Premier Zhao Ziyang said today that widespread urban economic reforms had led to dramatic gains in China's productivity, but he acknowledged major problems that could discredit the entire program if they are not "resolutely rectified."
In the most detailed top-level accounting of the program since it was launched five months ago, Zhao chronicled recent indiscriminate increases in wages, prices and bank credit that he said "must be dealt with in earnest."
He advocated "severe punishments" for those who artificially raise prices and profiteer through the resale of scarce goods and called for rectification of "newly emerging practices" such as issuing excessive bonuses and allowances, giving lavish dinner parties and gifts and offering and taking bribes.
Zhao's remarks, in a major speech to the National People's Congress, amounted to a state of the union address that in effect injected a note of caution into a largely optimistic overview of progress made in both rural and urban reforms. One diplomat described part of the speech as "something of a self-criticism."
One "conspicuous problem" that Zhao addressed was a lack of control over the country's currency, especially in the last quarter of 1984, which had contributed, he said, to a rise in prices. He seemed to hold China's banks largely responsible for this, thus helping to explain why the presidents of both the Bank of China and the People's Bank of China were ousted in the past month.
But despite the problems that he outlined, Zhao indicated that China's economic reforms, with their stress on departing from Soviet-style central planning, would go forward. The urban economic reforms, affecting more than 200 million people, allow for incentives such as bonuses for workers and for more reliance on market forces.
He said that the next stage consisted of wage and price reforms, with a new wage system for state agencies to be put into effect in July.
With five huge red flags forming a backdrop behind him, the portly Zhao spoke to the deputies in the Great Hall of the People without polemics or Marxist jargon. He did not mention the late Communist Party chairman Mao Tse-tung.
"Viewed as a whole," said Zhao on an optimistic note, "the problems in China's current economy are problems that arise in the course of advance." He added, however, that while "constituting a minor aspect of China's economic development, they must be dealt with in earnest."
Zhao said that the country's achievements were due in part to the opening of its economy to the outside world.
"Our economic structure has begun to break the closed and rigid pattern that had taken shape over a long period," he declared. "The urban and rural economies have been increasingly invigorated . . . "
The premier said that industrial and agricultural output in 1984 increased 14.2 percent over the previous year.
Zhao said that if such a high rate of growth could be maintained, China definitely would be able to achieve its objective of quadrupling its total industrial and agricultural production by the end of this century.
What the economic reforms could mean if all went well for China over the next few decades, some foreign experts say, is the rise of a once impoverished nation to a major economic power, competing for export markets not only with Asian nations but also with the United States and Western Europe. That, of course, is far from a certain prospect.
But what China's recent economic growth already has meant to millions of ordinary Chinese workers is not only the chance to acquire sufficient food and clothing but also to obtain luxury items that would have been unthinkable just a few years ago. Workers interviewed earlier this week in the industrial port of Tianjin said that everyone now aimed at getting what they called the "three main possessions" -- a refrigerator, a color television set and a combination radio-tape casette player.
In the best-run factories, workers are acquiring one or two of the three, and in some cases all three. In his speech, Zhao said that the production of many consumer goods, such as refrigerators, woolen fabrics, television sets and washing machines, had "increased dramatically."
The premier said that in 1984, the annual per capita income of urban residents used as living expenses reached 608 yuan ($217), or a rise of 12.5 percent over 1983, after allowing for price rises. Per capita net income of peasants reached 355 yuan, he said, an increase of 14.7 percent over 1983.
Zhao said that when it came to wage reform in 1985, the emphasis would be on "eliminating the current irrationalities, so that the egalitarian practice of 'everybody eating from the same big pot' in the distribution of wages" would be replaced by a wage system "better embodying the principle of distribution according to work."
But while a new wage system would be put into effect in state agencies as of this July, Zhao warned that "we cannot expect too much, for it will not be possible to solve at one stroke all the problems that have accumulated in the wage system over the past two decades or more."
Concerning price reform, which many observers see as the key test in the next few years, Zhao said, "the prices of many commodities reflect neither their value nor the supply-demand relationship.