1 Such control generated powerful negative economic consequences. Decisions were frequently taken by Party members, who lacked appropriate training and skills. Ideological orthodoxy constrained economic debate - for example, insisting that “planning” provided a framework in which resource allocation could take place without reference to such fundamental economic concepts as price, cost and profit. The centralized system also contained the potential for major errors, the most outstanding examples of which (in the Chinese case) were the Great Leap Forward (1958–59) and Cultural Revolution (1966–76).

2 See Bank, World, World Development Report (WDR), 1983 (New York: Oxford University Press, 1983), pp. 148–9. The corresponding figure for low-income countries (excluding India and China) was 0.88%; for India-in many ways, the most relevant comparator country - it was 1.4% p.a.CrossRefGoogle Scholar

3 An exception is the performance of China's merchandise trade, whose annual growth accelerated from 1.54% (1965–70) to 17.89% (1970–76) (State Statistical Bureau (SSB), Zhongguo tongji nianjian (TJNJ) (Chinese Statistical Yearbook), 1993 (Beijing: Zhongguo tongji chubanshe, 1993), p. 633). Even so, by the end of the 1970s, the export earnings of the “four Asian dragons” - whose combined population was about the same as that of Guangdong province - was more than four times larger than that of the whole of China!

4 Previous peak levels of steel and coal production (1960) were not re-attained until 1971–72. The growth of total grain output between 1965 and 1976 was almost identical to that of the 1FYP, although it too demonstrated a declining trend (TJNJ, 1993, pp. 364 and 446–47).

5 Some 30 million “excess deaths” may have resulted from mainly policy-induced errors during the Great Leap Forward (Banister, J., China's Changing Population (Stanford, CA: StanfordUniversity Press, 1987), p. 85.Google Scholar The average rate of natural increase during the 4FYP (1965–70) was 2.33% p.a. - virtually identical to that of the 1FYP years (2.35%)(TJNJ, 1993, p. 81).

6 That is, the increase in national income per 100 yuan of accumulation.

7 See Chen, Kuanet al., “New estimates of fixed investment and capital stock for Chinese state industry,” The China Quarterly (CQ), No. 114 (June 1988), pp. 243–266.CrossRefGoogle Scholar

8 This process was interrupted between 1962 and 1968 in the wake of a strategy which temporarily afforded a higher investment priority to agriculture. See TJNJ, 1993, p. 60.

9 To what extent the two economies can be described as having been “over-industrialized” is considered at length below.

10 The relative size of the service sector was probably greater than Table 2 suggests. Many services, which might otherwise have been generated by specialist suppliers, were provided directly by agricultural and industrial enterprises.

11 Useful international comparisons can be found in Bank, World, China: Socialist Development (Washington, D.C.: The World Bank, 1981)Google Scholar, Annex A. By the late 1970s, the incomes of over a quarter of China's total population (some 270 million people) fell below a poverty line roughly comparable with that used by the World Bank to analyse poverty in developing countries (Bank, World, China: Strategies for Reducing Poverty in the 1990s (Washington, D.C.: The World Bank, 1992), p. ix.Google Scholar

12 By the early reform period, the infant mortality rate had fallen to 71 per thousand, compared with 124 in LIEs (excluding India and China), and may even have been lower than in MIEs. Life expectancy at birth had risen from 35 (pre-1949) to 71 years (1981)(WDR, 1983, pp. 192–93).

13 In 1978, only 52% of rural households possessed a clock, 27% a wristwatch, 31% a bicycle, 20% a sewing machine and 17% a radio (TJNJ, 1988, p. 835).

14 The critical re-appraisal of Mao's legacy began during the interregnum of his chosen successor, Hua Guofeng, although it was left to Deng Xiaoping to complete the revisionist process.

15 The economic legacy was not devoid of positive features. The centralized system bequeathed a strong organizational framework, as well as a large task-force of people who were capable of mobilizing popular energies, who thought in strategic terms and who viewed themselves as members of a team rather than individuals.

16 E.g. see Ma, Hong and Sun, Shangqing (eds.), Zhongguo jingji jiegou wenti yanjiu (Research on Problems Relating to China's Economic Structure) (Beijing: Renmin chubanshe, 1981), p. 23.Google Scholar

17 A characteristically positive assessment is given in Cao, Bi-Jun and Lin, Mu-Xi (eds.), Xin Zhongguo jingji shi, 1949–1989 (A New Economic History of China, 1949–1989)(Beijing: Jingji ribao chubanshe, 1990), part 4, pp. 170–224.Google Scholar

18 Note too that a rapid rise of state financial revenues during 1977 generated a sizeable budget surplus – the first in four years. For details of all these measures, see ibid. pp. 290 and 298.

