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Rural industrialization and administrative decentralization in China, 1958-1978 Dolan, Margaret Elizabeth 1978

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•RURAL INDUSTRIALIZATION AND ADMNISTJmTTVE DECENTRALIZATION IN CHINA, 1958-1978 by MARGARET ELIZABETH DOLAN B.A. University of B r i t i s h Columbia, 1976  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in  THE FACULTY OF GRADUATE STUDIES . -Department of P o l i t i c a l Science, University of B r i t i s h Columbia  We accept this thesis as conforming to the required standard  THE UNIVERSITY OF BRITISH COLUMBIA November, 1978 @ Margaret Elizabeth Dolan, 1978  In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives.  It is understood that copying or publication  of this thesis for financial gain shall not be allowed without my written permission.  Department of  PQU-VUOV  ^V^o  The University of. British Columbia 2075 Wesbrook P l a c e V a n c o u v e r , Canada V6T 1 W 5  Date  ^Q0K^VY\WV-  n  y  V.-91-6..  (Ii) Abstract The failure of the highly centralized Soviet model of administration to provide a satisfactory solution to China's rural developmental needs led the Chinese leadership i n 1956 to search for an administrative strategy which would offer both the central control and l o c a l i n i t i a t i v e , unity and diversity i n planning believed necessary for the realization of their ambitious developmental goals. This study examines the process of administrative development i n China i n the context of the r u r a l industrialization strategy which has constituted a fundamental part of the Chinese developmental experience since  1958.  I t i s an attempt to discern what, i f any, pattern has been established with respect to administrative development, what has affected changes i n the r e l a tive distribution of power between the economic actors i n the system and f l - r . l n a l l y , what i s the nature of the administrative system guiding the r u r a l indust r i a l development program i n the closing years of the 1970s. The study compares administrative developments i n China with the concept of linear decentralization explored by a number of Western writers concerned with problems of development i n general and administrative development i n part i c u l a r . The evidence presented here suggests that the process of administrative decentralization i n the developing state i s l i k e l y to be f a r more complex than implied by the concept of a gradual progressive s h i f t of power from the central to the local authorities,in relation to developmental projects of a l o c a l l y relevant nature. Administrative decentralization i n China has been characterized by the continual expansion and contraction i n the number of centres of authority with respect to r u r a l industrial development and by constant shifts i n the responsibilities afforded to any particular level at a given period of time. I t i s also the case that a movement of power out of the Centre has not necessarily resulted i n a similar:' response at other levels of  (iii) the administrative apparatus and, i n fact, a reverse process may be occurring at particular levels outside of the centre. In general, a functional d i v i s i o n of responsibilities based primarily upon resource a v a i l a b i l i t y r e l a t i n g to r u r a l i n d u s t r i a l development has evolved between the t e r r i t o r i a l administrative units. This functional d i v i s i o n of labor between the various actors i n the economic system has shifted over time to accommodate - not only changes i n socio-economic variables but also changes i n t " • the goals and p r i o r i t i e s established by the leadership. The Chinese case i n d i cates that the strategy of r u r a l industrial development chosen along with", changes i n leadership preferences with respect to the incentive system adopted, the technology employed, the nature of the enterprise and of the i n d u s t r i a l system pursued, have been the most important variables i n determining the d i s tribution of authority i n the system. I t i s also a finding of this study that the terminological distinctions made between the deconcentration and the devolution of administrative authority have been extremely useful'tools i n enabling a more detailed breakdown of the administrative process i n China. These distinctions offer the p o s s i b i l i t y of more specific cross-national comparisons of the administrative functions performed by different actors i n countries which do not necessarily share similar formal administrative structures.  (iv) TABLE OF CONTENTS  Introduction 1.  2.  3.  The Relationship Between Local Government and Rural Development  1 4  The Rural Industrialization Program to 1972: Administrative Consequences  16  The Great Leap Forward, 1958-1961  16  Tightening of Aclministrative Control, I96I-I965  22  The Second Leap Forward, 1968-1972  28  Summary  35  Rural Industrial Development i n the 1970s: A New Strategy?  37  Centralization of Planning Authority After 1972  4l  The Decline i n Basic-level Production and Financial Management After 1972.  53  Summary  67  Conclusion  71..  Notes To The Text  7'$  Bibliographical References  8|t  -1-  Int-roduction: The goal of r u r a l industrialization has, since 1958, been one of the most significant developmental aspects i n the modernization of the People's Republic of China (PRC). Since 19^9, the PRC has provided the world with an on-going experiment i n p o l i t i c a l , social and economic development, the objective of which has been to construct, within a r e l a t i v e l y short span of time, a modern, Industrialized communist state from a predominately peasantbased, economically backward agrarian society. Rural industrialization has been a major force i n the campaign to modernize the Chinese Mainland. The program i t s e l f and the organizational framework through which i t i s implemented are of concern to other countries which share many'of the developmental problems which confront the PRC. They are also of immediate interest to those who seek to understand better the developmental process i n i t s specific as well as i t s general implications for the society and the polity as a whole. Rural industrialization i n the PRC must be seen i n terms much broader than the narrow economic sense. To the Chinese leadership, the program of rural industrial development represents a complete r u r a l strategy for modernization of which the economic repercussions constitute a major but not a t o t a l part. Prom i t s beginnings the program has been seen as an instrument through which the PRC can solve many of the problems which confront a predominately rural society which is. attempting to modernize. B r i e f l y , by turning the peasants into part-time industrial workers, by encouraging the growth of a technical force i n the countryside, and by providing the r u r a l areas with the means to transform agricultural production into a modern mechanized process the program i s aimed at the fulfillment of the ideological goals of reducing the gap between peasants and workers, be- . • tween mental and manual labor, and between the c i t y and the countryside. At  -2-  the same time, and i n a more narrow economic sense, the policy of s e l f reliance i n achieving local i n d u s t r i a l i z a t i o n reduces the demand on the centre for scarce resources such as raw material and capital inputs, permits the supply of the necessary i n d u s t r i a l products to service agriculture without placing too heavy a demand on an, as yet, inadequate transportation system, and encourages an efficiency i n coordinating r u r a l supply and demand which for a centrally planned economy, especially one as large and diverse i n terms of i t s natural resources as the PRC, remains a serious administrative problem. I t can be seen then that the rural i n d u s t r i a l i z a t i o n program i s f a r broader i n i t s implications than i t s obvious economic aspects would suggest. The choice of i-means used to achieve i t w i l l have major socio-economic ramifications as well. Indeed, i t i s this aspect of the program which has been the source of much of the controversy which has divided the party leadership since 1958. The present essay i s an attempt to probe i n some d e t a i l one aspect of the modernization process i n the PRC which has been a dominant theme of the Chinese p o l i t i c a l scene for two decades. This i s the interaction of the goal of r u r a l industrialization;and':the;"admlnistrative:\organization-used to achieve i t . What has been the relationship between the program advanced i n order to realize the goal of r u r a l i n d u s t r i a l development and the d i s t r i bution of power i n the system administering i t ? How i s decision-making authori t y distributed between Party,"State and local enterprise? Is a d i v i s i o n of labor with respect to r u r a l industrialization evident between various administrative levels? Where does control f o r the program l i e i n the 1970s? In this respect the essay w i l l be much more exploratory than explanatory i n i t s focus. After b r i e f l y surveying the h i s t o r i c a l progression of the rural i n d u s t r i a l i z a t i o n program beginning i n 1958, the paper w i l l turn to developments which have come t o l l i g h t i n more recent years and particularly  -3-  since early 1976. Although i t i s s t i l l too early to~> assess with any degree of accuracy the f u l l impact of these recent policy changes on the d i s t r i b u t i o n of power within the p o l i t i c a l system, there are definite indications that a new r u r a l strategy i s presently under way which w i l l result i n a reversal of many of the decentralizing tendencies which were observed during the euphoria of the Cultural Revolution. Before examining these trends i t may be f r u i t f u l to provide a discussion of some of the'.conceptual' underpinnings offered by both Western and non-West-, ern writings,including the organizational concepts used by the Chinese themselves, which deal with the questions of r u r a l government and development. I t i s of interest to note to what extent the r u r a l industrialization program i n the PRC has l e n t . i t s support to either of these conceptual frameworks.  Chapter One The Relationship Between Local Government and Rural Development: The developmental problems confronting the newly emerging nation-state of today are enormous. The demands upon the nation's p o l i t i c a l leaders to meet the needs of s o c i a l , economic and p o l i t i c a l developmentrat times appear almost insurmountable. Modernizing governments are called upon to plan, direct and implement developmental programs today which, during the early phases of development of the states of Western Europe and North America were for the most part l e f t to private i n i t i a t i v e . As a result, the modernization process has placed tremendous burdens upon the leadership of the developing states. Not surprisingly, the central governments of these states have found themselves i n undated with demands and functional requirements which have been beyond their capacity to f u l f i l l . A l l too often the net effect of this concentration , of ad1  ministrative power and authority at the centre of government has been a'serious neglect of the developmental needs of those areas lying beyond the reaches of t the p o l i t i c a l , social and economic centres of a c t i v i t y . While recognizing the need f o r firm central control over the modernization process, the majority of administrators and students of development reject the long-term continuation of excessive central dominance of national programs and policies.. Even where the hinterland i s recognized as constituting an inte-  5  gral part of national development schemes, advocates of administrative decent .v. t r a l i z a t i o n charge that the concentration of administrative power and authority at the centre has had a negative impact on the development process over tlme'.n • In addition to creating excessive demands on the central governments of developing states, overcentralization, i t i s argued, has been a major obstacle to developing the f u l l potential of l o c a l i n i t i a t i v e i n accelerating national de^v velopment. As a r e s u l t , l o c a l conditions have been neglected i n setting out  -5-  national objectives, undue delays have been created i n meeting l o c a l needs, and inefficiency has been encouraged through the concentration of scarce adminis-' trative talent at the centre of the p o l i t i c a l arena(Cento Symposium, 1965, 35-38; Maddick, 1963, 35; Humes and Martin, 1961,7). The development of l o c a l representative institutions Having some power and authority over the direction of change i n areas of immediate concern to the l o c a l population has been proposed as a necessary ingredient f o r successful national development. Most important among the positive benefits to be achieved from some form of administrative decentralization are, according to Maddick, the effects of l o c a l participation i n augmenting national efforts toward development : To acrjleve;:sociaIechahge:.:and-:general economic-'o' :"_ growth requires .a spreading :of effort so that l o c a l communities and Individuals can p a r t i cipate, to bring under ideal conditions,energy, enthusiasm, and most Important of a l l , l o c a l i n i t i a t i v e to the working out of l o c a l developmental a c t i v i t i e s . (Maddick, 1963, 24). Similarly', the authors of the . report • .'