The overall situation in China is good. Since the downfall of the Gang of Four and the convocation of the Third Plenary Session of the Party's Eleventh Central Committee in 1978, we have formulated a series of new principles and policies that have proved sound in practice. But this is only a beginning. Our goal for the first step is to reach, by 1990, a per capita GNP of US$500, that is, double the 1980 figure of $250. The goal for the second step is, by the turn of the century, to reach a per capita GNP of $1,000. When we reach that goal, China will have shaken off poverty and achieved comparative prosperity. When the total GNP exceeds $1 trillion, the national strength will increase considerably, although per capita GNP will still be very low. The goal we have set for the third step is the most important one: quadrupling the $1 trillion figure of the year 2000 within another 30 to 50 years. That will mean a per capita GNP of roughly $4,000 -- in other words, a medium standard of living. That target may not seem high, but it is a very ambitious goal for us, and it won't be easy to achieve.

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Our current principles and policies were formulated at the Third Plenary Session of our Party's Eleventh Central Committee, held in 1978. Over the last eight years we have done relatively good work. Before that we lost too much time, especially the decade of the ``cultural revolution'', when we created troubles for ourselves with disastrous results. But we have learned from experience: these principles and policies are the product of the lessons we learned from the ``cultural revolution''. The fundamental thing we have learned is that we must be clear about what socialism and communism are and about how to build socialism. The way to build socialism must be determined by the particular conditions in each country. I believe you can understand why we propose to build a socialism adapted to conditions in China.

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I am here to meet with you today for just one purpose. It has been nearly two years since we last met, and I should like to thank you for all your hard work.

The committee has been working for a year and eight months. Thanks to your perseverance and intelligence, your work has been making good progress, and you have been cooperating with each other very well. This will facilitate a smooth transition for Hong Kong. The success of our ``one country, two systems'' formula should be guaranteed by the basic law of the Hong Kong Special Administrative Region. This law will serve as a model for Macao and Taiwan. It is therefore very important. It is something new, without precedent in world history. You still have three years in which to draft the best possible document.

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March 27, 1987

There are three important criteria for judging the soundness of a country's political system or structure and of its policies. First, whether the country is politically stable; second, whether the system and policies help to strengthen unity among the people and to raise their living standards; and third, whether the productive forces keep developing. In the last eight years we have scored some achievements in these three respects. Still, ours is a country with a huge population, a vast territory and a poor economic foundation to start with, so we have many difficulties to overcome. Nevertheless, I think our future is bright.

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The principles our Party has laid down since the Third Plenary Session of its Eleventh Central Committee can be summed up in two points. First, we should adhere to the Four Cardinal Principles and second, we should strive for socialist modernization. The two goals we have set for our modernization drive are: to achieve a comparatively comfortable standard of living by the end of the century, and to approach the standard of moderately developed countries in another 30 to 50 years after that. To attain these two goals, we need two conditions: a peaceful international environment and political stability and unity at home. With those conditions we can carry out socialist construction in an orderly way under the leadership of the Party.

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The trouble we had recently is now over. In the long run, facts will show that the principles, policies and methods we used to deal with the student unrest and to make some changes of personnel in the Central Committee were in conformity with the interests of the entire population, and people will see more clearly that those principles, policies and methods were reasonable. Take the change of personnel in the Central Committee, for example. We used to go too far in handling cases of this kind. Bearing in mind the lessons of the past, we have handled Comrade Hu Yaobang's case quite gently. To combat bourgeois liberalization, we are not going to launch a political movement. The struggle will be strictly confined to a limited sphere, so as not to make it seem more serious than it is.

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Recently the college and university students created some disturbances. It is not the students themselves who are to blame for it but a small number of persons with ulterior motives, mainly higher intellectuals inside the Party who incited them to action. We have dealt with the matter sternly. But the struggle against bourgeois liberalization has not ended. Some people are still not clear what we are doing now in China. Everyone says that the modernization programme is a good thing, but some people have an understanding of it that is different from ours. By modernization we mean socialist modernization, but what those people advocate is modernization without socialism. This shows that they have forgotten the essence of the matter and that they have departed from the road China must take in its development.

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Why do some people always insist that the market is capitalist and only planning is socialist? Actually they are both means of developing the productive forces. So long as they serve that purpose, we should make use of them. If they serve socialism they are socialist; if they serve capitalism they are capitalist. It is not correct to say that planning is only socialist, because there is a planning department in Japan and there is also planning in the United States. At one time we copied the Soviet model of economic development and had a planned economy. Later we said that in a socialist economy planning was primary. We should not say that any longer.

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Recently two major events have taken place in our country: one was the student disturbances and the other the replacement of the General Secretary of our Party. The two events are related, and we have dealt with both of them. Why did the students create disturbances? Basically, it was because of weak leadership. Since we call for upholding the Four Cardinal Principles, we must conduct constant education in these principles among the people. In the last few years we have witnessed the emergence of an ideological trend in favour of bourgeois liberalization that has not been effectively countered. Although I have warned against this trend on many occasions, our Party has failed to provide adequate leadership in combating it. This was a major mistake made by Comrade Hu Yaobang. So the Central Committee accepted his resignation from the post of General Secretary.

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Recently some of our students created disturbances. These disturbances were different in nature from those of September 18, 1985, when students also took to the streets. We are now handling this matter. Actually, what concerns us is not the small number of college and university students, the one or two per cent of the total in the country, who took part. That is not really the problem -- a few students who take to the streets cannot affect the overall situation. The problem is that there has been some confusion in our ideological work, and students have not been given strong, effective guidance. That is a major mistake. We must change this situation and tell our young people about our past.

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