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China POTENTIAL FOR ACHIEVING NATIONAL GOALS
By 1987, under the stimulus of the reform program, the Chinese
economy had made major strides toward achieving modernization and
improved living standards. The potential for further improvements
in efficiency and productivity was greatly increased by the revival
of the education system, the opening of the economy to broader
trade and cooperation with other countries, the expanded use of the
market to enliven commerce and production, and the increased
decision-making power of individual economic units
(see Modernization Goals in the 1980s
, ch. 4;
Trade Policy in the 1980s
, ch. 8).
The country's most important resource was its labor force, the
largest in the world. The rapid expansion and improvement of the
education system that began in the late 1970s was creating larger
numbers of workers who were skilled and well educated, as well as
the first substantial numbers of advanced-degree holders to staff
the nation's universities and research institutes. In addition, the
decentralization of management encouraged the participation in
planning and decision making of growing numbers of local and
enterprise-level managers, planners, administrators, and
scientists. It also trained future economic leaders for higher
administrative responsibilities.
In terms of material resources, China was adequately endowed to
meet the needs of modernization in all but a few materials. Under
the new policy of encouraging cooperation and joint ventures with
foreign firms, advanced technology was more widely used to exploit
China's large deposits of iron ore and other important minerals,
along with the country's vast coal and petroleum reserves and its
enormous hydroelectric potential--the largest in the world. Much of
the investment in expanding the transportation network in the 1980s
was aimed at improving access to previously remote mineral and
energy resources for both domestic needs and foreign trade.
The most stringent resource constraint was the limited amount
of arable land, which actually declined in the 1980s as cropland
was appropriated for new rural housing and urban expansion. Between
1978 and 1985, the total area sown to crops declined by over 4
percent. The loss of farmland, however, was more than compensated
for by improved productivity of the land that remained under
cultivation. Farmers expanded the irrigated area, increased
fertilizer application, acquired improved crop varieties, and made
better use of comparative advantage in determining which crops to
grow, resulting in an average rate of growth in the value of crop
production of better than 5 percent a year over the same 7-year
period. Although agricultural growth rates had begun to fall off in
the mid-1980s, the incentives of the responsibility system and
greater access to international technical advances suggested that
the farm sector could continue to meet the needs of the growing
economy in the foreseeable future.
The industrial sector, while much less advanced than those of
the developed countries, was nonetheless a solid base for
modernization. Industrial enterprises were dispersed throughout the
country and included units capable of producing all major kinds of
machinery, equipment, chemicals, building materials, and light
industrial goods. Chinese enterprises could make most of the
products required for modernization, and the growing pool of
industrial technicians and managers was increasingly capable of
effectively integrating advanced foreign technology into Chinese
production processes. Key industries were being technologically
strengthened by the purchase of advanced foreign equipment and the
adoption of modern management techniques. Despite promising
potential, formidable obstacles still impeded the drive for
modernization. Physical restraints included a renewed increase in
birth rates and population growth rates as the number of women of
child-bearing age began to rise in 1986 and 1987. Some crucial
resources--especially educated personnel and modern equipment-
-still were in very short supply because of the sheer size of the
economy. In the realm of policy, the administration faced the
daunting problem of trying to integrate market measures--for
efficiency--with government planning and control, the source of
stability. In 1987 both kinds of mechanisms exerted extensive
influence with the result that market efficiency was hindered by
government intervention and government plans were undermined by
off-plan activities. Finally, the most serious concern of
government leaders was the possibility of future political
upheavals. While nearly all Chinese people enjoyed better living
conditions as a result of the progress achieved by the reform
program, the new policies also had given rise to new social
problems and political tensions. Increasing crime and corruption,
greater emphasis on the profit motive, widening income disparities,
and inflation aroused resistance in many conservative quarters and
resulted in the political struggle that caused Hu Yaobang to be
forced from his position as Chinese Communist Party general
secretary in early 1987. By mid-1987 it was not yet clear what the
outcome of the struggle would be or how it would affect the future
course of economic reform.
* * *
Among the most useful works on economic development in China
before 1949 are Mark Elvin's The Pattern of the Chinese Past
and Dwight H. Perkins' Agricultural Development in China,
1368-1968. These books examine the fundamental relationships
between technology, population, society, and economic growth in
China. A good, brief integration of much of the scholarship on the
Chinese economy in the modern period may be found in Ramon H.
Myers' The Chinese Economy Past and Present. China's
Modern Economy in Historical Perspective, edited by Perkins, is
a valuable collection of articles by leading scholars dealing with
various aspects of China's modern economic development. A concise
description of the Chinese economy in the eighty years before 1949
is presented in two brief works by Albert Feuerwerker, The
Chinese Economy, ca. 1870-1911 and Economic Trends in the
Republic of China, 1912-1949. The most authoritative and
detailed sources of information on the economy of the People's
Republic are the annual statistical yearbooks compiled by the State
Statistical Bureau. As of 1987 the most recent was Statistical
Yearbook of China, 1986, which contained updated information on
most major aspects of the Chinese economy since 1949, as well as a
set of explanatory notes that define the terms and measures used.
Another useful annual Chinese publication is the Almanac of
China's Economy. Recent general treatments of the Chinese
economy by Western scholars include a good overview, China's
Political Economy by Carl Riskin, and a mathematically oriented
work, The Chinese Economy by Gregory C. Chow. Some of the
earlier classic works on the post-1949 economy are China's
Economic Revolution by Alexander Eckstein, China's
Economy by Christopher Howe, China's Economic System by
Audrey Donnithorne, The Economy of the Chinese Mainland by
Ta-Chung Liu and Kung-Chia Yeh, and The Chinese Economy under
Communism by Nai-Ruenn Chen and Walter Galenson. China's
Development Experience in Comparative Perspective, edited by
Robert F. Dernberger, is a collection of studies by noted
economists dealing with China's modern economic development. A good
description of the Maoist economic model is presented in John G.
Gurley's China's Economy and the Maoist Strategy. The United
States Congress Joint Economic Committee has published a series of
useful volumes on the Chinese economy: An Economic Profile of
Mainland China (1967); People's Republic of China: An
Economic Assessment (1972); China: A Reassessment of the
Economy (1975); Chinese Economy Post-Mao (1978);
China under the Four Modernizations (1982); and China's
Economy Looks Toward the Year 2000 (1986).
There are many useful works dealing with specific aspects of
the Chinese economy. Economic planning is analyzed by Perkins in
Market Control and Planning in Communist China and
more recently by Nicholas R. Lardy in Economic Growth and
Distribution in China. The banking system is described in
Money and Monetary Policy in Communist China by Katherine H.
Hsiao and in China's Financial System by William A. Byrd.
The Political Economy of Reform in Post-Mao China, edited by
Elizabeth J. Perry and Christine Wong, is a collection of
insightful analyses of the reform process. Prominent among the many
works on Chinese agriculture are Food for One Billion: China's
Agriculture since 1949 by Robert C. Hsu, Agriculture in
China's Modern Economic Development by Lardy, and The
Chinese Agricultural Economy, edited by Randolph Barker,
Radha Sinha, and Beth Rose. Current economic information appears in
several official English-language periodicals from China, including
Beijing Review, China Daily, and China
Reconstructs. Major periodicals published outside China that
monitor the Chinese economy include Asian Wall Street
Journal, China Quarterly, Economist, and Far
Eastern Economic Review. (For further information and complete
citations,
see
Bibliography.)
Data as of July 1987
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