SUMMARY By JOHN P. HARDT Five years ago, as the Great Proletarian Cultural Revolution was building up to a peak, the Joint Economic Committee released a pioneering, two-volume assessment, entitled An Economic Profile of Mainland China. Today, as the People's Republic of China begins to participate in the United Nations and as relations between China and the United States begin to thaw, it is appropriate to reassess and update the conclusions reached in the earlier study. The present volume, in which 12 U.S. Government specialists analyze China's economic performance, is the result. Although the authors are faced with formidable data problemsdiscussed in each of the studies-they are able to support their conclusion that China's economy has shown great resiliency and that recent policies and programs are moving the country into a strong economic position. At the same time, the authors demonstrate that China has many remaining economic problems, the most conspicuous of which are the pressure of population on agricultural resources and the difficulty in keeping up in the worldwide technological race. The volume starts with two articles on the general economic setting an overall survey of China's economic performance in the past two decades (Ashbrook), an analysis of economic motivation in China (Jones). The next group of papers are on specific sectors of the economy-industrial development (Field), the electronics industry (Reichers), agriculture (Erisman), and transportation (Vetterling and Wagy). Next, problems of human resources are covered in papers on science and education (Orleans) and on population policy (Aird). Finally, China's external economic relations are addressed in papers on foreign trade (Usack and Batsavage) and foreign aid (Tansky). The authors have provided their own summe ries, and the readers will want to make up his own mind when there are clashes in individual viewpoints. Some of the major questions suggested by the analysis of these papers are as follows: 1. How badly was economic development in the PRC set back by the Great Leap Forward (1958-60) and the Great Proletarian Cultural Revolution (1966-69)? In general, the assessment of the present volume is less pessimistic than the assessment of the 1967 JEC study, partly because of the advantage of hindsight. It is now clear that fairly impressive industrial growth occurred in the midst of the Leap Forward confusion (Field, p. 64) and that the remedial measures in the post-Leap adjustment period were timely and effective (Ashbrook, pp. 4-5). Furthermore, the Cultural Revolution-which was just beginning to have adverse 1 Joint Economic Committee, An Economic Profile of Mainland China, Government Printing Office, vol. 1 and 2, February 1967, p. 684; commentary on this study is contained in Joint Economic Committee, Mainland China in the World Economy, Government Printing Office, Hearings in April 1967, p. 248. (IX) effects on the economy when the first JEC study was being publi proved to have no palpable effect on agriculture and only shor effects on industry (Ashbrook, pp. 25-20). The closing of universities for some 4 years will have som ing effects on the training of high-level professional manpower the present halting adjustments will, eventually, result in an acce compromise between ideology and experience" (Orleans, p. 205 As for the scientists, professors and the intellectuals in genera had to absorb the brunt of the Cultural Revolution: . . . the seemingly unrestrained attacks against his Chines colleagues are likely to be much more painful to the Wester scientists... than to the object of the abuser who probabl has become quite immune through exposure and who is pur suing his daily responsibilities, if not with enthusiasm, the at least with discerning acquiescence (Orleans, p. 197). 2. How serious were the short and longer term impacts of the Soviet rupture in relations on Chinese economic development? Soviet aid was critically important to Chinese industrial dev ment during the 1950's: The major impetus to the drive for industrial developmen was furnished by large-scale imports of machinery and equip ment, much of it in the form of complete industrial installa tions. The Soviet Union was the chief supplier of complete plants. During the decade agreements were signed with the U.S.S.R. for the construction of 291 major industrial instal lations in China. By the end of 1959, equipment valued at $1.35 billion had been delivered and about 130 projects were completed. Agreements were also signed with Eastern European countries for the construction of at least 100 major projects and about two-thirds of these were completed by 1959. In addition to supplying equipment for these installations the Soviet Union provided China with valuable technical aid including: (a) blueprints and technical information, (b) some 10,000 Soviet technicians and advisors, and (c) training for 15,000 Chinese technicians and academic students in the U.S.S.R. (Usack and Batsavage, p. 344). The impact of Soviet aid termination in mid-1960 on Chinese dustrial output was soon in coming: In 1961, industrial production fell sharply to a level slightly above that of 1957 but only two-thirds of the peak reached in 1959. After the withdrawal of the Soviet technicians in mid1960, the Chinese found that they could not operate many of the heavy industrial plants built as Soviet aid projects, and they were forced to cut production drastically (Field, p. 64). However, the shift to non-Communist sources of assistance in 1960's took away part of the sting, as in the electronics industry: The withdrawal of Soviet aid in 1960 forced China to turn to the non-Communist countries for assistance. These countries, principally Japan, West Germany, the United Kingdom, France, and Switzerland, are currently the source of more than four-fifths of China's imports of electronic products and production equipment. In 1960-1970 more than $200 million of technologically advanced electronic production equipment was imported from the non-Communist world. The imports consisted primarily of modern military and industrial electronics which China could have produced domestically only after a long development period. These imports as well as imports from the West of special electronics materials and technological know-how enabled China to forego the lengthy and expensive process of prototype development and to expand its electronics production base from 60 major electronics plants in 1960 to 200 in 1971. Years were saved in establishing the production of advanced electronic products for industrial and military programs (Reichers, pp. 87-88). Ideally, continuation of Soviet aid to 1967, that is, through three 5year plans would have served Chinese economic interests best. Yet, as Reichers suggests, the forced shift to Western industrial sources had tangible long-run benefits to the Chinese. 