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Published: Peking, Foreign Languages Press, 1974

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A Glance at China's Economy

Cheng Shih

Correction
On p. 25, lines 23-25, the sentence should read: "From 1970 to 1973 the average annual increase in chemical fertilizer output was nearly 5 times that in the previous ten years."

FOREIGN LANGUAGES PRESS
PEKING 1974

Printed in the People's Republic of China

iii

CONTENTS

Foreword                                           1
Progress in Agriculture                            7
The Growth of Industry                            21
Daily Expanding Transportation                    31
Stable Finances                                   37
Foreign Trade — Equality and Mutual Benefit       41
Steady Improvement in the People's Livelihood     47

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Foreword

China's economy developing vigorously along the socialist road. Before liberation it was extremely backward. With production stagnant and prices ever soaring, the people had a wretched life. Then, under the leadership of the Chinese Communist Party and Chairman Mao, the long suffering Chinese people waged several decades of hard struggles and finally overthrew imperialism, feudalism and bureaucrat-capitalism which had weighed them down like three big mountains, and set up a state of proletarian dictatorship. On October 1, 1949 the People's Republic of China was founded. The Chinese people at last stood up and the period of socialist revolution began. In three years the national economy was rehabilitated. While carrying out socialist revolution in the political, ideological and economic fields, the Chinese people started socialist economic construction in a planned way. Guided by the proletarian revolutionary line formulated by Chairman Mao, they have, in the past 20 and more years of hard struggle, hard work and thrift, transformed the poor and backward semi-colonial, semi-feudal old China into an initially vigorous and prospering socialist country.

On the basis of independence, initiative and self-reliance, Chairman Mao and the Party Central Committee formulated the proletarian line, principles and policies for the development of socialist economy. In 1953, the first year of the First Five-Year Plan, Chairman Mao put forward in good time the Party's general line during the transition period : "To bring about, step by step and over a fairly long period, the socialist industrialization of China and the socialist transformation of agriculture; handicrafts and capitalist industry and commerce by the state." With this general line as guide, the people of the whole country in 1956 completed in the main the socialist transformation in ownership of the means of production and in 1957 fulfilled the First Five-Year Plan, thus pushing the socialist revolution and socialist construction to a new stage. In 1958 Chairman Mao formulated the general line of "going all out, aiming high and achieving greater, faster, better and more economical results in building socialism." Later he issued the general policy in developing the national economy : "Take agriculture as the foundation and industry as the leading factor" and the strategic policies: "Be prepared against war, be prepared against natural disasters, and do everything for the people" and "dig tunnels deep, store grain everywhere, and never seek hegemony." These gave the orientation for China's national economic development. However, during the entire historical period of socialism, the class struggle is protracted and tortuous, and at times becomes very acute. And it was only because Chairman Mao's revolutionary line was thoroughly carried out and the interference and sabotage by the counter-revolutionary revisionist line of Liu Shao-chi and Lin Piao were smashed

that. China's economic construction was able to advance victoriously in struggle.

Revolution promotes production. The Great Proletarian Cultural Revolution further raised the Chinese people's enthusiasm for building socialism and speeded the country's construction. Facts have effectively rebutted the slanders spread by class enemies at home and abroad in their attacks on China's Cultural Revolution. It was in the fierce two-line struggle during this revolution that the Chinese people succeeded in fulfilling and overfulfilling the economic targets of the Third Five-Year Plan and, in 1971, began construction under the Fourth Five-Year Plan. In agriculture, there was a succession of good harvests. The rate of increase in grain output in the eight years from 1966 to 1973 greatly surpassed that of the 13 years prior to the Cultural Revolution. The situation in which the south had to supply grain to the north, as had been so over long years in the past, began to change. The state and also the rural units of collective ownership have stored certain amounts of grain. The main industrial crops, timber, livestock, products of side-occupations and fish yields have all increased in varying degrees. Facts have proved the truth of Chairman Mao's statement made as early as 1949 that "revolution plus production can solve the problem of feeding the population."

