Beyond "Crossing the River by Feeling the Stones" Inside the Making of China’s 1984 Economic System Reform Decision

How Chinese leaders made up their minds on economic system transition

For today’s episode, I want to share an article about the history of China’s Reform and Opening Up — a turning point that reshaped the nation’s economy and society. Despite the high cost, I always believed that studying contemporary Chinese history should be a required course for China watchers.

While many remember the landmark “Decision on Reform of the Economic System” adopted at the Third Plenary Session of the 12th Central Committee in October 1984, fewer know the long and complex journey that led to this moment. The decision on economic system reform was formed only after a long period of exploration and discussion. Although calls for reform once cooled down, the growth of extra-plan economy pushed forward the reform of the planned system. From the early rural reforms of 1980 to the fierce ideological battles over whether to embrace a “planned commodity economy,” this article uncovers the details behind the seemingly calm historical record and reveals how political will, economic necessity, and grassroots change converged to push China beyond the confines of the planned economy.

The author of this article is Wang Mingyuan王明远, a researcher at the Beijing Reform and Development Research Association (a social organization under the supervision of the Beijing Federation of Social Science Circles) and a senior, well-connected scholar of the history of Reform and Opening Up. He previously worked at China Economic System Reform Magazine and the China Society for Economic System Reform. He also runs his own WeChat public account, Fuchengmen No. 6 Courtyard (阜成门六号院), which I believe is well worth reading. The original article 1984年经济体制改革决定出台过程再探 was first published on Caixin. Thanks to his kind authorization, I‘d able to translated the piece to English:

Wang Mingyuan

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A Re-examination of the Process Behind the 1984 Economic System Reform Decision

In October 1984, the Third Plenary Session of the 12th Central Committee of the Communist Party of China passed the "Decision on Reform of the Economic System" (hereinafter referred to as "the Decision"), which marked a milestone event in economic reform. Looking back today, the two key steps that led to the remarkable achievements of economic reform in the 1980s were the rural reform launched in 1980 and the economic system reform initiated in 1984.

Regarding the process of formulating the Decision, memoirs by participants (such as Gao Shangquan and Xie Minggan) and research by scholars like Xiao Donglian have largely focused on the document drafting process that occurred in 1984 itself. In reality, as early as around 1980, the CPC Central Committee had already begun discussions around whether to formulate an economic system reform plan and what kind of economic model to adopt, which included considerable debate. These discussions continued until the Third Plenary Session of the 12th Central Committee in 1984, and even until the 14th Party Congress in 1992, objectively resulting in the ups and downs of early economic reform. Therefore, the author believes that the Decision was formed after a lengthy exploration process. Simply examining the 1984 document drafting alone cannot fully present the process of how this important document was produced, nor can it completely highlight its significance. This article will attempt to provide a more complete discussion of this process based on some newly discovered historical materials.

The First Peak of Economic Reform Discussions and Initial Attempts at Formulating Economic System Reform Plans

Through examining speeches by Deng Xiaoping and Hu Yaobang, we can discover that it was actually not in 1984, but in 1980, that the central leadership had plans to formulate an economic system reform plan and initiate major modifications to the planned system. For example, on March 19, 1980, Deng Xiaoping told Hu Yaobang and others:

"We need to accomplish two major tasks this year: one is drafting the resolution on historical issues, and the other is completing the long-term economic planning. We strive to complete both before the 12th Party Congress, as this matter is of great significance."

Between August and September, when Hu Yaobang was inspecting Inner Mongolia and participating in the meeting of first secretaries of provinces, municipalities, and autonomous regions, he revealed the central leadership's plan in greater detail. He said:

"The central leadership is preparing for a comprehensive economic reform, covering everything from prices to wages, finance, commerce, management, and planned management systems, all the way to markets."

Regarding specific steps, he stated:

"We will produce an outline and explanations in November this year, discuss them at the 12th Party Congress, and have them finally approved by the National People's Congress in November."

Many important decisions during the early reform period were discussed and formulated at meetings of first secretaries of provinces, municipalities, and autonomous regions. Hu Yaobang's statements should have been the result of careful deliberation by the top leadership, rather than just a preliminary idea.

