BEIJING, OCT. 26 -- A day after Premier Zhao Ziyang called for further reforms of China's Soviet-style industries, two senior Chinese officials today made clear that the country faces numerous obstacles to such reforms and is uncertain about how to proceed in some areas.
In a rare, nearly two-hour-long news conference, the two officials were unable to provide a timetable for the implementation of key reforms dealing with prices, bankruptcy, and the management of state-owned industries.
At the same time, they said China will continue to experiment with reforms that some more traditionalist Marxists would consider to be capitalistic, such as the creation of land and labor markets and the distribution of shares in state-owned factories.
The news conference was organized as part of a major Communist Party congress, which opened yesterday. The congress is supposed to endorse policy and top party leadership changes. Western journalists are being given access to some of the proceedings for the first time in decades.
Answering a question about a controversial reform, one of the two officials, Du Runsheng, director of a high-level party rural research center, said land use rights could be sold under a reform now under consideration.
A western economist here said the Chinese were edging toward creation of a real estate market, something that might have shocked Mao and Marx. But Du said China would keep its land under state ownership regardless of whether land use rights were transferred.
Meanwhile, price reform, considered the key to many other reforms, has been largely stalled since early this year out of a fear of inflation. Prices rose 7 percent in the first three-quarters of this year, and bank officials say that a more accurate rate would be more than 10 percent.
"We will persist in our efforts to implement price reform but will proceed in a steady manner so as to maintain the basic stability of prices," said Du at the press conference.
A western economist said the Chinese were likely to delay making any moves on price reform for an additional nine months to a year from now.
Prices are a highly sensitive issue because they affect so many people and because the Communists have prided themselves on controlling inflation. The Communists defeated the Nationalists in 1949 partly because of the Nationalists' inability to control runaway inflation. A Chinese official said recently that the government feared unrest, and possibly rioting, a few months ago because of rising food prices.
At today's news conference, the officials said a major problem was that demand for goods continually exceeds supply in a society that has become increasingly oriented toward consumption.
Earlier this year, the party shifted the main emphasis of the reforms away from price reform to factories in an attempt to make industries more efficient and productive. More than 20 percent of large state-owned factories are said to operate at a loss.
The latest experiment, which now extends to a large number of state-owned factories, has managers competing for contracts under which they attempt to run such factories at a profit.
Officials claim that the system is working well in numerous cases, but economists say that this "management contract system" is at best an interim measure. Since the contracts are based on fixed prices, they tend to work against any attempt to introduce price reforms that would deregulate prices.
The system also lends itself to corruption because managers who have connections to party and government officials can negotiate a better contract than those managers who do not have such connections.
Gao Shangquan, vice minister of the State Commission for Restructuring the Economy, was the second of the two officials to answer questions at today's press conference. He defended a new practice that appears to be capitalistic, the hiring of workers by private enterprises.
He also defended the earning of interest from bonds or dividends from shares, which are considered controversial practices here.
He said the "overwhelming majority" of party members supports the economic reforms that have been introduced by senior leader Deng Xiaoping, Premier Zhao and other reformist officials. But he acknowledged that some people with vested interests will be hurt by the reforms and will therefore resist them.