The new 'long march' -- to modernize: field report

Can China make it? Can 1 billion Chinese move from the bicycle age to their own version of the automobile age by the end of this century? Can they achieve what Chairman Hua Guofeng and Vice-Chairman Deng Xiaoping call the "four modernizations" -- of agriculture, industry, science and technology, and defense -- and turn China into a "relatively advanced" industrialized country; in other words, become a country with a gross national product of about $1,000 per person, modest enough in per capita terms but totalng somewhat more than Japan's GNP today?

The task China's leaders have set themselves and their people is arduous and the road ahead is long. Nevertheless, by the end of this year, answers may begin to emerge regarding three key questions essential to success:

1. Can the leaders energize the masses?

2. Can they get their own Communists Party cadres moving?

3. Can they find a framework firm enough for the Communist Party to remain in control, yet flexible enough to promote the innovation, initiative, and creativity required to transform the Chinese economy?

These questions are not primarily economic. But without positive answers, food production is not going to increase dramatically. Nor will productivity rise in the factories. Nor will China enjoy the stability and unity so sorely needed after the tumultous and destructive year of the Great Proletarian Cultural Revolution and the rule of the "gang of four" (1966-76).

What can be said so far is that China's leaders, adn Mr. Deng in particular, recognize the problems and have set about tackling them. Except for Chairman Hua, these are men who came to power after Mao Tse-tung's death and the arrest of the gang of four (headed by Mao's widow, Jiang Qing) in the fall of 1976.

They are not liberal democrats, but hardheaded, pragmatic party bureaucrats, dedicated to maintaining the party's political supremacy while recognizing the need for economic incentives and for a less rigidly controlled economy. They are willing to experiment to quite an extent with decentralized decisionmaking and aspects of the market economy, and they welcome foreign technology, machinery, loans, and credits.

In 1977 and '78 they were preoccupied with establishing their own positions and getting the economy going again after the chaos of the preceding years.

Their decision to seek foreign loans and credits created a euphoric mood among many Westrn and Japanese businessmen, a mood that lasted into early 1979. But once these leaders realized that China's modest foreign-exchange reserves ($ 2.5 billion in 1977, $4 billion in 1978) would be eaten up by the effort to finance teh 120 large-scale mining, manufacturing, and other projects they were planning, they cut back drastically on these plans.

Last year became the first one of a three-year program to "readjust, restructure, consolidate, and improve" the economy. Grandiose plans for heavy industry, especially for steel (60 million tons per year by 1985), were shelved or postponed. Agriculture and light indusry were given first priority.

In agriculture itself, a plan to raise production by 25 percent -- from 300 million tons of grain in 1978 to 400 million tons by '85 -- was quietly shelved. Mechanization took a backseat in favor of efforts to raise production with the means at hand but with added inputs of chemical fertilizer, improved seeds, and the like.

The results so far have been encouraging. Increased purchase prices to peasants and good weather yielded a grain harvest of 315 million tons, 3.4 percent more than the year before. Total industrial production increased 8 percent, with light industry growing faster (9 percent) than heavy industry (which grew 7.4 percent). Steel production was 34.4 million tons -- 8.3 percent over the previous year. Coal production met its target of 620 million tons, while oil production reached 2.1 million barrels a day.

In foreign trade, exports increased 29.2 percent over the previous year, totaling 21.2 billion yuan -- a little more than $14 billion. Imports totaled 24.1 billion yuan, a shade over $16 billion, this figure being 31.6 percent more than in 1978. The trade gap was met by credits, loans, tourism, and remittances from overseas Chinese.

Institutionally, much was done to make China a more attractive trading partner. A joint-venture law was promulgated last July, although further legislation regarding taxation hiring, and firing is required. A China International Trust & Investment Company, headed by a former Shanghai industrialist, Rong Yiren, has been formed to arranged marriages between Chinese and foreign enterprises, and in some cases to become a partner itself.

This year should see further progress, most observers believe.

Under the energatic direction of Zhao Ziyang, Sichuan (Szechwan), China's most populous province, with a population of over 100 million, did well both in agriculture and in industry, where innovative experimentation was carried on in decentralized factory management.

Guangdong (Kwangtung), Fujian (Fukien), Shanghai, and Peking have been allowed extra latitude in foreign-trade and investment negotiations. Guangdong and Fujian have set up special customs-free zones in which foreign manufacturers may set up plants with Chinese partners supplying land and labor, all to produce exports.

