To produce the desired "socialist planned commodity economy," China's reform leadership began to recognize the necessity of transferring more authority over economic decision making to urban factory managers. A "factory director responsibility system" was developed to encourage more local initÍÍÍÍiative, more efficient use of resources, and more skillful and judicious leadership by the frontline producers. The reform immediately met serious resistance from party secretaries attached to the factories, who until then had been responsible for factory management and especially for personnel decisions. In their view, the reform threatened party perquisites and usurped local party decision-making authority.

This major issue in industrial reform was introduced in the context of the party's ongoing efforts to redefine the proper party role, especially vis-à-vis the government. In the mid-1980s it appeared that party leaders would have to share power even further, this time with enterprise managers or economic reform managers. Mid-level party cadres, many of whom had become party members during the Cultural Revolution decade, were particularly prone to negative feelings, especially concerning the urban reform program. Their resistance and resentment found sympathy among national-level party and government conservatives like Peng Zhen, Deng Liqun, and others and provided a substantial base of support for these leaders when they presented their own, similar views in policy-making circles. At least the leaders at the top who advocated more gradual reform could point to this disgruntled mid-level party group as a reason for revising the pace and content of the reform agenda.

Data as of July 1987