Therefore, contrary to the reform history research community's view that the Decision was a product of "crossing the river by feeling the stones,摸着石头过河" the central leadership had actually wanted to formulate such a programmatic document when reform was just beginning. So why was the central leadership so actively seeking to change the planned system? This was obviously related to the ideological liberation movement between 1978 and 1980 and the profound reflection on the planned system within and outside the Party.

After the State Council's theoretical work conference in 1978 and the "great discussion on the criterion of truth," central leaders expressed their positions calling for reflection on the drawbacks of the planned economy and exploration of reform paths. Li Xiannian proposed that it was necessary to eliminate the conservative mentality of complacency, self-satisfaction, and arrogance, change feudal bureaucratic management methods, courageously transform all production relations that were incompatible with the development of productive forces and all superstructures that did not meet the requirements of the economic base, and strive to use modern management methods to manage a modern economy. On September 18, when Deng Xiaoping listened to reports from Anshan Iron and Steel Company leaders, he said that China's system was basically copied from the Soviet Union and was backward. Many systemic issues needed reconsideration.

"We need a revolution in technology and management," "No improvements or patching up," "Our current superstructure must be changed."

Shortly after the Third Plenary Session of the 11th Central Committee, Chen Yun also delivered a speech on "Issues of Planning and Markets," criticizing shortcomings in the planning work system and proposing that market regulation must play a role - not minor regulation but major regulation.

These measures all promoted enthusiasm for reform research in theoretical and intellectual circles. For example, Hu Qiaomu published the book "Acting According to Economic Laws and Accelerating the Realization of the Four Modernizations." He believed that after nearly 30 years since the founding of the People's Republic, economic problems could no longer be explained away by "lack of experience," and painful reforms were necessary. Deng Liqun successively published articles such as "Talking About Economics After Returning from Japan,"《访日归来谈经济》 "Laws of Commodity Economy and Planning,"《商品经济的规律和计划》and "On Planned Economy and Market Regulation,"《谈谈计划经济和市场调节》 vigorously advocating for commodity economy. Among these, "Laws of Commodity Economy and Planning" proposed that except for production and construction related to national welfare and people's livelihood, everything else should be regulated through markets. Even parts that must adopt state planning should be

"established on the foundation of commodity economy and must correctly reflect and adapt to the requirements of the law of value."

This was already very close to the reform goal of "planned commodity economy" from the Third Plenary Session of the 12th Central Committee.

According to the decisions of the Third Plenary Session, the CPC Central Committee decided in late March 1979 to establish the State Council Finance and Economics Committee国务院财政经济委员会 as the decision-making body for financial and economic work, with Chen Yun as chairman, Li Xiannian as vice chairman, and Yao Yilin as secretary-general. The committee established four working groups, with the first being the Economic System Reform Research Group经济体制改革研究小组, led by Zhang Jingfu and Fang Weizhong, fully demonstrating the top leadership's determination to make reform the top priority. Thanks to the inclusive style of the Finance and Economics Committee leadership, many young researchers interested in reform research were absorbed into this department. By 1980, the Finance and Economics Committee had more than 600 staff members, becoming the "Whampoa Military Academy" of economic reform, with many later becoming designers and implementers of economic reform or renowned economists.

On May 18, 1979, Chen Yun pointed out that a system reform is imperative.

The State Council Finance and Economics Committee began to formulate economic system reform plans. In December, the first draft of "Preliminary Opinions on Overall Concepts for Economic Management System Reform"《关于经济管理体制改革总体设想的初步意见》 was completed, which was the first overall concept for economic system reform after the reform and opening up. The "Preliminary Opinions" believed that in accordance with the requirements of large-scale socialized production, boundaries between departments and regions should be broken, professional companies and joint companies should be organized, and mainly economic means should be used to manage the economy; the single planning regulation should be changed to a combination of planning regulation and market regulation, with planning regulation as the main focus; the purely administrative method of managing the economy should be changed to economic methods as the main approach; enterprises should be transformed from appendages of administrative institutions to relatively independent producers.