Industry has developed at even greater speed. The 1973 steel output was more than twice, and power 2.4 times, that of 1965, before the Cultural Revolution. Machine-building, coal, chemical and light industries have likewise gone forward in big strides. The petroleum industry has developed especially fast, its output be-

ing several hundred times what it was in the early post-liberation period. New China has not only become self-sufficient in petroleum but in recent years has some crude oil for export. The building in a planned way of a number of inland modern bases such as for the iron and steel, coal, petroleum and chemical industries has been stepped up. This not only marks a change from the old China's irrational concentration of industries in the coastal regions, but also lays a solid foundation for developing industry along the line of independence, initiative and self-reliance.

The masses of the people are the creators of history, the decisive force spurring China's socialist construction. Relying on the masses has been China's basic experience in socialist construction for more than 20 years. The general line for socialist construction laid down by Chairman Mao is precisely to put proletarian politics in command, stress integrating Party leadership with the broad masses, vigorously launch mass movements and build socialism through self-reliance. This general line provides that agriculture be taken as the foundation and industry as the leading factor, and requires that the agriculture-light industry-heavy industry relationship be correctly handled by placing agricultural development first and strengthening industry's support of agriculture. Also stipulated are a whole series of "walking on two legs" policies: giving full play to the initiative of both the central and local authorities, making full use of industrial plants in coastal regions and accelerating the building of new ones in the interior, making simultaneous use of indigenous and modern methods, and simultaneously developing big, medium and small enter-

prises. These policies serve to bring all positive factors into play and mobilize every force to achieve greater, faster, better and more economical results in building socialism. The Chinese people believe that people are the greatest treasure, that under the Party's leadership, so long as there are people wonders can be worked.

The Tachai Production Brigade of Hsiyang County, Shansi Province, and the Taching Oilfield are models in resolutely implementing Chairman Mao's revolutionary line, fully mobilizing the masses, and developing the socialist economy rapidly and by their own efforts. Holding aloft the red banner of the general line for socialist construction, they persist in putting proletarian politics in command and launching mass movements. These units have struggled with dauntless heroism against nature and class enemies, and have won successes in both revolution and production. The Tachai peasants used their own hands to turn rocky gullies, ridges and slopes into terraced fields conserving soil, fertilizer and water. With the spirit of hard struggle plus a scientific approach, the Taching oil workers established a modern petroleum industrial base in the wilderness in less than three years. Tachal and Taching, two pacesetters in China's socialist construction, gained added brilliance in the Great Proletarian Cultural Revolution. A great mass campaign "In agriculture, learn from Tachai" and "in industry, learn from Taching" surges throughout the country, with the people's enthusiasm growing steadily and the national economy striding forward.

The Chinese people's adherence to the principle of maintaining independence, keeping the initiative in their own hands and relying on their own efforts in construc-

tion by no means implies "self-seclusion" and unqualified rejection of assistance from other countries. The Chinese people have always considered economic and technical exchanges on the basis of respect for state sovereignty, equality and mutual benefit, and the exchange of goods needed to make up for each country's deficiencies as beneficial and necessary to the development of the national economy.

China is a socialist country and at the same time a developing country. China belongs to the Third World. Constantly following Chairman Mao's teachings, the Chinese Government and people firmly support all oppressed peoples and oppressed nations in their struggle to win or defend their national independence, develop their national economy and oppose colonialism, imperialism and hegemonism. The Chinese people are determined to pursue the basic line and policies laid down by Chairman Mao for the socialist period and will continue the revolution under the dictatorship of the proletariat. They will resolutely carry through to the end the great movement to criticize Lin Piao and Confucius, which is of immense historical and practical significance. They are firm in grasping revolution, promoting production, modestly learning from the strong points of the people of other countries, and exerting every effort to build China into a socialist state with modern industry, agriculture, national defence, science and technology in a fairly short period of time, so as to make a greater contribution to mankind.

