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DISSEMINATION CONTROLS
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ECONOMIC THINKING AND PRACTICE IN COMMUNIST CHINA
Ever since tho collapse of tha Great Loaplnhe Chinese Communists have beeo trying to liveeputation as impractical radicals. They no longer resort to crash programs, reverting instead to tbe comparatively moderate methods of management practiced Their search for solutions to pressing economichas gone through three distinct phases. The firsteriod of retrenchment in0 and iberal phase in economicbegan early Reaction againstledightening of controls aftor No radicaleither direction now seems Hkoly.
Basic Economic System
The basic elements of the economic system that existed7 have by now been restored.
In agriculture* now aseliance is placed on small collective farms to grow the main crops. These were called Today the key collective unit is theteam, the lowest level of administration in theorganization. Teams must deliver most of their produce to the state in tbe form of taxes or sales at low prices. Peasants are encouraged to use their spare time to cultivate small private plots, and are permitted to market their at rural trade fairs and at farmers* stalls in cities* Asrivate plots now account for most of the nation's production of pork, chickens, and probably vegetables.
Industry in Communist China is almost entirely owned by
the state. As ln thecentral (or regional) planners allocate the capital, labor, and Important raw materials needed by Industrial enterprises to carry out assigned output plans.
Now recognising that good statistics are needed for soundpoint neglected during the LeapPeiplng haa undertaken major efforts0 to rebuild the statistical reporting Similarly, the regime has tightened financialthrough the state budget and the banking system, and has ordered enterprises to adopt and follow regularaccounting practices.
While this has improved efficiency, problems caused by unrealistic prices remain. Prices are established by the state and changed only atintervals. Theyreflect either the full cost or relative scarcity of raw
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and capital* It is therefore difficult forto allocate and managers to use such itemsational basis.
Retrenchment
The threat of widespread famine and popular uprisings that developed late0 resultedompleteof economic programs. The Chinese Communists feltto shift toolicy that entailed reduced emphasis on heavy industry and the expenditure of scarce foi-eign exchange for food imports* Factories tried to correct Leap Forwardcatch up on deferred maintenance, and7 standards of management.
In agriculture, thereholesale suspension of rural construction activities and the extremist farming methods of the Leap Forward. 1 either cultivated the fields in the traditional manner or were left free to work on their newly restored private plots. he commune hadather unimportant level of local government. Authority over farm production was delegated to lower levels of communebrigades and teams.
The Liberal Phase
In spite of their sweeping1 policies failed toignificantin either industry or This apparently convinced Peiplng that an even further retreat was necessary. Starting in1 andthrough the summerconomists dlscussed--and the regime in partwide range ofmore liberal even than those that existed
Thiseriod ofIndecision within the leadership. There was no firm direction over the economy. Industrial production continued to decline. Pelplng's growing concern over peasant incentives was reflected ln the reduction in size of the collective farm unit after2 and in the encouragements givento expand sidelinesuch as cultivating fishponds. There were reports inf experiments with private farming in Kwangtung and Anhwel provinces.
As the ranks of the urban unemployed grew, the regime allowed individuals to engage ln peddling and service trades and to operate repair shops under license. In Shanghai doctors began resuming private
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Political pressures on workers to participate ln after-hours indoctrination sessions diminished.
During2 theexhibited uncharacteristic concern for tbe good opinion of intellectuals, who by then had become thoroughly disillusioned with the party. Premier Chou En-lai toured the countryto persuade scientists and intellectuals to continueunder party leadership, lie admitted that high officials in the party had made mistakes, having been misled byreports from below, but Insisted that their intentions
had been good.
The Chinese discussions brought forth many heterodox to make and keep prices realistic, to direct investment according torofitability rather than political decision, and to have enterprisesingle unambiguous objective ofprofits. These are, in effect, proposals thatforces be allowed toarger role in the economy. One economist rebuked those who were prejudiced against profit because of itsconnotation. He invoked Man's authority by quoting4 work in which Mao had said, "We cannot talkon an empty stomach."