19 Significant in this regard was the transformation of a small surplus in China's balance of merchandise trade (US$0.38 billion, 1977) into a record deficit (US$1.14 billion, 1978).

20 Riskin, C., China's Political Economy: The Quest for Development Since 1949 (Oxford: Oxford University Press, 1987), p. 259.Google Scholar

21 E.g. in agriculture there was advocacy of replacing the production team by the brigade as the basic accounting unit, while private plots and household sideline activities were condemned for exhibiting “capitalist tendencies.”

22 Thus, the Third Plenum communiqué: “… the emphasis in the work of the whole Party should… shift towards the task of socialist modernization” (Documentary Research Department of the CCP Central Committee (ed.), Sanzhong quanhui yilai - diongyao wenxian xuanbian (Selected Important Documents Since the Third Plenary Session of the 11th CCP Central Committee) (Beijing: Renmin chubanshe, 1982), Vol. 1, p.1.Google Scholar

23 E.g. see Naughton, Barry, “Deng Xiaoping: the economist,” CQ, No. 135 (1993), pp. 491–92.CrossRefGoogle Scholar

24 The earliest institutional reforms in the countryside seem to have reflected a spontaneous peasant response, which only later received official – and grudging – endorsement.

25 One of the most interesting early comments against the adoption of rapid, comprehensive system reform and in favour of an incremental and experimental approach was made by Liu Guoguang and Wang Ruisun. See their “Restructuring of the economy,” in Yu, Guangyuan (ed.), China's Socialist Modernization (Beijing: Foreign Languages Press, 1984), esp. pp. 119–120.Google Scholar

26 E.g. see Aslund, A., Gorbachev's Struggle for Economic Reform (London: Pinter, 1991)Google Scholar; Goldman, M., What Went Wrong with Perestroika? (New York: Norton, 1992)Google Scholar; Sachs, Jeffrey and Woo, Wing Tye, “Structural factors in the economic reforms of China, Eastern Europe and the former Soviet Union,”Economic Policy, Vol. 9, No. 18 (April 1994)CrossRefGoogle Scholar; and Nolan, Peter, China's Rise, Russia's Fall: Politics, Economics and Planning in the Transition from Stalinism (Basingstoke: Macmillan, 1995).CrossRefGoogle Scholar

27 Eastern Europe and the former Soviet Union.

28 Sachs and Woo, “Structural factors,” pp. 102–104.

29 “It is very rare for agriculture to grow faster than 5% in any country where agriculture is an important part of the economy. Therefore, the less important is agriculture, the easier it is to strike up very high growth rates of GDP. This is what people have in mind when they dismiss Hong Kong and Singapore as irrelevant” (I. Little, “An economic reconnaissance” in Walter Galenson (ed.), Taiwan (Cornell: Cornell University Press, 1979), p. 450).

30 “Over-industrialization” was more evident in the USSR in terms of its employment share (45%). But if labour hoarding and high levels of job security generated over-manning in Soviet industry, such practices were not absent in China. In both countries, appropriate institutional reform promised to raise labour productivity and encourage state enterprise managers to release labour for productive work elsewhere in the economy (not least, in the service sector).

31 PPP estimates for the mid-1970s suggest that the USSR was ahead of all Western countries, except the USA, in its per capita consumption of educational services (G. Schroeder, “Consumption” in Bergson, A. and Levine, D., The Soviet Economy: Towards the Year 2000 (London: Allen and Unwin, 1983), p. 319).Google Scholar

32 This was the outcome of disastrous political and economic policy choices. Based on conditions at the beginning of 1993, an estimate of credit risk by the Economist Intelligence Unit showed Russia to be the second most risky country in the world, next to Iraq. Despite some downgrading because of its overheated economy, China ranked high - between Malaysia and Thailand (The Economist, 21 August 1993, p. 88).

33 Most scientific research personnel had no direct contact with economic activities, technical progress being regarded as a public good. In the absence of competition and profit seeking, enterprise managers also had little incentive to pursue technical progress. Pervasive shortages were reflected in the existence of a seller's marker so that in the production of both capital and consumption goods there was little encouragement to use scientific skills to improve product quality.

