Announcement of Reforms in Economic Management Essential in Order to Attain China’s Long-Term Development Goals on October 25, 1985

HOLD FOR RELEASE World Bank JNTERNATim.r,L MO ,,ETAHY FUND 1818 H Street, N.W ., Washington , D.C. 20433, U.S.A.• Telephone : (202) 477 -1234 JOIN f Lli>B,1'.i'i' OCT 1G 1985 BANK NEWS RELEASE EMBARGO: FOR RELEASE BY A.M. NEWSPAPERS FRIDAY, OCTOBER 25, 1985 REFORMS IN ECONOMIC MANAGEMENT ESSENTIAL IN ORDER TO ATTAIN CHINA'S LONG-TERM DEVELOPMENT GOALS During the next two decades, China could add substantially to the major, though uneven, progress that has already been made toward its goal of catching up with the industrial countries. But to do so China will have to steer a difficult course, in both development strategy and system reform. These are among the conclusions of a new World Bank report 1 which analyzes development issues confronting China and options for addressing them. The report examines critical issues over the next twenty years in virtually every aspect of China's economy: agriculture, energy, technology, transport, industrial location, internal and external trade, population, education, employment, and finance. The report states that success in effectively using available resources, especially people, will depend largely on success in reforming the system of economic management on three fronts: First, there needs to be greater use of market regulation to stimulate innovation and efficiency; efficiency means "ceaseless, intense efforts" to reduce costs, improve product quality, introduce new products and seek new opportunities. Second, stronger and more effective planning, combining indirect with direct economic control, is required. Third, social institutions and policies need to be modified and extended to maintain fairness in distribution. Within the basic objective of improving living standards and eliminating poverty, China has set targets of quadrupling the gross value of industrial and agricultural output (GVIAO) between the years 1980 and 2000, and increasing per capita national income from about $300 to $800, representing an increase of 5 percent a year. According to the World Bank report, these goals are feasible, if the following assumptions are made: o With future investment efficiency in China at the average of the past three decades, and along with increased investment in economic and social infrastructure, quadrupling GVIAO would require an investment rate of about 30 percent of national income, which is in line with China's past investment rate; and o With reasonable improvements in energy and materials use, and assuming that population comes near to the official target of 1.2 billion people, quadrupling GVIAO would allow the per capita income target to be reached. 1 China: Long-Term Issues and Options. Baltimore, the Johns Hopkins University Press for The World Bank; 212 pp.; $29.95 (hardcover); $14.95 (paperback). Publication date: October 25th, 1985. Six Annexes to the main report are published at the same time at $35 per set.