September 12, 1988

The main point I want to make is that the central leadership must have authority. The reform can be successful only if it is conducted under proper leadership and in an orderly fashion. Otherwise, everything will be in a mess, with everyone going his own way. How can we allow that? For several years now I have been objecting to the attitude ``You may have your policy, but I have my counterpolicy.'' There shouldn't be any counterpolicies. If the Central Committee and the State Council have no authority, the situation will get out of control.

I think that while we are carrying out the reform we have to improve the economic environment and rectify the economic order. We have to create a favourable environment so that the reform will go smoothly. Once the central leadership has decided on a measure, all local governments and departments must apply it, not only promptly but effectively. Otherwise, we shall not be able to improve the economic environment.

Right now things don't seem in good order. There are all kinds of problems, such as inflation and price rises, so some adjustments have to be made. Nevertheless, in our effort to stem inflation and keep prices down, we must on no account jeopardize the policies of reform and opening up or cause the economy to contract. We have to maintain a proper rate of growth. We are confident that we can solve the problems that have arisen. No doubt, some minor mistakes are inevitable, but if we don't make major ones I think everything will be all right.

The coastal areas, which comprise a vast region with a population of 200 million, should accelerate their opening to the outside world, and we should help them develop rapidly first; afterwards they can promote the development of the interior. The development of the coastal areas is of overriding importance, and the interior provinces should subordinate themselves to it. When the coastal areas have developed to a certain extent, they will be required to give still more help to the interior. Then, the development of the interior provinces will be of overriding importance, and the coastal areas will in turn have to subordinate themselves to it.

If the Central Committee and the State Council have no authority, none of this could be done. Each region would act only in its own interest without any coordination, counteracting the efforts of the others. Who can coordinate their efforts? Only the central leadership -- by which I mean the Central Committee and the State Council.

We must make it a principle that reform is to be carried out under unified central leadership. By reform I mean not just reform of prices but comprehensive reform in all other areas too. Only through the latter can we create the conditions for the former. Of course, to rectify the economic order, we must straighten out the price system. Without a rational price system, there will be no possibility of truly successful economic reform. Over the next few years we are going to establish a preliminary price system so that we can compete in the world market.

The central leadership can exercise macrocontrol only if its instructions are carried out. We have been advancing on the right path these last years; now it's time to review our experience. If we had not delegated power to lower levels, how could we have reached the present level of economic development? It is under new conditions that we are raising the questions of the authority of the central leadership, macrocontrol and the deepening of reform in all areas. When we were managing the economy in the past, the country was poor. Now things are different. We exercise macrocontrol in order to enable the people to live a relatively comfortable life. We should no longer apply the methods that were used in the difficult times of the past. Now the central leadership issues orders and exercises its authority only on the major question -- the question of basic direction.

(Excerpt from remarks made after hearing a report on a proposed programme for the reform of prices and wages.)

(From Selected Works of Deng Xiaoping, Volume III <1982-1992>)