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2. China

Historical perspective
National factor endowments
Case-studies in the different economic sectors
Exogenous sources for technological progress and self-reliance
A desirable path and a strategy for S&T development

The research objective of this study is to present China's experience in attempting to meet its target of "self-reliance." The research was carried out at both a macro and a micro level. Special attention is given to S&T policy, which is centred around the following: (a) the role of government; (b) the socio-economic background to S&T policy; (c) planning and coordination of S&T policy with respect to socioeconomic development; and (d) policies to encourage the efficient use of inputs to the S&T system, e.g. financial and human resources.

The Chinese study used a systems approach. The S&T system, economic system, social system and international system were studied as interrelated parts of an integrated whole. The system is a dynamic one, which changes with geographical location and time (fig. 1). We started by reviewing the past, and moved on to analysing the past and current status of S&T and its prospects for the future (fig. 2). The S&T system was analysed according to a life-cycle concept (fig. 3).

Historical perspective

China has carried out a socialist transformation and construction of the economy since 1949. The characteristic features of the Chinese socioeconomic system can be defined with reference to such factors as ownership, decision-making, motivation, information, and coordination structure. The patterns of past socio-economic development in terms of these basic features are described below.

Fig. 1. System in time and space phase

The completion of basic socialist transformation, 1949-1956

Following the three years of economic rehabilitation from 1949 to 1952, China initiated and established a relatively flexible central planning system. The first Five-Year Plan for national economic development was carried out between 1953 and 1957. An initial basis for socialist industrialization, involving the construction of 694 "above-norm" projects (including 153 major ones), was planned and completed.

Between 1953 and 1956, the annual average increase in the gross output value of industry was 19.6 per cent and of agriculture 4.8 per cent. During that period, more than 110 large industrial enterprises were completed, mostly in heavy industry. This laid the groundwork for Chinese socialist industrialization. The value of the industrial output of the state-owned enterprises reached around 53 per cent, and that of the collectively owned 19 per cent, in the year 1957. The remaining industrial enterprises were in the category of either joint state/ private ownership or private ownership.

Fig. 2. Research methodology 2

Planning in that period was relatively flexible, the scope for control was limited to minor parts of the state-owned enterprises, important materials, and projects. Indirect control of the cooperative, individual, private capitalist and state capitalist economy was through proper economic policies, the pricing system, taxation, and the credit system.

In the agriculture sector, the Agrarian Reform Law of the PRC was promulgated in June 1950. After the land reform, the agricultural production system was changed in three stages: the mutual aid team; the elementary agricultural producers' cooperative; and the advanced agricultural producers' cooperative.

Pattern of socio-economic development from 1956 to 1977

China undertook full-scale socialist construction in the period from 1956 to 1966. Between 1956 and 1966, fixed assets in industry grew four times in value while national income increased by 58 per cent in terms of comparable prices and by 34 per cent in terms of per capita amount. From 1966 to 1976, the ten-year Cultural Revolution brought China its biggest set-back since 1949; but, in spite of this, China as a whole still had a relatively high rate of economic growth in that period. The grain output rose from 193 million tons in 1956 to 282.73 million tons in 1977. Also in this period, crude steel output rose from 4.45 million to 23.74 million tons, coal from 11 million to 93.6 million tons, chemical fertilizers from 0.133 million to 7.238 million tons, machine tools from 25,928 to 198,700 sets, and cotton cloth from 5.770 billion to 10.151 billion metres.

The aim of the ownership system of that period was to strengthen the state-owned economic system and weaken the collectively owned system. Private ownership had almost been abolished. In rural areas, the rural commune economy was established. In the commercial sector, the sales of state-owned enterprises reached over 90 per cent during this period. The commodity circulation system suffered considerably.

Fig. 3. Complete life cycle and component stages of S&T system: research methodology 3

The ambit of mandatory planning in the coordination system was increased after 1956, while in the period of the "Great Leap Forward" (1958-1960), planning control was decentralized to the provincial level. Owing to the lack of effective macro-control, the economic system did not function efficiently. Central planning was once again emphasized in the adjustment period of 1963-1965, but, because the planning system was again disrupted in the period of the Cultural Revolution, there were no improvements or modifications in the conception or practice of planning at that time. In particular, the information flow was weakened.

The new pattern of socio-economic development after 1978

Since 1977 there has been intense discussion in China about the pattern of economic development. Reform was initiated first in the rural areas by the introduction of the "production responsibility system."

The system of contracted responsibility for production, with remuneration linked to output, greatly strengthened the performance of the agricultural sector. Furthermore, a variety of rural activities was encouraged, especially the development of rural enterprises. In 1985, the gross value of the industrial output of rural enterprises ran at around 30 per cent of the gross industrial output of the whole nation.

China pressed ahead with its rural reforms, and the rural economy moved towards specialization, large-scale commodity production, and modernization. As a result of the success of this reform, and of a series of experimental reforms in selected areas of the urban economy, a document on the "Decision on Reform of the Economic Structure" was adopted by the Twelfth Central Committee of the Communist Party of China at its Third Plenary Session. Emphasis was placed on the fact that "invigorating enterprises is the key to restructuring the national economy."

Stress was also placed on removing obstacles in the way of the development of the collective economy and the individual economy in cities and rural towns and the creation of conditions for their development, which gave them the protection of the law. The scope of mandatory planning was reduced and guidance planning was extended step by step. Certain farm and sideline products, small articles for daily use, and labour services in the service and repair trades were subjected to market regulation. This new pattern of socio-economic growth was rapid. For example, in 1985, grain production was 370 million tons and coal production 620 million tons.