But the questions referred to at the beginning of this article remain to be answered. Is what has already been done sufficient toenergize the masses? Among these changes, besides higher purchase prices for agricultural products, have been: bonus payments in factories for greater productivity by workers; more consumer goods in the stores (China made 1 million television sets last year, twice the amount of the previous year, and imported yet another million); and larger pay packets, partly to compensate for the higher prices of foodstuffs (except for staples) in the stores.

To some degree, these have already had an effect. More money is flowing to the long-neglected countryside. More food is reaching the cities as peasants bring the produce of their private plots to roadside free markets. In some factories, productivity has risen.

But it is too early to talk of a national trend, and newspapers still complain that many ordinary people doubt whether the new economic incentives are here to stay. Tey recall many previous occasions when they were told a certain policy was permanent, only to see it reversed by a change in the party line. These doubts can only be assuaged by time. That is why 1980 is an important year in consolidating what has already been gained and in drumming up enthusiasm for further progress.

Motivating party cadres, particularly at regional, county, and factory levels , is even more crucial than sparking the masses, because these are the people who can either obstruct a particular party policy or carry it through to success. Many cadres in key positions today are there not because of their energy but because of their ability to survive the dramatic policy shifts that swept away their less cautious or perhaps more idealistic colleagues.

"Every time we receive a new policy directive from higher up," one cadre said to a foreign visitor, "we read it carefully. We smell it, we taste it, we nibble at it a bit. We try to find out what it is really telling us to do.* If it gives us a certain latitude to make decisions from here to there, we will test it by perhaps making a small decision, from here to let us say two or three steps away. And then gradually we may get bolder. But we will always be operating within a very much more constricted boundary than the boundaries we think the directive has given us."

This tendency is even more pronounced these days, because cadres are being told not only to make decisions but to shoulder the full responsibility for them. They are not simply passing on orders from on high. They must make their factories and enterprises profitable or face a cutoff of state funds.

Among the decisions required may be the importation of new machinery or new technology with which many of these cadres have no real competence. They may have subordinates who do have such competence. Should they let them operate freely? Yet if the experiment fails, they ae the ones who will be blamed.

"In factory after factory I have visited," says one well-traveled foreign expert, "I have reached the conclusion that the real need is not new machinery but the management of people. Where personnel management is imaginative and rewarding, production rises even with antiquated machinery. Where this quality is lacking, expensive computers lie idle because no one knows how to use them."

Finally, the framework within which to get the masses and cadres moving while retaining party control is perhaps the most difficult question of all. In recent speeches, Mr. Deng and other leaders have emphasized time and again that the party is not about to give up its overall directing role.

Mr. Deng, who last year was saying citizens should be free to air their criticisms in posters on so-called Democracy Wall, this year is advocating that the constitutional provision guaranteeing this freedom be abolished. He and other leaders recognize that the party faces a crisis of public confidence, that long years of power have turned many cadres into bureaucratic overlords rather than servants of the public. But they feel they cannot afford the disorder and instability they think will be the inevitable consequence of too drastic a relaxation of controls on free speech and assembly. Criticisms should be aired within the workplace or neighborhood, not indiscriminately in public places, they say.

And, of course, whatever experimentation takes place with regard to factory management or profitability or selling in the market-place, the two pillars of socialism -- ownership of the means of production and democratic centralism, meaning overall control from the top -- cannot ever be sacrificed, they say.

Among Western observers of the Chinese scene there is also controversy on this subject. Some feel the current leadership is prepared to go quite far. If it is demonstrated that a capitalist free enterprise setup works, they will, within limits, allow it to take place in China -- not evolving toward capitalism per se, but toward the mixed economy that seems characteristic of most Western societies today. Communism would remain as a slogan, but its content would be far different from the communism practiced, say, in the Soviet Union.

Others believe this is wishful thinking, that leaders conditioned since adulthood by the tenets of Marxism-Leninism will not easily cast off the constraints of their faith. Yet China's problems are such that without a very bold, direct assault on some of the hallowed shibboleths of this narrow and dogmatic faith, the nation is unlikely to achieve the kind of economic growth and modernization its leaders want.

Which view of the Chinese leadership is correct remains to be seen. At the moment, the leadership believes modernization is possible within the framework of centralized party control, a framework not to different from the one that exists today. If events prove it right, there is no problem. But if they do not, the day may come when Mr. Deng or his successors are challenged to face the consequences of his own famous statement -- that he does not care whether a cat is black or white so long as it catches mice.