capitalist world
Eve 8° . ...and the crisis From the economic standpoint, the Chinese "continent" is largely an enigma. As we know, the Chinese practically ceased issuing detailed statistics on the economy and the population fifteen years ago, after the disappointments of the "great leap forward. " The only known statistics relate to foreign trade. All the rest is largely speculation, at best likely estimation, at worse outright guesswork into which ideological biases introduce many distortions. Thus, the real effects of the "great leap forward" (1958-60) are still not known. The estimation of the scope of the regression (and it is certain that there was one) has been the subject of controversial discussions and many exaggerations. And this is a question of events that occurred fifteen years ago; imagine the problem of finding out what is going on now! A cloud of secrecy surrounds the performances and difficulties (especially the difficulties) of the People's Republic. The problem is not only the uncertainties of the Chinese statisticians (which is a real problem in this country-continent), but also if not especially the bureaucratic propensity for dissimulation, which has been at the root of so many exaggerations in the past. (The pie-in-thesky agricultural objectives announced for 1960 have yet to be attained to this day - far from it.) One must thus proceed in a different manner, by examining two factors: the tendencies of the Chinese economy in relation to the surrounding capitalist world and what China can "represent" for this same capitalist world. 44 by R. LEW I. BRIEF BALANCE-SHEET OF THE CHINESE ECONOMY In the West, the Chinese population is the subject of investigations worthy of a Sherlock Holmes, but a Holmes in his worst days, a policeman and prosecutor rather than a detective. How many Chinese are there? In fact, nobody really knows. Reasonably, at least 800 million, and probably not more than 900 million. (Some rather malevolent Anglo-Saxon authors speak of more than a thousand million, which is an abusive figure.) That is, there is an indeterminate range of about 100 million, more than twice the population of France! Probably even the Chinese leaders do not know the real size of their population. For example, Li Hsiennien, vice prime minister, stated in 1971: "There are no precise statistics on this matter. Officidis of the department of supply speak of 800 million. Other functionaries say only 750 million, while the Ministry of the Interior claims the figure of 830 million. On the other hand, the planning department insists on a figure inferior to 750 million. "(1) This gives a range of uncertainty of 80 million, which indicates that the utmost caution is required in handling figEssentially: There is an immense population (with an even more important growth rate, on the order of 2% a year) that must be fed, housed, and provided with consumer goods; the immensity of the population is undoubtedly a major handicap in rap-
idly increasing the standard of living and in carrying out profound social transformations; on the other hand, it furnishes an enormous potential of labor. Industry We have two sets of official figures: the balancesheet on the first five-year plan (1953-57) and on the past decade (1964-74). The "great leap forward" and its aftermath remain unknown. The year 1952 is the reference point. That was when the economy attained and even surpassed the productive capacity of the best years before 1949. (It may be said in passing that 1952 in China corresponds to 1927 in the Soviet Union. About two years after the establishment of the new regime, the previous economic situation was reestablished in China; this took ten years in the Soviet Union. The rapidity with which this was done had an enormous effect on the masses' appreciation of the new regime. Similarly, the fact that since the 1950s the agricultural situation has improved slightly but genuinely has had a like effect.) The official figures for the first five-year plan (worked out on the Soviet model) give an average industrial growth rate of 19% a year, for a 140% increase over five years (Anglo-Saxon sources speak of an annual growth rate of 14-19%). It was thus an extremely large growth, but the point of departure was low. Recent official figures, presented by Chou En-lai to the National People's Assembly in January 1975 (the first official statistics released in fifteen years), claim a growth of 190% for the ten-year period of 1964-74, which corresponds to a growth rate of more or less 10% a year. These are very high figures if it is recalled that the Cultural Revolution occurred during this period, and according to experts, it caused rather significant regressions. These figures are too recent to have been contested in the West. And this time they will be contested with moderation, for the estimates of American "experts" have come close to official - or officious - Chinese figures ever since Nixon's visit to Peking. Another of the ideological miracles of peaceful coexistence. We may see others (in the opposite direction) if relations deteriorate. There remains the "great leap forward": two years of spectacular growth (around 30% in 1958 and 1959), followed by a fall, a result of agricultural disappointments, the withdrawal of Soviet experts (in 1960), and the excesses and lack of preparation of the "great leap forward, " although it is not possible to fix the relative weight of each of these elements.
