Chinese plan to speed up economic reform: Blueprint seeks to chart development towards a market economy in the post-Deng era

THE CHINESE Communist Party last night published a blueprint for accelerated economic reform designed to put the stamp of the ailing paramount leader, Deng Xiaoping, on the country's development until the end of the century.

While not abandoning recent attempts to cool down the booming economy, the emphasis of the Central Committee communique was firmly on opportunities for growth, coupled with the need for ambitious, wide-ranging structural reforms in banking, taxation, state enterprise, the legal system, investment and foreign trade. Wages will be linked to actual work, and some areas and some people will be encouraged 'to get rich first'.

Xiao Yang, the Governor of China's most populous province, Sichuan, and an alternate Central Committee member, said the party plenum meeting had been a 'turning point' in China's reform process. It is a year since the 'socialist market economy' was formally endorsed by the full 14th Party Congress, but the concept has remained nebulous.

'Now we let people know what it is about, what the detailed interpretation of it is like,' Mr Xiao told the Independent last night after the close of the 14th Congress's third plenary session. Some attempt has this time been made to spell out the different areas where reform will focus, although much remains clouded by party jargon.

'This document . . . expresses the Chinese people's determination to reform. The significance is that it is proposed that by the end of the century the market ecomomy system will be created. So the next seven years will be a very challenging time for us,' Mr Xiao said.

While still short on detail, some diplomats and analysts have said the four-day meeting may prove the most crucial top-level party gathering since the one 15 years ago at which Mr Deng launched China on its path of reform and opening up to the outside world. At issue, given the friction that still exists among senior cadres on the pace of economic reform, is the direction China will take after the death of the 89-year- old Mr Deng. 'No matter if Mr Deng is alive or not, this (blueprint) is China's general strategy for reform,' said Mr Xiao.

Speculation about Mr Deng's health was again sparked earlier this month with the publication of a set of his speaches reaffirming his reform principles. In the run-up to the plenum, Mr Deng's book has received blanket coverage in the official media.

In the summer, high inflation, rampant money supply growth, and a collapsing currency pushed China to launch an austerity programme, designed by the Vice-Premier, Zhu Rongji, which was aimed at reining in the speculative areas of the economy, such as property development and unofficial trading in shares. But the clampdown on bank loans also badly pinched the country's decrepit loss-making state industries, raising fears about large-scale unemployment.

This plenum stopped short of endorsing a privatisation programme for the state sector and the commnique stressed that public ownership would remain the predominant feature of China's economy. Dealing with heavily manned, loss- making state industry is one of the country's biggest headaches, and the plan is to turn as many as possible into limited liability companies.

Yesterday's blueprint contains 10 parts, of which Mr Zhu's adjustment plan represents just one. China's economic guru has been taking a very low public profile in recent weeks.

The communique played down many of the worst problems that still exist, including widespread discontent amoung China's 900 million peasants, whose living conditions have fallen far behind their urban counterparts. Yesterday's statement said the economic measures had 'produced positive results'.

LONDON - Chris Patten, the Governor of Hong Kong, says he has been given cabinet authority to 'pull the plug' on talks with China if he cannot strike a deal soon on broadening democracy in the colony, AP reports.

Hong Kong would like a settlement if possible, but 'there is a general feeling that we can't have a settlement at any price,' he said in an interview on BBC Television's On The Record programme.

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