final goal of founding perfect

socialist market economy come ture,

The Historical Progress and Basic__ Trend of Reform in China

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Transcript of The Historical Progress and Basic__ Trend of Reform in China