On the whole, long-term industrial growth is at least 8% a year (the figure given by the American economist Field for 1952-1971, a figure that seems to underestimate real growth), if not 12-13%, as official figures say. This is an average that conceals deep differentiations: "boom years" of growth on the order of 30% and other years of actual regression. Overall, China's industrial capacity today must be ten to fifteen times greater than it was during the best years of the old regime before 1949 (a heritage that was certainly modest, but not insignificant). People's China is creating a vast range of industry, although its point of departure was limited to a few sectors (textiles and coal, for instance). Table 1 offers some statistics. Agriculture Agricultural results, while favorable (even very favorable in comparison with the pre-1949 period), have been modest in a twofold sense. First, requirements of feeding the people and the still limited possibilities of industrial employment tend to keep the immense majority of the population in the countryside (more than 80%, a proportion that is about the same as the pre-1949 period). Second, the growth rate in agriculture does not exceed the growth rate in population by very much. There is one very clear index of the modesty of the results: In rating grain production (which accounts for 80% of agricultural production), the Chinese take 1949 as the reference-point. On this basis they point to a growth of 149% in grain production between 1949 and 1974, while there was a 60% increase in population during the same period. Unfortunately, the choice of the year 1949 is not very meaningful: That was the last year of the civil war, a catastrophic year for agriculture. If the average of the pre-1949 years or the year 1952 (a good year agriculturally) is taken as a reference, the situation becomes different:
(Official figures) 1952 +150 million tons of grain 1974 ·260 million tons of grain 1949 108 million tons of grain Compared with 1952 there has been no more than 70% growth in agricultural production (Anglo-Saxon "experts" give lower percentages), while the population increase has been on the order of 50-60%. That is not negligible, but it remains close to the traditional minimum, that is, about 280-300 kilograms a year per capita, as compared with 1,000 kilograms in the United States (of which a notable
45
CHINA
TABLE 1
Production in some sectors
(estimates or official figures)
1952
Coal (millions of tons)
66
1.35
")
Steel
(")
0.4
Crude oil
( ")
2.86
Cement
Chemical fer-
0.2 tilizer
")
Machine fools (millions of units)
13.7
Trucks (")
" )
• Tractors
Bicycles
Rodiol
-
(" )
Watches
Cotton cloth (billions of meters)
3.83
Electricity (billions of kwh)
7.2 part, however, is used to feed animals, that is, it goes for the production of meaf). The 300 kilogram per capita figure for China may be compared with the figure for capitalist India, which barely exceeds
200 kilograms.
Incontestably, agricultural production remains a weak point in the Chinese economy, a burden and challenge that is very difficult to rise to. This explains the priority that has been accorded to this sector for nearly fifteen years, in contrast to the
Stalin period in the Soviet Union, which indicates a laudable wise and understanding concern for the constraints that flow from the backwardness of the country and the large size of the population that has to be fed.
Foreign trade
There are two important facts: First, foreign trade has taken on great importance in economic activity during the past few years, which explains its rapid growth; and second, there has been a shift in the orientation of this trade during the past fifteen years, from the "socialist camp" toward the capitalist world.
It is this feature that makes China susceptible to the effects of the crisis, at least to a certain extent.
