ECONOMY OF CHINA EXAMINED

Press, Volume CX, Issue 32391, 2 September 1970, Page 12

ECONOMY OF CHINA EXAMINED

(By

COLINA MacDOUGALL)

HONG KONG. In the 19505, the outside world was rightly impressed by the spectacle of a new China rebuilding itself after a destructive war. But at the end of that decade, Chairman Mao Tse-tung tried to speed things up with the Great Leap Forward.

Unfortunately, it caused only chaos, and wasted scarce food resources; China took four or five years to recover.

Today, China’s speedy nuclear development has de- j ceived many people into thinking that it is only a matter of a few years before the Communist giant becomes an economic superpower. China, however, has shown it is determined to put politics before economics—and in any case, Mao’s ideas on economic development are untried and unconventional. The ups and downs of the Great Leap Forward and the Cultural Revolution—plus the endless problems of technical growth, education and food supplies—hint at an enormously complex society where, in spite of a central Government which plans nominally for the whole nation, progress is far from orderly. Marking Time Conflict between Maoist ideology and economic need is constantly thwarting development. The result is that while other countries—notably Japan have been making huge strides, China has suffered long periods of “marking time.” The Great Leap was an experiment which failed for good economic reasons. However, Mao believed when he surveyed China’s middleaged, bureaucratic Communist Party that he had been sabotaged by “revisionists” who did not like his guerrillastyle economics. His rivals pushed him from stagecentre and began to model the economy on distinctly more capitalistic lines. As a result, the early 1960 s was a period of rapid and relatively successful growth, China buying Western knowhow and encouraging its workers and peasants with more money and consumer goods. But Mao was planning a comeback. He saw China rushing headlong, like the Soviet Union, down the primrose path to revisionism, and he tried to stop it 'To oust the leaders and to reform the Communist tarty, he launched the Cultural Revolution. This, he hoped, would set China once and for all on a true course for socialism, and bring the benefits of a sound socialist economy.

Mao took care to see that the nuclear and defence industries were shielded from the disruptive effects of the Cultural Revolution, and this explains how the Chinese were able to continue nuclear

tests, and finally launch a satellite despite the political troubles. But not all essential industry was equally protected, and the process of recovery has been slow. China now has moved into a much quieter phase, and the prospects for steady development look better than even a year ago. The signs of exreme leftism—such as the tightening of collectivisation in the countryside which came after the Cultural Revolution—have melted away. Such basic industries as steel, built up mainly with Rusian help in the 19505, now are being expanded solely by the Chinese.

With 20 years qf technical development behind them, the Chinese Comunists doubtless are able, as they claim, to design and build sets of machinery for most manufacturing purposes. Their industry is not very sophisticated, but it can provide what they really need. Consumer goods have a low priority; apart from military requirements, industry today is focused on production to help agriculture. Farm machinery, water control plants and fertiliser making equipment are the key industries, transport running a close second. China’s main source of income is the land, where 80 per cent of the 700 million people live and work. Agricultural production has to feed the people and provide offtake for investments in industry. Today, the prospects are looking much brighter, thanks to world-wide research on high-yielding grains—and the effort which the Chinese clearly have put into getting the irrigation and fertiliser they so desperately need. Their next major problem will be to diversify agricul-

tural products with enough skill to improve the population’s diet and to boost foreign exchange • earning exports. In industry, the Chinese have chosen a unique path of development Chairman Mao calls this “walking on two legs.” The central government provides funds to build modern plants in the urban centres, and the local authorities in the countryside raise the cash to set up small scale enterprises to meet local needs.

This system relieves Peking of the responsibility for providing daily necessaries for the 700 million; State funds are reserved for projects which should lead the economy forward. Western industry have criticised this on the ground that it is wasteful to spread industry so thinly—but in fact, no Western country has had to meet the problems China faces. The question still is really an open one. It seems most unlikely that China, however appropriate the chosen path of development may be for its own needs, will ever catch up with the Soviet Union or the United States.

With political calm during the next few years—not a foregone conclusion, considering the age of Mao and other Chinese leaders—the protected aerospace industry probably will make giant strides. But the bulk of the modern sector will see only bread-and-butter growth. Most of China’s people will continue to live a little above subsistence level, grinding out small surpluses to finance local projects—and waiting for the benefits of State investment to filter down.—lntrasia Press Agency.