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Changes in Chinese Industry Since 1978

Published online by Cambridge University Press:  17 February 2009

Robert Michael Field
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Extract

The goal of the Chinese Government is to make China an efficient, modern economy by the end of the century. This goal was articulated by Premier Zhou Enlai in 1964 and 1975, and made public by Premier Hua Guofeng in February 1978, but a serious attempt at fundamental change was not begun until the strategic shift in economic policy following the Third Plenum of the 11th Party Central Committee in December 1978. Since then the Chinese have undertaken a bewildering variety of experiments and reforms in industrial enterprises. These experiments started on an extremely small scale, primarily in Sichuan, and then spread rapidly throughout the country. In 1982, however, after five years' effort, one enterprise in four was still operating at a loss.

Type
The Readjustment in the Chinese Economy
Information
The China Quarterly , Volume 100 , December 1984 , pp. 742 - 761
Copyright
Copyright © The China Quarterly 1984

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References

1. “Communiqué of the Third Plenum of the 11th Central Committee of the Communist Party of China,” adopted 22 December 1978, Foreign Broadcast Information Service Daily Report—China (FBIS), 26 December 1978, pp. E4–E13.

2. Enlai, Zhou, “Report on the work of the government,” delivered 21 and 22 12 1964Google Scholar. This part of his report was not included in the published version (see Peking Review, No. 1, 1965)Google Scholar, but is referred to in Enlai, Zhou, “Report on the work of the government,” delivered 13 01 1975, Peking Review, No. 4 (1975), p. 23Google Scholar.

3. Ibid..

4. Guofeng, Hua, “Report on the work of the government,” delivered 26 02 1978, Peking Review, No. 10 (1978), p. 19Google Scholar.

5. Ibid..

6. Field, Robert Michael, McGlynn, Kathleen M. and Abnett, William B., “Political conflict and industrial growth in China: 1965–1977,” in Congress of the United States, Joint Economic Committee, Chinese Economy Post-Mao (Washington, D.C.: U.S. Government Printing Office, 1978), pp. 239–83Google Scholar.

7. TJNJ 1983, p. 19.

8. The data on fixed assets are the accumulated total value using the original purchase price and are therefore in mixed prices. As the ex-factory prices of machinery and equipment declined an average of 36 per cent between 1957 and 1980, fixed assets valued in constant 1980 prices would have grown even more rapidly and the conclusion here and later in this article that assets have not been used efficiently would be strengthened. The data necessary to estimate fixed assets in 1980 prices are not currently available. The price index is derived from 1957 output in 1957 prices, 1981 output in 1980 prices and the 1981 output index (1957 = 100). See JJNJ 1981, VI, p. 14 and JJNJ 1982, VII, p. 14 and VIII, p. 16.

9. Byrd, William, China's Financial System (Boulder, Colorado: Westview Press, 1983), p. 46Google Scholar.

10. Economic Readjustment and Reform, Beijing Review Special Feature Series (Beijing, 1982), p. 98Google Scholar, and Shapiro, Sidney, Experiment in Sichuan (Beijing, 1981), p. 7Google Scholar.

11. The documents are:

a. Some Regulations on Enlarging the Management and Decision-Making Powers of State-Owned Industrial Enterprises,

b. Regulations on the Retention of a Portion of Profits by the State Enterprises,

c. Provisional Regulations on Increasing the Depreciation Rate of Fixed Assets and Improvement of Depreciation Provisions of State-Owned Industrial Enterprises,

d. Provincial Regulations on Imposing Fixed Asset Taxes on State-Owned Industrial Enterprises, and

e. Provincial Regulations on Instituting Complete Reliance on Bank Credit for Working Capital in State-Owned Industrial Enterprises.

12. It is not clear what it means for an enterprise to be included in the state budget. They constitute about half of state-owned industrial enterprises. They are not necessarily centrally-operated enterprises, of which there were only about 2,000 in 1978.

13. British Broadcasting Corporation, Summary of World Broadcasts (SWB), Part III: The Far East, 23 04 1980Google Scholar.

14. The total number of enterprises is from TJNJ 1981, p. 260: the other figures are calculated from the data in Table 2.

15. TJZY 1983. p. 65.

16. The statistics in this section, which were calculated from the data in Table 5, may differ slightly from officially published data. For a description of the price basis of the official data and method of calculating indexes see Field, , “Slow growth of productivity in Chinese industry,” p. 645Google Scholar. For the derivation of the data used here, see the note to Table 5.

17. It should be noted that the data in Table 5 may understate the full extent of the change because they were collected by the “factory reporting method.” The Chinese assign each independent accounting enterprise to a particular sub-branch of industry based on its principal output and in turn classify each sub branch as light or heavy industry. As the enterprise remains in that sub-branch (unless it is reassigned) irrespective of any change in the mix of output, the light industrial commodities that many heavy industrial enterprises have started to produce may not be fully reflected in the data.

18. The components are estimated by the RAS technique to force both rows and columns to add their respective totals. The row totals, which are for state and collective industry, are from Table 6; the column totals, which are for light and heavy industry, are from Table 5.

19. Derived from the data in Tables 1 and 7.

20. Zhejiang ribao (Zhejiang Daily). 2 June 1984.

21. Communiqués of the State Statistical Bureau of the People's Republic of China on Fulfilment of China's National Economic Plan, 1978, 1979, 1980, 1981, and 1982.

22. Liaoning ribao (Liaoning Daily), 7 February 1983, p. 2.

23. FBIS, 19 October 1983, p. K20.

24. Zhongguo jingji ribao (China Economic Daily), No. 4 (1983), p. 27Google Scholar.

25. FBIS, 30 March 1983, p. K10. Smaller enterprises pay according to an eight-level, progressive scale.

26. FBIS, 10 August 1983, p. K4.

27. Ibid. 4 June 1984, p. K3.

28. Ziyang, Zhao “Report on the work of the government,” delivered 15 May 1984, FBIS, 1 06 1984, pp. K1 and K3Google Scholar .

29. Yefang, Sun, “What is the origin of the law of value?”, Social Sciences in China, No. 3 (1980), p. 167Google Scholar.

30. Baosen, Chen and Wuxia, Liang, Shehui zhuyi jiage wenti (Socialist Price Problems), reviewed in Renmin ribao, 2 11 1983Google Scholar.

31. Joint Publications Research Service (Hong Kong) (JPRS), CEA-84-047, 14 June 1984. p. 34.

32. FB1S, 26 October 1983, pp. K12–13.

33. Liaowang (Outlook), No. 21 (1984), p. 1Google Scholar.