During the 1950s and 1960s, when foreign trade was on the order of $3, 000-4, 000 million and exports were covering or surpassing imports, China was a relatively small-scale trading nation. This has changed during the 1970s. Foreign trade has developed in the following way:
46
1957 1965 1970-73 130 220 +400 (in 1973) 5.35 11 25-27 (1973) 1.5 8 50 (1973); +65 (1974);
+80 (1975) 6.86 11 T5 (1972) 0.8 5.7 24.8 (1973) 28.3 48 86 (1971) 7.5 28.4 75 (1971); 110 (1973) - 21 35 (1971) 0.8 1.5 3.65 (1971) 0.295 1.5 10(1971)
1 3.5-4 (1972) 5.05 5.40 8.50 (1970) 19.3 42 75-80 (1972); 101(1973)
1970 S4, 290 million 1971 $4,720 million 1972 55,920 million 1973 $9,870 million It is estimated that this trade may have reached $13,000-14,000 million in 1974. It has thus tripled in five years. But even with the figure of $14,000 million, China remains only a moderate-level trading nation (in 1974 Belgium's exports alone exceeded S30, 000 million; Germany's exports approached $100,000 million). With $4, 895 million in exports in 1973, China was a small exporter. This is especially true in that the growth during the past several years is due just as much to price increases as it is to increases in the volume of transactions. In 1960 two-thirds of Chinese trade was still with the "socialist countries" and one-third with the capitalist world; after 1964 (as a result of the Sino-Soviet conflict), the proportion turned around, In 1973 China's trade with the "socialist camp" was only 51,700 million; with the capitalist world it was 58,170 million. (In its trade with the "socialist countries" China has had a trade surplus since 1956; in its trade with the capitalist world it had a deficit of $370 million in 1973.) (See Table 2.) These few figures are connected to the realities and economic options of the bureaucratized Chinese workers state. The third-place position of grain in imports and the importance of the purchases of chemical fertilizers ($180 million in 1972) attest to the priority of the agricultural sector. During the period 1969-74 annual wheat purchases ranged from 3-6.5
TABLE 2* Major Aspects of Chinese Foreign Trade in 1972 Imports Grain $335 million . Iron and Steel $485 million Machinery and equipment $335 million Chemical products $330 million million tons (the latter figure in 1974, 4 million tons of which came from the United States). There was even talk of a total of 7.6 million tons of cereal purchases in 1973. Although these purchases represent only about 3% of local production, they reveal the persistence of certain agricultural difficulties and of the problems of supplying the cities. Imports of machinery and equipment have become more important. While in 1959 they represented 47.5% of total imports, in 1962, at S120 million, they represented only 10.5% of the total. But in 1971, at $495 million, they rose again to 22.5% of total imports, and the figure has increased strongly since them. Above all, since December 1972 China has begun making significant purchases of entire factories, which corresponds to a double objective: to acquire advanced technology and to realize the objectives of the plan. For a long time China has tried to combine advanced technology, middle-level technology, and even artisanal or semi-industrial techniques, a policy that takes account of the backwardness of the country and at the same time provides the means of modernization. Furthermore, in order to attain the objectives of the plan, especially the agricultural objectives, it was necessary to expand the production of chemical fertilizers. Since the rapid domestic growth was insufficient, in 1972-73 China placed orders abroad for ten large chemical fertilizer factories. This aspect of China's trade policy is important. The fact that China buys these factories at high (world market) prices demonstrates the urgency of People's China attaining the targeted result, that is, a real "unblocking" of agriculture. And since China, pressed by the imperatives of its development, is turning toward the international capitalist market, it has begun to feel certain effects. From the end of 1972 through 1974 Ching ordered $2,800 million worth of factories and technological
Exports
Food products $920 million
Crude and combustible raw materials $620 million
Textiles S450 million Clothing $250 million equipment, which represents, among other things, thirty-five fully-equipped factories. The major orders went to Japan ($800 million of the $2, 200 million spent during 1973-74), France ($560 million), and West Germany ($295 million). Britain obtained large orders for Trident aircraft. Japan also remains the top overall trade supplier of the People's Republic of China, selling $2, 000 million worth in 1973 and $3, 000 million in 1974. Trade with the United States, which had increased strongly in 1973, increased again by 300% during the first six months of 1974. In 1973 U.S. sales to China totaled S690 million; U.S. purchases from Ching were $64 million. (Wheat accounted for a good part of China's purchases.) In 1974 American sales reached $1, 000 million, while U.S. purchases did not exceed $100 million; but American exports to China seem to be declining by half in 1975. China has signed fifteen contracts to buy factories from Japon, thirteen of them petrochemical units. For its part, China has begun to sell its oil (production of which is increasing spectacularly: 50 million tons in 1973, while 