The Chinese, of course, would object to this approach as they have explicitly argued their own economic development has proven these static-equilibrium, Western theories to be meaningless. We do not believe their past development has shown these theories to be wrong and, more important, we do not share their faith that they will be able to prove them wrong over the next decade. This is the essential distinction between our "pessimistic" forecasts and the "optimistic" targets for 1985 presented by Hua. Actual developments, of course, will undoubtedly show that the truth lies somewhere between these two extreme positions.

The most fundamental economic problem faced by the Chinese remains that of achieving a rate of growth in agricultural production well above the rate of population growth. This problem can be reduced to a simple question of the production possibilities in the agricultural sector. Failure to achieve and maintain a rate of growth well above 2 percent would mean the continuation of existing constraints on China's ability to maintain sustained economic growth and to obtain higher standards of living for the population, a problem that the new leadership has shown it is well aware of and desires to solve.

Agriculture

Even though the Chinese leadership now recognizes that the agricultural problem is the prime obstacle to the economic development of China and assigns its alleviation one of the highest priorities in their development program, the achievement of an average rate of growth in agricultural production of well over 2 percent will not be easy. Historically, China's agricultural development between the 14th and the 18th centuries did little more than keep pace with the 0.5percent growth in population. Furthermore, Dwight Perkins estimates growth was even lower in the 19th century (with declining per capita output) and less than 1 percent in the first half of the twentieth century (again, approximately equal to the rate of population growth).34 Thus, traditional agriculture was able to keep pace with population growth, but at an average rate of growth far below 2 percent. Furthermore, Perkins estimates that approximately half of this increase in production resulted from increases in cultivated area. By the middle of the 20th century, this source of growth was no longer available, and further increases in output relied more heavily on attempts to increase yields, largely within the framework of traditional, labor-intensive technology.30

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Since 1949, annual output estimates do not reveal a significant trend, either upward or downward, in the approximately 2 to 3 percent annual rate of increase of agricultural output. Furthermore, neither increased multicropping already at a relatively high level—nor mechanization—now at a relatively low level-would appear to offer the solution of China's agricultural problem. While there is

Dwight H. Perkins, "Agricultural Development in China, 1368-1968," Aldine, Chicago, 1969. See particularly the discussion in chap. II. Much of the analysis in this section of the paper parallels the discussion in Dwight H. Perkins, "Constraints Influencing China's Agricultural Performance." in the previous compendium of papers on China's economy issued by the Joint Economic Committee, "China: A Reassess ment of the Economy," 1975, pp. 350-365.

For a more detailed discussion of how the Chinese Communists have attempted to increase yields within the framework of their traditional, labor-intensive agriculture, see Thomas Wiens, "Evolution of Policy and Capabilities in Chinese Agriculture Technology," and James A. Kilpatrick and Henry J. Groen, "Chinese Agricultural Production," in this volume.

still room for the expansion of double cropping in the north and triple cropping in the south, it would appear the Chinese leadership is placing far too great a reliance on this means for sustained increases in agricultural output. As for mechanization, any form of mechanization which simply displaced rural labor from agricultural production would not lead to increases in output, merely free labor to serve as inputs in other sectors. What is hoped, of course, is that the mechanization will relieve the pressures on the agricultural labor force duringpeak work periods, such as transplanting, harvesting, or threshing, making more labor available for other tasks, such as increased multicropping; the increased labor in these other tasks expected to increase output significantly. Thus, an increase in mechanization is now being pursued by the new leadership as one of the most urgent tasks in agriculture, even though, in and of itself, the increased mechanization will not directly lead to the increased output being sought.3

In recent years, one of the greatest sources of increased yields. has been the adoption of better seed varieties for the traditional crops in conjunction with a program of increased applications of chemical fertilizer. Throughout the 1970's, the Chinese leadership has emphasized the importance of chemical fertilizer as a source of agricultural development, diverting significant resources to the expansion of its domestic production, its import, and the import of complete plants for its production. The costs of this program of obtaining greater supplies of chemical fertilizer, however, is only one of the problems involved in achieving higher yields through the greater application of chemical fertilizer. Transportation costs,. limited storage facilities, and the loss of nitrogen content during transportation and storage have resulted in most of the new plants. purchased abroad being located in the interior; that is, in the major centers of agricultural production.

In addition, due to these same problems, the Chinese produced approximately one-half the production of nitrogen in small-scale rural industries. These rural, small-scale plants produce fertilizer that is considerably poorer in quality than that produced in the large, modern plants. It must be noted, however, that the higher potassium and phosphorous content of the organic fertilizer used on a very large-scale by the Chinese complements well the nitrogen in the chemical fertilizer produced in the rural, small-scale plants. It is mainly in the more sparsely populated, less accessible agricultural regions that the quality and quantity of chemical fertilizer produced will be critical to the achievement of the higher yields the leadership hopes to obtain.37

The Chinese peasants have accumulated a vast storehouse of knowledge over the past six centuries or more within the confines of their traditional agricultural technology. Agricultural handbooks concerning new seeds and the use of chemical fertilizers for the various crops. grown on different soils are available throughout the countryside.