3. In view of its burgeoning population can the Chinese economy sustain its major priorities? With the exception of the three disaster years of 1959-61, China has fed its huge and growing population currently estimated to be 865 million. Peking's approach to China's neo-Malthusian problem has been two-pronged-a new investment strategy for agriculture and sporadic birth control programs. The new investment strategy adopted in the wake of the Great Leap Forward involved an increase in chemical fertilizers, pumps for water control, improved transportation, and so forth, and a concentration of these additional resources on potentially high-yield rice land in the south of China: The response of agricultural production to the new strategy-including the substantial increases in investments in agriculture and the concentration on high-yield acreageresulted in (a) the restoration of the 1957 level of grain production by 1964, and (b) the growth of grain production at a somewhat faster rate than population in 1965-71. ... as a result of the changed strategy, a new trend line. has been established in agriculture, distinctly higher and more steeply pitched than that prevailing under the low-investment policy of the first decade, yet lower than that which could be readily realized given even larger and better-balanced inputs. Output will exceed the trend value when weather is better than normal and fall below the trend value to the extent weather is unfavorable (Erisman, p. 142). The three birth control campaigns have had no appreciable effect on demographic rates. Moreover-and this is the most striking point in the population paper-a successful attempt at fertility reduction probably would have little effect on the total size of the population over the next two decades. Aird's four population projections for 1990 range only between 1,319 million and 1,330 million: These models imply that even a major and successful effort at fertility reduction in the PRC is not likely to make much difference either in the size of the total population or in the D size of the younger age groups, hence it cannot afford much The principal reason why these models show so little differ- In summary, the main line of thinking in these papers is that new investment will keep agriculture up with population but that agriculture will provide no extra margin for stepped-up economic growth. 4. What burdens do military development and foreign aid—the power oriented programs-place on economic development? A reading of the papers suggests that the Chinese have been generally successful both in building up a heavy industrial base and in gradually modernizing their armed forces. Among the major factors contributing to this success are: (a) the control of consumption at relatively, austere, egalitarian levels; (b) the use of foreign trade to get high-technology machinery and materials, which could be produced at home at very high cost and after long delay; and (c) the partial insulation of the nuclear and other high-technology programs from political turmoil. The military programs command roughly onetenth of China's GNP (Ashbrook, p. 45) and the foreign aid programs approximately $400 million annually, or about one-third of 1 percent of China's GNP. (Tansky, p. 371). During the next decade, when the cost of series manufacture and large-scale deployment of modern weapons will rise sharply upward, the leadership may face a much tighter squeeze on resources needed for growth. This squeeze would be compounded by the insistent pressure from the population to raise the level of consumption. 5. How successful has Peking been in developing the various economic regions of China? The authors agree that Peking can point to substantial successes in building up regional transportation and industrial facilities: When the Communists came to power, they inherited an undeveloped and badly damaged transportation network. Reconstruction of much of the old network was undertaken during 1950-52, and bold plans were formulated for the extension of the rail, highway, and inland waterway systems. Substantial progress was made during the 1960's and, after a pause during the early 1960's, expansion was again given high priority in the late 1960's. The rail network was extended into the southwestern and northwestern sections of the country, and additional connecting links were built in the east and northeast. The highway network was expanded and improved especially in western areas such as Tibet where no railroads presently exist. The inland waterway network was restored, improved, and expanded. Inland and coastal ports were modernized and their capacities increased (Vetterling and Wagy, p. 147). In summary, the Chinese have persisted in their plan for the regional development of the country through thick and thin. The original 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 Northwest-has certainly been delayed, but the pattern of development has been retained. Pao-t'ou and Wu-han, for example, are now wellestablished industrial bases, and a large number of industrial construction projects are currently under development in Southwest China (Feld, p. 71). PROSPECTS AND PROBLEMS The papers in the volume almost certainly will prove of value to anyone interested in the relationship of the United States with the People's Republic of China. The authors have provided a surprising amount of detailed information on the People's Republic of China's economic history, its current economic situation, and its future economic prospects. Although it has not been the purpose of the authors to spell out the implications of their findings for U.S. policy, they have provided us with an informational and analytic basis relevant to that important task. Some future prospects and problems may thus be identified. Past Western projections of Chinese performance have often seriously overstated or understated the actual future performance. In times of disruption and poor performance the recuperative capabilities of Chinese society have, apparently, often been underestimated. Now, in a period encouraging favorable forecasts it is well to be cautious. A number of problems may arise to disturb an extrapolation of currently favorable economic trends: • Natural calamities may play their roles as they have throughout Chinese history; for example, floods, droughts, earthquakes, epidemics, and so forth. The food/population balance may be disrupted causing short or longer term economic retardation. The military burden on the economy may sharply rise in response to escalating weapons costs in their nuclear program, force expansion, and modernization to meet perceived needs on the Soviet border or in the Taiwan Straits, or other policy reasons. Leadership struggles either to develop a better Maoist state or choose a successor to Mao may disturb the current stability. • Institutional changes, as China proceeds on its course of transformation from a traditional to a modern society, may continue to engender periods of instability and disruption. The Soviet experi |