100 million tons are planned for 1976), modestly at first (1.2 million tons in 1973, 4 million in 1974, 8-10 million in 1975), but on a larger scale in the future. These sales are essentially to Japan. Oil represented only 3.3% of Chinese exports to Japan in 1973; in 1974 the figure was 25%, and it will undoubtedly be higher still in 1975. In spite of that, China had a $300 million deficit in trade with Japan in 1974; the deficit in trade with the United States in the same year was $1, 000 million. The overall deficit in the trade balance, which exceeded S1,000 million in 1974, can no longer be compensated for by the reentry of currency obtained by transfers effected by overseas Chinese. The Chinese government has therefore begun to prudently resort to deferred payments, that is, to capitalist credit. Since they are counting on gaining a significant income from oil, the Chinese are allowing themselves to utilize credit (in the form of short-term credit -usually five years). And it must be said that the traditional rejection of credit in the laudable desire
47
CHINA to maintain independence had gone too far: The state monopoly of foreign trade, still very strictly applied, and the rejection of any foreign investment in China, even on a mixed basis, provide sufficient protection. The capitalists' regret at the "rigidity" of the Chinese economic system attests to the effectiveness of this protection. But the expansion of Chinese foreign trade is not an end in itself. It is linked to precise objectives, as we mentioned earlier. This year, after five years of growth of foreign trade (spectacular especially after 1973), the Chinese nearly completely halted their orders of equipment and factories. It is probable that they had already received enough to cover the objectives of the current plan (1971-75). Moreover, several years are needed to assimilate a technology (to understand it, and especially, to reproduce it so as not to be dependent on outside aid in making it function and in acquiring replacement parts). As for Chinese imports of American wheat, they also appear to be diminishing rapidly. At the end of January 1975 it was learned that the People's Republic of China was rejecting without explanation delivery of an order of about 600,000 tons of American wheat; this followed earlier rejection of several smaller de liveries in 1974 on the grounds that there had been too much spoilage. (For various hypotheses concerning this important reduction of grain imports see the article by Oskar Weggel in the February 1975 issue of the review China Aktuell, reproduced in Problêmes Economiques, April 30, 1975.) The more long-term tendencies will be able to be sketched out when the fifth plan (1976-80) comes out. One thing is certain: China has set itself ambitious economic objectives. While there is no return to the period of the first plan or the "great leap forward" during which precise targets were indicated (to catch up to Britain, then the third-largest industrial power, within fifteen years), the intention is to attain the level of the greatest economic powers within thirty years. This implies large growth, higher than during the preceding decade. How is this option to be combined with the primacy of politics, with the many "cultural revolutions" that are planned? That has not been indicated. But it is obvious that this question is of great importance for the future of the regime, its form of social rule, and its relations with the world. II. THE CAPITALIST WORLD
AND CHINA Nothing is very clear about China's perception of the capitalist crisis. One fact seems probable: The Chinese leaders do not understand the particular 48 aspects of the crisis. More exactly, in the present period, characterized by the primacy of seeking state alliances and counteralliances, the USSR is considered the main enemy (since this country is seen as a dynamic, ascending imperialism right on China's borders, whereas American imperialism, while certainly strong, is aging and perhaps in decline). The economic crisis of the capitalist West thus becomes a secondary, or rather, unwelcome phenomenon, for it weakens capitalist Europe in face of the USSR. And we know that the leaders of the Chinese bureaucracy attach great importance to a strong and united capitalist Europe. This makes them the most energetic defenders of European unity and of the Common Market - in fact, they are the only ones who undertake this defense so vigorously. What comes from Peking is the call for the political and economic unity and the military strengthening Nevertheless, the crisis is present in the reports of the official Chinese press. But in spite of their constant predictions of economic catastrophies, the Chinese (and Russian) leaders have ceased to believe them (to count on or fear this crisis). Alongside the schematic traditional official view there is an unofficial perception of a Western world that might be fragile but is scarcely threatened by economic collapse or by social subversion, except subversion carried out by the "Portuguese-type" CPs - and therefore by "social imperialism" - which is disapproved of by the Chinese and feared by both the Chinese and the Americans. There is really no end to the paradoxes of history! This astonishing distorfion, this short-term view, aids Western capitalism during a difficult period, which was not expected from "revolutionary" China. And this is not to