Zhao with students in Tiananmen Square, 1989.

Excerpt 5: Market Systems

Page 126 (from Part 3: The Roots of China’s Economic Boom, Chapter 7: One Step at a Time)

Former Chinese Premier Zhao Ziyang's secret journals were smuggled out of China and are to be published May 19th, for the 20th anniversary of the Tiananmen Square demonstrations.

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English Transcript

[Eds. note: Paragraphs in italics were deleted in the editing process.]

In summary, there were two aspects: one was the market economic sector outside of the planning system, and the other was the planned economic sector. While expanding the market sector, we reduced the planned sector. While both planned and market sector existed, it was inevitable that as one grew the other shrank. As the planned sector was reduced and weakened, the market sector expanded and strengthened.

At the time, the major components of the market sector were agriculture, rural products, light industries, textiles, and consumer products. Products involved with the means of production were mostly still controlled by state-owned enterprises.

If the enterprises that controlled the means of production were not weakened or reduced, if a portion was not taken out to feed the market sector, growth could not continue for the emerging market economic sector. If no part of the means of production was allowed to be directly sold on the free market; for example, if small enterprises producing coal or concrete were all under central control; then the new emerging market sector would have run into great difficulties for lack of raw materials and supplies. Therefore, for more than ten years, though there was no fundamental change to the planned economic system and the system of state-owned enterprises, the incremental changes in the transition from planned to market economies had an undeniably positive effect.

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