Progress in Agriculture

For thousands of years Chinese peasants have accumulated rich experience in agricultural production. In old China, however, particularly in the 100 years before liberation, on top of the long feudal exploitation and oppression, imperialism and bureaucrat-capitalism cruelly bore down on the peasants. Famines were frequent and production stagnated. The peasants were reduced to extreme poverty. On the eve of liberation in 1949, the country's annual output of grain was only 220,000 million jin,¹ that of cotton 8,890,000 dan,² and farm side-occupations were on the decline.

Old China's poverty-stricken peasants were ruthlessly oppressed by the feudal land system. Landlords and rich peasants, who constituted less than 10 per cent of the rural population, owned 70-80 per cent of the land, while the poor and middle peasants and farm labourers, 90 per cent of the population, owned only 20-30 per cent of the land. The impoverished peasants had to pay over

¹ One jin is equivalent to 0.5 kilogramme or 1.1 lbs.
² One dan is equivalent to 50 kilogrammes or 0.05 metric ton.

half (in some places as much as 70-80 per cent) of their produce to the landlords as rent.

After the founding of new China and under the leadership of Chairman Mao and the Communist Party, the land reform movement was launched throughout the countryside. The feudal system of landownership, which had fettered the productive forces in agriculture, was abolished for good. Some 700 million mu³ of land and large numbers of draught animals, farm tools and other means of production were distributed to over 300 million landless and land-poor peasants, who no longer had to pay the landlords 70,000 million jin of grain for rent every year. As a result, farm production quickly revived and developed. Agricultural co-operation was subsequently realized and followed by the mass establishment of people's communes, steadily raising the peasants' socialist enthusiasm.

Since 1962, the general policy of "taking agriculture as the foundation and industry as the leading factor" has been implemented in developing the national economy. In agriculture the policy of "taking grain as the key link and ensuring an all-round development" has been put into practice. Thus the relationship between agriculture, light industry and heavy industry has been correctly handled. Active support has been given to agriculture in matters of material goods, technology, finance, organization and leadership. With the development of agriculture as a priority, the work of industrial departments has switched to the orbit of taking agriculture as the foundation.

³ One mu is equivalent to 1/15 hectare, or 0.16 acre.

During the unprecedented Great Proletarian Cultural Revolution, the counter-revolutionary revisionist line of Liu Shao-chi and Lin Piao was smashed and Chairman Mao's revolutionary line further implemented. The mass movement — "In agriculture, learn from Tachai" — has gone on in breadth and depth, and socialist enthusiasm of the peasants greatly enhanced. All the above factors brought about rich harvests for 12 years running. Grain output in 1971 reached 492,000 million jin. In 1973, rural commune members, relying on their collective strength, conquered the drought in the north and the flood in the south and brought in an all-round harvest. The outputs of grain, cotton, bast-fibre plants, sugar and tobacco all broke previous records. The development of forestry, animal husbandry, side-occupations and fishery kept pace with agriculture. The gross grain output not only increased by a wide margin as compared with 1972, a year of natural disasters, but surpassed 1971, a year of bumper harvest, and marked the highest annual output in history. Gross cotton output increased more than 20 per cent over that of the previous year. Grain and most of the industrial crops now initially meet the needs of the country's construction and people's life. Honan, Hopei and Shantung provinces, and northern Kiangsu and northern Anhwei, insufficient in grain in the past, have become self-sufficient since the Cultural Revolution, beginning to "change the situation in which grain in the south has to be transported north."

The fundamental line for the development of China's socialist agriculture is: After the completion of land reform, the first step is collectivization (i.e., to form

mutual-aid teams, agricultural co-operatives and then people's communes). On this basis, the second step is to realize agricultural mechanization. Only by following this revolutionary line of Chairman Mao's has China's agriculture been making rapid strides along the road of socialism.