In May 1980, the State Council System Reform Office 国务院体制改革办公室was established. Subsequently, Xue Muqiao, dvisor to the reform office, was commissioned to draft an economic system reform plan. By September of that year, Xue Muqiao and Liao Jili completed "Preliminary Opinions on Economic System Reform."《关于经济体制改革的初步意见》 This "Preliminary Opinions" went a step further than the Finance and Economics Committee's "Preliminary Opinions" in terms of economic system reform goals. It broke through the "planning as primary" framework for the first time and proposed commodity economy as the reform goal; it broke through the concept of complete public ownership and proposed developing multiple economic components. This was a plan that was closer to the requirements of a modern market economy and more operationally feasible.

Deng Xiaoping and Hu Yaobang were active supporters of these two reform plans. At the national planning meeting held at the end of 1979, when Deng Xiaoping heard that the Finance and Economics Committee had a reform plan, he happily said,

"you can send out the draft to everyone to solicit opinions first"

可以披头散发和大家见面征求意见嘛

Hu Yaobang was even more appreciative of the latter plan and invited Xue Muqiao to explain it to provincial leaders at the meeting of first secretaries of provinces, municipalities, and autonomous regions. The economic system reform plan that Hu Yaobang mentioned would be issued by the central leadership in 1981 or 1982, the author believes, could roughly be based on the Xue-Liao version of "Preliminary Opinions," with the goal of establishing a commodity economy.

At the same time, this relaxed atmosphere promoted the establishment and rapid development of institutions such as the State Council Economic Research Center国务院经济研究中心, the State Council Technical and Economic Research Center国务院技术经济研究中心, and the Central Secretariat Rural Policy Research Office中央书记处农村政策研究室. At that time, influential economists from around the world, such as Armin Gutowski, Włodzimierz Brus, Ivan Maksimović, Okita Saburo, and Milton Friedman, were invited to China to lecture and provide suggestions for China's reform. The World Bank economic delegation also conducted its first inspection of China in 1980 and provided a detailed research report on China's economy to the central leadership.

Therefore, the earliest designs for China's reform that we can find today are mostly concentrated in 1980, and they were all highly forward-looking and open, seemingly not surpassed in depth until after 1992. The academic community generally acknowledges that 1978 to 1980 was the moment when society had the highest degree of consensus on reform and one of the most intellectually active periods in China's reform and opening-up history.

Calls for reforming the planned economy system once cooled down

However, the economic system reform decision that Deng Xiaoping, Hu Yaobang and others vigorously promoted was not included in the agenda of the Sixth Plenary Session of the 11th Central Committee in 1981 or the 12th Party Congress in 1982 as scheduled. After entering 1981, voices calling for reforming the planned system cooled down significantly, and instead there was emphasis that planned economy was an unshakeable bottom line.

The author believes this situation arose due to two factors. First, the so-called "foreign leap forward"（Refers to the rash advance in economic construction during 1977-1978, characterized by massive importation of foreign technology and equipment and heavy foreign borrowing.） from 1977-1979 led to massive deficits - over 17 billion yuan in 1979 and over 12 billion yuan in 1980 - while commodity prices rose on a large scale for the first time. Many people worried that if mandatory planning continued to be weakened, it would repeat the economic chaos of 1958. Second, in the second half of 1980, Poland experienced the "Solidarity" movement. The central leadership held continuous meetings to discuss this event. While affirming its positive significance in opposing Soviet hegemonism, a considerable number of people also worried that poorly handled economic reform could trigger political turmoil.

The central work conference at the end of the year established the economic work policy of

"for the coming period, the focus should be on adjustment, and reform must serve adjustment" and "centralized unity must be strengthened."

Reform was significantly cooled down.

After the end of the "Cultural Revolution," the gradual restoration of planning department functions and the gradual improvement of economic conditions also made many people believe again that planned economy was the system most suitable for China's national conditions. Past poor economic development was not caused by the planning system, but by failure to properly implement the planning system. This viewpoint was represented by an article titled "An Unshakeable Basic Principle" published in Red Flag magazine by Fang Weizhong, who was the Vice Chair of the State Planning Commission then. He believed that

"we cannot forget the superiority of socialist planned economy, and cannot attribute the losses caused by mistakes in economic guidance and political turmoil to the planned economic system."

