NO ORDINARY LDC

The image of China as a desperately poor nation with most of its people living in misery and degradation is an image of the past. At the start of 1972, the People's Republic of China is by no means an ordinary less-developed country. No run-of-the-mill LDC could boast of the following achievements:

The feeding and clothing of an estimated 865 million people.
The detonation of 13 nuclear devices.

The launching of two space satellites.

The production of sizable numbers of jet aircraft, submarines, tanks, missiles, and other engines of war.

The achievement of self-sufficiency in petroleum.

The construction of huge industrial complexes in remote areas.
The building of bridges across the Yangtze.

The extension of the rail network through some of the world's
most difficult terrain.

The training and seasoning of a first-class industrial labor force. The conducting of extensive scientific research in various fields of knowledge.

The maintenance of a sizable and growing economic aid program.

NOR A MODERN INDUSTRIAL NATION

While no ordinary LDC, China is not a modern industrial nation either. Eighty-five percent of its people live in rural areas and are engaged in most cases in backbreaking tasks in agriculture, construction, and transport. Even in urban areas only a fraction of the labor force works in modern factories, the great majority being hewers and drawers like their rural countrymen. Moreover, those fortunate enough to be in desk jobs are often sent into the fields and workshops for a month or two in line with Chairman Mao's determination to erase the distinction between manual and mental work.

Not only primitive working conditions but also spartan living conditions distinguish China from the modern industrial nations. In order to support a powerful military establishment and a massive investment program, Peking must treat the population as an input into the production process-to be fueled, maintained, and repaired, not catered to. Several factors have enabled the Communist leadership to successfully carry out this policy of spartan living conditions. No. 1, the Chinese people have taken tremendous pride in China's national resurgence and have been receptive to explanations of the necessity for self-sacrifice, even though the explanations seem to be wearing a little thin by now. No. 2, the policy of egalitarianism, especially the restrained living standards of the bigwigs, make low-living standards easier to accept. (Chairman Mao launched the Cultural Revolution in part because the bureaucrats were losing the spirit of egalitarianism.) No. 3, except for the near-starvation years of 1960-61, living standards have been stabilized under Communist rule, and the mass of people are palpably better off than in the pre-Communist era. No. 4, there have been gradual improvements in recent vears in the quality and variety of food and clothing, the conditions of housing, the availability of consumer durables, and the level of social services. No. 5, the strong net of Communist controls makes grumbling dangerous.

THREE PARTIAL FAILURES

The drive for the collectivization of agriculture must be included among the partial failures of the regime. In the beginning there was the "land reform" of the early 1950's when the landlords were shot or dispossessed and the land distributed to individual peasants. This was quickly followed by a succession of campaigns for collectivizationleading to mutual-aid teams, next to small agricultural producer cooperatives, then to large cooperatives (akin to the Soviet collective farm), and finally to the notorious commune, the unwieldy supercollective of the Great Leap Forward era (1958-60). After the collapse of the Leap Forward, a three-tier system of agricultural control was established, consisting of a paler version of the commune with constituent "production brigades" and "production teams." The small production team was given responsibility for day-to-day agricultural decisions, and the regime was forced to permit a large amount of private farming, trade, and handicrafts. Agricultural policy today is a compromise between doctrinaire ideas about collectivization and practical measures necessary to stimulate output.

The policy of attaining economic self-sufficiency also must be reckoned a partial failure. In the 1950's the fledgling regime entered into agreements with the Soviet Union to supply 300 modern industrial plants which would have given the Chinese a tremendous shove toward self-sufficiency by the end of three five-year plans (1953-67). The orderly buildup of industrial capacity, however, was interrupted by the Leap Forward attempt at instant industrialization. The abrupt withdrawal of the Soviet technicians in mid-1960 when only half of the 300 plants were completed crushed any hopes for self-sufficiency over the near term. In the 1960's Peking turned to Japan and Western Europe for material and technical support, but political turmoil of the Cultural Revolution (1966-69) again postponed prospects for selfsufficiency by reducing the flow of outside support and shutting down the system of technical education for 4 years. In short, much of China's military-industrial success to date has rested on foreign assistance-on plants erected from Soviet blueprints, on production of Soviet-model weapons, and on machinery imported from the West or copied from Western prototypes.

The policy of economic self-sufficiency is an unqualified success in one important dimension. The Chinese have no long-term foreign debt in contrast to other developing countries such as India, Pakistan, Indonesia, and Egypt which are staggering under a heavy burden of external debt.

