The orthodoxy of the day is that Chinese politics is now pragmatic. The China that was once the ultimate in ideological politics in both the intensity of her passions and the follies of her principles has vanished as by the wave of a conjurer's hand. The primacy of ideology, the hallmark of Chinese Communism under Chairman Mao Zedong, has been replaced by the no-nonsense philosophy of Deng Xiaoping who does not care about the “colour of the cat” so long as it catches “the mice.” With near unanimity scholars of contemporary China welcome the change. It promises not only liberation for the Chinese people from the heavy hand of doctrinal politics but also the prospect that analysis of Chinese developments can emerge from the realm of murky esoteric interpretation into the fresh air of reasoned policy evaluation.

In January 1935, three months after the epic Long March was under way, the Chinese Communists captured the second largest city in Guizhou province, Zunyi, and held an enlarged Politburo conference there. The importance of the Zunyi Conference in Chinese Communist Party (CCP) history and, particularly, in the late Chairman Mao Zedong's political career has aroused the interest of both Chinese and western scholars; their reflections on this episode have in turn greatly enhanced its importance, perhaps too much so.

Economists have argued that the compulsory procurement policy has been an important cause of China's past agricultural problems. Political scientists have seen administrative evasion, under-reporting, and other forms of “corruption” in villages during the Mao era as the result of state pressures for larger grain sales. The Chinese themselves now openly criticize the system of unified purchase (tonggou) for being coercive and inefficient; for forcing quota sales by administrative fiat, rather than utilizing market demand and incentives. In April 1985 the government abolished the system of unified purchase, the keystone of China's grain control policy since the early 1950s; in its place is a system of contract procurement (hetong dinggou).

The importance of international trade to the Chinese economy has been growing since the formal approval of the open-door policy at the Third Plenary Session of the 11th Central Committee of the Chinese Communist Party in 1978. However, trade expansion in China faces three constraints. First, there is the theoretical problem that orthodox ideology makes it illegitimate for a socialist country to have a large foreign trade sector. Secondly, there is the institutional problem that the Soviet-type foreign trade mechanism, characterized by a state monopoly of foreign trade, a centralized foreign trade plan, and insulation of domestic from foreign prices, is incapable of handling trade expansion in an efficient manner. Thirdly, there is the economic problem that the lack of competitiveness of domestic goods in the international market limits the country's export and thus import capacity. While the new Chinese leaders are making immense efforts to remove these constraints, this article will focus only on the first. The anti-trade attitude of Communist China is the combined result of China's historical heritage and Marxist ideology. The long history of self-sufficiency in “feudal” China meant that trade was never an imperative economic need. When contact with the west increased in the 19th century, international trade was associated with an influx of opium, an outflow of silver, and a series of unequal treaties. Such an unhappy, early experience of contact with the west has left China sensitive to any increase in international trade.

Hong Kong, by now, is quite modern. At the same time, it remains essentially Chinese. Measured by most accepted indicators, Hong Kong qualifies as a newly industrialized region. It is using so much inanimate power to drive machines that the increase in fuel consumption is no longer proportionate to the increase in population size. It has joined the ranks of the “ecological phase 4 societies” in which the livelihood of the inhabitants is dependent on “extrasomatic energy”. As it began its transition in the pattern of energy usage much later, Hong Kong is still well behind western industrial nations in per capita energy consumption. But in Asia, in 1981, it had the third highest per capita use of commercial energy after Japan and Singapore, which stood at 1,487 kilograms of coal equivalent. Between 1960 and 1979 its average annual growth rate in energy consumption was about 10 per cent, a rate higher than those of all the industrial economies and most Asian countries except Singapore and the Republic of Korea. Hong Kong's productivity is high, ranking third in Asia after Japan and Singapore with a Gross National Product (GNP) per capita that grew at the annual rate of 6 8 per cent. By 1980 its GNP per capita reached US$4,240.5 In terms of employment, in 1981, 49 per cent of its labour force was engaged in manufacturing and construction, 47 per cent in commerce and various lines of services, and just 2 per cent in agriculture. The inhabitants of Hong Kong are keen participants in the mass media.

According to recent accounts of Chinese economic reforms since the fall of the “gang of four,” many changes have taken place in how. industrial enterprises operate. “Responsibility” systems have now been introduced. Enterprises are now accountable for their profits, and losses, starting first with “experimental” plants, parallel to similar changes in the agricultural sector, and in late 1984 generalized to the urban economy.