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During the First Five-Year Plan period, the most rapidly developing areas were the less-industrialized regions in central and western China, which made up less than 25 percent of industrial output. Growth in the East was the lowest because of the deliberate decision not to let the city of Shanghai continue to dominate industrial output. The East dropped from 32 percent of industrial output in 1952 to 27 percent in 1957, but it was still the largest region. North China was the fastest growing of the more-developed regions largely because the relatively backward provinces within the region grew extremely rapidly.

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With the collapse of the Leap Forward and the severe economic problems that followed, the rate of growth dropped in every region. The drop was more severe for the central and western parts of the country. In the recovery of 1962–65, the star performer was the North, which had become the second largest region by 1965.

Between 1965 and 1970, the growth of industrial production was interrupted by the Cultural Revolution. Rates of growth were lower than the Chinese would have liked, but the pattern of growth followed the blueprint drawn up in the 1950's. North and Central China both continued to increase their relative share, while East China declined further. The rate of growth in the Southwest must have been a major disappointment. A large number of large-scale construction projects had been completed—especially in Szechwan-but the rate of growth of the region was well below average and its relative share in output fell.

It is interesting to speculate on what might lie behind the cryptic reference in Premier Chou En-lai's work report to a 10-year plan that is to run concurrently with the 5-year planning cycle.13 If it were no more than preliminary targets for the sixth Five-Year Plan (19811985), would he have referred to it as a 10-year plan? In 1956, for example, when the second Five-Year Plan was being drawn up, tentative targets for key commodities were given for 1967 and 1972, that is, for 10- and 15-year periods. The 10-year plan will probably be more than national targets for 1985. Given the current emphasis on self-sufficiency and hints that the number of provinces may be increased, the 10-year plan could be directed toward achieving a better regional balance in output. Whether that would mean a return to the regional administrative areas of the early 1950's with a formal organization and bureaucracy, or a revival of the more shadowy economic coordination regions of the late 1950's, or merely an attempt to achieve regional balance through the current national planning mechanism is more than anyone outside Peking can say. In any case, it seems clear that the central government has retained control over key economic decisions and has the power to redistribute investment funds as it wishes.

In summary, the Chinese have persisted in their plans for the regional development of the country through thick and thin. The plan—which was first to repair the industrial centers damaged during World War II, then to build new industrial bases in North and Central China, and finally to develop the Southwest and the Northwestis taking much longer than they had anticipated. Production was restored and the relative importance of the Northeast and East has begun to decline. Pao-t'ou and Wu-han are well established bases and the relative share of output in North and Central China has increased. But the Southwest has failed to develop rapidly despite the construction of the new industrial complexes, and the regional structure of industrial production has not been changed dramatically. The gestation period required for investment to have an impact on growth rates seems to have been much longer than the Chinese had anticipated. It has only been in the last 10 years that North China has increased its relative share noticeably. It seems likely that the

13 Chou En-lai, “Report on the work of the Government,” Peking Review, Jan. 24, 1975,

p. 23.

investment in the Southwest will start to pay off over the next 5 years but it will take another 10 to 15 years for the Chinese to achieve the goals they set for themselves in the early 1950's.

IV. INDUSTRIAL PERFORMANCE IN 1974 In his report to the National People's Congress, 14 Premier Chou presented more statistical information on industry than had appeared in any single speech or article since he gave an interview to the late Edgar Snow during the winter of 1970–71.15 Chou gave 1974 index numbers (with 1964 = 100) for the output of eight industrial commodities, ranging from crude oil to cotton yarn, and stated that the gross value of industrial output in 1974 was 2.9 times the level of 1964. The selection of 1964 as the base for comparison is logical—it is an even 10-year period and the previous National People's Congress met in 1964—but it is unfortunate from our point of view because absolute figures have never been published for 1964. In addition, focusing on the longer period draws attention away from performance in 1974, when industry grew by only 4 percent, and from China's current economic problems.

The average annual rates of growth derived from Chou's statement and reported or estimated rates of growth in 1974 are presented in table 4, together with the estimated level of production. The one bright spot in the economy was the petroleum industry which continued its rapid rate of growth. Other producer goods grew only slowly at best. The production of chemical fertilizer was about the same as it was in 1973 and the production of crude steel declined by nearly 2 million tons. The performance of consumer goods was no better. The output of goods manufactured from industral raw materials probably did relatively well; most goods that depend on agricultural raw materials did not. The output of cotton cloth was about the same as in 1973 and the output of sugar dropped nearly 2 percent. For every commodity except timber, growth in 1974 was below the average for the last 10 years.

