Economic Development Faces a New Stage in Which Reform Will Promote Readjustment

1. After a year of "improvement and straightening out," the economic situation in the fall of 1989 can roughly be summarized as follows: The superficial cause of the 1988 price hikeâexpansion of real purchasing power as represented by >i>M>sub>o>/sub>>/i> (cash)âhas been brought under initial control. From this point of view, we can say that control of aggregate demand is achieved, hence prices are showing a tendency to drop and the overheated economy is cooling down rapidly. On the other hand, problems in the economic structure and system have basically remained untouched. These problems at a deeper level are urgently in need of a solution, otherwise further economic development would be difficult. The above two facts show that the work of readjustment of the national economyâimprovement, straightening out, and deepening the reformâhas entered a new stage.