3 See, "Farm Mechanization: Targets for 1980," Peking Review, No. 8, Feb. 24, 1978. It is interesting to note that these targets were replaced by those for 1985 included in the longrun economic plan adopted by the National People's Congress less than a week after the above cited article was published.

37 See the discussion of these problems in James A. Kilpatrick and Henry J. Groen, "Chinese Agricultural Production," and Charles Lin, "PRC Agriculture: Performance and Emerging Issues in the 1970's," in this volume.

Demonstration plots, discussion meetings, and technical teams sent to the countryside reinforce the dissemination of new information. Nonetheless, contrary to their record in the past, it is most essential that the Chinese undertake a significant program of advanced basic research in the testing and selection of new seeds if they hope to modernize Chinese agriculture and achieve yields on a par with those in the most advanced countries by the end of the century.3

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Another major obstacle which the Chinese must confront if they are to solve their agricultural problem is the storage and control of water-essential for achieving the potential yield response catalyzed by increased use of new seeds and increased applications of chemical fertilizer. Historically, water management was critical to Chinese agriculture's ability to support a large population with limited cultivatable land. It was the existence of an extensive irrigation network, mostly in the southern regions, that allowed for extensive double cropping. By the 1930's, most cultivatable land with no serious. problems of water supply had been irrigated. Since 1949, the Chinese have increased the irrigated acreage significantly by utilizing flood control projects, wells, and electric pumps. They completed the irrigation network in south China, expanded the irrigation and rice double-cropping area northward into central China (north of the Yangtze River), and increased the irrigated acreage in the southwest and northeast.

The rice-growing areas of South China with adequate and dependable water supplies, therefore, are already irrigated and have been provided with new and rapidly growing supplies of chemical fertilizer. While the leadership has some concern over the lack of growth in this region in recent years, yields in China's rice bowl, Szechuan, compare favorably to those of the other rice-producing countries in Asia. Thus, where the Chinese have managed to develop the necessary complement of inputs, the results have been impressive and have been responsible for China's ability to maintain the average annual 2 to 3 percent rate of increase in agricultural production in the past.

The north China plain, China's traditional agricultural region and the home for over one-fifth of its total population, is primarily devoted to dry land wheat cultivation and suffers from inadequate and undependable supplies of water, resulting in low and unstable yields. High silt content of the Yellow River makes water control and irrigation projects costly, difficult, and often inefficient. Similarly, when rainfall is insufficient, droughts occur and the Yellow River may even dry up. In fact, conditions are so unstable that both flooding and drought can occur in the same year.

The Chinese have undertaken the Yellow River project, designed to regulate flooding by means of a series of storage dams closer to the river's source and to alleviate silting by implementing soil erosion control in the wastelands through which the river flows. In addition, attempts are being made to create facilities for the continuous removal of silt downriver. The costs of this project are tremendous and the returns in terms of increased irrigated land is estimated to be only about 7.5 percent of China's irrigated area in 1974. It is perhaps in

For a detailed discussion of the weaknesses and shortcomings of the process by which innovations have been adopted and implemented by the state in China's agriculture sector in the past, see Thomas Wiens, "Evolution of Policy and Capabilities in Chinese Agriculture Technology," in this volume.

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recognition of this that recent reports indicate the Chinese leadership has reduced the priority they formerly gave to the Yellow River project as a means for solving their agricultural problem in North China. To add to the irrigated area, the Chinese have been rapidly expanding the number of tube wells equipped with electric pumps for tapping the ground water under the north China plain.39 These various projects, however, must be well coordinated and carried out on a very large scale, and their ability to achieve high and stable yields in north China is still constrained by the natural supply of water.

Some observers have argued that China has not been able to achieve more substantial increases in agricultural output due to unfavorable constraints imposed by the reliance on traditional agricultural production techniques and that past growth was largely the result of one-time shifts in inputs which will not be available for sustained growth in the future.40 Obviously aware of these arguments and of the implications they have for China's economic modernization in the 1970's, the Chinese adopted a major policy decision regarding the means for achieving sustained growth and higher yields." This large-scale, nationwide program involves the identification and emulation of "model" communes and countries that have been able to achieve rapid increases in yields. The unit actually selected as the original model for copying is the Tachai Brigade and the Tachai-type advanced county campaign presents a broad-ranging and interdependent package of policies which are to be copied as the "model" for the modernization of Chinese agriculture.

