I. The New Situation and New Tasks In China's Efforts to Reform Its Economic Structure

1. Great changes have occurred in China's economic structure through reforms over the past 10-odd years guided by the theory of building socialism with Chinese characteristics put forward by Comrade Deng Xiaoping. A situation with the publicly owned economic sector constituting the mainstay while various other economic sectors develop simultaneously has taken initial shape. The economic restructuring in the rural areas continues to develop in depth; state-owned enterprises are shifting to new management mechanisms; the role of the market in the allocation of resources is rapidly expanding; economic and technological exchanges and cooperation with other countries are conducted widely; and the structure of planned economy is gradually being replaced by the socialist market economic structure. Reform has emancipated and developed the social productive forces, and promoted to a new height the country's economic construction, the people's living standards and overall national strength. China's socialist system has shown great vitality in a situation marked by abrupt changes in the international arena. The reform and opening to the outside world which have been adopted by the Party and people on the basis of a conscientious summing up of historical experiences constitute a strategic policy decision that conforms with the law of social and economic development and is the necessary path for China to achieve modernization.

Marked by Comrade Deng Xiaoping's important speeches in early 1992 and the 14th National Congress of the Chinese Communist Party, China's reform, opening to the outside world and the drive for socialist modernization have developed to a new stage. The 14th National Congress explicitly laid down the task of establishing a socialist market economic structure, which is an important component of the theory of building socialism with Chinese characteristics and is of profound and far-reaching significance for China's modernization drive. To establish a new economic structure by the end of this century is a great historic task of the whole Party and people of all nationalities in China during the new period.

2. The socialist market economic structure is linked with the basic system of socialism. The establishment of this structure aims at enabling the market to play the fundamental role in resource allocations under macro-economic control by the state. To turn this goal into reality, it is necessary to uphold the principle of taking the publicly owned sector as the mainstay, while striving for a simultaneous development of all economic sectors, to further transform the management mechanism of state-owned enterprises, and to establish a modern enterprise system which meets the requirements of the market economy and in which the property rights as well as the rights and responsibilities of enterprises are clearly defined, government administration and enterprise management are separated and scientific management is established. It is necessary to establish a nationwide integrated and open market system to closely combine the urban market with the rural market and link the domestic market with the international market, so as to optimize the allocation of resources. It is necessary to transform the government's functions in economic management and establish a sound macroeconomic control system which chiefly relies on indirect means so as to ensure the healthy operation of the national economy. It is necessary to establish an income distribution system which takes the principle of "to each according to his work" as its mainstay, gives priority to efficiency while taking fairness into account so as to encourage some localities and people to become prosperous first while adhering to the road to common prosperity. It is also necessary to establish a multi-layered social security system and provide both urban and rural people with a degree of security commensurate to China's reality so as to promote economic development and social stability. All these major links comprise an organic entity, interrelated and mutually conditioning, together forming the basic framework of the socialist market economy. It is necessary to establish a legal system in line with and corresponding to these major links, and to adopt down-to-earth measures to push the overall reform forward actively step by step and promote the development of the social productive forces.

3. The establishment of a socialist market economic structure is a pioneering undertaking unprecedented in history; it requires tackling many extremely complicated problems. In the past 15 years, we have blazed a fruitful trail in reform and accumulated rich experiences. Practice has proved that so long as we unswervingly adhere to Comrade Deng Xiaoping's theory of building socialism with Chinese characteristics and the basic line of the Party at the primary stage of socialism, we can withstand all kinds of tests and successfully achieve the great goals of reform, opening to the outside world and modernization.

In the process of establishing the socialist market economic structure, we must, under the guidance of the Party's basic theory and line, decide on the various steps of reform and judge their success or failure by always adhering to the basic criterion of whether they help develop the productive forces of the socialist society, enhance the overall strength of the socialist state and improve the people's living standards. Attention should be paid to the following points:

- Emancipating the mind and seeking truth from facts. It is necessary to change the traditional concepts of planned economy and advocate active exploration and bold experiment. Therefore, it is necessary, on the one hand, to inherit our fine traditions and, on the other, to break away from outmoded conventions and, proceeding from the realities of China, learn from those experiences of all countries, including the developed capitalist countries, that reflect the general laws of social production and market economy. It is necessary to be on the alert against Right tendencies, but mainly to guard against "Left" tendencies.

- With economic construction as the central link, reform and opening to the outside world, economic development and social stability promote one another and form a single entity. Development is an essential criterion. Only by seizing the favorable opportunities, conducting reform in depth, expanding the opening to the outside world and accelerating the pace of development, can we consolidate China's political stability and unity. Only by upholding the four cardinal principles, fostering both material progress and cultural and ideological progress, and maintaining social and political stability can we effectively guarantee the smooth progress of reform and opening to the outside world and the development of China's economy. In making active efforts to develop the economy and implementing reform and opening to the outside world, we should take care to be steady and discreet and steer clear of massive losses and social upheavals.

- Respecting the pioneering spirit of the masses and attaching importance to their personal interests. It is necessary to sum up in time the experience the masses create in practice, show respect for the wishes of the people and to properly guide and protect their initiative so as to give it full play. In the process of deepening the reform and developing the economy, it is necessary to properly handle the relationship between accumulation and consumption, between overall and partial situations and between long-term and short-term interests, and to effect continuous improvement in the people's living standards, so as to establish a broad and deep popular basis for our reform.

- Combining package reform with breakthroughs in key areas. It is a correct policy decision conforming to China's realities to start the reform from the countryside and gradually extend it to the cities, to combine urban reform with rural reform, keep micro-economic reform in step with macroeconomic reform, and ensure that the enlivening of the domestic economy and the opening to the outside world are closely related to and promote each other. In accordance with differing situations, for some major reform measures, plans can be drawn up first and conducted coordinately in related areas of the economic system, while some others should be tried out first in selected localities or areas and then extended after experience has been gained. It is necessary both to pay attention to the gradual progress of the reform as a whole and to miss no opportunity of making breakthroughs in key areas that spur the overall reform.

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