Regarding economic problems that appeared over more than 30 years, it was because planning was not properly implemented.

"Planned economy is a bright pearl, but unfortunately it has been covered by dust. Remove the dust, and planned economy will surely shine brilliantly."

In 1981, Chen Yun, who was in charge of finance and economics, again proposed the principle of "planned economy as primary, market regulation as auxiliary."计划经济为主、市场调节为辅 The viewpoint of "planned economy as primary" received approval from the vast majority of central leadership.

During this period, market-oriented reform explorations outside the plan clearly contracted. The first important manifestation was that in early 1982, the central leadership convened symposiums for Fujian and Guangdong provinces to conduct "criticism and assistance" for the two provinces' special zone work. The resulting Central Document No. 9 of 1982 proposed

"all important economic activities must be incorporated into state planning"; "stop importing daily consumer goods from abroad for sale inland, stop purchasing agricultural and sideline products at high prices from all over the country for export, and promote the use of domestic goods"; "strengthen unified leadership of foreign economic activities. Except for units approved by the state, any unit or individual is strictly prohibited from engaging in foreign economic activities."

Shortly thereafter, the central government launched a campaign against economic crimes. In addition to combating smuggling and corruption, it also affected many emerging individual and private enterprises, with the most famous being Wenzhou's "Eight Kings Case."(The arrest of eight individual business owners, accusing them for speculation and profiteering) As a result, many local economies experienced negative growth. For example, Wenzhou's industrial growth rate was 31.5% in 1980, but dropped to -1.7% in 1982. Shantou's GDP decreased from 12.49 billion yuan in 1982 to 11.52 billion yuan in 1983, with a growth rate of -7.7%, the only negative growth year since 1962.

Theoretically, discussions about economic system reform goals were also politicized, mechanically equating planned economy with socialism and commodity economy with capitalism. In 1983, Red Flag Publishing House published "A Collection of Articles on Planned Economy and Market Regulation." The preface stated that

"planned development of the national economy is a basic economic characteristic of socialist economy" and "abandoning planned economy will inevitably lead to anarchy in social production and destruction of socialist public ownership."

The ailing Sun Yefang also published "Persist in Planned Economy as Primary and Market Regulation as Auxiliary,"《坚持以计划经济为主市场调节为辅》 arguing that the socialist economy must persist in planned economy as primary.

"If we completely arrange production indicators according to market supply and demand and price fluctuations, then our economy would be no different from capitalism."

At this time, advocates of commodity economy like Xue Muqiao and Liu Guoguang were all subject to serious criticism.

Under these circumstances, the 12th Party Congress report's discussion of economic reform was a compromise product. On one hand, it emphasized developing enterprise autonomy and valuing market regulation; on the other hand, it constantly emphasized that

"our country implements planned economy on the basis of public ownership. Planned production and circulation are the main body of our national economy"

and pointed out that

"in recent years... phenomena that weaken and hinder unified state planning have grown, which is unfavorable to normal development of the national economy... we must not neglect or relax unified leadership of state planning."

In summary, from 1981 to 1983, exploration of economic system reform entered a conservative and stability-seeking phase.

Undoubtedly, the model of "planned economy as primary, market regulation as auxiliary" represented enormous progress compared to the past. However, so-called market regulation here could not be equated with market economy. In the words of An Zhiwen, then Party Secretary of the State Commission for Restructuring the Economic System, this model

"still persisted in the premise of the planned economic system, treating corporate management and market regulation as auxiliary means" and "the established companies were still administrative companies, not enterprise-oriented companies... all still could not escape the status of administrative appendages."

Therefore, the market regulation model under the "planning as primary" framework, similar to Eastern European reform models, still could not lead China out of the Soviet model's predicament. So while it had progressive significance during the period of setting things right, as economic order normalized and reform deepened, it gradually could not meet actual needs.