A brief summary of the major features of these model units which are to be transferred elsewhere indicates the bold and radical nature of the agricultural transformation being sought. While there is some questions as to the status of this campaign under the new leadership, Hua's speech still called upon the Chinese to pursue more vigorously the movement to "learn from Tachai" in their efforts to develop agriculture. This is not surprising, inasmuch as Hua is identified as a key figure in the adoption of the Tachai-type or advanced country model campaign for the modernization of Chinese agriculture. Thus, although it may be modified to some extent by the new leadership, the various ingredients of the campaign remain as the major focus of current Chinese efforts to solve their agricultural problem.

One area in which the new leadership has changed the nature of the campaign is in regard to its organizational and incentive objectives,

According to the data collected by Dwight H. Perkins, there was no significant increase in irrigated acreage between the mid-1950's and the mid-1960's, and the share of total arable land that was irrigated in the mid-1950's was 31 percent, compared with 27 percent in the 1930's. Between the mid-1960's and mid-1970's, however, the amount of irrigated acreage was increased by almost one-third and the share of irrigated land in total arable land increased to over 40 percent. During this same period, the number of tube wells with power pumps increased thirteenfold. See table Gin Perkins, "Constraints Influencing China's Agricultural Performance." in op. cit., p. 360.

40 See Perkins, "Constraints Influencing China's Agricultural Performance," and Alva Lewis Erisman, "China's Agriculture in the 1970's," in the previous compendium of papers on China's economy issued by the Joint Economic Committee, "China: A Reassessment of the Economy," 1975.

41 This nationwide ca npaign, known as the Tachai-type or advanced county campaign, includes a great many different, but complementary, activities for achieving modernization of China's agriculture and producing high and stable yields throughout rural China. Furthermore, the emphasis given each of these activities has changed over time. The following discussion in the text in this paper summarizes those activities which are most fundamental to this campaign and which are still important policies of the new leadership for solving China's agricultural problem, whatever the current status of the campaign as a whole. For a discussion of the evolution of the campaign, see Robert F. Dernberger, "China's Economic Future," op. cit., p. 131-138. It is interesting to note that the meeting of national representatives at Tachai Brigade in Shansi Province in the fall of 1975, convened by the State Council and which formally adopted the campaign as national policy, was chaired by Hua Kuo-feng.

Originally, the campaign placed emphasis on the larger production units, such as the brigade, as the basic decisionmaking unit in agriculture and on collectivized activities and distribution. The new leadership, on the other hand, has explicitly recognized the need to rely on the production team as the basic decisionmaking and accounting unit in agriculture and on task-related material rewards for the individual as the basic incentive system. The new leadership also has emphasized its support for the individual household's participation in subsidiary activities, including work on their private plot, and their right to participate in rural, free markets; insofar, of course, as this does not involve speculative behavior or cut into their work obligations for the collectivized activities of the team. In other words, the more radical aspects of the campaign have been removed in favor of greater moderation, but many other elements of the campaign remain.

For example, farmland throughout China is to be considerably remoulded into bigger and level fields to allow for the introduction of mechanization and irrigation. Local networks of water control and irrigation projects are to be completed, collecting water from any and all sources and providing facilities for the storage of water and its distribution to the fields.42 Land reclamation projects are also important, including such innovations as the moving of spring runoff channels and rivers underground through tunnels of considerable length, allowing for the cultivation of crops in the former riverbeds. In addition, cropping patterns are being changed. Where water is available, wheat and corn are being replaced by higher yield crops such as rice, and intercropping is being widely introduced to allow more efficient use of the available sunlight and land, and to lengthen the annual period during which crop growth may take place.

Rural, small-scale industries which rely on local financing, raw materials, and labor are being constructed to supply the cement, chemical fertilizer, electricity, and agricultural machinery required by this program of agricultural transformation. Mechanization is an important ingredient in the program as a means to increase the available supply of labor to help meet the large increase in the demand for labor resulting from the farmland construction, changes in cropping patterns, and the small scale industry undertaken as part of the program. Electrification is being carried out as a source of power for the mechanization of agriculture, to light up the threshing floor at night to allow for continuous threshing, and to mechanize food. processing (for example, grain milling), which now places a heavy demand on rural labor.

Finally, and very important, technical innovations are to be made in all aspects of the production process. Originally, these innovations were to be discovered and developed by the peasants themselves; the scientists and technical personnel were expected to go down to the rural areas and work with the masses. The new leadership, however, has put great emphasis on the need to develop China's scientific and

42 These projects were among the most impressive sights observed by one of the coauthors during his trip to China in 1975. Even though one would have to assume that the real wage and interest rates were close to zero (the opportunity costs of labor and capital were very small) to justify their construction in a traditional cost-benefit analysis, one could not help but admire the Red Flag Canal (which brought water to Lin County from a river a considerable distance away in another province), children in the mountains chipping rocks for the construction of a large water storage tank, underground dams to trap the underground flow of water, and a network of aquaducts to distribute water from a pumping station throughout the communes' fields by means of gravity.