Twenty year leap - from feudalism to technology
Jack Perry surveys China's dramatic industrialisation during the 1970s and the plans for the future, it was written in 1979. In the immediate aftermath of the death of Chairman Mao and the Gang of Four the future of industrial development was very uncertain. Jack Perry was the leader of the China-Britain Business Council and indefatigably promoted trade with China from the 1950s onwards.
On 26 February 1978, the Chairman of the Chinese Communist Party, Hua Guofeng, stunned an unprepared world by outlining the most comprehensive economic acceleration in the history of mankind: nothing less than an economic surge that would take China from late-feudalism to industrial modernity in a brief twenty years.
Recognising that neither the Chinese people nor a doubting outside world would accept the credibility of such a leap without convincing statistical evidence, he outlined precise developmental targets to be accomplished in 1985.
By contrast with former practice, he spelled out specific details of this plan. These have been reported in many articles and publications, requiring no further repetition in these pages. Noteworthy, however, was the naming of three specific targets to be accomplished by 1985: 60 million tons of steel (1977 - 24 millions); 400 million tons of grain (1977 - 278 millions); one thousand million tons of coal (1977 500 millions). The choice of these three targets was significant: food to raise living standards; steel to provide the basic element for industry; and coal, in part, to service the energy requirements of this dash for growth.
The 120 major projects outlined in this plan involve the mobilisation of all China's extensive assets - work force, raw materials both agricultural and mineral, planning capability, potential management expertise, scientific and educational skills, and above all the spirit and enthusiasm of China's near one thousand million.
Speaking for the Chinese leadership, Hua Guofeng implicitly acknowledged. that, within the declared time span, the substantial involvement of the technology and experience of the advanced industrial countries is indispensable to the realisation of these objectives - and thereupon exploded upon an astonished world a series of propositions that speeded the pulse rate of the world's industrialists.
In quick succession, Beijing announced the reversal of many previous policies, spelling out the new market possibilities China's leaders would now provide to an international economy that faces nothing better than stagnation into the foreseeable future.
First, the international banking community were invited to finance the major part of China's capital plant imports. Second, the world's most significant industrial producers would be encouraged to collaborate with China in working out schemes of mammoth development in the areas of steel, oil, natural gas, coal, electric generation, transport, metallurgy, industrial chemicals and petrochemicals. Third, to engage the maximum contribution from manufacturers and traders in secondary and ancillary industries, China's leaders offered to open its doors to foreign investment, participation in joint ventures, compensation and barter agreements and other developments that would provide direct encouragement to foreign manufacturers to produce in China for international markets at comparative low costs. Further measures were outlined to bring China's foreign trade practices in line with policies adopted by other developing countries who have been successful in expanding their exports, whilst simultaneously advancing their technology.
Since the spring of 1978, Beijing has been the Mecca for the world's industrial leaders, bankers, traders and entrepreneurs. In their thousands they have trekked to China's capital, seeking participation in, potentially, the fastest growing economy in the world. Nor has the traffic been one-way. Chinese delegations - ministries, planning commissions, trading corporations, scientific and technical institutes, research organisations, financial experts and marketing specialists have winged across the world, visiting scores of countries to see for themselves what contribution they could anticipate from Western technology design, management experience - and money.
The response must have exceeded their most optimistic assumptions. Hardly a single substantial Western company - even those of modest size - has failed to perceive China as an essential element in their strategic planning for the eighties and the nineties. In some quarters the vision of a 'billion people market' has caused lapses from reality, conjuring up prospects of a new Gold Rush - Klondyke a treasure house waiting to be discovered and exploited. Up to quite recently - almost daily came reports of one huge deal after another - the millions became billions and billions were doubled and redoubled. Press statements were issued by excited Western business executives, announcing the consummation of vast deals ranging from power stations and steel mills to coca-cola plants and breweries. Looking back, it is worth noting that only a few of these mouth-watering announcements have been confirmed by the Chinese - nor, to be accurate, have they been denied, which has encouraged even wilder hopes.
Now, a year later, when the Sound and the Fury shows some signs of abatement and the pot of gold looks more remote, it is perhaps timely to try and assess the validity of these Great Expectations.
In private conversations, many Chinese leaders have explained that 1978 was a year for exploration, testing reactions, making contacts, estimating capabilities, comparing prices, judging competitiveness, and, above all, weighing up Chinese capabilities and estimating their ability to handle the new anticipated sophisticated technology at the expected accelerating rate.
We were told 1979 would be the year for 'Decision-Making', when all the probing of the past year would be summarised, assessed and calculated and then - and only then - would firm arrangements be concluded for the period up to 1985. Then and only then - would project partners be selected and the right tempos be established.
