The Chinese Economy

Solomon Adler

• Publisher: Routledge
• Year: 2013
• Print ISBN:
  9781138970526
• eBook ISBN:
  9781136569449
• Topic: Business
• Subtopic: Business General
• Index: Business

First published in 1957. This volume provides a broad survey of economic progress in China from 1949 to 1952 and covers the historical background, China's economic system, industralisation and planning, the first Five Year Plan in industry, agriculture, transport, commerce and finance, education and health and foreign trade. The work is supplemented with an extensive bibliography, maps and statistical tables.

I

The Background

1AREA AND POPULATION

THE AREA OF CHINA is roughly 3,860,000 square miles. This huge land mass embraces a wide variety of climates ranging from the tropical in the extreme Southeast to the continental in the Northeast and the Northwest. Over 90 per cent of the country is in the north temperate zone, but the high summer temperatures combined with the heavy summer rainfall in the North and Northeast, amounting to 50 per cent of the annual total, make the widespread cultivation of rice and cotton practicable. The country is extremely mountainous with about three-fifths of the land lying more than 6000 feet above sea level, over a quarter consisting of valleys and the remainder of steppes, desert and oasis.

The population of China is approximately 600 million. The 1953 Census, which was the first modern enumerative census ever taken in China, clearly established that previous less comprehensive censuses and estimates based on them erred heavily on the side of conservatism.

China contains nearly one quarter of the inhabitants of the globe. Sinkiang (Chinese Turkestan) and Tibet, which together constitute about three-tenths of the total land area, are extremely sparsely populated. Population densities are also relatively low in the Northwest and the Northeast outside the Liao valley but very high in the Great Plain of North China, the Szechwan Red Earth basin, the Yangtze and Pearl River valleys and the plains towards the Eastern coastal area generally.

The Han people accounts for 94 per cent of the total population, the most important minority groups, numbering 35 million in all, being the Mongols, Koreans, Manchus, Uighurs (Turkis) and Huis in the Northeast and Northwest, and the Tibetans, Chuangs and Yis in the West and South. So little had China been systematically investigated demographically that a number of previously entirely unknown tribal groups have been discovered since 1949.

The Chinese people have been distinguished throughout their recorded history by their diligence, their fortitude, their skilled craftsmanship and their ingenuity and capacity for improvisation. Foreign observers from the time of Marco Polo have universally attested to “the industrious and patient character of [China's] people . . . their will to live and their ability to overcome adversity.”¹ The general level of skill in Chinese handicrafts exceeded that in the West until at least the sixteenth century.² China has the longest recorded continuous intellectual and cultural tradition, and unlike most other economically under-developed countries has an able and relatively large intelligentsia.

2AGRICULTURE

China is, of course, a predominantly agricultural country, the rural population constituting about 500 million. In the 1930’s the area under cultivation was generally estimated to be around 225 million acres, of which one-third was irrigated. Cultivation was intensive — according to Richthofen, “the most intensive we know” — and partook of the nature of “garden” agriculture. Thus, a cultivated area about two-thirds that of the United States was worked by around fifteen times as many farm households and supported a total population well over three times as large. The average cultivated acreage per farm was under 2½ acres, but this crude global average concealed wide disparities as between different types of agriculture and still wider disparities as between rural classes. Wheat, millet and kaoliang farms in the North and Northeast were somewhat larger than the national average and rice farms in Central and South China markedly lower. The distribution of land ownership was extremely unequal. On a very rough basis landlords and rich peasants (i.e., farmers regularly employing hired labour), constituting with their dependents about 10 per cent of the rural population, owned 70 per cent of the cultivated land; middle peasants, forming about 20 per cent of the population, owned roughly the same proportion of the land; and poor peasants — many of them landless labourers — formed 70 per cent of the village population but owned only 10 per cent of the land.

Landlordism was pre-capitalistic in character. While large estates in the form of latifundia were uncommon, the universal landlord domination of the countryside was oppressive economically, politically and socially, and perpetuated a general backwardness from which no escape was possible without a decisive break with the old forms of land tenure. The land problem was fundamental. Without its solution no regime could achieve stability and no meaningful programme of economic development and modernisation could be adopted. It was not merely a technical question but one which went to the very roots of Chinese society. Just as the realisation of this fact in all its ramifications was one of the greatest assets of the Chinese Communists on their road to power, so the Kuomintang's inability to come to grips with this problem was the basic cause of its failure. In the countryside the Kuomintang Government apparatus and party machine were essentially adjuncts of landlord rule. The Kuomintang land law restricting the payment of rent to a maximum of 37.5 per cent of the main crop was a paper law only, and rents generally ran to between 50 and 60 per cent or even more. Moreover, the land tax, a primary source of Government revenue, fell almost entirely on the peasantry. In addition the peasant was the victim of a corrupt village administration, of landlord exactions in the form of usury, middleman huckstering and semi-feudal levies, and of a barbaric system of conscription into an army enrolment in which was often tantamount to a death sentence.

In these circumstances, rural poverty was chronic and deep-seated. Tawney, writing in 1939, concluded:

The improvement of agricultural methods is, no doubt, indispensable, but it is idle to preach that doctrine to cultivators so impoverished by the exactions of parasitic interests that they do not possess the resources needed to apply it. . . . A government which permits the exploitation of the mass of its fellow citizens on the scale depicted in the pages which follow may make a brave show, but it is digging its own grave. A government which grapples boldly with the land question will have little to fear either from foreign imperialism or from domestic disorder. It will have as its ally the confidence and goodwill of half-a-million villages.³

Subsequent events have vindicated Professor Tawney's remarkably prescient judgment.