A third partial failure involves the system of economic motivation and incentives. In the 1950's the Communist government had built up a reservoir of good will among much of the populace-based on the pride and excitement of China's new independence and power. This reservoir was improvidently drained during the Leap Forward and the Cultural Revolution when political excesses interrupted the drive toward military-industrial power. Thereafter, people seemed to respond less rapidly to spiritual incentives. The persistent warnings of the propagandists against falling victim to the sugar-coated bullets of material incentives began to fall on deaf ears. The young people-two-thirds of the population have no personal memory of China's

humiliation-have had to be indoctrinated in order to understand the "past bitterness" of life under capitalism. They are not enthusiastic about settling down for a lifetime of hard work in the countryside even for Chairman Mao and the revolution. Finally, Peking ruefully admits that a majority of the scientists and educators do not really support the official ideology.1

The major economic problems posed by the uncertain state of motivation are the extent to which spartan living conditions will have to be relaxed at the expense of military-industrial development and the extent to which material incentives and wider income differentials will have to be accepted by the Government. Dealing with these problems poses increasing difficulties to Peking. The economy is steadily growing more complex, witness the wider range and more advanced technology of military-industrial goods and the higher and more diverse skills required in the labor force. As people acquire more education and work at more technical jobs, they presumably will expect commensurate increases in living standards. And they will respond increasingly to technocratic, rather than ideological imperatives.

RATES OF GROWTH

In the 1950's the Chinese began the development of an elaborate economic statistical system, faithfully copying the Soviet statistical organization and procedures. This embryonic system was a victim of the excesses of the Leap Forward. Since that time Peking has enforced a statistical blackout so complete that only a handful of national economic figures have been released since 1960. Outside observers, however, have been able to piece together a good general appraisal of trends in the economy through use of foreign trade data, the accounts of travelers and refugees, and the cryptic discussions of economic issues in the Chinese press. Rough-hewn estimates of average annual rates of growth since 1952 thus may be derived, as follows:

These numerical estimates show that economic results have paralleled economic policy in the PRC. Investment has been concentrated in the industrial sector, and industrial growth accordingly has outstripped agricultural growth. Agricultural growth, in turn, has been just sufficient to support the growing population at minimum standards. The growth of foreign trade was greatest in the 1950's when broad-scale Soviet support was forthcoming; in the 1960's, the total volume of trade never exceeded the level of 1959 (table 3), with selec

1 For an illustration of Peking's pessimistic appraisal of the attitude of scientists, see the discussion of the unsatisfactory ideological situation among scientific researchers at the Shanghai Silicate Research Institute of the Chinese Academy of Sciences. as presented in a Shanghai radio broadcast reported in FBIS Daily Report: People's Republic of China, February 8. 1972 (FBIS-CHI-72-77), p. C-3-5. "So far, it cannot be said that the majority of these intellectuals have completed this change [in their fundamental ideological outlook]," a theme repeated in other official commentary.

tive imports of key plants and equipment from non-Communist coun tries taking over the leading role.

Whereas the preceding tabulation showed the strength of China's economic growth, the following tabulation shows its erratic nature:

The Communist leadership under Chairman Mao does not have a single clear-cut set of economic marching orders which are uniformly put into action at the lower party and economic administrative levels. In the first place, radical swings in economic policy occur at the top because of realinements of political power, changes in the underlying economic situation, and a cyclical pattern of advance and retreat in ideological matters. Moreover, there are inevitable delays in the implementation of new policies as well as varying interpretations and degrees of resistance at lower levels. Indeed, economic administration is marked by a bargaining process in which the needs of various interest groups must to a certain extent be negotiated and compromised. Furthermore, economic results often are not reported accurately to the center, especially when the reporting units are small and scattered. The central authorities may have only an imperfect notion of the economic situation in much of their vast territory. Peking's writ thus may have surprisingly little force in the outback of the economy, especially when there is conflict or uncertainty at the top. One important consequence of these institutional forces is that the amplitude of swings in economic policy is much greater than the amplitude of changes in actual economic events.

Contributing to the complexity in policymaking is the constant change in economic needs. The economy in two short decades has moved from the tasks of restoring operations in basic production facilities to the tasks of manufacturing and deploying complex weapons systems. Chairman Mao himself is aging and does not bring the same perspective to the economy and society as when he was a young guerrilla chieftain in beleaguered revolutionary areas. Mao can hardly welcome what he perceives as China's drift toward Galbraith's "new industrial state" with its hierarchy of technocrats. The Chinese Communist propagandists use the concept "red versus expert" to distinguish those persons with proper ideological credentials from those with mere technical expertise.

SCOREBOARD IN EARLY 1972

In early 1972, the second year of the Fourth Five-Year Plan, the PRC is pursuing a moderate economic policy with impressive economic results. GNP is running at an annual rate of roughly U.S. $130 billion or $150 per capita. In the various sectors of the economy