As is pointed out in the Communiqu¨¦ of the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China, to achieve the four modernizations requires a great development of productive forces, which will in turn inevitably require a comprehensive change in the production relations and superstructure unsuited to the development of the productive forces as well as a change in all unsuitable ways of administration and thinking, and therefore is an extensive and profound revolution.

As the general designer of China's reform and opening-up, Comrade Deng Xiaoping has made an explicit and concrete exposition about the character, significance, aim, mission, methodology, procedure and guiding principle of the reform. He says that the reform is China's second revolution; to make revolution is to emancipate productive forces and to carry out reform is to emancipate productive forces too; and to conduct the reform is the only way for China to develop its social productive forces. The target of this revolution is the old system that fetters the development of the social productive forces and the objective of the reform is to establish a new system of socialist market economy with Chinese characteristics which is full of vigor and vitality, so as to promote the development of the social productive forces, the increase in the overall national strength and the upgrading of the living standards of the people, thus realizing a common wealth and the four modernizations. In the last 20 years, under the guidance of Deng Xiaoping theory, China's economic system has been experiencing a tremendous change, namely, the traditional socialist centralized planned economy system has been shifting to a socialist market economy system. As a result, the national economic development and social progress have been vigorously promoted and the goal of quadrupling the gross domestic product (GDP) has been achieved ahead of schedule. Now, China has not only settled the problem of feeding its over 1.2 billion population, but also is advancing with big strides towards a comparatively well-off society.

China's mineral industry is a basic industry of national economy and an important component of the entire economic system. In the last half a century it has made major contribution to China's economic and social development. However, because of the prolonged influence of the conventional system and various problems of historical origin, a considerable part of mine enterprises is  suffering from a stiff operational mechanism, heavy liabilities and social burdens, outmoded technical equipment, weak technical innovation ability, overstaffing, difficulties in the livelihood of some of the staff and workers, hardships in the production and operation and lack of international competitiveness. All these problems must be solved by taking appropriate measures through reform. To establish China's new mineral industry system adaptable to the socialist market economy system by way of reform is not only the requirement of the Party and the Government but also the need of the development of China's mineral industry itself. The objective of the reform is to set up a new system of mineral industry with Chinese characteristics, which is suited to the requirements of the socialist market economy and is full of life and vigor. The removal of the disadvantages of the old system through reform will make it possible to enhance the capability of self-survival and self-development of mining enterprises and their competitiveness in the international market and vigorously promote the sound development of China's mineral industry, so that it may provide the resources guarantee for the sustained, rapid and sound development of the national economy and make still greater contributions to attaining the third-stage strategic objectives of China's national economic development and to building China into a modernized, prosperous, democratic and civilized socialist country at the level of moderately developed nations, and it will be able to steadily raise the living standards of the staff and workers engaged in the mineral industry and achieve the sustainable development of the mineral industry itself.

In the last 20 years, along with the steady advance and deepening of the economic restructuring of the country, a series of major breakthroughs and progresses have been scored in the field of the restructuring of China's mineral industry.

1.6.1 Reform of the Administration System in Relation to Mineral Resources

The basic contents of mineral resources administration mainly include the administration of the ownership of mineral resources, reserves management, price accounting, planning, integrated analysis and policy research and formulation, and geological information management. After the founding of the New China, a mineral resources administration system was established after the model of the former USSR. This system played a certain positive role once for some period of time after 1949, but following the economic development and the change in economic situation, it became no long suitable to the need of the social productive forces' development. The disadvantages of the original system are shown mainly in the following 4 aspects: first, it does not truly reflect the Constitution's stipulation on the State ownership of all mineral resources; secondly, it does not define who represents the State to exercise the right of ownership over mineral resources; thirdly, it is unable to arouse the full vigor of mining enterprise, thus affecting the development of the productive forces of the mineral industry; and fourthly, it practises a multi-departmental decentralized administration of mineral exploration and development activities, which is often aggrevated by serious local protectionism, thus leading to enormous waste of mineral resources and affecting negatively the sustainable development of the mineral industry. Along with the development of the national economy and the advance of the institutional and economic restructuring of the country, China's mineral resources administration system has been successively subjected to major reforms, resulting in a series of significant changes. The reforms have been carried out with the aim to solve four problems: ¢Ùthe problem of state ownership of mineral resources, ¢Úthe problem of who is to exercise the state ownership on behalf of the State, ¢Ûthe problem of unified planning, coordination and management of mineral exploration and development activities, and ¢Üthe problem of how to bring the initiative of enterprises into full play.

With a view to solving the above problems and to pushing forward the reform of the mineral resources administration system, four important measures have been adopted. First, the Mineral Resources Law of the People's Republic of China was examined and passed at the 15th Session of the 6th Standing Committee of the  National People's Congress (NPC) on March 19, 1986. Therefore, it has been further defined and reaffirmed by way of legislation that mineral resources are owned by the State no matter in which region of the country the land and sea areas where they occur are located, thus providing a legal guarantee for pushing forward the reform of the mineral resources administrative system.

Second, on the basis of summing up the experience gained in the past endeavors of State institutional restructuring, the First Session of the Ninth National People's Congress passed a program for the restructuring of government institutions. Consequently, a number of government departments which used to exercise the decentralized administration over resources and mining production were dismantled or merged, and the governmental functions of administrating all mineral resources including oil-gas resources and supervising their exploration and development were concentratedly assigned to the Ministry of Land and Resources newly established on the basis of the merger of the Ministry of Geology and Mineral Resources, the State Land Administration, the State Bureau of Oceanography and the State Bureau of Geodesy and Cartography and the governmental administrative functions of managing mining production and operation activities to the newly established State Economic and Trade Commission, thus really achieving a unified administration of all mineral resources. This reform marked an important transformation and advance from the decentralized administration of mineral resources to a centralized one.

Third, it has been explicitly defined that the State Council exercises the right of ownership over mineral resources on behalf of the State and that the Ministry of Land and Resources is responsible for handling related administrative affairs.

Fourth, a series of reforms are being pushed forward in the mix of ownership, mineral exploration system, operation mechanism of mining enterprises, distribution system, social security system, etc. according to the requirements of the socialist market economy system.