Chairman PROXMIRE. Congressman Boggs.

Representative BOGGS. Thank you very much, Mr. Chairman.

It is good to have Senator Scott here. I have had the pleasure of talking with him several times about China. I just have one or two questions.

I asked Senator Mansfield this question; Senator, what do you see for the future between the United States and China?

Senator SCOTT. I think the future will be that of a growing acceptance of our differences, a growing confidence that neither wants land, that neither country is land hungry or is inclined to be aggressive toward its neighbors, and that between us we offer a closing of the circle with Russia whereby three very powerful nations will ultimately be able to arrive at a better composition of their differences. What we should avoid is what the Chinese say they want to avoid and that is having nations simply because they are strong seek to rule the world collectively, and I think that has to be avoided.

But the Chinese advocacy of friendliness to the little nations is a rather useful ingredient to throw into this pot with the United States and the Russians I think; and I think I see coming out of it the fact that the Americans and the Chinese like each other and always have. The Japanese people make that point constantly.

Our Governments are very different but I believe that we can arrive at a better basis of understanding than we ever had because once we were the Western conqueror and they were the conquered or the oppressed.

I don't think that Maoism is the same thing as pure Marxist socialism, but I think it is closer to it than the Russians.

On the other hand, I think it is capable of being evolved more successfully into a true socialist state. I think the Russians are going to have to fight between a socialist state and ultimately another form of government. I think the Chinese are heading more toward a true socialism rather than a true communism.

Representative BOGGS. After your trip, did you come to any tentative conclusions on why there has been a thawing in the tensions between this country and China?

Senator SCOTT. Well, it is the usual case. I think it is a mutual self-interest. It is obvious that the United States was the missing link-China could speak to Russia and couldn't speak to us. We could speak to Russia and couldn't speak to them. It was a closing of the circle; but, more than that, it was necessary for China to be able to open some doors to the United States because China needs to have more of world opinion in its favor if it gets into more trouble with the Russians, for example.

China is very, very much worried about Japan. It needs to explain to the United States why it is worried about Japan because we have difficulty seeing it. China feels menaced on all borders-to the south, to the west, to the east, and to the north; and I think this concern they have leads them to want at least, if they don't get new friends, to get new people they can talk to and explain their position to.

Representative BOGGS. I am very much interested in your comments about trade between our country and China. Do you see any danger of problems between China and Japan and if we increase trade with China?

Senator SCOTT. I don't think our increasing of trade will be so great as to increase their problems with Japan. There are more Japanese people visiting China than any other people. The Chinese feel that the danger of Japanese economic expansion is usually accompanied by military expansion or adventurism. We don't see that; they do. So the danger is something that the Chinese and the Japanese, I think, will have to work out rather than for us. But we ought not to get into a position where we appear to be encouraging the Japanese to build immense or aggressive military strength.

Representative BOGGS. Just one other question, Senator, on another subject. While in China, did you get to find out anything about their educational system and how it is working?

Senator SCOTT. Well, we did some, and although Senator Mansfield and I were busy with meetings with various leaders, others in our party saw more of the school system. I think Senator Mansfield and I both saw the kindergartens and the afterhours programs. Some people with us went to the universities and the rest. It is my impression that their universities are only now beginning to recover from the cultural revolution. Many of their professors have had to go to the May 7 Reeducational Schools. Some have spent as much as 3 years being reeducated in the form of thought acceptance.

Peking University, in my opinion, is not much more than a trade school; none of their universities seems to be as big as they once were at Chinhua, for instance. Their textbooks are temporary; they have not developed new and regular permanent textbooks. Their students are not always people who seem capable of learning, we were told by those who went there. In other words, they must have a certain proportion of workers and peasants, whether they can hack it or not. They say they have graduate courses for those who are especially talented, but they are unwilling to say where or how.

I think their educational system at the upper level has been pretty well shot to pieces, to put it bluntly, and I think it is very slowly recovering and having difficulty because they are afraid to put in the textbooks something that somebody higher up might disapprove of.

I think at the lower levels they have greatly increased the literacy of the country and they seem to have millions of happy schoolchildren who are working and studying quite hard and having a pretty good time after hours. They have good recreation programs.

