Hadrian's Reviews > Growing Out of the Plan: Chinese Economic Reform, 1978 1993

Growing Out of the Plan by Barry Naughton
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Mar 27, 12

bookshelves: chinese, economics-finance-business, nonfiction
Read in March, 2012

More Chinese economics!

This study was written in the early 1990s. Shortly after the renewed wave of political Conservatism (let me clarify - Conservative in the Chinese context means more nostalgia for Mao and central planning) in China, and during the recessions of the Eastern Bloc + Soviet Union, which China was more immune to, as they had achieved a greater degree of economic independence from Moscow.

He's taking a more critical and skeptical review of the reforms, but still acknowledges their success, especially when compared to earlier policies. For example.

The Ten Year Plan was the last big Stalin-style massive industrial economic growth plan before Deng and his allies started their work at the Third Plenum. It involved equally disastrous and absurd plans in agriculture, mining, and industry, and wound up being a catastrophe on all fronts. Oil output decreased instead of finding 10 new oilfields, new factories were bottlenecked by resource shortages, mechanization of communal agriculture solved none of the problems and instead led to large masses of workers which were not absorbed into the manufacturing sector, and so forth. Outputs barely rose in some cases, and dropped in many others. Electricity production, which was supposed to 'outpace England' in the goals, fell some 30%. Some of the heavy industry factories survived, but quickly crumbled or were replaced as the free market influenced Chinese policy.

So it was a disaster. Anything away from Communal Maoism was good.

The author also argues that reform was a legitimizing factor for the post-Mao leadership, as a means to retain power without aiming for the personality cult of Mao as described earlier.

There was doubt in the early stages of reform, of course. It was hodgepodge and many areas were shaky. The massive CCP slowly packaged and privatized parts of the economy and let them go, although it still arranged these areas so that it could still, albeit indirectly, influence these areas.

There was a big worry about the low quality of personnel, as many were purged in one of the very many incidents which took place since the 1950s. The recall of students from the countryside and educational modernism is slowly bringing that back from the brink, though.

Although there was some success. Only 1% of households were in private agriculture in 1979, compared to 99% in 1984. Agriculture was one of the areas furthest behind, in terms of economic growth, and it was one of those which most benefited from the reforms. This contributed significantly to the growth of the private sector in rural areas, and allowed them to invest in local cities, etc.

Manufacturing was a different nut to crack. Allowing factory workers some local initiative and independence was popular, although workers were displeased with the fact that managers could control their hiring and firing. Price-contols, another old facet of the economy, proved cumbersome and had to be jettisoned.

Simply opening up the markets led to an outburst of growth and investment. Increased output and quality of consumer goods led to increased domestic support.

The pragmatism, and thus, lack of ideological rigor involved has led to some controversial policies, not all of which have yet been resolved. Rapid growth did lead to economic instability and risks of inflation, as is a main worry some 20 years later.

The Chinese system does not yet completely resemble a western liberal market economy, as described in greater depth in Red Capitalism. But it did, slowly, haphazardly, grow into a sort of booming yet possibly fragile monster which is some unique and interesting case that merits much further study.

Lots to cover here, and this was one of the first books written for a Western audience which tries to give a comprehensive portrait of Chinese reforms. Interesting stuff. My incoherent babble of a review does it injustice. I'll clean this up later.
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