chapter  2
Low Expectations, High Growth: The Economy and Reform in 1987
WithPenelope B. Prime
Pages 18

The political roller coaster China rode in 1987 proved unsettling for the economic reforms. Following Hu Yaobang's resignation, expectations concerning the acceleration, or even the maintenance, of China's reform program fell. In the midst of uncertainties concerning the future of reform, the economy began to exhibit serious macroeconomic imbalances. China's post-1978 reform program began in the agricultural sector. In the focus of reform has moved to industry, and in 1987, to state industrial enterprises in particular. One major problem area for China's economy in has been the poor performance overall of state enterprises. Four categories of reforms that were important in 1987 further separate management from ownership. These are manager responsibility, issues surrounding enterprise funds, enterprise sales of stocks and bonds, and land sales. Many analysts believe that the key to the success of China's economic reform program is price reform.