minority problems and personally being the "root cause of the protracted unrest in Tsinghai." 37

Despite these political disruptions, Tsinghai managed to achieve strong industrial growth during the mid-1970's. GVIO grew steadily in 1974 and 1975, and increased over 22 percent in 1976-a year of chaos and poor performance in other provinces. In 1977, while the rest of China was enjoying a year of recovery in the wake of the purge of the "gang of four," Tsinghai's GVIO grew more slowly than in 1976. In fact, of the 19 provinces for which data are available for the years 1976 and 1977, only Tsinghai and Peking performed better industrially in 1976 than in 1977. Moreover, because industrial growth in Peking was slowed down by the aftereffects of the T'angshan earthquake, Tsinghai appears to be the only Province in China marching out of step in 1976 and 1977.

How did Tsinghai manage to achieve such an impressive rate of growth in 1976 with such a high level of political turbulence? Chang Chiang-lin is reported to have said, "Tsinghai is special . . .. [It] has abundant industrial and mining resources: our task is to develop industry." 38 Moreover, during the campaign to criticize local followers. of the "gang of four," Chang was accused of having defied Chairman Mao by deliberately reversing economic priorities; that is, by favoring heavy industry over light industry and agriculture. The answer, therefore, may be that Chang increased industrial investment in Tsinghai in defiance of Peking's orders.

With the purge of Chang and the appointment of moderate T'an Ch'i-lung to govern Tsinghai, the provincial investment priorities. were probably returned to "normal." The impact of changing priorities and of new management may have caused GVIO to grow more slowly in 1977.

IV. THE IMPACT OF POLITICAL INSTABILITY ON INDUSTRY DURING THE CULTURAL REVOLUTION AND THE MID-1970's

The findings of the previous section show that politically stable provinces tended to achieve moderate or strong industrial growth during the mid-1970's, and that politically unstable provinces-with only one exception-failed to do so. Because the Cultural Revolution (1966-69) was also a period of political instability during which industrial output declined sharply (see fig. 2), the two periods are compared in this section.

37 FBIS, Dec. 6, 1977, M-2-M-3. 83 FBIS, Dec. 6, 1977, M-2-M-3.

Mao Tse-tung launched the Cultural Revolution because of his dissatisfaction with what he felt was the growing ossification of the party and Government bureaucracies, and his belief that China's youth required a "revolutionary experience" to renew their faith in a revolution that had taken place before most of them were old enough to participate or even remember it. With the power struggle that broke out between the "radicals" (led by K'ang Sheng, Ch'en Po-ta, and Lin Piao) and the "moderates" (led by party bureaucrats Liu Shao-ch'i and Teng Hsiao-p'ing), the Cultural Revolution quickly became one of modern China's most chaotic periods. The Chinese Communist Party virtually disappeared as an institution, and the turmoil grew so great that PLA main-force units were ordered to restore order in many provinces and to assume control of a dozen.39 The economic consequences of the Cultural Revolution were especially serious in the industrial sector, where factional struggles in the factories and disruptions along the transportation routes caused production to decline precipitiously and to remain below trend for 3 years.

89 Harvey Nelsen, "Military Forces in the Cultural Revolution," The China Quarterly, No. 51, July. September 1972, pp. 444-474; William W. Whitson with Huang Chen-hsia, The Chinese High Command, New York, 1973, pp. 390-415; and Huang Chen-hsia, Chung-kung chun-jen chih (Mao's Generals), Hong Kong, 1968.

In contrast to the Cultural Revolution, the midseventies were marked by sporadic, usually isolated, outbreaks of political conflict followed by periods of relative stability. The turbulence was more the result of calculated moves in local struggles for power than of a broad ideologically motivated movement that got out of hand. Central, provincial, and local leaders closely controlled each of the three major political campaigns launched during this period, and none was allowed to mushroom into a second Cultural Revolutiona development that few within the Chinese leadership would have welcomed. Only in Chekiang and Fukien did the disruptions become serious enough for Peking to order the PLA to take over. Despite this careful control, however, the cumulative impact of the campaigns on China's industrial output was serious. Although the more politically stable provinces managed to sustain or increase output during the midseventies, the provinces that suffered the most disruptive factional strife experienced slowdowns or actual declines in industrial production.

Three industry-related aspects of the Cultural Revolution and the midseventies are compared below in order to shed more light on the impact of political conflict on China's industrial production: (a) unrest among factory workers; (b) disruption along the railways; and (c) the intimidation and purge of leaders, cadres, and the economic elite.

First, during the Cultural Revolution, Red Guard groups and rival factions converged on factories in the name of "making revolution" and turned them into political battlefields. The factions that began to form of ened an alternative path of advancement for young workers and frequently pitted younger, more "radical" workers against "moderate" veterans. The groups clashed and exchanged Fositions of power each time the political climate shifted in Peking, the provincial capital, or at the local level. The ensuing disruptions (which often ended in violence) caused factory production to decline drastically and in some cases to stop altogether until order could be restored by the intervening PLA units.

Reports of worker strikes and factory closures during the midseventies generally came from provinces with the greatest residual factionalism left over from the Cultural Revolution. The workers, who were motivated largely by self-interest, put into practice the lessons learned from the experiences of the Cultural Revolution. They participated in well-established factional networks (which had their roots in the factory and connections in Peking) to serve their own ends. As a result, the impact of factory worker disruptions was less damaging to industrial production than it had been during the Cultural Revolution, yet the workers probably achieved more tangible, longer lasting rewards.

