5. The annual rate of production and procurement of military hardware in 1972-74 has been about 25 percent below the peak rate of 1970–71, probably the combined result of the priority of agriculturesupport programs, the changeover to later model weapons, and the reassertion of Party control over the military.

6. Rising domestic output of crude oil and soaring international oil prices have enabled petroleum to take up the slack in earnings from traditional exports.

7. The third, and most serious, of the population control programs probably has not yet had a substantial impact on demographic rates. 8. If the government wishes to give the highest priority to a sharp curbing of population growth, it has at hand the bureaucratic and the scientific/technical resources to do the job.

9. With its floor under consumption, its purposeful investment program, its control over migration to urban areas, and its hard-driving leadership, China has easily outdistanced other large LDCs.

10. While the PRC has not narrowed the technological gap between itself and the leading industrial nations, it has been spared their tribulations with recession, inflation, and energy shortages.

11. Only a cataclysmic political upheaval-following the fading away of Chairman Mao and Premier Chou-could reverse the technocratic tendencies now deeply rooted in Chinese economic society.

12. At the same time, the examples of great political flareups in the past should caution the observer against any straight-line projection of steady economic growth.

13. Outside of political upheavals, the main challenges to the Chinese economy over the next 25 years will be to incorporate a more complex mix of products into the system, to maintain a spirit of hard work and sacrifice in a generation with no memory of national or personal humilitation, and to keep the lid on consumption in an era of universal education and advancing technology.

II. INTRODUCTION: ORGANIZATION OF THE PAPER

This paper appraises the economy of the People's Republic of China from the vantage point of early 1975. The discussion focuses on developments since the Cultural Revolution of 1966-69, dealing mainly with the transitional year 1970 and the first 4 years of the Fourth Five-Year Plan (1971-75). Two tables provides a quick summary of the entire quarter of a century since the formation of the People's Republic. Table 1 sets forth in capsule fashion the economic results for major economic sectors in each of six distinctive economic periods. Table 2 presents 10 basic economic time series, 1949-74.

1 For a systematic description of major developments in the years before 1970, see the author's paper in the previous JEC volume on the Chinese economy: Arthur G. Ashbrook, Jr.. "China: Economic Policy and Economic Results, 1949-71,' People's Republic of China: An Economic Assessment, Joint Economic Committee of the U.S. Congress. Washington, 1972, pp. 3-51. The volume is cited hereafter in this present paper as "JEC-72” and the paper as "Ashbrook, JEC-72." Tables 1 and 2 in this paper are updated versions of Tables 2 and 3 in the earlier paper.

of economic activity.
Return to pre-Communist level Reactivation of capacity as flow
trial base under Soviet aus-
Successful build-up of indus-
pices.
economy's resources.
Disastrous overstraining of the Ruinous increase in tempo and

deterioration of quality.
investment in priority
Rationalization of output, with
branches.

1966-69, Cultural Revolution..

ery.
of economic balance.
1961-65, Readjustment and Recov- Quick and successful recovery
momentum.
Short-lived break in economic Sharp dip in industrial output
with investment continuing.

Planning.

across the board. with oil a star performer; coal 1970-74, Resumption of Regular Resumption of economic growth Gains in capacity and output, shortages.

Agricultural results

Return of fields to operation and
distribution of land to peas-
ants.

sources; collectivization in
Gains in output from own re-
stages.

bad weather and ill-fated Precipitous fall in output due to communes.

with aid of new inputs. Quick return to growth pattern

Continued growth on basis of
good weather and larger in-
puts.

Continued growth on basis of
good weather and larger in-
puts.

The paper begins with a series of key findings. The text continues with a brief review of long-term economic forces at work in early 1975, an assessment of current policy and planning issues, and a discussion of major developments in agriculture, industry, foreign trade, and transportation. Then comes an analysis of trends in consumption, the possibility of effective population control, the reforms of education, and the prospects for future economic advances.

Three appendixes describe the computation of the GNP figures used in the text, the sources of information available on the Chinese economy, and the nature of the Chinese economic system as a variant of the Soviet economic model.

III. BACKGROUND: LONG-TERM ECONOMIC FORCES

At the beginning of 1975, the final year of the Fourth Five-Year Plan, the Chinese economy reflects the experience of a quarter of a century of development under Communist rule. Estimated long-term annual economic growth rates have been as follows, calculated on the base years 1952 and 1957:

The short-term rate of growth of GNP has been erratic, mainly because of the two major political upheavals-the Great Leap Forward (1958-60) and the Cultural Revolution (1966-69). As depicted in the first section of figure 1, GNP plunged in the aftermath of the ill-fated Leap Forward and dipped, less severely, when the Cultural Revolution interrupted industrial production.