The Growth of Extra-Plan Forces Driving Reform of the Planned System

Although market-oriented reforms encountered many obstacles, economic system reform was ultimately restarted in 1984, truly a case of circumstances being stronger than people. The author believes the main driving force behind this situation was the rapid growth of extra-plan forces, primarily rural economy, making it impossible to maintain the situation where planning controlled everything.

If we examine rural land reform, initially there was hope to maintain it within the framework of "collective economy as primary, individual contracting as auxiliary." Most representative was the "three cuts" plan proposed by the main Yao Yilin and Du Runsheng in early 1981, whereby only 15% of impoverished households could implement household responsibility system. However, the 1982 "Document No. 1" drafted under the leadership of Hu Yaobang and Wan Li affirmed farmers' right to autonomously choose what form of production responsibility system to adopt. By the end of 1982, most production teams had implemented household responsibility or household contracting systems, thus making the rural planned economic system lose its foundation.

What played a decisive role in the growth of rural commodity economy was also the 1981 "Document No. 3" and the "Document No. 1" of 1983 and 1984. The 1981 "Document No. 3" decided to support rural diversified operations, calling for mobilizing both collective and individual enthusiasm to organize various forms of professional teams, professional groups, specialized households, and specialized workers to engage in service industries, handicrafts, breeding, and marketing. At this time, rural land reform had just begun, and introducing this decision showed that the document makers had great vision and timely measures.

However, rural commodity economy development faced three major obstacles: legal obstacles from the crime of "speculation and profiteering," economic policy obstacles from unified purchase and marketing, and ideological obstacles regarding whether hiring workers constituted exploitation. Faced with large numbers of farmers being criminally charged with speculation and profiteering for engaging in long-distance trading and commercial transport, Hu Yaobang repeatedly expressed indignation during local investigations, saying:

"What kind of logic is it that things rotting when they can't be sold is socialism, while long-distance trading is capitalism!"

He praised "middlemen" as "Erlang Shen" who helped farmers solve livelihood problems. Under Hu Yaobang's intervention, the 1983 "Document No. 1" formally proposed allowing farmers to engage in commerce and conduct long-distance trading.

The 1983 "Document No. 1" also relaxed the unified purchase and marketing system that had been in place since 1953. The document stated:

"For important agricultural and sideline products, implement unified purchase and assigned purchase... varieties should not be too numerous. For products after farmers complete unified and assigned purchase tasks and non-unified purchase products, multiple marketing channels should be allowed."

By the end of 1984, state unified and assigned purchase varieties were reduced by 38 from 183 in 1980 (24 of which were traditional Chinese medicines). Sales of the vast majority of farmers' products became free, and the three-decade-old system of state monopoly purchase and sale of agricultural products began to disintegrate.

This Document No. 1 also gave the green light to the employment issue. The document pointed out:

"Rural individual industrial and commercial households and skilled farmers in planting and breeding can hire helpers and take apprentices."

The 1984 "Document No. 1" further eliminated restrictions on the number of hired workers, pointing out that as long as individual households

"retain a certain proportion of accumulation from after-tax profits as collective public property; stipulate limits on dividend distribution and business owner income, and give workers a certain proportion of labor returns from profits, etc.,"

they could not be treated as capitalist hired labor operations, allowing employment of more than 8 people.

According to a 1984 survey by the State Council Rural Development Research Center of 37,422 households in 272 villages across 28 provinces, municipalities, and autonomous regions nationwide, 51% of new economic cooperatives used hired labor, with an average of 7.9 hired workers per cooperative, already breaking through the so-called "seven up, eight down" boundary. Therefore, giving the green light to employment was a key measure in promoting the development of urban and rural individual and private economy at that time.

By 1984, township and village enterprises surged to 6.06 million, with 52.08 million employees and total output value of 170.6 billion yuan, surpassing the output value of primary industry for the first time in history. In addition, the total number of individual industrial and commercial households nationwide in 1984 was 9.304 million, with employees exceeding 13 million. During this period, although state-owned enterprises expanded considerably in scale (from 1980 to 1985, the original value of state-owned enterprise assets increased by 60%), profits and taxes remained basically unchanged - 90.7 billion in 1980, 103.2 billion in 1983, and 115.2 billion in 1984, far below the pace of capital expansion. After just five or six years of development, employment in the extra-plan economic sector was already comparable to the number of state enterprise workers. Reform had reached a critical point, and the commodity economy model was emerging.

