THE newly-elected governor of Sichuan Province, Mr Xiao Yang, has pledged to continue market economy policies to catch up with the prosperous east coast. Mr Xiao also defended the reform record of his former mentor, the now disgraced party boss Mr Zhao Ziyang, saying he had made an undisputed contribution to China's reform programme. Mr Xiao stressed that Mr Zhao should not be judged solely on his errors. ''You can't deny that Comrade Zhao Ziyang had played an instrumental role in [China's] reform and open policy,'' he said. ''Although he erred on the June 4 incident, that doesn't mean that his reform and open policy was also flawed.'' He praised Mr Zhao for his contribution to raise farmers' incomes and improve their living standards through agricultural reforms launched more than a decade ago. Mr Xiao outlined his ambitious plan to redouble the Sichuan economy by 1997 by expanding the province's competitiveness in the domestic market. ''For example, we now import about 13 billion yuan (HK$17.5 billion) worth of daily consumer goods each year, but our exports to other provinces were only about six billion yuan,'' he said. ''That means there is a huge local market for us if we can recapture it from other provinces. We are also prepared to open this potential market to foreign investors.'' But the governor made clear that he was prepared to take a tough position on government cadres who took advantage of the expanding market by ''moonlighting''. Mr Xiao was elected governor early last month with a record number of votes. His success contrasted sharply with his failure at the 14th Party Congress last year when he received the least number of votes in the election of Central Committee members. Although Mr Xiao failed to win a seat in the Politburo, he said that that did not mean Beijing had attached less importance to Sichuan, China's most populous province. On the Three Gorges Dam project, Mr Xiao pledged that the interests of Sichuan people would not be sacrificed. One of the five vice-directors of the newly-established Three Gorges Construction Committee, he said the project would not go ahead unless the Government could ensure that the resettlement of the one million people who lived in the reservoir areas wouldbe successful. He said that the province was now negotiating with Beijing on how to resettle the evacuees and promised that the local residents would receive proper compensation and relocation. ''But I must stress that we are not just thinking about compensation, we want to energise the local economy so that their living standards would be improved as a result,'' he said.