Official encouragement to intellectuals to speak out more treely began to produce some lively debates. In the rankshe economists, there wasrief period some fairly uninhibited discussion on such controversial topics as the use of price and profit mechanisms to promote economic efficiency.
The liberal proposals were published mainly in the nonpartysign that they never enjoyed full party approval. Nevertheless, People's Daily did publish an article last July that presented theview that profit and cost indexes wero better criteria of success of enterprise performance than output and laborindexes.
that emerged during the economic discussion closely resemble "liberal"that have been debated ln the USSR in recent years and that have been adopted in part ln Yugoslavia. The Chinese then selves admitted that this was the first time such ideas had received an extensive airing in Communist China.
Also in July, Chaniberal polltburo member who has been inactive sincepublic opposition to Leap Forward policies earlyas quoted in an economicolicy of pricing goodsto their quality, oneumber of liberal policies Chen Yun had espoused
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revived, with chencited as the authority. chen was quoted as sayingolicy would encourage factories So produce higher quality goods.
the outspoken economic discussions and relaxation of economic controls encouraged hopes among intellectuals for further liberalization of the economic system. inumor was circulating in canton that chou rn-lai and chen yun had been stronglyystem of limited free
orthodoxy reaffirmed
the hopes of the proponents of economic liberalization were dampened by the tenth party plenum held ln the communique issued on this plenum indicated that the party, having become less fearful about the economic situation, intended to tighten controls and restrict what lt viewed as capitalist tendencies. theas to bebut the party clearly intended to stand by the orthodox totalitarian principles followed before the leap forward.
marxism-leninism in domestic as well as international peiplng stepped up its attacks on yugoslavia forcapitalism revive. it cited yugoslav efforts to adopt price reforms, give enterprises more autonomy, and permit more private farming and handicraftmeasures liberal economists ln china would
one outgrowth of the tenth plenumationwide "social ist education" drive directed against "bourgeois practices" and "capitalist here are signs that this is being supersededore"flve-anti" campaign involving crackdowns onand corrupt officials.
this does not mean ato leap forward policies, butommitment to7 degree of orthodoxy. pronouncements since the plenum have continued to stress the importance of good statistics, cost accounting, and realisticthe framework of orthodox principles andto strong political control. liberal institutions that existeduch as private plots and petty private trade,to be tolerated.
september, chinesepropaganda began placing new emphasis on the theme that chinaefender of the purity of
by its propaganda andsince last september, the
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has made lt clear tbat no major effort would be made to make prices realistic pr to encourage enterprise managers to maximize profits at the expense of other assigned objectives. Enterprise managers willto lack tho Incentive and tho Information needed toinputs efficiently*
them that mmor their they must
Economic research continues to be published, but little of lt is controversial. Thewho are constantly being told to combine theory with real itv, have bad lt Impressed on this means political
economic reality, research to be useful, accept the fact that the economy Is directedarge party apparatus led by men who have strong ideological prejudices and totalitarianand who will tolerate liberal policies only forof temporary expediency.
Outlook
Since the tenth plenum. Peiplng has been exhibiting general satisfaction with the country's basic economic It does not seem to be under any particular pressure to institute radical changes, either in the directionetreat or another Leap Forward.
The regime clearly does not Intend to give up socialized agriculture, to which itscommitment is very deep. Yet concern over peasantwill Inhibit any tendency to revive giant communes. There probably will be little change in the strongly centralized system of running industries. This system appeals to Chinese leaders because of its effective-ness in channeling resources to the regime's top priority
It is conceivable thatChinese leaders may come to believe that their political ands would be better served by allowing the economic system to Dperate morepossibility that has been predicted for the USSR. Nevertheless, the present leadership in China seems tofirmly In the efficacy of tight political direction. (S
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Original document.
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