Agricultural production made progress after land reform. However, production continued to be conducted on small-peasant farming based on individual household ownership. This failed to do away with poverty and avoid polarization and could not keep pace with development in socialist industrialization. Consequently, a movement for agricultural mutual aid and co-operation was at once launched. In the process of collectivization, the principle of voluntary participation and mutual benefit was observed and measures for gradual advance were adopted. First, mutual-aid teams were organized, each of several or a dozen households, with the peasants working together and practising labour exchange and mutual help. This embodied rudiments of socialism. Then agricultural producers' co-operatives of an elementary, semi-socialist type were organized. These were characterized by the pooling of land as shares and by unified management, with the incomes paid to members according to a fixed ratio between labour and land pooled. Next came the co-operatives of an advanced, socialist type. In these, land became the common property of the co-operative, with compensation for other means of production such as draught animals and large farm tools turned over to the collective, while the principle of "to each according to his work" was applied. Thus, the peasant masses became ideologically prepared to enter

into each new kind of relations of production, which ensured sustained rises in farm production throughout the process of collectivization. A convincing indication of this is the 19 per cent increase in grain output of 1957 as compared with 1952.

On the basis of agricultural co-operation, people's communes were set up throughout the rural areas in 1958, pushing agricultural collectivization to a new stage. The people's commune integrates government administration with commune management. It adopts the system of ownership of the means of production at three levels — the commune, the production brigade and the production team — each exercising its own administrative and accounting functions, with the production team as the basic accounting unit. It is larger in size and more socialist in nature than the agricultural co-operative. With a greater membership, more land and more financial resources, a people's commune can undertake farm capital construction on a larger scale, engage in a diversified economy, carry out scientific experiments and guard against natural calamities, thus ensuring the consolidation and development of the collective economy.

Following countrywide establishment of the people's communes, especially after the Cultural Revolution, when the interference and sabotage by the counter-revolutionary revisionist line was crushed, and Chairman Mao's revolutionary line and various proletarian policies were further implemented, the commune members' initiative to fight nature and develop socialist agriculture was greatly raised. The Tachai Production Brigade in Hsiyang County, Shansi Province, is an outstanding example of a rural community resolutely taking the socialist road,

giving full play to the revolutionary spirit of self-reliance and hard work, and rapidly increasing production. Situated in the Taihang Mountains, 1,000 metres above sea level, Tachai was a poverty-stricken village before liberation. The soil was poor; drought was common and frequently followed by floods in summer. The village worked only 800 mu of farmland, which was divided into 4,700 strips. Of the 80 or so households there, 35 poor-peasant households had worked as hired labourers for landlords and rich peasants; nine households wandered and begged in other places. With the liberation of the village in 1945, the peasants got organized and started on the road of collectivization Since then they have persistently educated themselves in Marxism-Leninism-Mao Tsetung Thought, displaying their love for their country and the collective. They have turned areas of "seven gullies and eight ridges" into terraced fields by levelling mountains to build farms. They have built channels, which wind round the hills, and also flood-diversion projects. Poor land has turned fertile, with a layer of organic soil a foot thick, which conserves soil, water and fertilizer and ensures high, stable yields. The per-mu yield of grain rose from over 100 fin (700 kilogrammes per hectare) shortly after liberation to 1,094 jin (more than eight tons per hectare) in 1971. The peasants conquered the unusually serious drought in 1972 and one of several months' duration in 1973 by sheer hard work — dibbling with water carried on their shoulders while undertaking water conservancy projects in a big way. The gross grain output in 1973 reached 770,000 jin, a 16 per cent increase over that of 1972, marking a record in Tachai's history. Forestry, animal husbandry and side-line production also expanded by a big margin.