Representative BOGGS. Thank you, Senator. Thank you. Mr. Chairman.

Chairman PROXMIRE. Before I ask Senator Pearson, I would like to ask Senator Mansfield if he would like to comment on that. We would like to have your observations.

Senator ScOTT. We have both been schoolteachers.

Chairman PROXMIRE. I know that.

Senator MANSFIELD. We both did visit elementary and middle schools. Our wives and other members of the party visited Peking University and came back with the impression generally that Senator Scott has just given.

But we were impressed with the elementary system especially because you may remember, Hugh, we went to a deaf mute school in Canton and there we saw the children in three different rooms. Acupuncture was applied to youngsters who were deaf and sometimes

it worked and sometimes it didn't. The Chinese are the first to admit that they are not by any means absolutely sure of how acupuncture will function, that it is still experimental.

Then we went to a school after hours, and they put on little skits and things for us. They were all prepared ahead of time. This is the only instance that I know of where I felt that we were the recipients of something which had been planned for some hours previously. But they have a good system in the elementary and middle schools; but as the distinguished minority leader has said, you have this amalgamation of the peasant, the worker and the soldier in the universities, and academic standards have declined because of the cultural revolution. They had a sort of an open admission policy which I think is always open to question even though we practice it at some universities in this country. But I think the trend now is, as Senator Scott has said, on the way up. Once again, examinations are being held and I think the egalitarianism which existed, the workers, the peasants and the soldiers is being broken down somewhat and they are getting back to the old Chinese system of meretorious matriculation for entrance into the universities.

Senator SCOTT. We noticed in all the meetings we had the workers, the peasants and soldiers were always included and women members for members of councils of the committee, but we noticed the government official, the bureaucrat, the trained cadre, did almost all of the talking and, on the other hand, the worker or the soldier never had any sense of embarrassment in interrupting or correcting the leading speaker, but basically they spoke not 5 percent of the time. They did the listening and they are pretty well ignored by whoever happens to be the leadoff man.

Chairman PROXMIRE. Senator Pearson.

Senator PEARSON. I don't want to be long. I don't want to be cynical of my constituency, but I notice my wheat farmers become much more tolerant about national philosophies and ideologies when there is a chance to sell more wheat, and I was interested in the observation that in that very limited opportunity for expanded trade, perhaps it is in agricultural commodities, fertilizers, chemicals, and I further understand they have been purchasing about 150 metric tons of wheat from Canada, Australia, some from France, and they pay cash on the barrelhead either in dollars or in gold; is that correct? Senator SCOTT. I don't have the accurate figures with me on the amount in U.S. dollars. Their percentage, as I read earlier, is 24 percent of the total imports are food and most of that is wheat; I don't have the dollar figure.

Senator PEARSON. I think one of the points to be made and emphasized so we don't raise false hopes-I saw a figure the other day that China represents 0 of 1 percent of the total world trade today, and so we are talking about a very limited capacity and very limited opportunity in this field; but, as the chairman said, and as the minority leader and the majority leader said, both this morning and on their report on the floor, this trade can really open the door to many other opportunities of advancing mutual understanding between the two great powers and I think it is important for that reason.

I don't have anything further, Mr. Chairman.

Chairman PROXMIRE. Well, Senator Scott, I want to thank you very, very much. You were most gracious to come before us and I

think your statement and your responses have been very, very helpful to the committee. This is a fine beginning for these hearings in which we intend to probe the Chinese economy and bring up to date our study we made a few years ago.

Senator SCOTT. Thank you, Mr. Chairman.

I would like to close with a little anecdote.

I was talking with Cliff Robertson, the actor, last evening. A few years ago he had acupuncture in Hong Kong. He had 11 needles. And then his wife, Nina Foch, tried to find some places to put iodine and never could find the holes.

It is a very mysterious treatment.

Chairman PROXMIRE. It looks like you have given us the needle this morning.

Senator SCOTT. Glad to be here.

Chairman PROXMIRE. Delighted to have you.

We are fortunate to have two of the leading authorities on China to initiate the academic part of our search for insights on China. Prof. T. C. Liu, is the Goldwin Smith professor of economics at Cornell University, and well known internationally as an econometrician and statistician and as a specialist on the economy of Mainland China. Professor Liu has nonetheless been responsible for a number of significant publications on China. His "Chinese Economy and National Accounts" with K. C. Yeh, is one of the outstanding publications in the field.