. The 1965 Cento Symposium On The Role of Local Government i n National Development concluded that "the participation of the people i s essential f o r national development and...can only be assured through i n s t i t u t i o n a l forms of l o c a l governmenti"[augmented by] informal group organizations and a c t i v i t i e s i n community development." (1965 77). 3  The process of administrative decentralization outlined i n these studies i s seen not only as a means of enhancing national developmental .^objectives but also as an indication that p o l i t i c a l development i t s e l f has occurred. There i s here the perception of a positive linear development i n moving from a concentration of administrative power at the centre toward a deconcentration of central authority to i t s agents operating i n the f i e l d followed by an .eventual  -6-  devolution of the authority. :andmeans to i n i t i a t e and implement l o c a l development strategies to the l o c a l governments themselves'(Maddick, 1963, 225;Leemans, 1970,  6 0 - 6 1 ; Cento Symposium, 1967,  77).  1  The process i s viewed ^as a  gradual one with the period of delegated authority to central f i e l d agencies dominating the early and middle stages of development (Maddick, 1963, 226). Once the decision to decentralize administrative powers and functions has been made, questions regarding the timing,degree and form which the decentralization w i l l take remain important issues to be decided by the central authorities. These decisions w i l l be affected hot only by the objective socioeconomic, p o l i t i c a l , geographic or demographic characteristics of a given ft state but also by the objectives and/or policy preferences of the leaders themselves. Whether the concern Is for democracy or freedom, or f o r socioeconomic development or administrative efficiency, i t i s the p r i o r i t i e s of these objectives which w i l l have a major impact upon the pattern of l o c a l government adopted (Leemans, 1970, 17-24). In the majority of developing states i t i s the u t i l i t a r i a n aspects of decentralization which appear to dominate policy-makers'concerns. I t i s these states i n particular, where central planning i s frequently the primary stimulus i n the economy (whether by choice .or necessity), which rely on the e f f i c i e n t economic performance of l o c a l levels i n meeting economic goals. In these states where socio-economic c r i t e r i a dominate, Leemans. suggests that some combination of deconcentration and devolution of powers be adopted which w i l l provide for the gradual inclusion of popular, representative i n s t i t u tions:".in the policy-making process (Leemans, 1970, 6 0 ) . The objective i s to create an i n s t i t u t i o n a l arrangement which w i l l encourage the mobilization of l o c a l talents and resources to meet the demands of modernization while continuing to provide the central government with the means to coordinate the  -7-  development process on a national scale. The nature of the function to be performed and the size of the area to be serviced w i l l also affect the extent to which administrative authority w i l l be decentralized (Leemans, 1970, 46). I f the function i s primarily of a l o c a l character and one that community resources are able, to support (such as minor construction projects, primary education and simple health care f a c i l i t i e s ) , the l o c a l i t y would be the major locus of control. Tasks which require greater resources or which are geared to service several l o c a l i t i e s such as r u r a l e l e c t r i f i c a t i o n projects demand a higher l e v e l of control and coordination of effort. I t i s also the case that the t e r r i t o r i a l basis of the function may change over time. As community resources are expanded through the a v a i l a b i l i t y of education, the acquisition of new s k i l l s and increased economic well-being, the l o c a l i t y may find i t s e l f i n the position to take on larger and more complex projects. However, i t should also be apparent that the process of modernization i t s e l f can create demands for resources which may not be available to the l o c a l i t y . Therefore, the demand for more refined equipment, for s c i e n t i f i c research; for large water control projects for example, may require a larger t e r r i t o r i a l and resource base and higher administrative control. Prom the preceding discussion several points can now be summarized which appear to be f a i r l y consistent i n Western concepts of l o c a l government and development. The f i r s t general proposition i s that l o c a l participation i s perceived as a necessary concomitant;:, of r u r a l development and thereby of national development schemes. Secondly, there i s the i m p l i c i t assumption of an evolutionary process of administrative development i n moving from central cont r o l to .field agents having variable degrees of delegated authority, to l o c a l government as the major focus of i n i t i a t i v e i n planning for l o c a l development. Thus Maddick proposes that with maturity "successful l o c a l authorities w i l l  -8prove to be centres of I n i t i a t i v e . " (1963, 225). A t h i r d point to be noted i s that the areal division of powers w i l l be subjected to pressures to change arising from the process of modernization i t s e l f . Most frequently cited i s the trend toward larger units of l o c a l government as the need for greater resources and technical expertise expands beyond the l i m i t s of the l o c a l i t y . At the same time, however, the resources of the l o c a l i t y are also expected to increase rendering the l o c a l government more capable of administering to other needs of a l o c a l character. Some form of functionally determined basis for cooperation between units of l o c a l government may provide a viable alternative to larger units while at the same time guaranteeing greater p o s s i b i l i t i e s for continued popular participation i n the decision-making process. Therefore, i n spite of the perception of a linear development from central to l o c a l control over certain programs of action, there i s also the implied need for f l e x i b i l i t y which w i l l permit change in':, the administrative division of power as i t i s warranted. F i n a l l y , i t should be stressed that the demand for the eventual devol u t i o n of authority to the l o c a l government units does not constitute a demand for l o c a l autonomy. I t i s rather the participation of the l o c a l population i n the formulation of developmental programs of a l o c a l character which i s the goal of advocates of administrative decentralization. Central control continues to be regarded as a necessary component of national development, providing the broader perspective which i s essential to coordinated development. The i n sistence on l o c a l autonomy i n the absence of the necessary resources to promote l o c a l development w i l l simply contribute to the continued weakness of the l o c a l authorities. The key to national development rests on the capacity ofrt leaders to create an administrative framework which rests on a symmetry or balance between the requirements of control and coordination and f l e x i b i l i t y  and l o c a l i n i t i a t i v e (Maddick,  1963,  227-230).  In the context of the rural development strategy of the PRC a l l of the considerations noted above have figured prominently i n the on-going debate among the leadership over.;, the dangers of overcentralization and the negative consequences of excessive l o c a l determination of the direction of economic " . development.. While a command economy controlled by a highly centralized administrative structure may provide the i n s t i t u t i o n a l framework through which communications and plans are passed down to the lower levels, this type of administration i s deemed to be both i n e f f i c i e n t In';terms of resource allocation and costly i n terms of the need to police lower levels. On the other hand, i t i s the nature of a centrally planned economy that i t r e l i e s on the fulfillment of the national plan i n order to meet i t s overall developmental objectives. What the Chinese Communist Party (CCP) has attempted to do i s to determine the proper distribution between central and l o c a l authority i n economic decisionmaking (broadly defined as i n the Introduction) such that the perceived advantages of both central control and local i n i t i a t i v e are maximized. To achieve these ends the Chinese have attempted hot only to simplify the bureaucratic apparatus of^government but also to create additional institutions through which l o c a l participation may be enhanced. In terms of constitutionally-provided powers, the administrative systemof.'the PRC i s a highly centralized one i n which the organs of l o c a l government are i d e n t i f i e d as the l o c a l instruments of State authority whose decisions and actions are subject to control and supervision by higher levels of authority i n the ^administrative apparatus.. The l o c a l revolutionary committees which are the executive organs of the l o c a l people's congresses(the elected representa-:. tive body) are responsible not only to the elected body at their own level but also to the organ of state administration at the next highest level which i s  -10-  empowered to suspend or annul decisions taken by. the former. "Local revolutionary committees are also subject to the authority of the State Council  :::':.L^  which i s ther.highest organ of state power i n the system (P:.R-°.',No'.ll, 17 March 1978,  12).  Dominating the administrative apparatus at the centre is. the CCP which constitutes the supreme policy-making authority i n the state. Having i t s e l f a highly centralized nature and at each level providing the basis from which legitimate p o l i t i c a l power and authority emanate, the CCP reinforces the common perception of the t o t a l i t a r i a n nature of the Chinese governmental system. The coincidence of membership i n the leading organs of Party and State lend support to this?.contention: In.fact,'";however.,:.the:'.leadership  of the PRC, l i k e the.'.l?,"^  e.lites."bf many other developing countries has been persistent i n i t s opposition to the bureaucratization of the administrative apparatus. As guides to the determination of the distribution of power and authority within the Party and State bureaucracies, Chinese communist ideology has provided i t s leaders with two organizational principles which, theoretically, provide the basis through which both central control and l o c a l f l e x i b i l i t y can be achieved. The f i r s t of these i s the Marxist-Leninist principle of democratic-centralism. The concept defines a system of organization i n which the rninority i s subordinate to the majority, the lower l e v e l to the higher l e v e l , the part to the whole. I t i s , as Johnson suggests,  in. theory at least,...  an effective chain of command...which rests on a fine balance between p a r t i cipation and obedience." (Johnson, 1965, 95).. Applied to the state and party 7  apparatus the concept implies a freedom of consultation and discussion of policies and actions by a l l levels of the party and state hierarchy while r e i n forcing the binding nature on a l l lower echelons of decisions taken at the top..  7  -11The second organizational principle which i s of relevance to the concern for the maintenance of a responsive administrative apparatus i s the Maoist concept of the 'mass l i n e ' . The concept c a l l s for the direct p a r t i cipation of the leadership i n the daily lives and work of the masses. Through this linking of leaders and l e d , the ideas of the masses are communicated to the leadership where they are then systematized and returned to the masses as concrete policies to be put into practice. In this way an effective twoway communication network i s to be established between the administration and the people, the psychological gap between leaders and led narrowed, and the i n i t i a t i v e of the masses In formulating policies realized (Seldon, 1969,  148-  151).  