Implementing the reforms of the science and technology system, however, presupposed reforms of the economic, industrial, and local administrative systems (see Reform of the Economic System, Beginning in 1979 , ch. 5). In general, science and technology reforms represented the application to that sector of the principles underlying the sweeping reforms of the economy proposed in the October 1984 "Decision of the Central Committee of the Chinese Communist Party on Reform of the Economic Structure." Both reform "decisions" emphasized greater autonomy for institutions, a greater role for the market, more competition, and rewards for the successful introduction of improved products and processes. In every case, the goal was increased productivity and economic benefit.

The central provisions of the 1980s reform related to funding, the technology market and cooperative ventures, and the rights and potential job mobility of individual researchers. The intent of the reformers was to change the basic conditions of the economic system, so that the self-interest that had pushed managers of factories and research institutes toward compartmentalization, duplication, and hoarding of resources would henceforth push them toward cooperation, division of labor, and orientation toward the needs of the market. Because these reforms represented a radical departure from the procedures developed since the 1950s, the leadership anticipated that their implementation would be slow, and it planned to phase them in over a number of years.

Perhaps because of the centrality of funding to the whole reform scheme and because the administrative machinery for handling budgets was already in place, many concrete provisions for funding research were adopted following the March 1985 Central Committee decision. In February 1986 the State Council promulgated provisional regulations under which science and technology projects listed in the annual state economic plan were to be completed as contract research, in which there would be nationwide open bidding on the contracts. Banks were to monitor expenditures under the contract. Institutes conducting basic research were to have their regular operating expenses guaranteed by the state, but all other income would come from competitive research grants. The government was to continue to fund completely the institutes working in public health and medicine, family planning, environmental science, technical information, meteorology, and agriculture. In 1986 the newly established National Natural Science Foundation, explicitly modeled on the United States National Science Foundation, disbursed its first competitive awards, totaling -Y95 million (for value of the yuan--see Glossary), to 3,432 research projects selected from 12,000 applications. The amount of money awarded to individual projects was not large, but the precedent of competition, disregard of administrative boundaries, and expert appraisal of individual or small-group proposals was establis1f5 ished and widely publicized. And, early in 1987, the NDSTIC announced that henceforth weapons procurement and military research and development would be managed through contracts and competitive bidding.

Data as of July 1987