The Complexity Behind the Drafting of the Economic System Reform Decision

The reform history research community usually believes that drafting the economic system reform decision at the Third Plenary Session of the 12th Central Committee was an inevitable predetermined arrangement, and that "planned commodity economy" was a consensus among top leadership. Therefore, the launch of this economic system reform was a natural outcome. However, based on newly discovered historical materials, the author finds that the emergence of the 1984 "Decision" and the proposal of the "planned commodity economy" model involved complex and difficult struggles behind the scenes, and was by no means easily achieved.

The first difficulty was that while Hu Yaobang and others were still actively promoting the restart of formulating an economic system reform decision, their forces were not dominant, and its inclusion in the Third Plenary Session of the 12th Central Committee agenda had a certain element of unexpectedness and contingency. Hu Yaobang's idea roughly began at the end of 1983, and he proactively approached the then Premier of the State Council to discuss this matter. On January 16, 1984, when the Central Secretariat meeting was discussing the 1984 central work plan, Hu Yaobang proposed that the Third Plenary Session of the 12th Central Committee to be held in October should pass an economic reform plan.

However, several Secretariat members opposed this arrangement, believing that time was too rushed and it would be difficult to produce results. This was actually related to the fact that at the end of 1983, two leaders had reiterated that

"planned economy as primary, this principle must be upheld, this is the most basic principle"（Chen Yun） and "without planned economy there is no socialism."

When the Central Secretariat中央书记处 discussed economic work several times in the first quarter of 1984, including reviewing the "Seventh Five-Year Plan" outline, they did not again discuss the issue of formulating an economic system reform plan. It seemed that making an economic system reform resolution at the Third Plenary Session of the 12th Central Committee was unlikely.

However, things quickly changed. According to the recollections of Xie Minggan, who served as Deputy Director of the Economic Comprehensive Bureau of the State Economic Commission国家经委经济综合局副局长 and Director of the Policy Research Department of the Ministry of Materials物资部政策研究司司长, he was seconded to the State Council at the end of February to participate in drafting the government work report. Around May Day, when the government work report was completed and everyone was preparing to return to their respective units, they were suddenly notified to stay and draft documents for the Third Plenary Session of the 12th Central Committee, with the main theme being urban economic reform issues.

This means that it was not until less than half a year before the Third Plenary Session that this theme was determined. Obviously, there was a fundamental shift in the attitude of the central decision-making level in March and April. The greatest possibility is that Deng Xiaoping's inspection tour to the south during the Spring Festival, where he personally witnessed the earth-shaking changes in Guangdong, Zhejiang and other places, strengthened his confidence in promoting market-oriented reform. Soon after returning to Beijing, he approved the formulation of an economic reform plan. However, unfortunately, no strong historical materials have been found to directly support this inference. We can only see his meetings with Hu Yaobang and others, where he called for expanding opening up in coastal areas.

The second difficulty was that during document drafting, debates between planned model and commodity economy model were still ongoing. As the person responsible for presiding over document drafting, Hu Yaobang specifically expressed his opinions to Yuan Mu, the person in charge, before drafting work began: the document should be written at a "high" level, producing a "historic document." The reform goal was to establish a new socialist system with vitality, and it should include developing multiple economic components, among other things. However, according to recollections by Gao Shangquan, Xie Minggan and others, when the drafting group specially went to Beidaihe to report the first draft to Hu Yaobang at the end of July, Hu Yaobang was very dissatisfied after reading it. The document had not broken free from the old framework of "planned economy as primary" and was still within the framework of the 12th Party Congress report's description of the economic system.

Hu Yaobang decisively decided to send most people back to their original units and separately recruited Lin Jianqing, Zheng Bijian, Lin Zili, and others who supported the commodity economy to join the drafting group. He also designated Lin Jianqing and Yuan Mu to jointly lead the drafting group, thus changing the balance of forces within the drafting group between those supporting planning and those supporting markets.