What conclusions do the Chinese leaders appear to be reaching? They now know that all the required outside finance is available: the world's bankers have done their sums. The project developers have, in the main, submitted their proposals and the Chinese are assured that supply is no problem. Thus China's leaders are certain - what was perhaps in doubt earlier that the Four Modernisations programme will not fail due to Western hesitations, political doubts, or financial inhibitions. Full support in all the significant areas is assured. Western economic leaders like what they see in China.
So can the Chinese planners move into top gear, fill in the gaps and fulfil the expectations outlined by Hua Guofeng a year ago? These are the questions that now have to be answered, and the signs are that strong doubts have been registered. A great debate has been in progress in China for some months: the main questions have revolved around tempo, choice of priorities, weaknesses of internal co-ordination, relations between the regions and the centre. The big question, simply put, is: has the Chinese leadership bitten off more than it can chew? To answer this question, all the participants are encouraged to use 'realism' as the touchstone. No romancing, no building castles in the air, no boasting, no carving out of economic empires. So the following questions seem to be under weighty examination.
Is the 1978 plan well-conceived, balanced, realistic, prudent? Are the priorities correctly defined? Are China's technical standards capable of absorbing sophisticated, advanced technology without profligacy or waste? Does the management capability exist to implement such a huge and complex economic plan? Can Chinese industrial productivity be quickly raised from its present low level? Has the right balance been struck between agriculture - light industry and the capital sector?
Are the plans for the radical transformation of the economic infrastructure adequate to meet the heavy burdens the new economic development will demand?
Can China service and repay on time the onerous financial obligations to foreign lenders now being undertaken? Can China's life saver - high oil output - be brought speedily into realisation to lift export capability to the necessary level of about 100 million tons annually? Will the proposal to create 10 Daqing oilfields by 1985 prove a reality? After the agonies of political and economic disruption over the past few years, is China moving forward adequately to stability and assurance?
In recent weeks the Chinese press has begun to articulate some of these questions in a probing manner. There prevails a general mood of self-criticism and analysis which is healthy, timely and essential if the future is to be faced with enthusiasm and realism. Indeed, realism is the one prerequisite without which planning becomes sterile bombast.
As if all these problems are not enough, one enigma over-shadows all others - can Chinese living standards be raised at the right pace to justify the high hopes the 1978 programme excitedly aroused?
The Chinese political and planning authorities are now engaged in an overall review of the 1978 plan. It is clear - even if no official statement is yet available - that many of the targets need to be redefined in the light of actual experience. This should cause no surprise. How could it be otherwise? Is it reasonable to presume that an economic plan of such dimension covering almost an entire continent and involving nearly one-fourth of the world's population can be carried through without amendment, review, error or miscalculation. It is probable that some far-reaching revisions are being prepared. Steel is one candidate, grain is another, oil is a third. Concentration on steel and grain production has become an article of faith which seems to have assumed the sanctity of theology. To raise steel production substantially cannot be achieved without all the supply elements fitting together like a well constructed mathematical equation.
Has China created the right kind of economic balance that makes steel its vanguard for achieving momentum? It appears that excessive concentration on steel has caused substantial dislocations of other supply elements - iron ore, coking coal, energy, transport, electricity, water. Excessive concentration on grain, too, (so it is argued) has forced many communes to desist from planting other crops that make more economic sense both to the commune and the State. China, some say, should import more grain and export more oilseeds, edible oils, and many other cash crops for which there exist substantial and continuing international market-requirements. So, perhaps these two 1985 targets may be slashed - and others raised.
Even more important, however, is the future of the oil industry. So far, the Chinese have not specifically endorsed the view that many foreign commentators hold: namely, that China's ability to finance its monumental capital investment programme depends on its success in quickly becoming one of the world's largest exporters. The present output is around 100 million tons of which about 8/10 millions are exported. Assume the speedy growth of China's industry will require at least double this volume - namely 200 million tons - then a further 100 million by 1985 is essential to pay off China's debts and provide the base for the next leap forward. At existing prices, 100 million tons equals US $13/15 billion, which is approximately the right kind of export income that makes sense for repaying Chinese borrowing from abroad.
This looks like a convenient equation. Does it make sense? Can the Chinese produce 300 million tons by 1985? the 1978 plan says yes - 10 Daqings would provide about 300 million - yet the question is surrounded by some doubt. This arises from the absence of firm contractual arrangements with the international oil companies, whose expertise is essential if these three targets are to he reached. So far, only research and exploration contracts have been agreed - many more are in the pipeline, but one has a nagging doubt whether the pursuit of the fast expansion of the oil industry - on land and off shore - has been given adequate priority by the economic planners and the ministries concerned. We shall see!