In view of its slender technical basis, Chinese agricultural practice was relatively efficient.⁴ According to statistics for years prior to 1949 given in the United Nations Statistical Yearbooks and in Food and Agriculture Organisation publications, the yield per acre of rice was at least double that of India; of wheat, barley and cotton at least 50 per cent greater, and of millet, kaoliang, peanuts and sesame seed two to three times as great. But that there was very wide scope for elementary technical progress is revealed by the contrast between Chinese and Japanese yields in the same period, the latter exceeding the former by around 50 per cent in rice, wheat, sweet potatoes and yams. Starting from more or less the same level as the Chinese, the Japanese succeeded in sharply raising productivity per acre in a comparatively short time by four fairly simple measures: more and better irrigation, selection and standardisation of seed, increasing and systematic use of pesticides and the application of artificial fertilisers, none involving mechanisation and only the last requiring a fairly high degree of industrialisation (see p. 126 below).

China before 1949 was the world's largest producer of rice, millet, kaoliang, sweet potatoes and yams, broad beans, soya beans and rape and sesame seeds; the second largest producer of barley, maize, peanuts and tobacco; the third largest of wheat; and probably the fourth largest of cotton. In addition she was the major producer or one of the major producers of a wide variety of other agricultural products such as tea, eggs, tung oil, perilla seed oil, essential oils and bristles.

Despite her leading position as an agricultural producer China frequently imported as much as 2 per cent of her net rice and wheat consumption; this import deficit was primarily due to maldistribution both within and between surplus and deficit areas resulting from the backward system of land tenure and from transportation difficulties. Traditionally an overwhelming proportion of Chinese exports consisted of agricultural products and by-products.

3NATURAL RESOURCES

China's natural resources were still largely unexplored before 1949. Consequently, there has been a general tendency to under-estimate China's mineral wealth with respect both to its magnitude and to its exploitability. She was known to have huge and quite conveniently located coal deposits, including coking and anthracite coal; substantial deposits of iron ore which many foreign experts believed to be for the most part badly sited and of low grade; and significant amounts of tin, tungsten, antimony, manganese, lead, zinc, magnesite, bauxite, mercury and other minerals. Preliminary geological surveys since 1949 have already revealed more extensive deposits of minerals previously known to be present and also the existence in workable quantities of many minerals previously believed to be absent. (The endpaper map inside the front cover shows the natural resources of China.)

Coal and hydroelectric power. The Board of Trade Report cites an estimate of 272 thousand million tons for China's coal reserves. A later estimate made in 1947, cited by the United Nations Economic Commission for Asia and the Far East in 1953 in its Coal and Iron Resources of Asia and the Far East, placed them at 444 thousand million tons. Even this figure is tentative, as explorations since 1949 indicate that the Northeast's coal reserves, for example, were several times higher than the best-informed previous estimates. China is clearly one of the three or four richest countries in the world in coal, and the Board of Trade Report's conclusion cannot be questioned, that “China's total known coal reserves are ample to meet the needs of any amount of industrialisation that she may eventually accomplish.”⁵ She is also rich in anthracite, having a ratio of hard to soft coal of one to four, as compared with the world average of one to eight, and North China has an abundant supply of high-grade coking coal.⁶

China is potentially well endowed with hydroelectric power, the estimate of the United Nations Economic Commission for Asia and the Far East in 1949 amounting to 109 million kilowatts.⁷ This estimate excludes the Northeast which has two of the largest functioning hydroelectric stations in the Far East; Tibet, which is the world's highest land mass and contains the sources of many large rivers including the Yangtze and the Brahmaputra; and Sinkiang. More recently, the total Chinese potential has been put at over 300 million kilowatts, which places it ahead even of the United States. While “China possesses ample hydroelectric potentialities . . . her use of water power resources in the past has been infinitesimal.”⁸ Their exploitation will, of course, demand enormous investments over a considerable period of time.

Iron. The United Nations Coal and Iron Resources of Asia and the Far East cites an estimate placing China's iron ore reserves at over 4 thousand million tons. But again recent preliminary surveys have established a wider and richer diffusion of iron ore, and this estimate needs to be revised upwards. “Already claims are made that China possesses the largest known deposits of iron-ore in the world.”⁹ According to pre-1949 surveys the Anshan deposits have a 30 per cent Fe content, and the Chahar-Suiyuan, Tayeh and Hainan deposits a 50-60 per cent Fe content.¹⁰ Nor is the problem of location anywhere near so difficult as was previously supposed. China is thus more than adequately endowed with the two basic raw materials needed for modern large-scale industry.

Non-ferrous Metals and Other Minerals. In the ’30s China was the world's largest producer of tungsten and antimony and is still the largest producer of tungsten, her output in 1952...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Title Page
• Orginal Copyright Page
• Table of Contents
• List of Tables
• Preface
• Chapter I. The Background
• Chapter II. Economic Progress From 1949 to 1952
• Chapter III. China’s Economic System
• Chapter IV. Industrialisation and Planning
• Chapter V. The First Five Year Plan in Industry
• Chapter VI. Agriculture, 1
• Chapter VII. Agriculture, 2
• Chapter VIII. Transportation and Commerce
• Chapter IX. Finance
• Chapter X. Living Conditions, Education and Health
• Chapter XI. Foreign Trade Conclusion
• Appendix I. Extracts from the Common Programme
• Appendix II. Extracts from the Constitution
• Appendix III. Statistical Tables
• Appendix IV. List of Works Cited
• Index
• Map, Natural Resources and Heavy Industry