34 In the mid-1970s, the value of the USSR's equipment imports was equivalent to a mere 2% of total domestic equipment investment (Hanson, P., “The import of Western technology” in A., Brown and M., Kaser (eds.), The Soviet Union Since the Fall of Khrushchev (London: Macmillan, 1978), p. 31).Google Scholar In China's machine-building industry, “the stock of Soviet equipment was rapidly becoming obsolete and domestically produced equipment was primitive” (Craig, Jack, Lewek, Jim and Cole, Gordon, “A survey of China's machine-building industry” in U.S. Congress, Joint Economic Committee, Chinese Economy Post-Mao (Washington, D.C.: U.S. Government Printing Office, 1978), p. 311).Google Scholar

35 “A country's potential for rapid growth is strong not when it is backward without qualification, but rather when it is technologically backward but socially advanced” (Abramowitz, M., “Catching up, forging ahead, falling behind,” Journal of Economic History, Vol. 46, No. 2 (1986), p. 38Google Scholar; see also Gomulka, S., The Theory of Technological Change and Economic Growth (London: Routledge, 1991)).Google Scholar

36 Yeh, K. C., “Macroeconomic changes in the Chinese economy during the readjustment,” CQ, No. 100 (1984), p. 693.Google Scholar Remember too that primary and secondary education had been hugely disrupted by the Cultural Revolution, when schools were closed for long periods.

37 “The Cultural Revolution is estimated to have cost China 2 million middle level technicians and one million university graduates…” (World Bank, China: Socialist Development, p. 106).

38 In addition, the low effectiveness of Soviet scientific research was reflected in the high ratio of ancillary personnel per scientist and engineer (5.0 in 1970, compared with 1.3 in the USA) (U.S. Congress, Joint Economic Committee, Soviet Economy in a Time of Change (Washington, D.C.: U.S. Government Printing Office, 1979), p. 745).Google Scholar

39 See Martin Whyte's article in this issue.

40 See Bèrgere, Marie-Claire, The Golden Age of the Chinese Bourgeoisie (Cambridge: Cambridge University Press, 1989).Google Scholar On the dynamism of the modern sector in pre-war China, see also Rawski, Thomas G., Economic Growth in Prewar China (Berkeley: University of California Press, 1989).Google Scholar

41 E.g. see Maurice Dobb, who argued that by 1914 capitalism had “… as yet touched little more than the hem of Russia's economic system”(Studies in the Development of Capitalism (London: Routledge and Kegan Paul, 1966), pp. 35–36).

42 See Blackwell, W., “The Russian entrepreneur in the Tsarist period,” in Guroff, G. and Kasteson, F. V. (eds.), Entrepreneurship in Imperial Russia and the Soviet Union (Princeton, N.J.: Princeton University Press, 1983)Google Scholar; also Gatrell, P., The Tsarist Economy, 1850–1917 (London: Batsford, 1986).Google Scholar

43 Nor is it self-evident that almost 60 years of “anti-capitalist” Stalinist planning in the USSR had had a greater inhibiting effect than 30 years of similar experience in China. A large “second economy” developed in both countries and private-sector activity characterized their agricultural sectors.

44 Relevant data can be found in Liu Nanchuan, Yichu, Chen and Chu, Zhang, Sulian guomin jingji fazhan qishi nian (70 Years of Soviet Economic Development) (Beijing: Jijie chubanshe, 1988), pp. 120 and 145Google Scholar; and SSB, Zhongguo gongye jingji tongji nianjian (Statistical Yearbook of China's Industrial Economy), 1988 (Beijing: Zhongguo tongji chubanshe, 1988), pp. 7 and 293.

45 In 1978 some 80% of the 6,057 engineering factories produced their own iron castings (Hong, Ma, Xiandai Zhongguo jingji shidan (The Contemporary Chinese Economy: A Compendium) (Beijing: Zhongguo shehui kexue chubanshe, 1982), p. 231).Google Scholar In the USSR, less than 20% of cast iron and steel was purchased from specialist suppliers, compared with more than 80% in the USA (Granick, D., Soviet Metal-Fabricating (Madison, Milwaukee: University of Wisconsin Press, 1967)).Google Scholar

46 Relevant data can be found in SSB, Zhongguo gongye jingji tongji ziliao (Statistical Materials on China's Industrial Economy) (Beijing: Zhongguo tongji chubanshe, 1985), p. 137.

47 New railways built to the west of the main north-south coastal axis accounted for 84% of total investment in railway construction between 1963 and 1978 (Yu Guangyuan, China's Socialist Modernization, p. 168).