mention Chinese electoral support for the worst reactionaries of the type of Franz Josef Strauss, who was received with all the honors of a chief of state and was considered worthy of having a confidential talk with the "great helmsman. " The Chinese market and the capitalist crisis What can China represent for the capitalist world in crisis? From the commercial standpoint, very little at bottom, at least in the short term and thus during this crisis. Six or seven thousand million dollars in exports to China (80% of it from the capitalist countries) is very little, and that figure is already the result of considerable growth. The Chinese market's capacity for absorption is limited and regimented (in accordance with the plan and certain agricultural requirements). But it is true that no market will be neglected, especially by some firms that have realized important
sales, such as the American company Kellog, which in 1973 signed two contracts for $205 million, or the French Technip and Speichem group, which in September 1973 concluded a contract of 5300 million for a petrochemical complex. But only a few firms have benefited from these contracts (which totaled 51,246 million in 1973 and $747 million during the first eight months of 1974). This is derisory in comparison with the difficulties capitalism is now facing. China derives greater benefit from the technology that it acquires than the West does from its sales. This is especially true in that the Chinese will make enormous efforts to master, reproduce, and even improve the technology, if only to be as little dependent as possible for future supplies. At least that is the choice that has been made. Thus, trade with China threatens to remain what it was during the nineteenth century: a promised land that turns out to be disappointing in reality. For China, purchasing technology and grain and selling oil is a provisional, makeshift policy, or so it is hoped. What China aims at is economic independence, not to say autarky. China & shifts in world market prices Nevertheless, in its own way the West is making China feel its crisis, and more generally the breadth of the crisis. Let us not forget that the increase in the value of China's foreign trade derives in part from inflation. In other words, because of inflation, China must devote a greater part of its income (which is growing, to be sure to buy the same quantity of products. This has been very striking in the case of grain purchases: In 1966 China bought 5.6 million tons of grain for $400 million; in 1972 the 4.8 million tons cost only $345 million; but in 1973 it cost $840 million for 7.7 million tons. These sums were
SALE spent because of difficulties or inadequacies in Chinese agriculture and not at all out of a desire to make deals; they were lost expenses for the Chinese есопоту -The rise in oil prices works in the opposite direction. One author(2) has tried to estimate the probable currency income from Chinese oil exports. Between 1975 and 1982, according to this Japanese author, China could sell 137 million tons of oil, which would bring it $27, 200 million. The two figures are largely arbitrary, since they depend on future sales possibilities and prices, both of which are uncertain. But they indicate the possibility of significant income, which would help in financing the coming five-year plans that call precisely for more rapid growth rates. The crisis exerts another effect: International competition is driving down the prices of Chinese export products. But China had raised its prices in 1973, bringing them into line with world market rates. At the time it seemed that the Chinese thought they could find buyers by relying on constantly rising world trade and on the existing political situation (everyone was racing to recognize China and to see who would be first to be invited to Peking and receive the confidences of the "president"). They counted above all on the good will - especially the political good will - of the Japanese. Nevertheless, the Japanese were the first to back off most clearly. Japan, hard hit by the crisis, compelled the Chinese to reduce the price of their oil, which is more expensive than that of their Indonesian competitors (because it is posted in Chinese yuan and not in declining dollars). Taking account of the shorter transport, the Japanese made a good deal. The Chinese were forced to give in; the negotiations, it seems, were laborious, the Japanese threatening to halt oil imports. We are a long way, as can be seen, from the end of 1973 and the Arab oil embargo! And this implies a relationship of for-
49
CHINA ces that is far from favorable to China, in spite of the crisis. Even more: China is asking not only for technology, but also for indispensable grain, and for good relations too, but business is business after all. As for textile products, which still account for some 20-25% of Chinese exports, their sales prices at the Shanghai fair at the end of March 1975 were 40% less than they had been a year earlier. On the other hand, the People's Republic of China was able to maintain nearly doubled prices for its supplies of food and services to Hong Kong, which amounted to a total of 6, 000 million Hong Kong dollars in 1974. Evolution of the relationship of forces On the other hand, the evolution of capitalism is bringing to light a fact that has hitherto been neglected and that points exactly in the opposite