In the now famous document On The Ten Major Relationships formulated i n A p r i l 1956,  Mao l a i d out the general policy guidelines which were f u r t h e r to  c l a r i f y the two concepts of democratic-centralism and the 'mass l i n e ' i n their application to Chinese r e a l i t y . In the relationship between the state and the producing units, he argued: It's not right to place everything i n the hands of the central...provincial and municipal authorities without leaving the factories any power of their own, any room for independent action, any benefits...In principle, centralization and independence forming a true unity of opposites, there should be both central i z a t i o n and independence.. .Every unit.of production \ must enjoy independence as the correlative of central i z a t i o n i f i t i s to develop more vigorously. (P.R.,No.r*l January 1977,  14).  This applied to the agricultural production units as well and was, as the f o l lowing study w i l l show, meant to provide the l o c a l communities with both the material meanss and freedom of action which, i t was f e l t , were necessary for the promotion of the r u r a l industrialization program. I t did not constitute a signal for the complete overthrow of central control In achieving r u r a l Indus-  -12-  trialidevelopment. Mao was concerned with the overall balance of power i n the centrall o c a l relationship. In encouraging l o c a l i n i t i a t i v e , he insisted that i t be of a type which would reinforce not reduce national unity: To build a powerful s o c i a l i s t country i t i s imperative to have strong and unified central.leader ship and unified planning and discipline throughout the country...At the same time i t i s essential to bring the i n i t i a t i v e of the l o c a l authorities into f u l l play and l e t each l o c a l i t y enjoy the p a r t i c u l a r i t y suited to i t s l o c a l conditions. ( i b i d , 17). This principle was to apply not only to relations between the central and l o c a l governments but to those between the lower levels as w e l l . The ideal was a system i n which central planning and l o c a l i n i t i a t i v e and f l e x i b i l i t y i n plan implementation would be exercised  1  simultaneously.  In practice the principles of democratic-centralism  and the 'mass l i n e '  have been subjected to broad generalizations and have met with variable  "  degrees of success i n opposing the excessive bureaucratization of both the state and party organizations. Both structures have come under heavy attack at one time' or another from external and internal c r i t i c s for t h e i r lack of responsiveness to the needs and demands of the people.The f l e x i b i l i t y with which both of the concepts can be interpreted has meant that, i n their appllcacation, the policy preferences of the leadership have played a determining role i n deciding whether democracy or centralism, leaders or led w i l l dominate administrative relations. In addition to the desire to counteract the-negative effects of bureaucratism, Chinese attempts at administrative decentralization have been motivated by the recognition of the need for l o c a l participation i n socio-economic  -13-  .  development. This applies not only to the role of the l o c a l authorities i n promoting l o c a l development programs but also to the role of popular p a r t i c i pation i n these projects. To this end the leadership has experimented with both a deconcentration and a devolution of administrative power to lower levels of the administration as well as promoting the usage of the mass campaign i n mobilizing popular support for higher level i n i t i a t i v e s . In contrast to the linear concept of decentralization expressed i n the Western l i t e r a t u r e , Chinese attempts to decentralize decision-making authority have been highly elastic i n nature. The contraction and expansion of administrative authority and responsibility at various levels of l o c a l government has occurred not only as a result of attempts by the leadership to resolve developmental-problems of a managerial nature but also as a consequence of the shifts i n the p r i o r i t i e s which the various leaders have assigned to the d i f ferent socio-economic goals as well as the p o l i t i c a l preferences of the leadership as how best to meet them. The Chinese case i s further complicated by the.shifting of administrative authority between Party and. State made possible by the introduction of the system of dual rule under which l o c a l government branches are held responsible to their corresponding functional branch at the next highest level of admini1  stration and also the the l o c a l party committee which exercises horizontal control over the l o c a l state administration.(Schurmann, 1968, 194). Introduced as an attempt to bring some measure of coordination to administrative a c t i v i ties on a t e r r i t o r i a l basis, dual rule has encouraged the Party to become i n volved i n the functions of government i t s e l f . The central planners have, therefore, been reluctant to devolve decision-making powers to l o c a l governments fearing a subsequent loss of state control to the l o c a l party committee. Surprisingly, these state planners have been much more generous i n the delegation  -14-.. of decision-making authority to the basic l e v e l production units than have the l o c a l party committees. Despite the rather tortuous path which administrative reform has followed i n the PRC, there has been a. greater consistency to administrative decent r a l i z a t i o n than might appeartto be the case i n the foregoing discussion. Since the introduction of the commune system i n 1958 there have been few structural alterations made i n the formal administrative apparatus. At the same time, an examination of the r u r a l industrial strategy since 1958 indicates that the leadership has attempted, albeit not without a significant amount of manoeuvring, to bring a greater r a t i o n a l i t y to the administrative division of powers. The gradual development of the hsien as an important actor i n the growth of the rural industrial sector provides the best example of the attempt to bring into closer alignment administrative responsibility and l o c a l i n i t i a t i v e . At the same time, the Chinese case i l l u s t r a t e s the problems inherent i n adapting administrative responsibilities to the area! requirements of ("the d i f ferent technological demands of r u r a l development. Throughout the following pages i t w i l l become apparent that the leadership has yet to resolve the continued tension between the administrative demands of agricultural development and r u r a l industrialization as well as those contained within rural i n d u s t r i a l development i t s e l f . F i n a l l y , the study of China's r u r a l industrial strategy which follows suggests that the choice of technologies adopted by the leadership acts as a greater barrier to popular entry into the decision-making process than do the i n s t i t u t i o n a l constraints of the formal administrative d i v i s i o n of powers. At times the leadership has indicated an acute awareness of this fact and has attempted to bring about i n s t i t u t i o n a l changes which would f a c i l i t a t e greater popular participation i n the determination of l o c a l development-decisions.  At other times however, the leadership has tended t o pay only l i p s e r v i c e t o these i s s u e s . The c o n f l i c t among China's e l i t e s over the question o f l o c a l "•<":-. c o n t r o l and i n i t i a t i v e has been c l o s e l y r e l a t e d t o t h i s issue of t e c h n o l o g i c a l choice. I t i s a f u r t h e r i n d i c a t i o n of the extent t o which the personal choices o f the leaderhip have played a v i t a l r o l e i n the determination o f the d i s t r i b u t i o n o f r e s p o n s i b i l i t y and a u t h o r i t y w i t h i n the system.  -16-  Chapter Two The Rural Industrialization Program to 1972:  Administrative Consequences  The Great Leap Forward,1958-1961: Rural industrialization as a program of action did:"not come into i t s own u n t i l 1958 at which time i t s theoretical and organizational basis was far from being firmly established. Prior to t h i s , the adoption of the S t a l i n i s t strategy of economic development stressing rapid economic growth, particularly i n the heavy i n d u s t r i a l sector, capital-intensive technologies and a reliance on i n s t i t u t i o n a l transformation i n order to increase productivity i n agriculture and other sectors of the r u r a l economy, had meant that r u r a l i n d u s t r i a l growth had suffered. Indicative of the r e l a t i v e neglect of r u r a l industry and a g r i c u l ture i n the Soviet model was the small share of manufactured goods produced to service agriculture which, i n 1957,  amounted to only 16 percent of the t o t a l  of provincial i n d u s t r i a l investment projects (Riskin, 1971,  252).  Of particular  concern by 1957 was the low l e v e l of i n d u s t r i a l a c t i v i t y below the level of the provinces which accounted for a mere 3 percent of the gross production value of a l l l o c a l industries ( i b i d , By 1956,  253).  the major structural reorganization of the Chinese countryside  envisioned by the Soviet model (that i s the formation of agricultural producer cooperatives) had been v i r t u a l l y completed. This had been achieved, however, i n the absence of any appreciable gain i n the agricultural surplus upon which the expansion of the modern i n d u s t r i a l sector was so heavily dependent. In addition, the forced r u r a l savings for central investment p r i o r i t i e s secured through increased taxation and procurement quotas had acted as a disincentive to agricultural production and had threatened r u r a l s t a b i l i t y i n encouraging peasant discontent with central policy. The model had also f a i l e d to increase  -17the food supply to the expanding urban sector and had i n s t e a d encouraged r a p i d growth i n the urban population through r u r a l - u r b a n migration (Hofheinz, 148). By 1957  3  1962,  the need to reverse these trends had become a major concern of  the c e n t r a l policy-makers. Improved a g r i c u l t u r a l performance r e q u i r e d both increased f e r t i l i z e r a p p l i c a t i o n and b e t t e r methods of water c o n t r o l . The leadership was divided;, moreover, i n the choice of means'.'to achieve these improvements. By  emphasizing  modern technology i n the form of chemical f e r t i l i z e r p l a n t s and mechanized i r r i g a t i o n techniques, the resources of the modern sector could be brought t o bear upon the a g r i c u l t u r a l s e c t o r . This o p t i o n would encourage continued centr a l c o n t r o l over the a l l o c a t i o n and d i s t r i b u t i o n of the needed inputs.^as i t was the c e n t r a l m i n i s t r i e s or t h e i r branch agencies i n the provinces which administered the modern i n d u s t r i a l s e c t o r . A heavy r e l i a n c e upon modern product i o n techniques would a l s o e f f e c t i v e l y l i m i t the r o l e of l o c a l i n i t i a t i v e i n planning new developmental p r o j e c t s .-.There was the a d d i t i o n a l factor-.as w e l l of encouraging an .uneven p a t t e r n of economic growth between regions as the modern sector alone was incapable of supplying the necessary machinery and equipment to a l l r u r a l areas simultaneously. In c o n t r a s t , the second o p t i o n which was t o . r e l y upon f u r t h e r s o c i a l r e o r g a n i z a t i o n and l a r g e - s c a l e production using t r a d i t i o n a l techniques demanded the a c t i v e p a r t i c i p a t i o n of the l o c a l population i n the massive p r o j e c t s to transform the p h y s i c a l aspects of the countryside. The e f f e c t i v e n e s s of the program depended upon an intimate knowledge of the needs and resources a v a i l able to the l o c a l i t i e s s i n c e , i n the main, i t r e s t e d upon a p o l i c y of r u r a l s e l f - r e l i a n c e . The l o c a l areas themselves would provide, i n accordance w i t h t h i s s t r a t e g y , the greater share of the resources necesaary to meet the demand for improvementslhi both water c o n t r o l and f e r t i l i z e r a p p l i c a t i o n . There was,  -18therefore, the a d d i t i o n a l i n c e n t i v e that the centre would not be required to d i v e r t i t s scarce resources away from the higher p r i o r i t y modern s e c t o r . Given the general d i s i l l u s i o n m e n t w i t h the impact upon r u r a l economic growth of the h i g h l y c e n t r a l i z e d a d m i n i s t r a t i v e s t r u c t u r e of the Soviet model, the majority of the Party leaders were l a r g e l y i n favor of some form of adminis t r a t i v e reform by 1957.  