Second, China's railways were frequently disrupted in both periods. During the Cultural Revolution, hordes of youthful Red Guards clogged the system, causing tremendous delays in transportation and shortages of raw materials. The havoc was caused more by the sheer

40 Robert Michael Field, "Chinese Industrial Development: 1949-70", Congress of the United States, Joint Economic Committee, People's Republic of China: An Economic Assessment, Washington, D.C., 1972, pp. 65-66; and Parris H. Chang, "Provincial Party Leaders' Strategies for Survival During the Cultural Revolution," in Robert A. Scalapino, ed., Elites in the People's Republic of China, Seattle, 1972, p. 524.

number of rebellious passengers and their "exchanging revolutionary experiences" than by the railway workers themselves.

During the midseventies, however, the railway workers appear to have been fully aware of their importance to the national economy and to have taken advantage of their strategic position in a deliberate attempt to better their lot. Despite the scale of the conflicts over wage policy and the lack of promotions in such important rail centers as Chengchou and Lanchou, many railway hubs, such as Peking and Canton, were relatively stable and reportedly fulfilled their production goals routinely." In sum, the railway unrest of the midseventies differed from that of the Cultural Revolution because the railway workers played a more active role and fewer rail centers were affected.

Finally, the intimidation and purge of leaders, cadres, and the economic elite was markedly different in the two periods. During the Cultural Revolution, countless cadres and economic leaders were humiliated or forced into early retirement, and the Chinese Communist Party was practically defunct. In contrast, the purges of the midseventies were much less severe and no party or government institutions were in jeopardy-even during the most chaotic political campaigns. During the recent campaign to criticize the "gang of four," for example, the new regime has tried to avoid the pitfalls of the Cultural Revolution purges. Although some of the purges undoubtedly have been personal vendettas inspired by enmities that can be traced to the Cultural Revolution, the Hua regime for the most part has adopted a decidedly lenient approach toward provincial and local leaders with ties to the now-discredited radical "gang of four." The recent official appearance in Peking of Politburo alternate member Saifudin, who had been stripped of his party and government posts in Sinkiang shortly before, appears to be a case in point. The sudden reappearance of a purged victim after so short a period of time is highly significant, especially when it is remembered that a leader purged during the Maoist era did not usually reappear for several years-if at all.

To summarize, the basic differences between the Cultural Revolution and the midseventies are in the scope and intensity of the impact on industrial production. To illustrate the difference in the scope of the impact, table 4 shows the number of provinces in which GVIO was 5 percent or more below the trend as a percent of the number of provinces for which GVIO data are available. It can be seen that the Cultural Revolution caused industrial production to decline in 1967 and remain below trend in 1968-69 in practically every province. In contrast, only half of the provinces were 5 percent or more below trend in 1974-75 and slightly over two-thirds of the provinces in 1976, which was the height of the unrest during the midseventies. Thus the scope of the disruptions caused by the Cultural Revolution was wider than that of those caused by the struggle for succession.

41 JMJP, Oct. 11, 1977, FBIS, Feb. 18, 1977, E1-E6; FBIS, June 13, 1977, H6-H8; and FBIS, Dec. 20, 1977, E9. 42 Richard K. Diao, "The impact of the Cultural Revolution on China's Economic Elite," The China Quarterly, No. 42, April-June, 1970, pp. 65-87.

43 FBIS, Jan. 30, 1978, M-5; FBIS, Feb. 13, 1978, E-18-E-19; and FBIS, Feb. 8, 1978, E-1.

TABLE 4.-PROVINCES FAILING TO ATTAIN POTENTIAL INDUSTRIAL GROWTH, 1967-69 AND 1974-76

The intensity of the disruptions, and consequent loss of industrial output, was severe in both periods. In his "Report on the Work of the Government," delivered to the Fifth National People's Congress in February 1978, Chairman Hua Kuo-feng said: 44

As a result of the interference and sabotage [of the "gang of four"] between 1974 and 1976, the nation lost about 100 billion yuan in the total value of industrial output. . . and the whole economy was on the brink of collapse.

The estimated losses for these 3 years (and for the Cultural Revolution) are shown in table 5. Hua presumably was comparing actual with planned output, but the difference between the trend (which was estimated from output in the relatively normal years of 1965-66 and 1970-73) and actual output gives a reasonable estimate of the loss in the years 1974-76.

TABLE 5.-INDUSTRIAL OUTPUT LOST DURING THE CULTURAL REVOLUTION AND THE
STRUGGLE FOR SUCCESSION, 1967-69 AND 1974-76

Sources: Potential output: Estimated by regressing the logarithm of output in 1965-66 and 1970-73 against time. Actual output: CIA, "The Gross Value of Industrial Output in the People's Republic of China: 1965-1977," forthcoming.

When the loss of industrial output in the mid-1970's is compared with the loss in the Cultural Revolution, it can be seen that the disruption was not as serious as in the earlier period. In the turbulent year 1974, GVIO actually declined in only four of the provinces examined in this section, and in the year 1975 (when Teng Hsiaop'ing's moderate economic policies were in force), the situation was relatively stable, and industry began to recover. Only after the purge of Teng Hsiao-p'ing in 1976 and the launching of the divisive campaign to discredit him did the intensity of the political conflict have

44 Peking Review, No. 10, 1978, p. 12.