ABSTRACT
This chapter provides policies on the rural economy; policies on the collective economy and individual economy in towns and cities; policies on how to develop comparative advantages, encourage competition, and coordinate economic activities; and price policy. Economic independence should be granted to enterprises under collective ownership. Handicrafts and petty trades in cities and towns were transformed into collective economy during the drive for communization in 1955. One of the principal errors of our economic policy in the past was to neglect developing a commodity economy. As a rule, every region has its comparative advantages as well as its comparative disadvantages. In the prevailing price system, there are a number of inconsistencies in the relative prices between industry and agriculture, as well as among industrial products. Agricultural performance directly affects the people's livelihood, political stability, industrial development, and foreign trade.