E a r l i e r , at the Eighth Party Congress of 1956,  it  had been decided that an expansion in! the area and degree of competence of l o c a l government l e v e l s was both a d e s i r a b l e and a necessary c o n d i t i o n of r u r a l development (Gudoshnikov, 1957,305). However, questions concerning the extent to which economic decision-making power should be d e c e n t r a l i z e d , how much cont r o l l o c a l l e v e l s should have,:and over what areas of the economy, remained unresolved. Conservative opposition to the accelerated s o c i a l r e o r g a n i z a t i o n i n the countryside had increased f o l l o w i n g the economic d i s l o c a t i o n s created by the r a p i d a g r i c u l t u r a l c o l l e c t i v i z a t i o n d r i v e of 1956  (Hofheinz, 1962,  149). A  major concern of the State Planners was t o avoid a d m i n i s t r a t i v e confusion between the enlarged economic u n i t s and e x i s t i n g l o c a l government u n i t s f o l l o w i n g the amalgamation of s e v e r a l smaller a g r i c u l t u r a l cooperatives. A of s k i l l e d administrators i n conjunction w i t h l i m i t e d production  shortage  technology  added to the management d i f f i c u l t i e s encountered i n the l a r g e r cooperatives. The s o l u t i o n proposed by the State Council was to keep the production u n i t s small a l l o w i n g them a considerable degree of management autonomy while expandi n g the p a r t i c i p a t i o n of l o c a l government a u t h o r i t i e s i n the planning process i t s e l f (Hofheinz, 1962,  149).  Decision-making  a u t h o r i t y over issues -related to  production management was to devolve t o the producing u n i t s w i t h the market p r o v i d i n g the main guide to a c t i o n . At the same time, a deconcentration of a d m i n i s t r a t i v e r e s p o n s i b i l i t y to l o c a l governments would not i n t e r f e r e w i t h  - 1 9 -  continued central supervision of the l o c a l authorities through their respective functional branches. The series of widespread natural disasters which struck the Chinese mainland i n early 1 9 5 7 combined with Party opposition to a heavy reliance on materi a l incentives to increase production performance to frustrate the successful implementation of the above administrative reforms. Over the protestations of the State Planners, Mao and his supporters fought to introduce administrative changes which would., they believed, enhance the powers of the l o c a l authorities to respond more effectively to the increasingly serious shortcomings of agricultural production."'" Once more the argument for a major devolution of administrative responsibilities i n conjunction with extensive social reorganip  zation regained momentum. Arising out of the above debate was a strategy for rural development based upon the policy of 'walking on two legs' which has since been attributed to Mao Tse-tung. I t called for the application of both modern and indigenous techniques to achieve the simultaneous development of industry and agriculture, of heavy and light industry, and of national and l o c a l industries (Sigurdson, 1 9 7 3 s  6 9 ) .  By simplifying the bureaucratic apparatus, by leaving controloover'^  the profits from l o c a l enterprises i n l o c a l hands, and by c a l l i n g l o c a l i n i t i a tive and responsibility into play, the masses would, i t was argued, be encouraged to foster growth i n the rural Industrial sector i n order to meet their most immediate needs: ...successful labor-intensive techniques were expected quickly to produce a labor shortage and a demand for simple labor-saving machinery. At the same time., the increased income accruing to the cooperative from i t s use of surplus labor could provide the capital for such simple forms of semi-mechanization. This, i n turn would release labor for further construction but with greater mechanical help. Both the demand for the means r.".' :. -• j'—'-lL'.i-- iiof procuring new t o o l s anoLmachines,would s p i r a l ; . . . (Gray, 1 9 7 0 , 5 0 3 ) .  -20-  Under s t r i c t Party leadership, centralization over policy, p r i o r i t i e s would be assured while democracy i n plan implementation would be achieved through mass involvement i n the decision-making process. The transferring down of administrative cadres (as a result of administrative simplification), was to bring the 'mass l i n e ' into action. The form of aclministrative decentralization adopted by the Third Plenum of the CCP Central Committee i n October 1957 was not as; complete as that envir  1  sioned above. Rather than being transferred to the producing units themselves, decision-making authority became concentrated i n the hands of the Party "at the l o c a l levels of administration (Schurmann, 1969, 206-209). As a consequence, the provincial party apparatus gained a considerable degree of control over previously state-operated, centrally controlled enterprises, over commerce and the transportation system,-and over the allocation of materials and personnel. The system of revenue-sharing was also broadened giving the provinces a significant Increase i n financial power and, thereby, control over investment decisions.(ibid, 208). A s i m i l i a r pattern, albeit on a smaller scale, rci. occurred at the level of the commune (Ann, 1975,  641-645;  Riskin, 1971,  260).  The natural impulse to invest i n i n d u s t r i a l projects guaranteeing a higher rate of return, led not to the expansion of enterprises producing goods to service agriculture but to the creation of provincial industrial systems which began to compete with the modern sector for scarce resources. Here,--as" ; T  well as at the commune l e v e l , agriculture was subordinated to concerns for more profitable undertakings. In conformity with the policy of self-reliance, a g r i culture was squeezed to provide the necessary surplus for l o c a l investment p r i o r i t i e s which,tat the level of the commune i n particular, were, more often than not, uneconomical and exceedingly primitive operations. I n their haste to  -21-  make the most of their new-found,- economic powers, provincial and commune party committees contributed to serious disruptions i n the r u r a l economy. In the i n d u s t r i a l sector, loss of central control led to declining product quality and output performance, to competition for scarce resources needed for the centrally controlled 'key industries', and to serious transportation bottlenecks,/ More important in'-.terms of the over-all strategy was the decline i n agricultural performance brought about i n great part by the concentration of control over economic management decisions i n the hands of the commune party committee. In spite of the f a i l u r e to realize an improvement i n agricultural performance, the 'walking on two legs' approach to r u r a l development was not an i r r a t i o n a l approach to China's r u r a l developmental problems of the 1950s/ The shortage of trained administrators and lack of technical expertise, the inadequate transportation system which made the costs of transporting indust r i a l goods to-crural areas prohibitive, the scarcity of capital for investment i n modern Industrial expansion to service l o c a l needs a l l point to the basic rationality of a program which envisioned a temporary dual strategy of economic development for the Mainland. These same conditions, however, made the adoption of a highly decentralized system of administration especially d i f f i c u l t to implement and control. The leadership had met with l i t t l e success i n their f i r s t attempt to come to terms with the complexities of creating an administrative system which would offer the opportunity to r e a l i z e both l o c a l i n i t i a t i v e and central control. The Great Leap experience indicated to the leadership the d i f f i c u l t i e s inherent i n transferring downward a broad range of decision-making powers for which the requisite administrative talents at the l o c a l level were sadly lacking. At the same time, i t became apparent that once power had devolved from t'  -22-  the c'entre to the regional authorities i t became extremely d i f f i c u l t to control i t s subsequent application. As a result, what to the centre appeared to be a major devolution of administrative authority proved to be just the opposite where the individual producing unit was concerned. By 1961,  the leadership was  s t i l l confronted with the basic.question of how to distribute authority within the administrative system such that the negative consequences for planning and control, and ultimately for the economy, experienced during the Leap would not recur.  Tightening of Administrative Control, I96I-I965: The administrative consequences of the Great Leap strategy had been a substantial curbing of the power and authority of the state planners, a marked increase i n the powers of the l o c a l party committees at the provincial and  ~  commune levels of administration, and the p o l i t i c i z a t i o n of the entire economic system by:-placing authority for economic decisions firmly i n the hands of the Party from top to bottom of the administrative system.' The-role of the. CCP i n economic planning decisions has remained a permanent feature of the .Chinese economic system (Howe, 1973,  236).  In the realm of economic management, however,  the influence of the Party has continued to be a source of contention among '>•' the central leadership. Between 1959 and 1962,  decisions were taken by central party and state  authorities which were to undo to a considerable extent many of the administrative changes associated with Mao's Great Leap strategy. By 1961,  steps were  taken to curb the excessive power of the provincial party committees by establishing s i x regional Central Committee Bureaus which, as agents of the Sentre, were delegated the authority to directly supervise many of the major economic a c t i v i t i e s of the provinces. These bureaus were given control over resource.'.  allocation, the interprovincial transfer of material, and even over the use and distribution of l o c a l resources (Chang, 1975,  145). The State Planning  Commission was enlarged inr.1962 and central control over financial management and the banking system re-established ( i b i d , 144). At the lower levels of administration, s u p e r v i s i o n ; of much  "of l o c a l enterprise expansion,  education and r u r a l health care, reverted to the state and party authorities at the l e v e l of the hsien (Ahn, 1975,  6 4 l ) . Tax-collection and banking and  credit f a c i l i t i e s were also returned to the hsien l e v e l of administration, and trade and procurement policies were henceforth to be regulated not by the communes but by the state-controlled supply and marketing agencies organized on a national basis (Ibid,  642-643).  These administrative changes, the leadership argued, were necessary on both economic and p o l i t i c a l grounds. The economic dislocations caused by the excesses of poorly planned economic undertakings of the past few years had been worsened by. the presence of serious natural disasters (primarily caused by flooding) i n the 196O-I96I period. In addition, the withdrawal of Soviet technical and material assistance and the subsequent breakdown i n relations between the two countries meant that the PRC would now be forced to rely on i t s own efforts and resources i n i t s attempts to modernize i n a hostile p o l i t i c a l environment. Given the major shortages of food at that time, China could 111  afford to divert i t s scarce resources into technically backward and eco-.  nomically i n e f f i c i e n t r u r a l enterprises (Riskin, 1978a,79). In spite of these 'objective' rationalizations made by the leadership, Riskin notes that the excessive chopping-off of even economically e f f i c i e n t r u r a l enterprises during this period suggests that the personal preferences of the leaders themselves were not without influence,(ibid, 83). Subsequent policy choices also indicate that the faction i n control at the centre envision-  -24-  ed a very d i f f e r e n t strategy f o r China's r u r a l i n d u s t r i a l i z a t i o n than that which had enjoyed a b r i e f p e r i o d of implementation i n the 1958-1961 p e r i o d . The majority o f the h a s t i l y constructed commune and b r i g a d e - l e v e l enterp r i s e s were shut';down i n the immediate post-leap p e r i o d , and f u r t h e r expansion was discouraged i n the 1962 Rural Communes (Ma Sen, 1977,  Revised Draft of the Regulations Concerning the 186;  Ann, 1975,  641). Some small-scale process-  i n g plants d i d continue to operate as long as they met the c r i t e r i a of s e r v i n g a g r i c u l t u r e , o f s e l f - r e l i a n c e and o f not d i s t u r b i n g a g r i c u l t u r a l production through e i t h e r the d r a f t i n g of l a b o r or other resources not authorized by the "Regulations'. The production of farm machinery,mainly t r a c t o r s , remained concentrated i n the l a r g e r i n d u s t r i a l centres under p r o v i n c i a l and, i n ""some., cases, c e n t r a l control.