Meanwhile, the Chinese leadership has still not yet announced the implication of the present round of 'readjustment'. The 1978 targets will certainly change, the emphasis between the different economic sectors will also undergo reconsideration; we can expect, probably, some new moves in agriculture, which obstinately fails to allow itself to become mechanised. Some higher priority is likely to be given to light industry, which received scant attention in the 1978 programme.
Certain truths have to be faced. Industrial productivity is low, not just because plant and equipment are old and requires renewal, but mainly because managerial capacity is inadequate and factory organisation is inexpert. Like all generalisations, such statements can be confounded by pointing to many success stories of which China can be justly proud. But overall, management fails to take full advantage of its resources. This is the Chinese 'Achilles heel' and all the importation of advanced Western technology will not solve Chinese productivity problems unless this weakness is grappled with as a major and immediate priority. Indeed, without this determination much of the projected Western imports will be wasted. Judging from recent Chinese statements, these dangers are being seriously noted and assessed.
So how go the Four Modernisations? It is futile, and unhelpful to the Chinese to pretend that everything is fine and the ship is on course. No outside observer can possibly make an accurate assessment of the degree of success or failure, and all we can do is to speculate in the knowledge that our assumptions are bound to lack substantial evidence. But neither should we, on the one hand, hide behind official statements nor, on the other, accept the 'I told you so' bleatings of the cynics. It is not unreasonable to suggest that in the first year the Chinese have bitten off more than they can chew, hence the need for the establishment of new priorities and new tempos. It is probable that some of the 1985 targets may need to be postponed for a couple of years or so; a fresh look may be needed at the relative speed of advance between agriculture and industry; Chinese export capability in the stagnating trade world of the eighties and nineties needs practical reassessment; accelerating oil production is the key to increasing supplies of technology from the West.
A year after the launching of the plan, some parts clearly need rationalisation. Only those who obstinately refuse to learn from the past can possibly believe that every Chinese statement, aspiration or plan carries with it the sanctity of the 'Tablets of Stone'. The drawing in of breath and a reappraisal from practical experience is an indispensable necessity. Certain it is that Chinese leaders and planners will make more mistakes in the future, and why not? They can learn nothing from the textbooks because none have been written. Providing realism and not idealism pervades Chinese hopes, aspirations and plans, then this generation of nearly one thousand million Chinese has the possibility of transforming their country from feudalism to modernity.
But underlying the whole problem of China's speedy transformation is a question which rarely receives much public comment even though some recent references in Chinese journals suggest concern. What is the problem? Simply put - it is the pervasive ideological inheritance from feudalism. We Westerners, in the main, fail to understand this problem; we have enjoyed the benefits of an industrial society which has discarded the inertia of agrarianism and replaced it with the dynamism and creativity of science and technology. Up to 1949 Chinese society stagnated within traditions and modes of thought unchanged through centuries, though the fierce winds of the anti-Japanese war, and even more so, the successful struggle against the Guomindang opened up the prospect of political liberation and the beginnings of revolutionary transformation. But the struggle between feudalism and revolution has not yet been won and will continue for many generations. Ideological feudalism means resistance to change, acceptance of traditional patterns, obeisance to higher authority, be it the family head, the scholar, the local bigwig, or even the weight of superstition. All this challenges initiative, independent thought, and the acceptance of new responsibilities. It makes for caution and not experiment, it awaits official endorsement instead of initiative, it encourages flattery and not constructive criticism. The ideological patterns of feudalism are present in every level of Chinese society and is one of the prime causes of the apparent sharp swings of Chinese policy which arise when the two trends - feudalist and revolutionary - constantly confront one another.
So no friend of China should underestimate the enormity of the task they face: problems and bottlenecks; even errors and miscalculations are inevitable.
Yet soporific sentimentality is no substitute for realism; mistakes have been made; some are acknowledged publicly, others await identification and solution. Hence, the next two years are critical. Strategic decisions will be needed and these may cause changes of direction. But the economic course for the future is clearly established and no conceivable changes in the personality of political leadership in China is likely to cause any diversion from the aim to build China quickly into a leading industrial nation, because that is the only route which socialist China can take. The peasants and workers of China are determined that their living standards should rise substantially and any group of political leaders that stand in the way of that realisation will be swept aside.
© Copyright Society for Anglo-Chinese Understanding (SACU) 2006, reprinted from SACU's magazine China Now 85, Page 2, July 1979
The views expressed in this article are those of the author and do not necessarily represent the view of SACU.
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