On August 5 and 30, Hu Yaobang had two more conversations with the drafting group. He pointed out that developing commodity economy could not be characterized as engaging in capitalism. What is socialism? Socialism means eliminating poverty and letting all people live good lives. Poverty cannot be equated with socialism. He also quoted Lenin's words:

"Complete, all-encompassing, genuine planning = 'bureaucratic utopia'"

pointing out that the result of excessive control was an economy without vitality, scarce market commodities, and difficult living conditions for the people. These conversations played a very important role in breaking through the question of whether commodity economy was "socialist or capitalist" and boldly explaining the inappropriateness of the traditional planning system.

The third difficulty was that later economics and history circles both believed that the soul of the 1984 "Decision" lay in abandoning the formulation of "planned economy as primary" and first proposing "developing socialist commodity economy." However, this goal was only achieved just before the Third Plenary Session of the 12th Central Committee convened. Based on Gao Shangquan's recollections and the State Commission for Restructuring the Economic System's revision suggestions to the central leadership, we can see that as late as September 5, when the fifth draft was completed and circulated to various departments for comments, it still contained the formulation "planned economy as primary, market regulation as auxiliary" and did not clearly state "developing socialist commodity economy." The author believes that after the central leadership issued the draft for comments, the letter from the then main State Council leader to the four Standing Committee members Hu (Yaobang), Deng(Xiaoping), Chen(Yun), and Li(Xiannian) on September 9, as well as suggestions from Ma Hong, Gao Shangquan, and the State Commission for Restructuring the Economic System to the central leadership, played important roles in getting "developing socialist commodity economy" written into the Decision.

However, reform history research circles also often overestimate the significance of the September 9 letter. If we carefully read this letter and the author's conversation with the drafting group on August 28, his concept of "planned socialist commodity economy" was still focused on how to more clearly explain the model of "planned economy as primary, market regulation as auxiliary," with the foundation still being to establish and perfect a "Chinese-style planned economy," rather than clearly rejecting the "planning as primary" model. On October 2, when Hu Yaobang organized the drafting group's final meeting, he made the decisive decision to delete "planned economy as primary" and include "developing socialist commodity economy," making it the title of the fourth section. This step was also very crucial.

After the Third Plenary Session of the 12th Central Committee, Deng Xiaoping once said:

"In the past, we could not have written such a document. Without the practice of the previous few years, we could not have written such a document. Even if we had written it, it would have been very difficult to pass - it would have been seen as 'heretical.' We used our own practice to answer some new questions that emerged under new circumstances."

The word "heretical" fully reflected how hard-won economic system reform was and how difficult ideological liberation was.

The economic system reform resolution greatly boosted public confidence, and economic growth experienced explosive growth. From 1984 to 1988, the number of China's township and village enterprises increased by an average of 52.8% annually, employment increased by an average of 20.8% annually, and total income increased by an average of 58.4% annually. By 1988, there were 18.88 million township and village enterprises, with 95.46 million employees and total income of 423.2 billion yuan. During these four years, individual and private economy also maintained average growth of over 20%. In 1988, there were 14.53 million individual industrial and commercial households with 23.05 million employees. The promulgation of the "Decision" also greatly enhanced foreign investors' confidence in investing in China. From 1984 to 1988, the total number of foreign direct investment projects reached 14,605, with investment amounts of $20.43 billion. The total number of projects and investment amounts were 10 times and nearly 3 times those of the previous four years, respectively. Large investment projects such as Shanghai Volkswagen and Beijing Matsushita Color Picture Tube Co., Ltd. began production and operation.

Driven by vigorous market forces, China's gross national product increased from 717.1 billion yuan to 1,492.8 billion yuan, doubling in just four years. Urban and rural residents' income also nearly doubled, allowing the masses to enjoy the enormous benefits of reform. The economic system reform resolution also allowed China to step into the door of market economy with one foot, and it could never be withdrawn. Although there continued to be multiple disputes around planning and markets later, reform was the best enlightenment and education. Public opinion cannot be defied, and consensus among policymakers also increasingly strengthened, laying a solid foundation for the 14th Party Congress to formally establish the reform goal of market economy.