Economic Development Faces a New Stage in Which Reform Will Promote Readjustment

Abstract

1. After a year of improvement and straightening the economic situation in the fall of 1989 can roughly be summarized as follows: The superficial cause of the 1988 price hike—expansion of real purchasing power as represented by Mo (cash)—has been brought under initial control. From this point of view, we can say that control of aggregate demand is achieved, hence prices are showing a tendency to drop and the overheated economy is cooling down rapidly. On the other hand, problems in the economic structure and system have basically remained untouched. These problems at a deeper level are urgently in need of a solution, otherwise further economic development would be difficult. The above two facts show that the work of readjustment of the national economy—improvement, straightening out, and deepening the reform—has entered a new stage.