Dissatisfied regional military leaders could draw on the same spirit to resist central directives and thwart goals of economic development and political unity.

This issue thus remains a central dilemma for the current leadership in Peking and will probably not enjoy satisfactory resolution during the next 3 years. Short run "quick fixes" in such matters as rural private plots, pay scales, school grading and promotions, et cetera, will reflect central elite preferences for material incentives without permitting or encouraging public abrogation of Maoist egalitarianism as the ideal.

In the international arena, China's relations with the three major powers of Asia and the third world constitute the four foreign issues that will continue to test the viability of the Hua-Teng regime.

Given the critical dependence of that regime on domestic economic development, the leadership may be expected to pursue most vigorously those diplomatic and economic relations most likely to foster attainment of domestic economic growth. In that context, relations with Japan deserve the greatest scrutiny because they are moving with the greatest promise. A trade agreement with Japan in early 1978 provided for an encouraging array of imported technologies and resources, including yen loans. Remaining to be resolved was a treaty of peace, the key to which was disagreement over a clause regarding "hegemony" in the Far East. The Chinese leaders were against "hegemony" in the hands of any power, a position curiously reminiscent of the historic American preference for the pattern of power in Asia. Perceived by the Japanese to be a joint declaration of opposition to Soviet aims and initiatives in Asia, the antihegemony clause may yet be included in a peace treaty with China. Without it, Chinese leaders fear that the Japanese will bend to Russian pressure. Fearful of a Japanese "Munich mentality," the Chinese have urged American visitors to shape U.S. policy toward the Far East in order to reinforce Japanese will and moral purpose.

Those signals in 1976-77 from China to Japan reflected a Chinese desire to draw even more heavily upon Japanese technology and economic genius at risk of antagonizing domestic opposition groups as well as the Soviet Union and possibly even the United States. Should cautious policies in Japan in 1978-80 seek to reduce Japan's economic and political-exposure in China, thus frustrating the current Chinese regime's apparent preferences for closer relations, negative economic and political consequences could follow for China. Depending upon the availability of requisite technology from Western suppliers and Western markets, China might be able to maintain. planned rates of growth and sustain a growing political image of Sino-Japanese-American parallel interests. But a failure to sustain such an image as the promised reward for the new opening to the West, combined with domestic economic shortfalls, could provide new opportunities to radical leaders in China and could reinforce other stimuli to revived radical policies.

In the dynamics of that equation between Japan and China, the American role in the Far East is clearly critical. "Normalization" of relations between the PRC and the United States is also a domestic political issue in China because it symbolizes the foreign policy initiatives of the current regime, aimed at China's enhanced political and economic status. If American initiatives toward the Far East generally and toward China directly fail to fulfill some of those aims,

whether through recognition of the regime or through conferring real military-political or economic benefits without recognition, the credibility of the Hua-Teng regime at home may be expected to suffer some, possibly fatal, erosion.

Near-term relations between the United States and the PRC thus have some significance for the stability of the Chinese domestic political stage even though immediate economic benefits from MFN and other American economic moves might not substantially improve economic performance. If the image of Sino-American cordiality and "progress" can be sustained, implying probably "normalization" in due course, reflecting potential real growth in economic benefits to the PRC and deterring Soviet adventures along China's borders and among contiguous states, the Hua-Teng regime may disarm opposition criticism and avoid domestic crisis over Taiwan.

The factor of deterrence of Soviet intimidation and military adventures is linked directly with the potential performance of China's economy. If relations with the Soviet Union cannot be maintained by the current regime's foreign policies at levels of confrontation well short of hostilities, valuable resources would have to be diverted to defense. The dilemma for Hua and Teng in 1978 was clear. Some emphasis on the Soviet threat might assist them in mobilizing China's political and economic resources under tighter, central control. It could also enhance values of professionalism and military modernization. But too much emphasis on the Soviet threat could provide younger Chinese military leaders with arguments for heavier diversions of resources from economic development to national defense, potentially delaying economic growth, frustrating consumer expectations, and stimulating political divisiveness and instability.

Such a dilemma is not easily resolved but can only be maintained in some balance. The cost of maintaining that balance in 1978-80 might be significantly reduced for the Hua-Teng regime if the larger structure of power in Asia imposed systemic deterents on the U.S.S.R. as well as other states in Northeast and Southeast Asia. Such an environment might prevail-at least for the short term-if confidence in regional economic growth and political stability were reinforced by evident American presence and will, even though those ingredients might not directly support China's ambitions for reunification with Taiwan. In their discussions with American visitors through 1977 and in internal debates, the position of the conservative coalition in Peking seemed to reflect the hope that American presence and resolve would continue, in both Europe and the Far East, to hold Soviet "social imperialism" at bay. China's contribution to that process would be primarily moral and rhetorical, her resources being focused on the hard domestic issues of economic development.

The fourth and last foreign policy issue for the leadership in Peking in 1978 concerned China's relations with the Third and Fourth Worlds, the less developed majority of the world's states. Traditional ideological categories argued for Chinese support of these regimes against their continued "exploitation" by former colonial powers, exploitation now allegedly being expressed through manipulation of world commodity prices and consumption of raw materials without commensurate rates of economic growth among the less developed suppliers. For the conservative leadership in Peking, how far could they reasonably push that theme while still urging European unity

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.

Distinctiveness and transferability of the Chinese development model__
Prospects and dilemmas

INTRODUCTION

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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.