TABLE 4.-INDICATORS OF CHINESE INDUSTRIAL PRODUCTION, 1974

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1 Chou En-lai, op. cit., p. 22.
15 Edgar Snow, "Talks with Chou En-lai," The New Republic, Mar. 27, 1971, p. 20.

The picture that emerges from the national physical output data also is reflected in the provincial claims for the gross value of industrial output. Data on the growth of output over the corresponding period of 1973 are presented in table 5. The fact that figures covering 9 months or more are available for only 5 out of 29 provinces suggests how little progress there was to report.

TABLE 5.-PERCENTAGE INCREASE IN THE GROSS VALUE OF INDUSTRIAL OUTPUT OVER THE CORRESPONDING

PERIOD OF 1973, FOR SELECTED PROVINCES, BY LENGTH OF PERIOD IN 1974

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The anti-Confucius campaign seems to have made itself felt throughout industry. Workers, dissatisfied with low wages and living standards, engaged in sporadic work stoppages, and absenteeism was high. The upshot was that many industries were well below the levels of production necessary to meet their goals.

By midyear the situation was serious enough for the Central Committee of the Chinese Communist Party to issue Directive No. 21, which focused on the economic difficulties caused by the excesses of the political campaign.16 The Central Committee stated specifically that the production of coal in the first 5 months of the year was 8.35 million tons short of the national target, and that the shortage of coal had affected major rail lines and a long list of industries including iron and steel, nonferrous metals, chemical fertilizer, and cement. To remedy these deficiencies, the Central Committee called for cadres to strengthen their leadership, for production to be put on a par with revolution, and for disciplinary action to be taken against workers and cadres who left their posts without permission.

The extent to which production actually declined and how successful the Chinese have been in restoring it are hard to assess. The monthly indexes of industrial output presented in table 6 throw some light on the situation during the summer and fall. It must have been nice to be able to report, as Kirin did, that production in September was 21 percent above production in August, but a moment's reflection indicates that rates of growth like this only show how bad the situation had been the previous month. For example, the lowest monthly growth rate, the 2.8 percent reported for light industry in Szechwan, is the equivalent of 40 percent annually. If rates of growth had been anything like 40 percent, they surely would have been reported.

16 New York Times, Nov. 15, 1974, p. 3.

TABLE 6.-MONTHLY INDEXES OF INDUSTRIAL OUTPUT, FOR SELECTED PROVINCES, 1974

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The rates of growth reported in the late summer and early fall of 1974 indicate that political interference in the factories had begun to ebb and that the tempo of industrial production had begun to edge up. The fact that provinces were still reporting large monthly increases in October and November, however, shows how slow the recovery was. Indeed, some areas had not fully recovered by yearend. In Hupeh, for example, output of 32 out of 70 major products in January was less than in January 1974.17

V. PROSPECTS FOR 1975 AND BEYOND

Despite accumulating structural problems and the poor performance in 1974, industrial production in the remainder of the decade should get back to the recent growth trend of 8 to 10 percent. The reduction in the number of economic ministries and commissions—from 40 to 26 and from 12 to 3, respectively-was announced at the National People's Congress in January 1975. Furthermore, Chou En-lai's statement that China is drawing up a 10-year plan in addition to the regular 5-year and annual plans suggest that centralized planning and management of the economy is being tightened. And this tightening will be reinforced by the current campaign to impose “the dictatorship of the proletariate." Among other objectives, the campaign is designed to provide the discipline necessary for a period of orderly economic development.

Chou singled out the Fifth Five-Year Plan period (1976-1980) as crucial for the attainment of “front rank" status for China by the end of the century. The basic economic problem for the People's Republic of China is to boost the growth rate of grain production well above the rate of population growth. The degree of success the Chinese have in promoting birth control and in raising agricultural production will be important determinants of the rate of industrial growth, influencing, for example, the amount of investment resources that can be spared for the expansion and modernization of heavy industry.

By purchasing 13 of the world's largest ammonia-urea fertilizer complexes, China has set the stage for a possible breakthrough in agriculture in the early 1980's. These purchases will affect industrial

17 Putting its best foot forward, Hupeh reported that output of 38 out of 70 major products was greater than in January last year. See FBI8, Mar. 4, 1975, H1.

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