First Published: Unity, Vol. 4, No. 3, February 20-March 5, 1981.
Transcription, Editing and Markup: Paul Saba
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China is pioneering a new course for her industrial system. The current goal is to restructure the productive system to ensure a smooth and balanced pathway for future development, while at the same time accelerating employment growth and production of consumer goods.
At the heart of the current plans is a deep concern for developing a socialist economic system that will be able to meet the material and cultural needs of China’s nearly one billion people. The Chinese see that the key to successfully accomplishing this enormous task lies in the development of economic plans geared to suit China’s particular conditions. New plans seriously take into account China’s low level of development, her abundant yet untapped resources and her enormous unskilled labor force.
The new policies have apparently met with significant initial success. The production of household goods like bicycles, TV’s and sewing machines is up over 10%. New housing was 65% higher last year than in 1978 and will advance another 15% this year. On the other side of the ledger, the average industrial wage is up 8%, and urban employment is up 10%.
This is all in sharp contrast to the situation just five years ago. At that time, due to the disruptions of the Cultural Revolution, and by the “gang of four” in particular, the economy was in chaos, with production stagnating and in some cases even declining. Underemployment and unemployment were spreading, especially among urban youth. Most importantly, the standard of living of China’s working people had not significantly improved in ten years.
Then, in late 1976, those around Jiang Qing were swept from power. Free of their policies of unrelenting strife and turmoil, China got back to the task of fully modernizing the country. But by 1979, it was clear that although the removal of the gang had alleviated many of the immediate problems, the protracted reign of bad policies had cut deep distortions into China’s productive system, and the whole economic structure was out of proportion and balance. Chinese officials now state that some policies during the period of 1976-1979 such as overemphasis on developing heavy industry also aggravated the problem.
China could produce too much of little use, and too little of what was needed They were not capable of producing enough consumer goods, and there were plenty of obsolete machines consuming China’s scarce resources and energy There was much investment in new plants requiring high-skill, high-technique, high-resource. At the same time, industries which would utilize the large reservoir of traditionally skilled workers were not expanding rapidly enough and were not even receiving a share of the existing supplies of primary products necessary to reach output capacity.
In June of 1979, the National People’s Congress moved decisively to set economic development on a more stable basis and set plans based on a realistic picture of Chinese conditions.
Under the slogan of “Readjustment, Restructuring, Consolidation and Improvement,” China’s leaders put the brakes on rapidly expanding industrial investment so that by 1981, overall industrial growth will be down quite sharply from the 10% rate of a few years ago, to a planned 5% or 6%.
The overall slowdown has been accompanied by a very rapid expansion of those sectors of the economy where previous output levels were too low. The readjustment process is aimed at developing relatively good coordination among the three main sectors of agriculture, light and heavy industry. Within the industrial sector, it has meant a significant shift from heavy industrial development to light industries.
In the past, the concept of growth hinged on the most rapid expansion of heavy industry. Previously new heavy industrial projects consumed as high as one-third of the total output value of the economy. However, projects often took years to reach the point of turning out products. Even then, plants often ran well below capacity because the available raw materials and power were inadequate. Scarce resources that might have expanded the output of consumer goods were tied up in a battle to expand the productive capacity of the industrial sector. By the end of this year, 500 projects at one stage of development or another will have been scrapped or postponed.
With the reduction in industrial investment, some of the specialized resources no longer targeted for new plants have been devoted to housing construction. The share of total investment devoted to housing, schools, theaters and other nonproductive facilities has increased from 17% to 30% in the last three years.
China is now trying to cut back, in particular, on industries which use relatively large amounts of natural and financial resources and machinery, while increasing those which use relatively large amounts of labor. This objective is consistent with the leadership’s desire to speed up employment growth. It is also consistent with greater output of household goods, many of which can be produced with available supplies of labor skills and with raw materials or designs, which either can be purchased cheaply overseas or produced domestically in a fairly short period of time. Over the last year, the consumer products sector has expanded nearly 50% faster than industry in general. This is expected to continue for at least the next few years.
Machine building is a good example of the kinds of particular industries that are being cut. It, more than any other sector, outgrew the surrounding economic system. In the past machine building was singled out for special consideration, and the results were disastrous.
Today, China can produce many machines that it cannot use. Yet these machines cannot be exported because the designs are often 10 to 20 years behind international levels, and no country will pay what they cost to produce Machine building has been slashed except where design can be significantly improved, and new up-to-date products brought out immediately, for example, in electronics or where present output can support necessary expansion, particularly in agriculture.
The readjustment process is part of a much broader picture of economic activity in China today. The important question in all the ins and outs of “Readjustment, Restructuring, Consolidation and Improvement” is how to improve the livelihood of the Chinese people. Question of accumulation and consumption, centralized planning limited competition and market economy are all being taken up as China moves to develop a strong socialist economy in “the Chinese way.”
Through the recent policy revolution, the Chinese have also demonstrated the capacity of the socialist system to take enormous countermeasures, rectify its past error and find the better way. Not only are all areas of economic life geared to the common good, but through state control of the economy, the Chinese are able to make the necessary adjustments and adapt to prevailing conditions.
In this way, socialism is a marked advance over capitalist production which is characterized by anarchy of production and a steady diet of economic crises – recession, depression and inflation. (The source of these problems lies in the capitalists’ relentless drive for profits which is not based on the needs of the people nor on sound, coherent, planned economy.)
The common solution for economic crises offered by the ruling class in capitalist countries is for the working class and oppressed nationalities to tighten their belts, in China, on the other hand, recent economic problems have led to major adjustments and overall improvement in the productive system so that the Chinese people can now look to a promising future of economic development and an improved standard of living.