Since 1964 a mass movement to learn from Tachai has been in full swing throughout the countryside. Models of the Tachai type have successively emerged in the well-watered country south of the Yangtze as well as in the arid mountain regions of north China. Hsiyang County, where the Tachai Production Brigade is situated, is such a model. Since the Cultural Revolution the people of the county, following Tachai's example, have set themselves the task of transforming their mountains and rivers. During the six years from 1967 to 1972 over 5,500 farm capital construction projects were built and 52,000 mu of land was reclaimed. Of the county's 400,000 mu of arable land 320,000 mu has been transformed into high-quality farmland of the Tachai type. Irrigated land quickly expanded and the face of rivers and mountains gradually changed. The grain output in 1971 was 2.8 times that of 1966 and the gross income of collective economy 2.5 times. Confronted with a severe drought in the spring of 1973, the people of Hsiyang, led by the county and commune cadres, dibbled 220,000 mu of crops by carrying water on their shoulders and rush-planted over 100,000 mu. They made every effort to build conservancy projects, watering the fields and protecting young plants. Finally they beat the unusual drought by working with unmatched might and wrested a bumper harvest never seen before. The county's total grain output in 1973 was 239 million jin, 2.8 million jin more than its record output in 1971.

With a vast territory and many rivers, China possesses rich water resources. But in old China, water conservancy projects were neglected and flood and drought were frequent. Since liberation the rural areas have

actively engaged in building water conservancy projects, opening up hilly areas, harnessing rivers and levelling the land. Exerting collective strength, they have mainly followed the principle of undertaking small projects, building them in complete sets and relying on the efforts of communes and brigades. Every year, many thousand million cubic metres of earth-and-stone work was completed. Harnessing work on the main rivers — the Yellow, the Huai, the Haiho, the Liaoho and the Yangtze — has been carried out on a comprehensive scale and under unified planning by the state. By 1971, 1,700 reservoirs of big and medium sizes had been built (there were only 20 before liberation), 130,000 kilometres of dykes built or reinforced, nearly 100 large flood-diversion channels dug, over 900,000 mechanically pumped wells sunk and power-driven irrigation and drainage equipment with 20 million horsepower installed. Flood prevention and drought-resistance capacity was constantly increased, and water resources were further exploited.

Before liberation there was a saying that the Yellow River "breaches its dykes twice each three years." But over two decades since liberation no breach has ever occurred, and it has irrigated large tracts of farmland, benefitting production. The Huai River basin, known as the most serious calamity-stricken area in China's history, became one of the country's new granaries after 20 years' harnessing. In 1972, grain output in the whole basin reached 62,000 million jin, which was 34,000 million fin more than the figure just after liberation. The Haiho River basin in the past had suffered from flood, water-. logging, drought and alkalinization. Since liberation,

especially since 1963 after Chairman Mao issued the call "The Haiho River must be brought under permanent control," a new stage began in its harnessing work. During the Cultural Revolution, each winter and spring hundreds of thousands or even a million builders concentrated their efforts on this project. At the same time millions of peasants from neighbouring communes and production brigades went in for farm capital construction and integrated projects. In the mountainous areas of the upper reaches, a number of large and medium reservoirs were built, and in the middle and lower reaches over 300 main waterways and tributaries were dug or dredged. Dykes with a total length of 4,300 kilometres and 60,000 bridges, sluice-gates and culverts were completed. Conditions in today's Haiho basin begin to improve, as it is now basically free from the threat of flood and waterlogging. And the basin's capacity in 1973 for draining flood-waters and accumulated water into the sea was over 6 times that in 1963, while the grain output doubled.

China's northern areas have less precipitation and in recent years have been threatened with extraordinary drought. In the movement to learn from Tachai, cadres and commune members sank many pump wells, effectively utilizing the subterranean water while harnessing the rivers and lakes. To this work the Party and the People's Government gave leadership and abundant economic, technical and organizational support and assistance. To cope with successive droughts, 370,000 pump wells with complete equipment were drilled from October 1972 to the end of 1973, breaking all previous records. Now in north China 1.2 million pump wells are irrigating

100 million mu of farmland and effectively checking drought.