48 Ibid. p. 156; Perkins, D. H. (ed.), China: Small-Scale Industry in the People's Republic of China (London: University of California Press, 1977), pp. 156 and 178.Google Scholar

49 World Bank, China: Socialist Development, Annex D, pp. 20–21.

50 Perkins has argued that high fuel and other costs in small plants contributed significantly to China's heavy consumption of power and other material inputs (China: Small-Scale Industry, pp. 72–76).

51 Cf. Yu Qiuli (January 1978) on the need to restructure small-scale industry and to “convert most small- and medium-sized [machine-building] plants from general equipment producers to producers of specialized components under contract to large plants…” (Craig et al., “China's machine-building industry,” pp. 297–98).

52 In 1979, average arable area per head in China was 0.1 ha., but with significant regional variations. Comparative international indicators include Japan (0.04 ha.), India (0.26 ha.), USA (0.86 ha.) and USSR (0.89 ha.).

53 Detailed data for the USSR can be found in Liu Nanchuan et al., 70 Years of Soviet Economic Growth, pp. 287, 289 and 303. Figures for China show that in 1980, on average, each production brigade had 1.1 large or medium tractors, and 2.6 walking tractors (SSB, Zhongguo nongcun tongji nianjian (Chinese Rural Statistical Yearbook), 1989 (Beijing: Zhongguo tongji chubanshe 1989), pp. 232–33 and 244).

54 Soviet Economy in a Time of Change, p. 40.

55 See Ash, Robert F., “The peasant and the state,” CQ, No. 127 (1991), p. 498.Google Scholar

56 E.g. the World Bank estimated that agriculture was receiving around 20% of total national investment in the late 1970s (China: Socialist Development, p. 49).

57 TJNJ, 1993, p. 349.

58 Chemical fertilizer use rose from 0.4 to 8.8 million tonnes between 1957 and 1978 (TJNJ, 1993, p. 349).

59 The distinction reflects the extent of multiple cropping. By 1980, China's multiple cropping index had reached 152 (Walker, K. R., “Trends in crop production,” in Kueh, Y. Y. and Ash, Robert F. (eds.), Economic Trends in Chinese Agriculture: The Impact of Post-Mao Reforms (Oxford: Clarendon Press, 1993) p. 166).Google Scholar

60 On the eve of reform, the level and quality of food (especially high-quality food) intake in China lagged well behind those of the USSR, let alone Taiwan and the USA. Remember too that total population in the Soviet Union was growing slowly. It follows that whereas the major thrust of reform in the USSR was to improve efficiency, in China it embraced the twin goals of improved efficiency and higher output.

61 In China, the basic unit was the production team, which on average embraced 56 farm workers and 26 hectares of sown area; in the USSR, it was the collective, with 488 workers and 3,485 ha. (Liu Nanchuan et al., 70 Years of Soviet Economic Development, p. 287; TJNJ, 1981, p. 132). Chinese production brigades contained 449 workers, but only 206 ha. of sown area (1980). Another difference with potentially important implications was the much higher average educational and technical level of the Soviet rural workforce.

62 See Nolan, Peter, The Political Economy of Collective Farms (Cambridge: Polity Press, 1988).Google Scholar

63 China's experience during the recovery from the Great Leap Forward provided clear evidence of the effectiveness of establishing contractual arrangements with individual farm households.

64 For detailed consideration of these historical determinants, see Nolan, China's Rise, Russia's Fall.

65 This was self-evidently so after the ‘Tiananmen massacre.” But well before that climacteric, a series of campaigns against “bourgeois-liberalization” sought to reduce expectations of political reform.

66 Cf. Kornai, J., The Road to a Free Economy (New York: Norton Books, 1990)Google Scholar; Kennett, D. and Lieberman, M. (eds.), The Road to Capitalism (Orlando: Dryden Press, 1992)Google Scholar (especially the chapters by D. Lipton and J. Sachs); Prybyla, J., “The road from socialism: Why, where, what and how,” Problems of Communism, Vol. XL (January-April 1991)Google Scholar; and Aslund, A., “Gorbachev, perestroika and economic crisis,” Problems of Communism (January-April 1990), pp. 13–41Google Scholar and Gorbachev's Struggle for Economic Reform.

67 E.g. the authors of the “500 day plan” for transforming the Soviet economy; also, subsequently, Chubais and Sobchak.

68 Cf. Liu Guoguang and Wang Ruisun, “Restructuring of the economy” in Yu Guangyuan, China's Socialist Modernization.