China: Hard Times

Peking outlines new reforms

Traditionally, the Chinese government’s public pronouncements were exercises in bombast, filled with declarations of “great victory” and “excellent situations” on all fronts. But last week, when the 3,202 delegates to the National People’s Congress assembled in Peking for their annual meeting, self-congratulations were at a minimum. Instead, the top leaders depicted a country facing a long period of economic austerity.

The underlying message was reaffirmation of the policy first adopted by the Peking leadership in 1979 to reverse the unsound and unrealistic plans that were formulated earlier in a race to achieve the so-called four modernizations of post-Mao China: industry, agriculture, defense, and science and technology. Both foreign businessmen and the Chinese, Peking’s leaders insisted last week, should abandon any further hopes for a quick economic boom.

To be sure, the congress delegates were informed of some “great achievements” in the country’s economic readjustment policy. Light industry, for instance, was up this year by 12% and there were impressive increases in rural incomes. Moreover, Finance Minister Wang Bingqian told the delegates that China’s budget deficit for 1981 will fall to $1.6 billion, down from $8 billion last year. But heavy industrial output declined by 5% from last year. And the nation’s overall growth rate was only 3%, far too sluggish for a country with an estimated per capita income of $250 annually.

Moreover, the reduced deficit has been achieved by one of the most severe spending cutbacks imposed by any nation in recent history. Expenditures for capital construction, for example, declined from $32 billion in 1980, to $22 billion this year, a drop of nearly one-third. In the first half of his year alone, more than 1,500 projects were canceled or postponed to save money. At the same time, despite China’s pleas for other countries to spend more on defense to guard against Soviet “hegemonism,” Wang announced that China’s military budget will fall below $10 billion this year, a decline of 12% from 1980—and more than 25% since 1979.

The main event of the congress was an address by Premier Zhao Ziyang on China’s future. Zhao’s report, so lengthy that it took two days to deliver, revealed that during the next five years China will engage in a major effort to streamline what he called the country’s “bloated, overlapping, administrative structure.” The monumentally inefficient bureaucracy, which can trace its beginnings to Confucius’ time, has survived wars, political upheaval and even the Cultural Revolution. Today, it is estimated that China has as many as 20 million civil servants.

In other areas, Zhao announced that China will soon take bids from foreign companies for drilling in the country’s promising offshore oilfields. He also confirmed that China will try to keep its domestic oil production above 100 million tons annually, to offset increased demand.

To China’s would-be liberals, Zhao issued a stern warning: no departure from socialism or disobedience of the party wil be tolerated. But he reserved his strongest rebuke for the leadership itself, accusing the bureaucracy, “with its timidity, inertia and obstructionism,” of placing Chinese long-term development in jeopardy. He touted current policies, citing wage hikes for some workers and an increase in savings deposits in both urban and rural areas as “a sure sign of higher living standards and confidence in China’s economic prospects.” With the short-term outlook so gloomy, long-term promise was the best Zhao had to offer.