direction of the remark made above. If the economic development of China is compared with that of the USSR during the 1930s or that of the capitalist world in the 1930s and of today, one fact stands out: Not only did the USSR progress rapidly in absolute development (industrially); in addition, its progress was especially striking because production in the surrounding capitalist world in crisis (the "great crisis") was at least stagnating if not declining. Chinese economic development, on the other hand, took place in face of a capitalist world in full expansion. If, for example, one compares China to its capitalist Japanese neighbor, it is probable that the economic growth of the latter during the 1950s and 1960s was greater than China's. The consequence was that the economic relationship of forces remained largely unfavorable to China, as did the relationship of industrial and military technology, especially with respect to the United States. While Ching progressed rapidly, it continued to remain very far behind the developed capitalist world (and also far behind its ex-ally and current enemy, the Soviet Union). Today, during the long phase of slower growth of capitalism, when China is continuing to emphasize rapid development (even more rapid than during the past ten years, it seems), this situation of persistent lag may be turned around, and China could begin to close the gap. The effort to master advanced technology points in this direction. This means that the relationship of Forces - that is, the pressure of the capitalist world market, the military and diplomatic constraints, and, above all, the insidious constraints of "world norms" in the realm of what is considered the average level of agricultural production and of goods and services 50 in a developed country — could become less unfavorable. The intolerable (long-term) tensions in a country like China in which the large majority of the population remains agricultural and lives in difficult conditions and in which several hundred million farmers produce scarcely any more than a few million of their American counterparts, musf not be underestimated. That is a very limited basis for building socialism. And however the Chinese leaders may make use of their present situation, they are very conscious of the insufficient, necessarily transitory character of the present state of their economy. From this standpoint, which is different from the standpoint of China's short-term interest as an exporter, the slowdown of the growth of capitalism is a good thing for China. Obviously, a European and American socialism that would aid Ching would be far better; but that is another story. For Ching to attain the ambitious and legitimate economic targets it has set itself - or rather, that have been set by the leaders but are probably supported by the masses — it is necessary for the surrounding world not to evolve too quickly (and, if possible, not to progress at all). This whole discussion, a speculative one, takes place before a backdrop that the Chinese leaders in the first place tend to forget. Economic autarky, "socialism in one country" — poor socialism to boot - is more than ever impossible. The experience of both Ching and Russia attest to that. On two levels. Underdeveloped countries cannot rise to a highly developed economic stage without leaning on the productive forces of the developed countries, unless this development entails great constraints and pressure on the masses. But above all, "socialist" autarky is impossible, because the surrounding capitalist world exerts pressure, which then requires that the workers state either seal itself off from the outside world, which means an autarky of permanent poverty, or else open itself to the outside world, and it is then difficult to control what is being imported, machinery or a different social system. China, which is protecting itself effectively, is certainly far from that, although it is paying dearly for what it imports, so far only in dollars. But what about the future? And then, is not degeneration also part of a transition to "socialism in one country, " the specific features of which are those of a bureaucratic regime defending its own privileges? Footnotes: 1. Quoted in "People's Republic of China: An Economic Assessment, " Joint Economic Committee of the U.S. Congress, 1972, p. 37. 2. Tatsu Kambara, "The Petroleum Industry in China, " The China Quarterly, December 1974, p. 719.
The international recession has rapidly exerted its effects on the market for raw materials, whose prices had gone through dizzying increases in 1972, 1973, and early 1974. But in just one year the tendency has been forcefully reversed. The prices of agricultural raw materials such as fiber and rubber hit their peaks in January 1974 and have been going down since then. The prices of mineral products and nonferrous metals began to bend downward in May 1974. In November 1974 the prices of most food products were still higher than they had been at the beginning of the year, but they have been going down since then. Today, the big debate is either over what methods should be adopted to halt the decline in prices or over the proper measures for averting a new explosion of prices in the event of a boom in 1977-78 (a boom that would develop along the lines of the 197273 boom), according to who is doing the debating. After a long decline... Although the explosion of raw