Linhsien County in the Taihang Mountains of Honan Province is a model of water conservancy work. In the past, 370 of the county's 500 villages lacked water. Starting in 1960 the peasants waged a tenacious 10-year struggle that resulted in the Red Flag Canal. This canal has 200 reservoirs of medium and small sizes, 40 power stations and 154 electric drainage and irrigation stations, with its main and branch channels totalling 1,500 kilometres in length. Water from the Changho River, many miles away, winds round some 1,000 hilltops, crosses 1,900 gullies and passes through 134 tunnels, watering the whole county. The area of irrigated land has increased from 12,000 mu before liberation to 600,000 mu. The per-mu yield of grain reached 580 jin in 1973 while it was only a little over 100 jin before liberation. In the past the county had to be supplied with over 20 million jin of grain by the state. Now it delivers more than 40 million jin to the state each year. Over 95 per cent of the communes and production brigades have surplus grain in store. What was formerly a land of barren mountains suffering from severe drought is now assured good harvests every year.

Rural communes, production brigades and teams have given full play to the initiative of the cadres, masses and agricultural scientific and technical personnel. They have systematically carried out the Eight-Point Charter for Agriculture¹ formulated by Chairman Mao in the light

¹ This Charter includes the following points:
1) with respect to soil: deep ploughing, improvement of quality, general survey and planned utilization;
2) rational application of fertilizer;
3) building of water conservancy works and rational use of water;
4) popularization of better strains of seeds;
5) rational close planting;
6) plant protection, prevention and elimination of plant diseases and pests;
7) field management; and
8) improvement of farm tools.

of China's experience in increasing farm output and practised scientific farming. In many areas, the farming process and methods have been improved to suit local needs. In north China, saline and alkaline land, low-lying waterlogged land and desert wasteland have been steadily transformed, as have red-soil and other low-yielding lands in south China. Mass efforts in selecting arid breeding seeds have produced a good number of new strains of fine-quality with high yields, and many peasants have become experts in seed cultivation. Since the Cultural Revolution, hybridized sorghum and hybridized maize have been quickly popularized and their output rapidly increased. Improved strains are now used in over 80 per cent of south China's rice-growing areas and over 70 per cent of the wheat-growing areas in the Yellow River valley. There has been a sustained increase in the supply of fertilizer on a nationwide scale as a result of the increase in livestock, the extensive use of green manure, the growth of the chemical fertilizer industry and the setting up of bacterial fertilizer plants using indigenous methods. In dealing with the rice borer, army worm and other insect pests and plant diseases, special emphasis is laid on prevention, and the mobilization of the masses has led to the adoption and extension of effective methods to this end.

Chairman Mao points out : "The fundamental way out for agriculture lies in mechanization." It is in accordance with Chairman Mao's instructions on this problem that China has, on the basis of collectivization, been vigorously carrying out agricultural mechanization in her own way. Farm machinery is now to a great extent manufactured in the locality. These machines are chiefly of medium and small types, their purchase being primarily financed out of the collective funds. With the exercise of the dual initiative of the central and local authorities, and with the adoption of the policy of "walking on two legs," the process of mechanization has gradually gathered momentum. In the past 4 years, the number of tractors, diesel engines, chemical fertilizer, plastic sheets and electric power supplied to agriculture by industrial departments surpassed the total figure in the previous 20 years. In 1972, the number of tractors for farm use was 2.6 times that of 1965, walking tractors over 50 times, installation capacity in small power stations 8 times; mechanized farming area expanded 40 per cent and rural electric power increased 250 per cent. Compared with 1972, in 1973 production of tractor and internal combustion engine parts, rubber-tyred push carts, walking tractors and combine harvesters increased 30-60 per cent, and chemical fertilizer, internal combustion engines and pumps more than 20 per cent. The amount of chemical fertilizer, rolled steel, cement, electric power, walking tractors and rubber-tyred push carts supplied to agriculture by industrial departments marked an all-time high.

On the plains in the north, tractors, harvesters and power-driven drainage and irrigation machines are being

18.2

[A photograph]

Leading members of the Hisyang County Revolutionary Committee, Shansi Province, drawing long-range plans for remaking the land.

18.3

A Glance at China's Economy

Foreword

Progress in Agriculture

The Growth of Industry

Daily Expanding Transportation

Stable Finances

Foreign Trade—Equality and Mutual Benefit

Steady Improvement in the People's Livelihood