Economic restructure is one of the most crucial elements of
China's reform and opening-up policy. For the first 30 years of the
PRC, the government practiced a planned economy system, whereby
industrial production, agricultural production, and the stocking
and selling of goods in commercial departments were all controlled
by state plan. The variety, quantity and prices in every sphere of
the economy were fixed by state planners. While this contributed to
the planned, focused and steady development of China's economy, it
also sapped its vitality and limited its growth. Economic reforms
began with the rural areas in 1978, and were extended to the cities
in 1984. In 1992, after some 10 years of reform in the clear
direction of the establishment of a socialist market economy, the
government set out the main principles of economic restructuring:
encouraging the development of diversified economic elements whilst
retaining the dominance of the public sector; creation of a modern
enterprise system to meet the requirements of the market economy; a
unified and open market system across China, linking domestic and
international markets, and promoting the optimization of resources;
transformation of government economic management in order to
establish a complete macro-control system; encouraging certain lead
groups and areas to become rich first, enabling them to help others
towards prosperity too; the formulation of a China-appropriate
social security system for both urban and rural residents,? so
as to promote overall economic development and ensure social
stability. In 1997, the government stressed the importance of the
non-public sector to China's national economy, in which
profitability is encouraged for such essential factors of
production as capital and technology, so as to further progress
economic reforms.?
A socialist market economic system has now taken shape, and the
basic role played by the market has been improved in the sphere of
resource allocation. At the same time, the macro-control system
continues to be perfected. The pattern has basically been formed in
which the public sector plays the main role alongside non-public
sectors such as individual and private companies to achieve common
development. According to the plan, China is forecast to have a
relatively complete socialist market economy in place by 2010 and
this will become comparatively mature by 2020.