BEIJING, OCT. 29 -- Senior Chinese officials today announced bold plans -- including creation of special new economic zones -- to open the country more fully to the outside world and to use capitalist incentives to stimulate growth.
Premier Zhao Ziyang declared that in two to three years, only about 30 percent of the country's economy will be controlled through central planning, the official New China News Agency said. Experts said this was the first time any top leader had given such a specific target for reductions in Soviet-style central planning.
Zhao made the disclosure in a meeting today with Arthur Dunkel, director general of the General Agreement on Tariffs and Trade. China has applied to join GATT -- a grouping of more than 90 countries that promotes expansion of international trade, largely by negotiating tariff reductions -- but its application has been hindered by its continuing barriers to free trade.
Zhao told Dunkel that nine years ago, China's entire economy was centrally planned. The premier estimated that 50 percent of the economy is now under central planning.
In a separate report, the news agency said certain foreign enterprises and joint ventures that produce technically advanced products will be allowed to sell some of their products on the domestic market. This move is seen as part of an effort to make China more attractive to high-technology investors.
At a press conference, meanwhile, State Councillor Gu Mu said Hainan Island, in the South China Sea, is to be turned into a special economic zone and will experiment with all forms of international trade and investment that China has so far avoided, including unrestricted sales of land on the island and other elements of a capitalist system.
The ownership of land is a sensitive issue in communist countries, and officials insist that land throughout China is still state-owned, even though peasants now have land-use rights for up to 15-year periods.
Gu said a proposal has been made to turn two large peninsulas in the northern part of the country -- the Liaoning and Shandong peninsulas -- into areas more open to foreign trade and investment.
Gu's press conference, held in connection with an ongoing Communist Party congress, signaled that reformist leaders have won a battle over conservative or traditionalist leaders who have sought to limit the expansion of special economic zones. The existing four zones offer tax breaks and less government interference to foreign investors.
Hainan, an undeveloped tropical island slightly smaller than Taiwan, would become by far the largest of China's special economic zones.
Hong Kong investors have expressed an interest in developing Hainan as a resort area for Hong Kong tourists. Published reports say millions of dollars would be needed to produce the facilities -- electricity, roads, airfield and ports -- to bring in major western investors.
Hainan has the potential to produce gas and oil, and a consortium of Australian companies has gathered data there in preparation for drilling. The Chinese news agency said a French firm is cooperating with a Chinese company to produce methyl alcohol.
Direct foreign investment in China last year dropped 50 percent from the previous year. Foreign business executives attribute this drop to a number of problems, including foreign exchange restrictions and the rising cost of doing business in China.
Gu said foreign investment was picking up again this year but he was unable to cite plans to improve existing regulations that would make China more attractive to skeptical foreign investors.
China's leaders originally seemed to have unrealistic hopes for the development of the four special economic zones, which are located in the provinces of Guangdong and Fujian, along the South China coast. The zones have failed to attract as much high technology as Beijing initially hoped, but they have served as laboratories for reform experiments and have exposed many young Chinese to western-style management and technology.
Hainan Island was the focus of a $1.6 billion scandal in the summer of 1985 when officials took advantage of its open port status to import foreign automobiles and consumer goods that were resold elsewhere in China at double or triple the original price.
In another development, Gu said today that he is now convinced that the country's paramount leader, Deng Xiaoping, should step down from his position on the party's ruling Politburo. "Originally, I didn't agree with it, but now Deng has given a lot of important reasons why he should," said Gu.
His remarks came amid rumors that Deng might choose to stay on as a member of the Politburo and its five-man standing committee, the party's most important decision-making body. Some observers said it was unlikely for Gu to make his remarks unless he was fairly sure he was in line with the developing consensus and with Deng's wishes.