Economic objectives and goals

The immediate task facing the Chinese Communists in 1949 was to restore and rehabilitate a war-disrupted, inflation-torn, fragmented economy. Given the legacy of the past with its economic backwardness and population pressure, what were the objectives of industrialization in China, and what were generally the long-run economic objectives of the new regime? This is the broad issue to be addressed first in this chapter. The instruments and appeals used to motivate workers, cadres, managers, and peasants to pursue and implement these objectives will then be considered. The relative importance assigned to these appeals and the character of the incentives mix was changed from time to time as indeed was the priority allotted to different – and at times competing – objectives. These shifts in priorities and incentives produced policy changes and differing development strategies that are analyzed in the second half of this chapter.

If we examine the post-war experience of most underdeveloped countries we find that the urge for development derives from two closely inter-related sources. On the one hand, this urge is powered by a desire to reduce international inequalities and gradually close the standard of living gap between highly developed and low-income economies. On the other hand, the development urge derives from a felt need to close the economic, military, and political power gap between the more industrialized and less developed countries. In a very real sense, we are witnessing the operation of a powerful international and all-pervasive “demonstration effect”.