China's development strategies and policies from the 1960s to the 1980s were directed toward two main objectives:


Before the 1980s, the importance of developing a heavy industrial base was particularly emphasized. Before 1977, this development effort resulted in the creation of almost the entire range of modern industries. China was now nearly self-sufficient in those industries making capital equipment. This objective was achieved through high investment expenditure and a massive infusion of centrally mobilized resources. Consequently, consumption grew more slowly than income. But, after the economic reforms of 1977, government policies on consumption aimed not only at ensuring a more rapid improvement in living standards, but also at narrowing the differential between heavy and light industry.

Poverty reduction

The second major development objective was the elimination of the worst aspects of poverty. Owing to the past pattern of development, there was a general absence of individual incomes from property. The income share of the richer group was small; and as a fundamental policy objective the low-income groups had their basic needs satisfied. Formerly the food supply was also guaranteed through a mixture of state rationing and collective self-insurance. The great majority also had access to basic health care, education, and family-planning services. Consequently, life expectancy was raised from 37.7 in 19601965 to 64.2 in 1975-1982. The life expectancy at birth of males and females in 1984 was respectively 68 and 70.

The main economic policies in the 1980s and the relationship between the main social and economic policies and the S&T policies are listed qualitatively in table 1.

Figure 4 shows the pattern of growth of the Chinese economy by sector from the 1950s to the 1980s, as well as the trends after 1978.

The growth rates for the main agricultural and industrial outputs are also shown in table 1. The figure clearly demonstrates the socioeconomic development pattern and its impact on the agricultural and industrial sectors.

The growth rate in the agricultural sector from the 1960s to 1977 was relatively slow, owing to the lack of scope for the expansion of cultivated land and also to excessive governmental intervention in the application of the misguided "grain first" policy. From the figures for the rate of growth of grain, cotton, etc., in table 1, the effects of the socioeconomic development pattern and policy are self-explanatory. The rate of multiple cropping had been increased to an average of 1.5, and traditional labour-intensive cultivation techniques had been refined by extensive improvements in modern irrigation (table 2).

Since the Second Five-Year Plan emphasized the government's policy of promoting the growth of industry, the amount of inputs - capital, labour, and materials - was greatly increased with respect to the output. The growth rate of the industrial sector was consequently high between the 1960s and 1977.

The status and role of S&T at various stages of development is demonstrated by the following three factors:

Table 1. Output of selected agricultural and industrial sectors showing the effect of socio-economic development pattern and policies

  1960 1964 Growth rate (%) 1965 1977 Growth rate (%) 1978 1985 Growth rate (%)
Agricultural sector
Grain (104 tons) 14,350 18,750 6.91 19,453 28,273 3.16 30,477 37,911 3.17
Cotton (104 tons) 106.3 166.3 11.84 209.8 204.9 -0.20 216.7 414.7 9.72
Oil-bearing crops 194.1 336.8 14.77 362.5 401.7 0.86 521.8 1,578.4 17.13
Industrial sector
Cotton cloth (108m) 54.5 47.1 -3.58 62.8 101.5 4.08 110.3 146.7 4.16
Crude steel (104 tons) 1,866 964 -15.22 1,223 2,374 5.68 3,178 4,679 5.6X
Chemical fertilizers (104 tons) 40.5 100.8 25.60 172.6 723.8 12.69 869.3 1,322.2 6.17
Crude oil (104 tons) 520 848 13.01 1,131 9,364 19.26 10,405 12,409 2.64
Coal (108 tons) 3.97 2.15 -14.21 2.32 5.50 7.46 6.18 8.72 5.04
Electricity generation (108 kWh) 594 560 -1.46 676 2,234 10.47 2,566 4,107 6.95
Bicycles (104) 176.5 170.5 -0.86 183.8 742.7 12.34 854.0 3,227.7 20.92
Television sets (104) 0.79 0.21 - 28.20 0.44 28.46 41.55 51.73 1,667.66 64.24

Fig. 4a. Indexes of total product of society and national income

Fig. 4b. Indexes of gross output value of agriculture and industry

Table 2. Degree of mechanization, electrification, farmland under irrigation, and amount of chemical fertilizer used in Chinese agricultural sector

Item 1952 1957 1965 1977 1980
Mechanically tilled land area          
In (104 ha) 13.6 263.6 1,557.9 3,841.0 4,099.0
% of total arable land (%) 0.1 2.4 15.0 38.7 41.3
Irrigated area (104 ha) 1,945.9 2,733.9 3,305.5 4.499.9 4,488.8
% of arable land 18.5 24.4 31.9 45.3 45
with mechanical and electrical irrigation 31.7 120.2 809.3 2,434.9 2,523.1
Electricity consumption in rural area (108 kWh) 0.5 1.4 37.1 221.9 320.8
Chemical fertilizers utilized 7.8 37.3 194.2 648.0 1,269.4

1. The growth of S&T personnel and the education system (tables 3 and 4).

2. Major S&T events from the 1960s to the 1980s:

- October 1964: The first successful test of an atomic bomb.

- September 1965: Synthesis of insulin.

- October 1966: Successful guided atomic missile test.

- 1966-1967: Comprehensive survey team comprising 30 different disciplines carries out systematic survey in regions above 7,000 metres on Mount Qomalangma.

- June 1967: Test of H-bomb.

- April 1970: First Chinese earth satellite (173 kg in weight) launched.

- September to December 1979: Optical fibre communication system established and tested for operation in Shanghai, Beijing, and Wuhan.

- October 1979: Liver cancer diagnosis at an early stage through radio-rocket electrophoresis with autoradiography.

3. Programme effort. This was one of the Chinese S&T successes directed by the central government, in which resources were concentrated on large specific projects. However, for a large variety of products this had to be supplemented by the technology market.

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