We are indebted to Prof. Robert. F. Dernberger from the University of Michigan who conducted with Dr. Hardt several author workshops during the course of the preparation of the volumes that contributed to its quality and integration. Professor Dernberger also assisted in organizing and conducting critical workshops related to both volumes of this publication. The first volume is entitled "Chinese Economy Post-Mao: Volume I. Policy and Performance." And the second volume, to appear later, is entitled "Chinese Economy PostMao: Volume 2. Recomputation of Chinese National Accounts." This second volume is largely the coordinated effort of R. Michael Field of the Office of Economic Research, CIA, with support from K. C. Yeh of Rand Corp. We are grateful to Mrs. Ruth Eckstein and the Cambridge University Press for permitting us to reprint a chapter from the last book of her late husband Prof. Alexander Eckstein of the University of Michigan, "China's Economic Revolution." JOHN R. STARK, Executive Director, Joint Economic Committee. CONTENTS China's Post-Mao Economic Future-Robert F. Dernberger and David Recent Chinese Economic Performance and Prospects for the Ten-Year The Political Dynamics of the People's Republic of China-William W. The Chinese Development Model-Alexander Eckstein--- Soviet Perceptions of China's Economic Development-Leo A. Orleans--- Economic Modernization in Post-Mao China: Policies, Problems, and II. MANUFACTURING AND EXTRACTIVE INDUSTRIES Political Conflict and Industrial Growth in China: 1965-1977-Robert Michael Field, Kathleen M. McGlynn, and William B. Abnett-- A Survey of China's Machine-Building Industry-Jack Craig, Jim Lewek, Population Growth in the People's Republic of China-John S. Aird---. Technology and Science-Some Issues in China's Modernization-Jon An Analysis of China's Hard Currency Exports: Recent Trends, Present Page 789 The Impact of Most-Favored-Nation Tariff Treatment on U.S. Imports The Impact of U.S. Most-Favored-Nation Tariff Treatment on PRC Ex- 812 840 851 860 SUMMARY BY JOHN P. HARDT The post-Mao period seems to be dominated by a pragmatic economic policy which is exemplified by the drive for the "four modernizations": in agriculture, in industry, in national defense and in science and technology. The current goal, first enunciated by Chou En-lai in the 1960's, is to convert China into a powerful and prosperous nation by the year 2000. While Mao is still shown great respect, under the joint leadership of Hua Kuo-feng and Teng Hsiaoping (the man Chou selected to be his successor) Maoist ideology has been deemphasized and the adverse effects of the Cultural Revolution on education, on science and technology and, consequently, on economic growth, are now readily acknowledged. The current focus on economic modernization, technological change, professionalism and measured ties to the Western developed economies may now be seen at all levels of Chinese policy and life. Although the rapid, thoroughgoing pursuit of the letter and spirit of Chou's vision is a fact of post-Mao China, most authors remind us that we may be seeing yet another policy cycle which, under Mao, alternated from periods stressing ideology to periods emphasizing economic priority and pragmatism. No one can predict, for example, whether the policies of modernization will be able to survive the passing of 73-year-old Teng Hsiao-ping, generally regarded as the instigator and implementor of China's push for modernization. Trend or cycle, the Chinese economy and society are in the throes of significant and interesting changes. This volume follows three earlier compendia on the Chinese economy: "Economic Profile of Mainland China" (1967); "People's Republic of China: An Economic Assessment" (1972); and "China: A Reassessment of the Economy" (1975). Hearings related to some of those earlier volumes were also published. The current volume updates and expands the coverage of the earlier publications. The 37 contributors number more than any of the previous volumes. The participants represent academic institutions in the United States, Canada, the United Kingdom and Sweden, various departments of the U.S. Government and research institutions. A companion volume to this entitled "Recomputation of Chinese National Accounts" will be published separately by the Joint Economic Committee. This compendium is organized into five sections: Policy Perspectives; Manufacturing and Extractive Industries; Population and Labor Utilization; Agriculture; and Foreign Economic Relations. Some of the major questions addressed in the studies, with indications of some of the authors' responses are illustrated below: Question 1. What are reasonable projections of China's economic future? Has the economy of the People's Republic of China settled down to a stable, continuous process of economic growth? all of the papers in this volume recognize the record of positive rates of growth in both agriculture and industry in China's economic development over the past 28 years, which have created a significant economic base for the new leadership to build on in their attempt to modernize China's economy. More important, all recognize the tremendous potential for future growth and even the more pessimistic of the papers that follow believe the new leadership's economic plans and policies will achieve a considerable degree of success, i.e., further increases in GNP per capita. Perhaps most important of all is that these economic plans and policies of the new leadership indicate domestic economic rationality and stability and a far greater reliance on normal commercial relations with the industralized countries of the non-Communist world than was true in the past. [Dernberger-Fasenfest, p. 47.] By examining historical growth rates some conclusions on Chinese economic development have been drawn. This growth tabulation clearly shows the general pattern of economic development, that is, the rapid increases in industrial output, while grain output barely keeps up with population. While the data are not accurate enough to put much weight on this distinction, the main point remains firm-grain output in China has been roughly matching population growth over the long haul. Several important factors argue for substantial economic growth over the 8 remaining years of the recently announced 10-year plan: 1. The investment of one-quarter of GNP to rapidly build up the nation's productive capacity. 2. The continued existence of rural capital construction projects with a high payoff. 3. The renewed advances of industrial technology, bolstered by the Hua regime's greater acceptance of foreign equipment and its revitalization of domestic science and higher education. 4. The continued restraint in the allocation of high-technology resources to military industries. 5. The potential for further striking gains from foreign trade, via the route of comparative advantage. 6. The continued rise of per capita consumption in a variety of small ways, a trend that permits greater experimentation with material incentives. 7. The existence of an effective and low-cost administrative apparatus for reducing population growth still further, thus reducing pressures to shift resources from investment to consumption. 8. In general, the apparent settlement of leadership issues and the ascendancy of the economic modernizers at the expense of the militant ideologues. Formidable as these progrowth forces seem, they do not guarantee a continuation of 51⁄2-percent GNP growth and 9-percent industrial growth through 1985. While the short-term potential for high growth rates is quite promising because of sizable "catch-up" possibilities, the longer term prospects are for a drifting down of the GNP and industrial rates as opposed to the increases envisioned in the new plan. [Ashbrook, pp. 227-228.] The primary causes of China's declining economic performance since 1974 appear to be short term and political in character rather than long term and structural. The adverse influence of these short-term elements appears to have receded rapidly, due largely to the decisive actions taken by the new government since late 1976. However, even if we could confidently assume future political stability, the target rates of growth included in the 10-year plan remain quite ambitious The possibility of slightly better future performance cannot be ruled out since the 1964-74 decade included the cultural revolution that had a significantly adverse effect on industrial production and investment... A return to economic performance similar to that of the 1964-74 decade, however, is dependent on two crucial conditions. First, there must be a stable political environment that is conducive to long-run economic planning. In the absence of automatic mechanisms for determining the allocation of resources, these decisions are made through a direct political process that is extremely vulnerable to disruption. If the political consensus that appears to underlie the 10-year plan should be shaken, there could be a renewed paralysis of the planning process, a deferral of investment decisions, and a decline in the rate of growth. A second condition for the resumption of sustained growth is the deferral of modernization of China's military establishment. The underlying scarcity of resources and the envisaged increase in the flow of investment to improved social services and transportation infrastructure; to scientific and technical modernization; as well as to industry and agricultural implies that the share of resources |