ABSTRACT
Mainland China's economic condition was in shambles before the 1989 prodemocracy movement and, to some extent, was a direct cause of the unrest. The economic maladies stemmed partly from the failure of the reform and partly from the retrenchment policy pursued by the hardliners since September 1988. The reformers believed that a high rate of growth was a necessary stimulus for economic reform. The corruption was also facilitated by the economic reform which delegated power of the central government to local authorities to set up a dual-price system. During the 1978-1988 periods, the advent of reform and liberation witnessed a rapid revival of individual business and private enterprises. The new policy was responsible for the emergence of millions of 10,000-yuan families in the rural areas and tens of thousands of well-to-do-businessmen in the cities. The hard-line policy, however, has gained little support from the populace, but has caused backfiring from local authorities, private businessmen, and overseas investors.