Professor Liu was able to draw on that publication for some of the framework for his input to the committee's earlier publication on China, "An Economic Profile of Mainland China."

If Professor Schwartz would come forward, and sit at the other side, please.

Professor Schwartz is a member of the illustrious group of Asian specialists at Harvard which includes Professor Fairbank and Professor Reischauer. We have often asked his colleagues to share their insights with the Congress. This is the first time this committee has had the pleasure of Professor Schwartz' appearance.

A professional historian, Professor Schwartz has demonstrated a keen insight into contemporary Chinese trends. This combination of current perspective against a rich historical understanding should provide a very useful session indeed.

As I indicated, gentlemen, in my letter, we are most anxious to engage you two scholars in direct dialog, so if you are able to restrict your formal, introductory comments to about 10 minutes, it would be helpful. We will have a timer and ring it so you will know. You may place into the formal record of proceedings a much longer statement you wish.

if

May we start with Professor Liu.

STATEMENT OF TA-CHUNG LIU, GOLDWIN SMITH PROFESSOR OF ECONOMICS, AND CHAIRMAN, DEPARTMENT OF ECONOMICS, CORNELL UNIVERSITY

Mr. Liu. Mr. Chairman, it is an honor to appear before this distinguished committee.

The statistics and the estimates presented in this volume entitled "People's Republic of China: An Economic Assessment" are very

useful to the serious student of economics, whether one agrees with them or not. However, the impression of the mainland a nonspecialist reader would get from a rapid reading of this volume would be quite different from what the statistics and the estimates in the volume imply. For instance, it is said on page 6 that "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." And, on page 10, that "In the early 1970's China almost certainly will be widening its lead over the ordinary less-developed countries."

On the other hand, the most important conclusions one gets from a careful reading of the estimates and the statistics given in this volume are that the Chinese people on the mainland were fed less well in 1970 than in 1957 and that it is not certain at all that they are better clothed in 1970 than in 1957 either.

On the basis of the estimates given in the volume itself, it can be easily calculated that per capita food production in 1970 was only 90 percent of that in 1957. After correction is made for the change in the trade balance in foodstuffs, per capita food consumption was about 6 percent smaller in 1970 than in 1957. Even according to the Communist figures themselves, per capita consumption of food in 1957 was none too high. The hardship caused by a reduction of 6 percent in 1970 from this low 1957 level is not difficult to imagine.

The estimate given in this volume does not indicate an improvement in the clothing situation either. The per capita production of cotton cloth increased by about 1 percent per year during 1957-70. But the per capita production of cotton declined by 18 percent during the same period. There would be much less cotton available for padding winter clothing and blankets in 1970 than in 1957, the main winter clothing and blanket for most Chinese being cotton padded.

Before we have detailed data on exports of cotton cloth and imports of cotton in 1970, we cannot say much about the situation of clothing in 1970. In any case, the mainland produced only 4.4 pounds of cotton in 1970 per person, much of which was used to make the 9 yards of cloth per person, a very small amount indeed for all purposes.

The impression a traveler may get by visiting a few leading cities, provincial capitals, show communes and factories where the workers are paid better than the rest of the population, cannot be taken as representing the country as a whole. Partial pictures of the huge Chinese mainland gained by visitors cannot argue with the statistical estimates made for the country as a whole in this volume.

The only comparison of the Chinese mainland with other Asian developing nations and regions given in the volume has to do with per capita gross national product in U.S. dollars in 1970 as follows: The Republic of China in Taiwan, $350; the Chinese mainland, $145; Pakistan, $120; India, $100.

The per capita gross national product of the Chinese mainland is therefore obviously very low. However, a comparison of the data on recent rates of growth of GNP and per capita GNP during 1957 to 1970, not given in this volume, would give some idea of the economic potential of the mainland relative to other Asian developing countries and regions with different economic systems.

Among the five countries and regions for which we have the data for 1970, the Chinese mainland ranks the lowest, as follows: In terms of the rate of growth of gross national product in percent per year: