in resisting the Soviets? The West's capacity (and that of Japan) to contend with Soviet aggressiveness in a spirit of unity must be closely related to Western and Japanese economic health. Should competition for either markets or resources begin to seriously erode Western political unity, China might find her own burden of defense intolerably increased.

In brief, China's immediate stake in the industrial West's economic prosperity and political stability was high. In practice, China's representatives in Africa, Southeast Asia, and Latin America were discovering that China's interests frequently paralleled those of the United States and other industrial powers. The outcome of conflict in Angola, Somalia, and Cambodia, to name three cases, might favor Soviet interest at China's expense. China's new leaders were thus learning that a power with interest in the benefits of a healthy global political-economy could not always apply ideological and security policy principles at home and abroad with uniformity or consistency.

A SUMMARY OF CHINESE POLITICAL PERSEPECTIVES

In the immediate aftermath of Chairman Mao's death, China's leaders in 1978 had no reason to modify traditional perceptions of the priority of issues, namely, that domestic political and economic issues are the governing determinants of China's allocations of political and material resources. Foreign issues must come second and must usually be exploited to serve domestic interests.

Among those domestic issues, the health of the economy in 1978-80 and its capacity to satisfy an increasingly impatient coalition of claimants loomed as the dominant general issue. Should the policies of the Hua-Teng regime fail to achieve a balanced response to the expectations of those claimants, both political instability and economic shortfall might ensue. However, a brief convergence of generational, regional, bureaucratic, and idological interests in the immediate postMao years suggested that such a balanced response might be feasible, provided that the foreign environment did not introduce countervailing pressures, whether political or economic, to preclude Peking's attainment of a new equilibrium among contending forces.

Guided at home by a search for "moderate" policies, abroad the regime likewise sought means for defining and maintaining an appropriate "political distance" between China and the three major Asian powers. In that endeavor, China's leaders clearly had fewer levers and resources at hand than they had at home. Abrupt changes in the perceived structure of power in Asia or the process whereby crises might be resolved could upset China's economic plans through the workings of the domestic political process. Radical opposition might use such change to mobilize a new coalition of power among impatient younger military leaders, frustrated rural youth and idealists threatened by Teng's new class of professionals to demand still another turn of China's political cycle.

In the light of the past 25 years of change in China, the odds seemed to favor such a shift in Chinese political style before 1980, probably having the effect of constraining the authority of central leadership, increasing the role of the military both in Peking and in the provinces, accelerating military modernization with a consequent delay in the achievement of economic goals, and bringing another round of domestic political instability. Unless foreign powers were willing to commit

substantial political and economic resources, such changes on China's domestic political stage could not be influenced very much by any single power's Asian policies. Only Soviet determination to go to war with China or American determination to support China in such a war might overwhelm the otherwise independent dynamic of China's internal political system.

Conversely, internal political developments in the Peoples' Republic of China might profoundly disturb the political equilibrium of all Asia and challenge the leaders of every state to reexamine their stake and their opportunities in the Asian power game. A China committed to its own internal development through a strategy of political compromise among competing interests might reassure other Asian powers, including the U.S.S.R. and the United States, that China would and could play a responsible role in the Asian political and economic system. But a strategy of political confrontation within China could excite opportunists in contiguous states and introduce an era of spreading insecurity across Asia in the early 1980's. In 1978, the choice still rested among a few Chinese political leaders whose success or failure would be measured increasingly by economic statistics.

THE CHINESE DEVELOPMENT MODEL*

BY ALEXANDER ECKSTEIN

CONTENTS

Introduction_.

Objectives..

Factor endowments__.

Institutional mechanisms and incentives..

Performance..

Economic stability

Economic growth.

Income distribution__

Standards of living..

Self-reliance____

! ! ! ! ! !

Distinctiveness and transferability of the Chinese development model__
Prospects and dilemmas__

INTRODUCTION

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80

81

87

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96 96 97

98 103 106

108

112

China's economic performance-based on the criteria of growth and stability-and the elements shaping it were appraised in the preceding chapters.* The role of the past in conditioning ideological predispositions, in imposing resource constraints, and in shaping institutional arrangements was explored in chapter 1. This legacy combined with the prevailing ideology defined the goals and to some extent the policy and institutional instruments chosen for their implementation. This in turn required a far-reaching transformation of economic institutions to assure a high rate of resource mobilization and control over resource allocation. The latter issues were explored in chapters 3 and 4.

To what extent can the combination of ends and means, objectives and instruments, used by the Chinese in the course of their economic development during the last quarter of a century by characterized as a distinct development model? What are the key elements of this model and is it transferable either as a whole or in part to other underdeveloped areas? These are the questions to be explored here based on the different strands of analysis in the earlier chapters.

It would be misleading to think of the Chinese development model as a static, frozen, unchanging system. On the contrary, as was indicated in chapter 2, the Chinese have experimented with three or possibly four models since 1949. The original First Five-Year Plan strategy based on a more or less Stalinist development pattern was gradually modified through a process of trial and error until it evolved into the model associated with the 1970's, that is, the period since the Cultural

*We are indebted to the Cambridge University Press and Mrs. Ruth Eckstein, widow of the late Professor Eckstein, for permitting us to reprint chapter 8, "The Chinese Development Model" from Alexander Eckstein's, China's Economic Revolution. London, New York, Melbourne: Cambridge University Press, 1977 (in hard cover and paperback).

The occasional references in this paper to earlier chapters and tables apply to Professor Eckstein's book, China's Economic Revolution, not to this publication.

Revolution. The focus throughout this chapter will be on this particular post-Cultural Revolution phase of China's development, recognizing that it too is bound to change in the future under the impact of leadership and policy shifts on the one hand and economic transformations generated by the very process of economic growth and structural change on the other.

This exploration of the currently prevailing model will proceed in steps. The goals and objectives of the post-Cultural Revolution regime will be examined first. This will be followed by an analysis of (1) the country's factor endowments and how these have conditioned the strategy adopted, (2) the incentives and institutional mechanisms used to mobilize and allocate resources consistent with the goals and the strategy adopted, (3) the economic performance generated by the interplay of objectives, strategies, and factor endowments, (4) the extent to which one can speak of a distinct Chinese development model and its applicability to other less developed countries, and (5) the dilemmas posed by the development approach adopted in the 1970's.

OBJECTIVES

The late Premier Chou's statement to the National People's Congress in January 1975 that China wants to build a powerful modern socialist country by the end of this century probably encapsulates Chinese Communist objectives in their clearest and most succinct form. The pursuit of power requires rapid growth of the economy as a whole; more specifically it requires rapid industrialization, with particular emphasis not only on military goods but also on those branches of industry that serve as inputs for defense production such as steel, fuel, and machinery.

However, rapid industrialization carries with it certain implications for agricultural development. An expanding population and labor force must be fed, a growing industry must be supplied with agricultural raw materials, and imports of machinery and other types of industrial equipment must be financed through exports. A developing country such as China could, if it wished, follow a quite open foreign trade orientation based on the principle of comparative advantage. That is, it could specialize in the production of certain types of farm products for which growing conditions are particularly favorable, use these both for home consumption and exports, and rely on imports to meet a significant share of food-supply requirements. While the Chinese import some foodstuffs, as shown in chapter 7, these are marginal. Major reliance on imported farm products would violate the principle of self-reliance enunciated on many occasions as a major objective in addition to those mentioned by Chou. In the Chinese view, a foreign trade oriented farm policy would expose the country to the risk of sudden supply embargoes, rendering it thereby vulnerable to foreign pressures.

All of this means that agricultural development cannot be neglected lest it hamper and retard industrial growth. For essentially the same reasons consumer-goods production cannot be neglected either, even though it may be assigned a lower priority than expansion of producer-goods output. Increases in the output of textiles, daily necessities, other wage goods, and even some semi-luxuries (for example radios, watches, bicycles) are called for in part to keep pace with

population growth and in part to permit at least a modest rise in the standard of living. Such increases are necessary as incentive measures for the labor force and as a means of sharing the fruits of development with the population at large.

The meaning of "modern" as used by Chou En-lai in his report to the National People's Congress is far from clear. This is not too surprising. Industrialization automatically implies a certain measure of modernization. At the minimum it implies a gradual spread of modern technology in industry and transport and also, although at a slower pace, in agriculture. It also means the rise of an army based on modern weapons, the spread of literacy, better health care, and the spread of modern science and its application to agriculture and industry.

However, the application of this concept to the process of production raises a number of dilemmas that have plagued_Chinese policy makers throughout the history of the People's Republic. They also plagued Chinese statesmen and modernizers in the nineteenth and twentieth centuries. In the contemporary Chinese context the commitment to modern technology has to be reconciled with simultaneous commitments to "walking on two legs" and to the relative importance of being "red" versus "expert."

A key programmatic slogan of the early modernizers was: "Chinese learning for its fundamental principles (or its fundamental value) and Western learning for its practical use (or practical application)." In a basic sense one could similarly sum up Mao's value orientation and that of most of his associates as a counterpart of this. One could perhaps paraphrase it as "Marxist-Leninist-Maoist learning (or ideology) for its fundamental principles and modern technology for its practical application."

The dilemmas thus posed are clearly reflected in the meanings and connotations associated with the Chinese word yang which can be interpreted as "modern, developed, strong," and as such it is a goal to be achieved. But it also suggests "foreign, alien, westernized" and as such may be associated with the restoration of capitalism, revisionism, and a feeling of inferiority as compared to technologically more developed economies and societies.

In contrast, t'u is or can be translated as "native, indigenous" and as such is identified with the common people of China, with the masses, and thus represents a positive value. But it can also mean "backward, primitive" and as such is a phenomenon to be overcome, to be conquered.

Perceived from this vantage point "experts" are to be prized; but this is coupled with a lingering suspicion that they are expert in "modern" and therefore "foreign" technology. They are divorced from the masses and tend to look down upon the cruder, more backward, and primitive methods used by them. Therefore, in Chinese Communist perceptions there may be some association between "red" and "native" on the one hand and "expert" and "foreign" on the other.1

Regardless of how interpreted, the pursuits of power and modernity are, of course, not unique to China; these objectives are shared by many other developing countries imbued with a strong sense of nationalism.

1 This juxtaposition of yang and t'u and its possible meanings, connotations, and significance is based on a seminal paper by Lyman P. Van Slyke, "Culture and Technology," prepared for a conference on Sino-American Relations in Historical and Global Perspective (mimeo), Wingspread, Wis., March 1976.