Peking slows its reforms

Conservative policymakers are moving to blunt the effort to reform China's economy. This follows the crackdown last month on demands for political reform which led to the ouster of Hu Yaobang as head of the Chinese Communist Party.

In recent weeks, advocates of Soviet-style central planning have slowed China's modernization program in at least two key areas:

State controls on investment and production have been tightened. The state has given higher priority to heavy industry and clamped down on light industry - the economy's fastest-growing and most efficient sector, which has grown up largely outside the central government's control.

The state has shifted support away from factory managers and back toward party supervision. This suggests that central government authorities will be less willing to come to the rescue of innovative enterprise directors when they encounter resistance from party bureaucrats, reducing their ability and perhaps willingness to take risks.

The attempt to erode some of the market-oriented reforms pushed by Chinese Premier Zhao Ziyang over the past six years comes during a struggle over who will succeed Mr. Zhao as premier, following his recent promotion to acting general secretary of the Communist Party.

There has never been real consensus among top party leaders about the reform policies, and the conservatives have acted quickly during this time of political uncertainty to reshape those policies. Whether the results are more than merely a slowing down of reform remains to be seen and depends heavily on the choice of a new premier.

Reform-minded party leaders have been issuing frequent but vague assertions that basic reform policies remain unchanged. The official People's Daily said in a front-page editorial Monday that China must struggle against ``bourgeois liberalism.'' But it stressed that the campaign should not be allowed to spread beyond certain limits and affect China's economic policies.

Still, signs of a policy shift are unmistakable. One sign came recently at a meeting of the standing committee of the National People's Congress (parliament). Members of the committee were quoted in the official press as favoring a return to more central planning. They also criticized consumerism and the rise of competition among state agencies.

``We must pay attention to the `planned' part of our planned commodity economy,'' said former Foreign Minister Huang Hua, according to the People's Daily.

Wang Zhaodong, a senior editor for the Economics Daily, the party's official voice on economic policy, says that the guiding ideology in economic policy for 1987 could be summarized as the ``three guarantees and the three controls:''

Guarantee production within the state plan and control production beyond the state plan.

Guarantee the construction of productive projects (such as factories and power stations) and control construction of nonproductive projects (such as tourist and entertainment facilities and housing).

Guarantee the state's key projects (in energy, transport, and communications) and control non-key projects (processing industries and other light industrial projects).

One goal for the year is to control overheated production, which is still a problem despite a sharp drop in the growth rate for 1986, Mr. Wang said in an interview. China's total production grew by 18 percent in 1985 over the previous year, a rate many economists said was unhealthy because it caused inflationary pressures and demands on scarce raw materials, energy, and transportation facilities.

Growth in production dropped to 9.2 percent last year, compared with a target of 7 to 8 percent. Foreign analysts have reacted positively to the decrease, crediting Premier Zhao with achieving overall state control of the economy without endangering the reform program. Still, serious problems remain in the priority sectors of energy, transport, and communications, and inflation is still a threat, some analysts say.

Some analysts also say that the emphasis on cooling economic growth is now more an ideological concern than an economic one. Vice-Premier Li Peng recently called for resources to be channeled away from light industry and nonproductive projects to heavy industry, according to the official New China News Agency.

Mr. Li said that too many nonproductive construction projects were under way which have been draining energy and raw materials away from the state. Efforts are needed to cut these projects and readjust the investment structure, he said. Analysts say Li's definition of the situation has strong ideological overtones. Most of the so-called nonproductive construction - which has benefited from the reforms - is operated and largely funded by peasant collectives, which are highly efficient in the use of investment capital.

Wang also said that this year Peking will try to bring the collectively owned township enterprises in the rural areas under provincial-government control. In addition, there will be tighter credit and licensing procedures and stricter allocation of construction materials.

More subtle than the shift in macroeconomic management but no less significant is the change in industrial management policy. Under the reforms, the ``factory director responsibility system'' has aimed at giving the factory manager both responsibility and power to make decisions on production, administration, and personnel. It is no longer said that he must exercise these functions ``under the leadership of the [factory's] party committee.''

In theory, party organizations at the factory level are now responsible for worker morale and political and ideological education. Party officials have been complaining that the party committees in enterprises have been rendered powerless by these reforms, though many factory party officials continue to exert authority in management and personnel matters.

While recently affirming the continuation of the director responsibility system, Li gave a boost to the party committees, saying their responsibilities were not decreased but rather increased. He said they were responsible for guaranteeing the socialist direction of the enterprises.

Elaborating on Li's comments, Wang said: ``The party secretary must make sure that decisions [by the factory manager] are made within the socialist road.'' Such widely publicized statements, and the newly turbulent political climate, are likely to have a dampening effect on experimenting with ``capitalist ideas.''

Industrial relations - between party committees and management - were defined in three important directives from the party Central Committee and the State Council released last month. Originally adopted in September, they had undergone an amendment process before being published, Wang said. It is possible that the directives may have been altered in recent weeks to reflect the new political climate.

The directive on the party's role in the factories said that the party organization should strongly support reform in the enterprise leadership system. But it added it should also ``look seriously for ways to bring the role of the party organizations as guarantors and supervisors into full play more thoroughly.''

Another of the directives appeared to strengthen the role of labor unions - which could provide additional restraints on the autonomy of enterprise managers.