(Ma;Sen, 1977,  275):- The.hsien  became an  important  centre f o r the r u r a l t r a c t o r s t a t i o n s and w.a'ss p r i m a r i l y concerned w i t h the s e r v i c i n g and r e n t i n g out of . such equipment to the communes and  brigades.  Although e f f o r t s to e s t a b l i s h c e n t r a l l y operated t r u s t s c o n t r o l l i n g the production and maintenance of t r a c t o r s were i n t e r r u p t e d by the C u l t u r a l Revolut i o n i n 1966,  they i n d i c a t e t h e t d i r e c t i o n i n which the leadership was headed  during t h i s period of ' r e s t r a i n t ' . At the same time that economic policy-making was being  reconcentrated  i n the hands of the c e n t r a l a u t h o r i t i e s , the f a c t o r y management was  being  given greater a u t h o r i t y over decisions concerning the d a i l y operations of the e n t e r p r i s e . ( E c k s t e i n , 1977, buro i n 1961  90-94). The "Seventy A r t i c l e s " passed by the P o l i t -  gave c l e a r guidelines, f o r the r e g u l a t i o n of i n d u s t r y . A l l non-  profit-making • enterprises and a l l c a p i t a l c o n s t r u c t i o n outside of the c e n t r a l plan were to cease operations. Consumer goods and small machinery products serving a g r i c u l t u r e were to receive p r i o r i t y , production was to be enoeor^ged through the use of m a t e r i a l rewards, and r a t i o n a l management s t r e s s i n g e x p e r t  -25-  t i s e versus mass participation and quality versus quantity was to prevail (Chang, 1975,  135-136).  In terms of planning authority two features of the s h i f t i n policy encouraged, the expansion of the role of the hsien i n the r u r a l industrialization program. The f i r s t was a s h i f t away from the emphasis on heavy machinery and steel production which encouraged higher level control i n i t s demand for i n puts and resources, to concern for the establishment of l o c a l chemical f e r t i l i z e r and small-scale agricultural machinery plants using modern technologies. The second was a de-emphasis on the role of human organization i n large-scale water control and i r r i g a t i o n a c t i v i t i e s , and an emphasis instead on the use of'water pumps and e l e c t r i c a l power stations (Perkins, 1973,  59). The hsien,  while i t did not yet have sufficient resources to produce these modern inputs on i t s own, became important as a coordinating body linking higher l e v e l production with lower level needs. Its resources did, however, lend themselves to serve as the focal point for the establishment of an agro-scientific network which these new industrial inputs were designed to complement. As the state planning unit for the communes, brigades and production teams, the hsien was also In the position to control the character and pace of further rural indust r i a l growth at these levels. The hsien was constrained i n i t s role as i n i t i a t o r of r u r a l Industrial strategy by the planning and financial control which was retained by the prov i n c i a l l e v e l . The demand for agricultural machinery and alsoufor .^modern. teo&-riologies . • tended to reinforce the provincial role i n r u r a l industrial development even though the hsien had assumed a more important role as a coordinating agency. There i s some evidence to suggest that the central leadership between 1961 and 1965 envisioned an expansion of the provincial role i n rural industry and that the 'small,' modern and complete' r u r a l plant was to be a temporary phenomenon. The concluding report of the 1965 National Conference  -26-  held by the State Economic Commission suggests that a more integrated indust r i a l system was i n the offing. The report called for the gradual reorganization of China's processing industries by:-  ;  ...turning existing enterprises into specialized factories i n conformity with the needs of production and then organizing wide cooperation on the basis of specialized production... (SCMP 3^58, 12 May 1962, 16-17). These two features, specialization and cooperation, the report concluded, "were an objective law i n developing mass production and a path a l l i n d u s t r i a l ly advanced countries had to take." . The machine-building industry was held up as a case i n point of the uneconomical and unscientific practices presently characterizing China's industries. There i s l i t t l e doubt that the pursuit of such v e r t i c a l l y integrated industrial systems would have effectively limited the role of l o c a l i n i t i a t i v e i n rural industrial planning. The necessary coordination of production plans which would accompany the v e r t i c a l integration of i n d u s t r i a l production would have (as w i l l be seen later) encouraged the centralization of planning decisions as well as management especially where product quality and standards of production were concerned. Implementation of the i n d u s t r i a l systems approach was, however, effectively delayed by the intervention of the Maoist-led attack on the negative social and p o l i t i c a l consequences (as perceived by the opposition) of a rural strategy which emphasized sectoral growth i n strategic areas and r e l i e d heavily ;.up6n material rewards and:-:the role-.of-."scientific" research i n promoting r u r a l development. Opposition grew as well against a development strategy which encouraged the role of expertise, fostered inequality i n both the economic and social spheres and, according to; l a t e r charges, paved the way for spontaneous capitalism to flourish i n the countryside. In terms of administrative power-sharing arrangements, the period repre-  -27-.  sented the establishment of a two-track system of control. Much of the authori t y for planning and control over financial and material allocations for indust r i a l expansion which had devolved to the provincial levels of administration during the Great Leap period now reverted to the central state apparatus or was deconcentrated to i t s branch agencies i n the regions and provinces while con%: t r o l of the day-to-day management of economic decisions devolved to the enterprises and basic-level production units. At the same time, subprovincial levels of government began to assume an increasingly important role i n economic development a c t i v i t i e s as the administrative authority which had become concentrated i n the hands of the provincial party apparatus during the 1958-1961 period was deconcentrated to lower levels of administration. Within the state administrative system, the I 9 6 I - I 9 6 5 re-~a: forms witnessed power flowing i n many directions and into many hands at the r:\ same time with the result that a much more diffuse power-sharing arrangement had evolved by 1965. The role of the Party i n the daily a f f a i r s of the enterprise was effect i v e l y limited by the emphasis of the strategy on technical and managerial expertise and on material rewards. Industrial undertakings at the level of the commune and brigade were substantially curbed, and were limited to r e l a t i v e l y minor processing industries which were more i n keeping with their resource capabilities. Also, we see the emergence of the hsien as an important locus f o r the coordination of an'Agriculture F i r s t ' strategy for r u r a l development a i r r though the provinces retained their control over the financial and technolog i c a l resources needed to i n i t i a t e policy. The o v e r a l l ! strategy r e l i e d less on l o c a l self-reliance which would have encouraged greater autonomy, at the subprovincial level and more on a nation-wide self-reliance which emphasized the development of 'key'industries especially indigenous sources of energy and  'key' educational institutions designed to create a modern s c i e n t i f i c community to lead the development process.  The Second Leap Forward, 1968-1972: I f the period of rural i n d u s t r i a l development throughout the early years of the 1960s can be summarized as an attempt to revolutionize production technology, the Cultural Revolution i s best characterized by i t s attempt to bring about a revolution i n production relations. In i t s emphasis on mass participation, on Party leadership, on egalitarian idealism and normative appeals, the period reflects many of the aims and objectives of the Great Leap Forward. Yet, operating from a different (and more advanced))material base than that which existed i n 1958, the Cultural Revolution constituted a new phase of experimentation i n the development of a program designed to foster r u r a l i n d u s t r i a l growth. In 1958, the Great Leap strategy had been aimed at the mobilization of. indigenous methods of production (social reorganization of the rural handicraft industry and of agricultural laborers) to serve the demands of the rural population f o r consumer.:- goods while the modern sector was to continue to provide agriculture with i t s heavy industrial inputs. From 196I-I965, the strategyhad been to develop rural industry based on the use of modern technology, a sectoral strategy, and an 'Agriculture-First' policy. The Cultural Revolution period aimed at achieving all-round development u t i l i z i n g both modern and indigenous techniques to create s e l f - r e l i a n t i n d u s t r i a l systems i n the rural areas: All-round development of the l o c a l economy was part of a broad model which aimed at promoting I n i t i a t i v e >• for economic growth by giving the l o c a l i t i e s both responsibility and means f o r transforming their econo-"'.c mic, health, educational, and cultural conditions s e l f reliantl y . (Riskin, 1978a, 86).  -29-.  To achieve the obj ective of all-round development based on l o c a l i n i t i a tive and self-reliance, the two-track system associated with the e a r l i e r strategy had to undergo a major transformation. This two-track system had, i r o n i c a l l y , come under attack both for i t s encouragement of bureaucratic centralization and for fostering autarchy and localism among the producing units. The Cultural Revolution reforms were aimed at simplifying the higher levels of administration while reducing the autonomy of the enterprise by reconcentrating control i n the hands of the Party. Mass i n i t i a t i v e was, i n theory, to be i n s t i t u t i o n a l i z e d i n the newly created revolutionary committees (consisting of representatives of Party, Army and masses) which were, however, subordinated to the l o c a l party committee or tb the party committee of the enterprise(Bettleheim, 1973, 35). ^ One of the most significant, i f only symbolic attempts to curb the bureaucracy at this time was the paring of central ministries and planning agencies whose numbers had been expanded during the 1960s, while expanding the scope and degree of administrative competence of the l o c a l i t i e s (under l o c a l party and revolutionary committee control) for o v e r a l l ! development. As Sigurdson argued i n 1973, the paring process may have been more a matter of form than content: Authority and power are l i k e l y to be shared among more people than previously, but the changes i n the central organization seem to be mainly a question of delegating less urgent matters to l o c a l governments while concentrating on those which are essential for promoting over-all economic development and rapid industrialization. (Sigurdson, 1973, 70). In terms of economic management, a considerable degree of l o c a l autonomy did devolve to the l o c a l party apparatus at the lower levels of administration. Much of the evidence to support this claim stems from attacks on the Cultural Revolution policies which began to appear i n the media i n 1972. Charges of  -30-  declining grain output, competition f o r raw materials, excessive emphasis on sideline production, and tendencies toward localism (producing only f o r v. • :  one's own advancement) were leveUed against l o c a l authorities, i n particular the commune and brigade-level management committees (SCMP 4985, 