Second, upholding the leading position of the state economy and developing diverse economic forms.

The socialist state sector occupies the leading position in the entire national economy. The consolidation and growth of the state sector are the decisive factors in ensuring that the collective economy of the working people will advance along the socialist road and that the individual economy will serve socialism. As the level of development of the productive forces in our country is on the whole still fairly low and uneven, it is necessary to maintain different economic forms for a long time to come. In rural areas, the principal economic form is the co-operative economy collectively owned by the working people. At present, the state sector alone cannot and should not run all handicrafts, industries, building industry, transport, commerce and the service trades in the cities and towns; a considerable part should be run by the collective. Co-operatives financed and run by young people and other residents have spread to many urban areas in the past few years and played a useful role. The Party and government should support and guide them and forbid discrimination or attacks against them from any quarter. We must also encourage the appropriate development of the individual economy of urban and rural working people as a necessary and useful complement to the public economy, within limits prescribed by the state and under supervision by industrial and commercial administrations. Only through the rational distribution and development of diverse economic forms is it possible to invigorate the urban and rural economy and make life more convenient for the people.

To bring the initiative of enterprises and of the working people into play, we must earnestly implement a responsibility system in the operation and management of both state and collective enterprises. The responsibility system for production set up in various forms in the countryside in recent years has further emancipated the productive forces and it must be adhered to for a long time to come. The thing for us to do is to gradually perfect it on the basis of summing up the practical experience of the masses. In no case must we make rash changes against the will of the masses, still less must we backtrack. With the growth of agricultural production and the rising management ability of the peasants, demands for new types of combined management are bound to arise. We should promote various forms of inter-unit economic combination strictly in accordance with the principle of stimulating production and of voluntary participation and mutual benefit. It can be predicted that in the not too distant future, there will emerge in our rural areas an improved cooperative economy, with a diversity of forms, which will be able to make full use of the advantages in the light of local conditions and facilitate the large-scale adoption of advanced production measures. Recently, the economic responsibility system has also been initiated in industrial and commercial enterprises with some good results. Although industry and commerce are vastly different from agriculture, the application of the economic responsibility system (including the system of responsibility for profit or loss in some of the state enterprises) similarly helps to implement the Marxist principle of material benefit, to heighten the workers' sense of responsibility as masters of the country and to promote production. We should adopt a positive attitude to this system, earnestly sum up experience and discover and devise a set of specific rules and methods which are suited to the characteristics of industrial and commercial enterprises and which can both ensure unified leadership by the state and bring into full play the initiative of enterprises and their workers and staff members.

It is impermissible to undermine the public ownership of the means of production, which is our basic economic system. Of late, there have been cases in certain rural areas of damage to farm irrigation works, destructive lumbering and doing away with the accumulation and retention of common funds by the collective, while in some state-owned industrial and commercial, enterprises, there have been such acts as violation of unified state plans, arbitrary holding back of materials earmarked for unified distribution, withholding of profits that should be turned over to the state, evasion of taxes, wilful inflation of prices and blocking the flow of commodities. All such things, though done by only a small number of people, seriously impair the public economy and the interests of the state and the people, and they must be resolutely corrected.