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Conditions and Prospects for Economic Growth in Communist China*
Published online by Cambridge University Press: 18 July 2011
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THE Communist conquest of mainland China may be legitimately viewed as the culmination of a century-long interregnum during which the traditional equilibrium of Chinese society was profoundly disturbed by the Western impact, at a time of dynastic decline. The initial impact of the West was in the nature of a shock treatment administered by the Opium War, the subsequent military defeats, the unequal treaties, and the rise of the whole Treaty Ports system. Thus China's first massive contact with the West was associated with humiliation, bewilderment, frustration, and a sense of inequality. In these terms, then, a constant and continuing struggle for equality has been a hallmark of China's development since 1840.
The military and diplomatic defeats suffered by the Chinese made them conscious of the West's technological and industrial superiority. In fact, one of the essential ingredients in China's striving toward equality was economic—expressedin a deep-seated aspiration to catch up, to narrow the gap, and to industrialize. In other words, the Western impact generated “tension between the actual state of economic activities in the country and the existing obstacles to industrial development, on the one hand, and the great promise inherent in such a development, on the other.”
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- Research Article
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- Copyright © Trustees of Princeton University 1954
References
1 Gerschenkron, Alexander, “Economic Backwardness in Historical Perspective,”in The Progress of Underdeveloped Areas, ed. by Hoselitz, Bert F., Chicago, 1952, p. 5.Google Scholar
† Parts I and II of the analysis are contained in this article. Parts III and IV will appear in the January and April issues of World Politics.
2 These figures, as well as all national income estimates throughout this article, are based on preliminary findings emerging from a detailed study of Communist China's gross national product which the author is in the process of preparing.
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22 For coal, official statements admit a shortfall.
23 Power for household use is strictly rationed, particularly in Manchuria.
24 The arithmetic behind this estimate is as follows:
Peak Manchurian finished steel capacity 910,000 MT
Finished steel capacity after dismantling 325,000 MT
Capacity which must be reinstalled to produce 1952 output 475,000 MT
Capital requirement per ton of finished steel US$ 400
Total capital requirement for reinstallation of capacity US $190,000,000
However, about half of this capital investment is for structures, which have been left more or less intact, so that one should only count equipment costs, which may be estimated as: US $ 95,000,000
Add to this a replacement allowance of 10 per cent per year on old capital which was not removed. For two years: US $ 65,000,000
Total cost of replacement and reinstallation: US $160,000,000
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28 The “cash and currency control plan” placed the People's Bank in the position of a central clearinghouse for all transactions and a repository of all capital, including current working capital, for the state enterprise system.
29 The victory bond units, known as fen, are composed of 6 catties of rice (millet in Tientsin), 1.5 catties of flour, 4 feet of white shirting, and 16 catties of coal. The fen is quoted nationally every ten days, with the value based on the wholesale prices of these items in Shanghai, Tientsin, Hankow, Sian, Canton, and Chungking; in computing the fen, the commodity basket values in these cities are given the following weights: Shanghai—45; Tientsin—20; Hankow, Canton, and Chungking—10 each; Sian—5.
Unlike the fen, parity deposit and wage units are separately quoted for all large cities. The exact composition of these varies from city to city, but they all include some grain, staple, cloth, vegetable oil, and coal.
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33 It roust also be borne in mind that part of this increase is due to price rises. The rise in the wholesale price level may be crudely estimated at about 20 per cent between 1950 and 1951, and 30 per cent between 1950 and 1952.
34 Following Western fiscal practice, we treated all expenditures not covered by regular revenues as deficits which had to be covered by extra-budgetary levies, bond issues, or bank overdrafts.
35 I am indebted to Dr. Joseph Froomkin for calling this to my attention.
36 This was not true prior to 1953, when the Manchurian transport system was under joint Sino-Soviet management.
37 Based on an article in People's China of September 1, 1953, by Hsu Hsueh-han. This figure may include, however, substantial military equipment paid for by Peking.
38 This observation applies, of course, only to small net imports or exports.