THE Third Plenary Session of the 12th Central Committee of the Communist Party of China, having analysed the current economic and political situation in China and summed up the experience, both positive and negative, in socialist construction, and particularly that of reform of the economic structure in the urban and rural areas over the past few years, holds the consensus view that, proceeding from the overall need to build socialism with Chinese characteristics by integrating the basic tenets of Marxism with actual conditions in China, we must go a step further with the policy of invigorating the domestic economy and opening to the outside world and accelerate the restructuring of the national economy as a whole, with the focus on the urban economy, so as to create a new, better situation for our socialist modernization.

I. Reform Is a Pressing Necessity In the Current Developments in China

China has prepared and practised reform of its economic structure for several years. The Third Plenary Session of the Party's 11th Central Committee, in deciding to shift the focus of the work of the whole Party to economic construction, stressed the imperative need to reform the economic structure for China's socialist modernization. The Party made tremendous efforts after that session to set things to rights and readjust the national economy, and carried out reform mainly in the rural areas. The 12th Congress, basing itself on the historic change consequent upon the rectification of the guiding ideology of the Party, set the explicit task of reforming the economic structure systematically. It pointed out that this reform would provide an important guarantee for keeping to the socialist road and achieving socialist modernization. In the past two years, and particularly since the beginning of this year, the Party Central Committee and the State Council have taken a number of policy decisions and issued major directives, stimulating reform in various fields in depth and breadth.

Our economic restructuring scored great achievements first in the countryside. Agricultural production, which worried us for so long, has been enabled to develop vigorously in a very short time, displaying the great vitality of our socialist agriculture. This is due fundamentally to a bold break with "Left" ideas. We have changed the structure of China's rural economy that was incompatible with the development of the forces of production in agriculture and introduced across the countryside the system of contracted responsibility for production with remuneration linked to output, bringing into play the enormous initiative of the 800 million peasants for building socialism. The rural reform is going forward and the rural economy is moving towards specialization, large-scale commodity production and modernization. Therefore, there is an urgent need to unclog the channels of circulation between town and country, expand the market for the increasing amount of agricultural products, and satisfy the rising needs of the peasants for manufactured goods, science and technology as well as culture and education. Our successes in rural reform and the demands on the cities by the growing rural economy provide highly favourable conditions for restructuring China's entire national economy, focusing on the urban economy.

Such restructuring has been repeatedly explored and tested in recent years, and a number of important measures have been taken. This has yielded marked results and important experience, and economic life has been invigorated to an extent unknown for many years. Our urban reform is only in the initial stage, however, and defects in the urban economic structure that seriously hinder the expansion of the forces of production are yet to be eradicated. The economic effectiveness of our urban enterprises is still very low the huge potential of our urban economy is far from being fully tapped, and there is serious loss and waste in production, construction and circulation. Expediting reform is a prerequisite for the growth of the urban economy. The cities are economic, political, scientific, technological, cultural and educational centres where modern industry and members of the working class are concentrated, and they play the leading role in socialist modernization. Firm, systematic reform is the only way that the cities will play their due leading role of invigorating the urban economy and enlivening the domestic economy as well as opening to the outside world and promoting a healthier and faster development of the national economy as a whole.

It should also be noted that emerging on a global scale is a new technological revolution which presents both new opportunities and new challenges to our economic growth. This means that our economic structure must become better able to utilize the latest scientific and technological achievements, promoting scientific and technological advancement and generating new forces of production. Reform, therefore, is all the more imperative.

Political unity and stability in China are ever more consolidated; major successes have been achieved in economic readjustment; the economy has been growing steadily; the major targets of the Sixth Five-Year Plan (1981-85) have been fulfilled ahead of schedule; and the country's financial situation has improved gradually. This has made all comrades in the Party and the people of all nationalities much more confident about socialist modernization. Their wish to speed up reform of the economic structure is much stronger. In particular, the sound all-round consolidation of Party organizations at the central and the provincial, autonomous regional and municipal levels, has set, or is setting, to rights the ideas guiding all fields of work in modernization and has given, or is giving, the reform a clear orientation. Conditions are now ripe for all-round reform of the economic structure. We both can and must raise and expound, in a rather systematic way, a number of major issues related to the reform so as to achieve unity of thinking and enhance it among all comrades in the Party (particularly among leading Party cadres). We must make the reform more effective and give fuller play to the superiority of socialism. The Central Committee hopes and is confident that the Third Plenary Session of the 12th Central Committee will play a historic role in drawing up a blueprint for an allround reform, quickening its tempo and stimulating the restructuring of the entire national economy with the urban economy as the focus, just as the Third Plenary Session of the 11th Central Committee did in setting things to rights and raising the task of restructuring the economy and promoting rural reform.