TNAG-1711-FCO40-2389-Future-British-Consulate-General-in-Hong-Kong-HMS-Tamar-1987 — Page 98

THE ECONOMY

General

"The accumulation of paces adds up to a thousand miles. The accumulation of streams

forms great rivers,” (Proverb)

Key factors in the Chinese economy are: the need to provide food, consumer goods and employment for the vast and still growing population; the comparatively small amount of arable land (only about 15% of the total); the undeveloped state of communications and energy supplies; the shortage of technical and managerial skills; and the presence of extensive mineral resources, many of which are still undeveloped. Most urban enterprises (and all of any size) are owned by the State, while most land in rural areas is collectively owned. However, current policy is to encourage the growth of collectively- and individually- operated enterprises in towns. These are mostly small-scale service concerns, carrying out catering and repair work etc. Similarly in rural areas, most farming operations are now carried out by households or other small units. Collectively- or individually-run service or light industrial enterprises are also being encouraged. China's private economy is said to have almost doubled in size during 1985; private retail sales are now 13% of total sales. More than 17 million work in the private economy (an increase of over 30% from 1984) in individually-owned non-agricultural enterprises ranging from individual fruit carts to laundries. Private transport and construction firms have shown the most rapid employment growth. The new policies are aimed at raising efficiency and production, improving the much-neglected service sector and alleviating the problems of urban unemployment, which is considerable, especially amongst school-leavers, and rural under-employment. Three quarters of the work force, or some 300 million people, are engaged in agriculture, around 75 million work in State enterprises and some 20 million in collective businesses. China has some 21 million officials ("cadres" in Chinese terminology).

Chinese leaders have declared the aim of turning China into a "powerful socialist country" through the "four modernisations" - of agriculture, industry, defence, and science and technology. Targets introduced in 1978 were abandoned as over-ambitious, and a programme of "readjustment" has been pursued involving greater emphasis on light industry. at the expense of heavy industry, severe cuts in capital investment and the closure of uneconomic plants in order to bring China's budget back into balance. As a result of this policy, the economy has achieved greater sectoral balance. In 1978 the contributions of heavy industry, light industry and agriculture to total national output value were 41%, 31% and 28% respectively. In 1984 each contributed about a third, but the investment and construction boom in 1985 made relatively greater demands on heavy industry; the figures for 1985 were 35%, 31% and 34%. In his report to the 12th Party Congress in September 1982, Hu Yaobang put forward the target of quadrupling the value of gross industrial and agricultural production by the year 2000, thereby placing China in the "front ranks of the countries of the world" in terms of gross national income and the output of major industrial and agricultural products. Economic progress since 1982 has been on course to achieve this target. Even if it is achieved, per capita income would, as the Chinese acknowledge, remain low compared with that of major industrial countries.

Within the framework of policies determined by the Party leadership economic activity is directed by various Commissions and Ministries. A State Commission for Restructuring the Economic System was set up in 1982, headed by Premier Zhao Ziyang. The State Planning Commission is responsible for drawing up long, medium and short-term plans on the basis of directives by the leadership. The State Economic Commission is responsible for supervising implementation of plans and coordinating the activities of the various ministries. Other economic departments include the Ministry of Finance and ministries responsible for various industrial sectors.

Since the late 1970s, reforms have been introduced which have altered the traditional methods of managing the economy. These reforms, endorsed in 1984 by a major Party

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