15 Sept. 1971> 118-132; SCMP 5158, 6 June 1972, 94-96). These attacks, beginning as they d i d as early as 1971, suggest that lower level autonomy, especially at the commune and brigade l e v e l s , was more a consequence of a loss of control and discipline than of any preconceived plan f o r increasing the administrative competence of these l e v e l s / As indicated i n the introductory remarks t o this section, the Cultural Revolution strategy f o r r u r a l industrialization stressed-local i n i t i a t i v e , s e l f reliance, and the rapid development of small but. complete l o c a l industrial systems. Given the emphasis on the development of an i n d u s t r i a l base i n the countryside, iron and steel production, e l e c t r i c a l power and cement processing became important additions to the e a r l i e r expansion of l o c a l chemical f e r t i l i z e r and small agricultural machinery plants. Now, however, under the renewed emphasis of the policy, of r u r a l self-reliance, the proximity of decisionmakers and planners to the sources of raw material and labor and c a p i t a l inputs became an important element i n the overall!, strategy. There developed within this framework a d i v i s i o n of competence f o r r u r a l i n d u s t r i a l development which corresponded closely with the service to be performed and the control over the necessary financial or technological resources essential to the fulfillment of a given function. For example, the planning and implementation of large water conservation schemes involving intercounty cooperation, major farmland c a p i t a l construction projects requiring substantial state assistance, and large-scale agricultural machinery production requiring ad-/ .: c vanced technological inputs f e l l under the j u r i s d i c t i o n of the provincial l e v e l ,  -31-  while on a limited scale, the hsien, commune, and brigade assumed^, leadership of these projects (FBIS, 18 June 1971,  D 2 ; . 11 Dec. 1970,  C4; 4 March 1974,  B13).  The focal point for the r u r a l industrialization program and to a large extent for many of the s o c i a l , p o l i t i c a l , and economic a c t i v i t i e s associated with the policy of rural self-reliance, became the hsien during this period. Hsien authorities established p r i o r i t i e s and quotas for commune and brigade undertakings, organized and mobilized l o c a l water conservation and land reclamation projects:, led l o c a l r e c t i f i c a t i o n campaigns, operated training programs for technicians i n hsien, commune and brigade-run enterprises, and established workshops i n the l a t t e r (FBIS, 7 Dec. 1970, June  1971,C2;  SCMP 4855, 2 March 1971,  C7; 28 May 1971,  Dl; 22  132-133). The hsien revolutionary  cortmittee established p r i o r i t i e s , the direction and speed of development for commune and brigade industries as well as setting down over-all plans and unified arrangements for l o c a l industrial development (SCMP 4985, 15 Sept.  1971,  118-132). Many of these a c t i v i t i e s remained,however, subject to provincial budgetary allocations and provincial plans for the construction of major hydro-electric projects upon which a number of county-led undertakings remained heavily dependent. In this respect, the autonomy of the hsien i n economic decision-making can only be said to have increased relative to i t s position i n I965:.."";  Beyond the scope of the state plan which tended to reinforce the control of the centre and the provinces over l o c a l industrial development was the rapid expansion of a large number of collectively-owned county, commune and ". :  _  brigade enterprises which did enjoy considerable autonomy i n planning and management. In most cases, the planning authority for the industry, depended on i t s level of ownership. The output of state-owned enterprises at a l l levels was, therefore, included i n the state plan while that of collectively-owned  -32-  industries at and below the l e v e l of the hsien was not, with the exception of those producing components for a higher level plant or products for export (Sigurdson, 1977 37-38). Control over this unplanned sector devolved p r i marily to the county-level planners (Eckstein, 1977,95). However, the communes and brigades also enjoyed a large amount of freedom i n operating these units. The emphasis on l o c a l self-reliance i n establishing r u r a l industrial systems was. clearly a major factor i n promoting this autonomy i n planning, part i c u l a r l y for the expansion of collectively-owned county, commune and brigade enterprises. Since l o c a l resources were to be exploited i n expanding r u r a l industry, no higher level approval was necessary so long as the state quota for agricultural and sideline products was f u l f i l l e d , competition for scarce resources with the centrally-operated industries was avoided, and state subsidization was not needed (Riskin, 1978a, 88-89). In i t s p r a c t i c a l application, the push to rapidly develop the material basis of the commune and brigade levels of ownership led not only to interference with agricultural production but also to violations of the conditions of their expansion noted above. Local party cadres, anxious to f u l f i l l higher level directives to promote basic-level i n d u s t r i a l growth, began to press production teams to o v e r f u l f l l l targets and quotas and to expand sideline production to support the expansion of commune and brigade industry. Team laborers began to flock to the rural;:'towns seeking work i n the expanding industrial sector (SCMP 5306, 13 Jan. 1973,  87-88). At the same time, i n their efforts to  reduce their dependence upon higher level inputs of agricultural machinery, communes and brigades began to expand their industrial concerns into areas reserved f o r the hsien, thereby creating conflict over the demands for similar' resource'inputs (SCMP 5158,  6 June 1972,  94-94).  The administrative reform of the 1968-1972 period differed i n many areas  -33--  from the reforms of the Great leap era. In comparison, the 1968 reform was more, sophisticated than i t s precursor. Rather than a wholesale devolution of power from the centre to the provincial and commune levels of administration such as occurred during the 1958-1961 period, the administrative changes made after I968 reflected i n part attempts to deal with the requirements of an economy which had become increasingly complex. The functional d i v i s i o n of powers between administrative levels with respect to economic responsibilities which had begun to appear i n the 1960s now was further elaborated upon. The competence e of the hsien was expanded i n connection with i t s new responsibilities for small scale r u r a l i n d u s t r i a l growth. Similarly,y\ more power devolved to the communes and production brigades to determine to a considerable extent the growth of their collectively-owned enterprises. At the same time, the provinces were . ?T given greater scope i n handling the larger i n d u s t r i a l undertakings r e l a t i n g to r u r a l industrialization. I t would be naive to conclude from the above that the administrative reforms taken i n 1968 were simply the result of efforts to come to terms with the management requirements of an expanding economy.. The Cultural Revolution was aimed at bringing about significant changes i n a l l spheres of a c t i v i t y i n cluding the s o c i a l , p o l i t i c a l and economic. I t represented an attack against not only the excessive bureaucratism of the preceding years but also against an approach to development which fostered specialization and bureaucratic p r i vilege, and encouraged productivity through material gain, a l l of which acted against the decentralization of administrative power. In terms of i n d u s t r i a l development, the decentralizes of the Cultural Revolution era aimed at the creation of a 'horizontally integrated economic system' i n which the workshop, without undermining production efficiency, would become the basis for the education and socialization of the masses through the forces of technical modern!-  -34-  zation (Andors, 1974, 26-27). Relying heavily upon l o c a l inputs of s k i l l s and resources and men and material, l o c a l industries were to develop i n accordance with l o c a l needs, a condition of operation which required greater l o c a l participation i n the economic decision-making process. Providing immediate supervision over the decision-making process as well as ideological guidance for the motivation of the decision-makers was the l o c a l party committee. And, as i n 1958, this proximity of l o c a l party cadres to the decision-making process carried over into the operational!zation of the decisions themselves once again contributing to a blurring of the functions between State and Party and between the Party and the management of the enterprise. As a result, party cadres became caught i n the dilemma of loyalty to the l o c a l i t y and to the enterprise or to the ideol o g i c a l imperatives of the movement leaving them open to charges of localism from above and of commandism from below. In addition, the devolution of administrative•authority to the l o c a l levels l e d to a concentration of production management decision-making i n the hands of the commune and brigade party committees. Production team and enterprise management were l e f t with l i t t l e latitude i n decision-making, a.situation, which l e d to serious disruptions for the overall economy.. In their attempts to devolve administrative power f o r l o c a l undertakings to the relevant l o c a l authorities, the leadership i n 1968 was faced with problems similar., to those which confronted their counterparts i n 1958. The d i f f i c u l t i e s of ensuring loyalty to the Party Gentre from the l o c a l party cadres remained unresolved. Constraints, on e f f i c i e n t administration also persisted i n the lack of administrative talent among l o c a l party cadres, i n part exacerbated by the p o l i t i c a l upheavals attending the Cultural Revolution i t s e l f . Added to these were the many problems inherent i n achieving both a rational as well  as a more egalitarian distribution of resources working within a framework of a development policy which espoused rural self-reliance. By 1972, however, i t was the f a i l u r e of the reforms to achieve positive results i n economic performance which led to the renewed debate among the leadership over the direction i n which the country was moving and over the distribution within the system of the power to determine that direction. I t was a debate which was ultimately to explode into another major p o l i t i c a l confrontation at the top of the power hierarchy.  Summary: In their attempts to develop a comprehensive program for China's r u r a l industrial development, the leadership of the PRC between 1958 and 1972, had -•. adopted policies which were to have a widely varying impact upon the d i s t r i bution of power and responsibility i n the system. Each strategy affected  oh-.;:-  changes i n the sphere of competence between a l l actors In the economy between s  levels of government, between State and Party, between "government and enter-: I prise, and f i n a l l y between a l l of these and the masses. Yet, after more than fourteen years" of experimentation, the leadership had s t i l l to resolve the contradictions which persisted between central planning and l o c a l i n i t i a t i v e within a planned economy. In simple terms of managing an economy as large and diverse as that of the PRC, the complexities are l i k e l y to be enormous. In the simultaneous pursuit of rural i n d u s t r i a l expansion and increased agricultural production these problems are simply magnified. Added to these managerial problems were the p o l i t i c a l implications of a strategy which, i n many instances, assumed an importance i n the on-going debate equal to that of the economic consequences.  -36-  During this period, the r u r a l i n d u s t r i a l base had, imfact, expanded s i g n i f i c a n t l y . From scattered rural handicraft production i n 1958,  i t had, by  1972 developed into a f a i r l y comprehensive, although still,immature r u r a l industrial system. The leadership also appears to have attempted to insure a division of competence between levels with respect to responsibility for developing the expansion of l o c a l industry. By 1972,  the provincial and municipal  levels, as the t r a d i t i o n a l centres of heavy industry, continued to be the major suppliers and planning authority ofuheavy agricultural equipment and e l e c t r i c a l power to the countryside. The hsien for i t s part, provided the main focus for the small-scale r u r a l industrial sector which included chemical f e r t i l i z e r , cement, water pumps and l i g h t agricultural machinery, as well as the agricultural machinery repair network. Communes and brigades remained primarily occupied with agricultural sideline a c t i v i t i e s , small processing industries, and farm machinery repairs (although, i n fact, these a c t i v i t i e s were increasingly slighted i n the later years of the Cultural Revolution era). Given conditions of p l e n t i f u l resources or of stable slow growth this division of labor with respect to rural industrialization may have been operative. This w i l l never be known, however, since the leadership adopted a goal of rapid development which encouraged each l e v e l to disregard the overall", s t r a ^ tegy i n looking out for i t s own interests. The result was the imbalances which had become f u l l y apparent by.  1971.  Chapter Three Rural Industrial Development i n the 1970s: A New Between 1972 and 1975,  Strategy?  China's r u r a l industrial program was subjected to  the attempts of the leadership to reassert the .goals of order and s t a b i l i t y i n Chinese society. By late 1971,  signs had begun to'appear i n the Chinese media  that the mobilization phase associated with the Cultural Revolution was coming to a c l o s e and that a period of retrenchment and consolidation, similarr to that experienced i n the I96I-I965 period, had taken i t s place. In the economy questions of efficiency, quality control and unified planning,: of rational systems of management and standards of production signaled that, for the time being at least, checks on rapid i n d u s t r i a l expansion were being established. The apparent comparability of the 1972-1975 phase of China's rural indust r i a l strategy to that adopted i n the early 1960s tended to mask many Important changes which were occurring which were substantively different from the earl i e r period, changes which included greater:;, not less, State and Party interference i n the management of the economy. The pattern which was evolving, however, was being strongly resisted by the opposition on the ' l e f t ' , the socalled 'Gang of Pour' associated with the aging Mao. Not u n t i l early 1976,  with  the death of Mao and the 'gang' effectively silenced, did the new strategy for the mobilization of the Chinese r u r a l economy become f u l l y apparent. Periods of economic mobilization i n the past have been associated with high levels of Party and State involvement, with an emphasis upon the transformation of the economy through a reliance on mass enthusiasm and mass campaigns reinforced by a high degree of moral suasion to realize rapid increases i n production. Redness or ideological correctness and practical work experience have taken precedence over expertise, collective willpower over technological  -38-  change, and lower level i n i t i a t i v e over bureaucratic control (Skinner and Winckler, 1969,  432-438). These are the characteristics which accompanied the  Great Leap and the Cultural Revolution discussed i n the preceding chapter. In the present period of mobilization which has been evident since 1976, the Party leadership appears to have adopted a combination of techniques to achieve rapid economic growth which represents a significant departure from past mobilization phases. On the one hand, appeals for mass mobilization and collective willpower based upon ideological appeals have been i n s t i t u t i o n a l i z e d i n the National Campaign To Learn From Tachai i n Agriculture. Simultaneously, the leadership has resurrected the role of material incentives to a dominant position i n the campaign to promote rapid economic growth. Similarly, expert:', t i s e , s c i e n t i f i c and technological advancement and technical s k i l l s have been given clear precedence over ideological purity or redness just as formal education has to a considerable extent replaced the highly valued experience of the workplace associated with past campaigns. The effect of the above strategy on the distribution of authority and responsibility i n the economic sphere has been substantial. In terms of r u r a l Industrial development, much of the previously dispersed authority was to become concentrated f i r s t at the level of the hsien and l a t e r , i n the hands of the provincial party and state planning agencies. Below the level of the hsien the economic importance of commune i n d u s t r i a l undertakings has been given precedence over that of the brigade although, since 1976,  neither level.enjoys  the autonomy which I t had experienced i n the 1968-1972 period. Even the degree of competence of the production team has been seriously compromised by Central policies i n spite of frequent exhortations to lower levels to respect team autonomy. Overall],; the effect of measures adopted by the central authorities i n recent years has been to place restrictions on l o c a l planning i n i t i a t i v e  -39-  with respect to rural industry both through administrative changes and through greater higher l e v e l control over resource allocations, to r e s t r i c t the management autonomy of the enterprise through the establishment of v e r t i c a l manageri a l and industrial networks controlled by the provinces, and to bring the .1 entire rural economic system more f u l l y under the control of the unified plan and the Party. The information upon which the above interpretations are based stems p r i marily from translations of Chinese press releases from 1970 to May 1978.  As a  result, the reader i s at the mercy of both the f i l t e r i n g processes involving t the translator and the selection process involved i n my own '^tudieis. The scope of the a r t i c l e s chosen was however f a i r l y broad being concerned with r u r a l developments i n general and with r u r a l industrialization i n particular. These were, therefore, primarily of a l o c a l character concerned with the administrative levels, at and below the provinces. Unfortunately, the intermediate levels of government (the regions and d i s t r i c t s ) received l i t t l e coverage i n these materials making i t d i f f i c u l t to assess their areas of competence with respect to r u r a l industrial policy. Their absence may indicate that they have not been considered to have played a .significant role i n r u r a l i n d u s t r i a l development although this l i n e of argument remains necessarily weak."'' In examining the translated Chinese texts, the questions which have been asked are those outlined i n the opening pages of the essay which are concerned with the locus of economic planning and management authority with respect to the r u r a l i n d u s t r i a l program. Therefore, questions such as which levels are responsible for what type of decisions, and what kind of a c t i v i t i e s the various administrative levels undertake have, provided the major focus of the examination. In addition, directives passed down by the centre, or central policies outlined i n the o f f i c i a l Party Press, the People's  Daily, have been r e l i e d  -40-  upon to a considerable extent as Indicators of the direction of change even though evidence of their application by lower levels i s not readily available. Judgements made with respect to the distribution of economic planning and management within the present system have been based upon the descriptive content of the a r t i c l e s as well as upon the frequency with which certain levels of administration receive mention i n connection with r u r a l industrialization. Por example, during the 1969-1973 period, reports on county-level involvement i n the r u r a l industrialization program clearly reflected the importance of the hsien i n the over-all strategy for r u r a l mechanization. The importance of the hsien as revealed i n these reports was supported by the observations of visitr2  ing experts to China during and immediately following this period.  Slmlarly;;.  press coverage of the brigade's role i n i n i t i a t i n g r u r a l economic undertakings was likewise substantiated by first-hand observations. Since 1975, however, the r i s e i n provincial and commune levels of economic a c t i v i t y appears to have c  r  overshadowed the economic role of these other levels based upon the frequency and content of the reports dealing with a c t i v i t i e s undertaken at these levels. In enterprise management, the deployment of work teams to lower l e v e l production units, increased frequency of telephone conferences between higher and lower, levels, more emphasis on on-the-spot investigations.,, the establishment, of special bodies to monitor compliance with standards of quality and output performance have a l l been Interpreted as indications of greater central concern and higher level interference with management decisions.  Attempts  to establish universal accounting practices and financial management committees i n conjunction with direct interference i n the areas of credit and loans, and income distribution procedures indicate a narrowing of the financial competence of the individual enterprises and production units. Using the above c r i t e r i a as the basis for an analysis of changes i n the  distribution of economic decision-making authority at and below the provinc i a l l e v e l since 1972,  and particularly after 1975,  the remainder of the  chapter has been divided into the two areas of economic planning and product:' tion and financial management i n connection with the r u r a l industrialization program. Following this a summary of the changes i n the distribution of authority and responsibility between administrative levels, especially as compared to the Cultural Revolution policies with respect to rural Industries, w i l l be given.  Centralization of Planning Authority After 1972: The Chinese economy i s predominately a planned economy and as such, the 'unified plan' has. always, i n theory at least, received top p r i o r i t y . Not even the most 'radical' elements within the Party (while encouraging greater administrative decentralization) have openly advocated going against the central plan. In spite of this basic consensus over the central role of the unified plan i n the Chinese economy, we have already seen that a considerable lack of agreement at the Centre has existed over questions concerning which sectors the plan i s to include, how specific the plan should be i n handing down targets and assignments to the lower levels and primarily, over where the planning i n i t i a t i v e should l i e . Should preliminary plans be forwarded to the centre from the lower units of vice versa? How much f l e x i b i l i t y should be allowed i n the implementation of the plan? Since 1959,  the majority of the Party and State leaders have f u l l y re-  jected the excessive centralization of planning associated with the Soviet model of the 1950s. Following t h i s , however, there have been repeated attempts to determine the optimal distribution of planning authority within the economic system, one which would be both economically e f f i c i e n t and p o l i t i c a l l y acceptable. The Constitution of the PRC places authority for the national economic  -42-  plan and the state budget i n the hands of the State Council (P.R.,No. 11, March 1978,  11).  17  Local People's Congresses, which are the l o c a l organs of state  power are empowered by the 1978 constitution to: ...ensure the implementation of the state plan; make plans for l o c a l economic and cultural development and for public u t i l i t i e s ; examine and approve l o c a l economic plans, budgets and f i n a l accounts, ( i b i d , 12). In practice, the struggles over the desired locus of planning have involved not only a struggle between higher and lower levels of the administration, but also between Party and State at the same levels of the administration. Maintaining the separation of function between Party and State with respect to planning has proven to be an almost Impossible task. As Barnett's study of the state administrative levels i n the 1960s indicates, the overlapping membership between Party and State cadres i s significant at a l l levels of the adminlstration.lt i s v i r t u a l l y complete at and below the level of the hsien (Barnett, 1966,  430). He concluded from this that Party control over the  decisions and functions at each level of government was assured,, a condition which threatened to create conflict within the Party i t s e l f over i t s proper role i n the modernization of the country. The questions which Barnett raised i n connection with the role of the Party i n administrative tasks were concerned with the issues of specialization versus general s k i l l s or redness versus expertise, which have long been a ••resource of debate within the Party. There i s also another Issue which i s raised by the approximation of Party and State i n connection with a decision to decent r a l i z e administrative competence. In l i n k i n g i t s interests to a particular l e v e l of administration, and i n actual fact,becoming a level of administration i t s e l f , the l o c a l party committee has tended to lose sight of the general p i c ture. The check oh localism which-the Party provides by virtue of i t s o v e r a l l !  -ItSperspective i s thereby weakened. This became evident during the Great Leap when the party committees of the provinces began to develop independent economic systems at odds with the overall plan and resurfaced under the decentral i z i n g influence of the Cultural Revolution. During this period, the role of state planning was seriously downplayed. As a result of the narrow economic localism that characterized the period, growth i n certain sectors of the economy was impressive while the overall economic picture was far from s a t i s factory. In the five years between 1967 and 1972, China's grain production had increased by just over 4 percent while her population had grown at an estimated 2 percent per annum. On the whole, i t i s estimated that food production, i n c l u ding animal and vegetable sources probably only just matched population growth while i n d u s t r i a l crops fared l i t t l e better (Eckstein, 1977, 210 and 226; 211212). At the same time, small-scale i n d u s t r i a l growth i n some areas at least had been impressive. The output of small-scale cement plants quadrupled reaching 50 percent of t o t a l national output.  Small-scale production of tractors  (15 horsepower garden units) increased eight-fold, machine tool production doubled while small-scale f e r t i l i z e r plants began to produce more than 50 percent of China's nitrogenous and 75 percent of i t s phosphate f e r t i l i z e r s . This upsurge i n rural Industrial growth was not achieved without negative consequences especially i n the form of raw material shortages (coal and iron ore i n particular), and transportation bottlenecks similarr to those experienced during the Great Leap. Agricultural performance had f a i l e d to show any dramatic improvement while regional disparities i n economic growth had begun to assume strategic importance i n the future overall growth of the economy. Opposition to anarchy i n planning had, as Riskin suggests, become a  -44-  generally accepted position by 1972 (Riskin. 1978a, 98). In the r u r a l indus^ t r i a l sector, i n addition to the raw material shortages, wide discrepancies i n product quality, neglect of machinery repairs, product duplication and waste, and localism (neglect of the unified plan) were widespread problems. Agricultural production suffered from an underinvestment of time, labor and capital, a l l as a direct consequence of the diverting of resources into the more lucrative i n d u s t r i a l sector (PBIS, 18 June 1971, C8, D2; 10 June 1971, G2). Other problems Included the neglect of backward teams and brigades as county and commune planners naturally attempted to. channel their investments into the more productive areas guaranteeing higher returns. Two factors tended to.: encourage t h i s neglect. The f i r s t was the excessive emphasis on s e l f reliance which, given ahsunequal.distribution of resources, fostered uneven growth between regions. In addition, basing l o c a l government income primar?-.l l y on l o c a l Industrial p r o f i t s encouraged greater investments i n those regions where a higher agricultural surplus could guarantee a market for i n d u s t r i a l goods. I t also tended to foster expansion of the sideline production of indust r i a l crops at the expense of low-earning food crops frustrating the nationwide goal of l o c a l self-sufficiency i n grain production (FBIS, 12 March 1973, D2). Such redistributive mechanisms as existed f a i l e d to offset the trend 5  toward greater inequality between r u r a l units. The f i r s t steps taken by the centre to r e c t i f y the r u r a l economic s i t u ation were to re-establish the primacy of agricultural production i n the "„.:.J national development strategy which involved reasserting the autonomy of the production team with regard to questions of labor allocation and production management(SCMP 5209, 24 August 1972, 54-56). Commune and brigade management committees were subjected to hsien-led investigation and r e c t i f i c a t i o n for  the i l l e g a l drafting of team labor to service their i n d u s t r i a l concerns and for the encouragement of i n d u s t r i a l crop and sideline production to the neglect of grain (SCMP.5196, 6 August 1972, 114-117). And, despite the increased polemics evident during the early 1970s with respect to advancing to a higher stage of s o c i a l i s t ownership, the 1975 Constitution reaffirmed the three levels of collective ownership with the production team as the basic unit of account (P.R., No.4, 24 January 1975, 14).^ With respect to independence i n economic planning, team autonomy has,in practice,been circumscribed by i t s prior obligations to the State i n terms of agricultural taxes and procurement quotas.for agricultural and sideline production. There are Indications, however, which suggest that, at least i n the early 1970s, the team was able to influence a revision of the plans when they were judged to be excessive i n their demands. Such was the case of a production team i n Pukien Province which was successful i n opposing county plans to expand the acreage of r i c e paddles (FBIS, 16 March 1973, CI). Bastid has also noted that during t h i s same period the production team was free to reject advanced production experiences such as the Tachai model (Bastid, 1973, 178). In a more negat i v e l i g h t , the teams have simply f a i l e d to f u l f i l l the assignments handed down to them which have been deemed .unacceptable although t h i s form of opposit i o n i s soundly discouraged (SCMP 5158, 6 June 1972, 94-96). Within the guidelines of the 'unified plan' the right of the team to determine i t s own seed selection, sowing times, land reclamation tasks and manpower allocation has been constantly reaffirmed i n directives from the centre and violations of these rights by commune and brigade management committees have received harsh c r i t i c i s m . In spite of these repeated attacks on transgressions of team r i g h t s , the situation remains unresolved. In some cases i t  -46-  appears to have worsened to the point ©f the misappropriation of team funds and materials (FBIS, 17 Feb. 1978,  El6). The strategic role of the production  team i n the push-""to mechanize agricultural production has to be seen as the primary instigation of t h i s continuing c o n f l i c t of interest i n the countryside. China's r u r a l industrialization strategy i s heavily dependent upon agricultural output since i t i s agriculture which, i n the i n i t i a l stages, provides the c a p i t a l , raw materials and labor inputs necessary to generate indust r i a l growth. I t s ownership of the major portion of the means of agricultural production makes the production team an important economic actor i n the rural industrial sector even though i t does not necessarily own or operate i t s own enterprises. Team income distribution plans which govern the allocation of funds f o r consumption and investment, i t s manpower allocation decisions, as well as the type of crops grown and the extent of team sideline a c t i v i t i e s are necessarily of immediate concern to hsien, commune and brigade enterprises which depend on these inputs from agriculture to sustain their growth. There i s , therefore, a constant pressure upon these levels to interfere with team plans, an a c t i v i t y which has to date tended to have a negative impact on a g r i cultural performance. .-- t" As the pressure f o r rapid mechanization increases, as i t has'in recent years, the contradictions inherent i n the d e s i r a b i l i t y of team autonomy and the dependence of r u r a l industrial growth on agricultural output are l i k e l y to be exacerbated. This may encourage the adoption of even greater controlling mechanisms than those already exercised by the centre to prevent the undesirable violations of team autonomy. On the basis of present information, higher l e v e l interference i n the planning processes of the production teams already appears  -47-  to have begun. Since 1976,  the centre has attempted to provide a degree of predictabil-  i t y i n terms of the a v a i l a b i l i t y of team resources for the r u r a l i n d u s t r i a l program. Most of these 'reforms' have been concerned with questions of management and financial practices and w i l l be treated i n the following sections. A major change has, however, occurred with respect to the annual te^am plans which, u n t i l very recently, have i n the fashion of a l l other production units been formulated at the beginning of the year i n accordance with the targets and quotas established by the state plan, and further refined by the communes and brigades (Bastid, 1973  }  169).  As of A p r i l 1978,  productiontteams have been  required to publish their production plans one year i n advance (FBIS, 13 A p r i l 1978,  Gl). The objective i s to permit greater certainty i n formulating plans  for investment i n r u r a l enterprises since the amount to be shared between state, collective and individual are predetermined. Under the system of fixed production quotas i n which tasks, time l i m i t s and work points are'fixed, i t i s the production unit (and the individual peasant) which w i l l bear the burden should the plans remain u n f u l f i l l e d at the end of the year (FBIS, 15 March 1978, •Mc  H8).  To ensure l o c a l cooperation with this new policy large numbers of higher  level cadres have been sent down to 'assist i n formulating' these advance plans. In this way, the leadership hopes to regain some control over the basic-level planning a c t i v i t i e s while retaining some measure of l o c a l f l e x i b i l i t y by deconcentrating authority to i t s work teams operating i n the f i e l d . I t would appear from present trends that the production teams w i l l be closely supervised by the higher level cadres (from the hsien level and above) to ensure that the goal o of rapid agricultural mechanization w i l l not be sacrificed to the immediate consumption gains of the peasantry.  The degree of competence enjoyed by the communes and brigades i n promoting the r u r a l i n d u s t r i a l strategy has a l s o s u f f e r e d a setback as a r e s u l t of 1968-  the recent upsurge i n the pace of r u r a l i n d u s t r i a l i z a t i o n . During the 1972  p e r i o d , t h i s l a r g e l y unplanned sector of the economy had experienced per-  haps as much autonomy i n planning as i t had during i t s i n i t i a l phase o f expans i o n under the i n f l u e n c e of the p o l i c i e s of the Great Leap. By 1972,  signs of  r e s t r a i n t had begun to appear which i n c r e a s i n g l y a f f e c t e d the a b i l i t y of these two l e v e l s to i n i t i a t e new p r o j e c t s . One o f the e a r l i e s t i n d i c a t i o n s o f a curbi n g of a c t i v i t i e s was the cutback i n team l a b o r which could be d r a f t e d by these i n d u s t r i e s t o the 5 percent l e v e l s e s t a b l i s h e d i n 1962  (SCMP 5196,  6 Aug.  1972,  114-117). Given the l a b o r - i n t e n s i v e nature of these e n t e r p r i s e s , these cutbacks n e c e s s a r i l y imposed severe r e s t r i c t i o n s on the expansion of e x i s t i n g undertaki n g s / As a r e s u l t , considerable v i o l a t i o n s of l a b o r p r a c t i c e s continued to 'rr. f r u s t r a t e the c e n t r a l a u t h o r i t i e s (SCMP 5456, 4 Sept. 1973,  30).  An i n d i c a t i o n  of the seriousness of the l a b o r question appeared as l a t e as November  1977  when d i r e c t i v e s issued from the centre demanded that commune and brigade enterp r i s e s i n t e r f e r i n g ; w i t h a g r i c u l t u r a l production "should be r e s o l u t e l y chopped o f f . " (FBIS, 9 Nov. 1977,  Hll)J  Commune and brigade a u t h o r i t i e s a l s o were under a t t a c k during t h i s p e r i o d f o r t h e i r neglect of a g r i c u l t u r a l machinery r e p a i r s e r v i c e s while pursuing the more l u c r a t i v e i n t e r e s t s which brought them i n t o competition w i t h h s i e n - l e v e l i n d u s t r i e s f o r resources (FBIS, 28 Feb. 1973,  H7). C r i t i c i s m s were a l s o l e v i e d  against the production of complete u n i t s r a t h e r than machinery p a r t s which co 1 could be mass-produced and coordinated on an industry-wide b a s i s . As a model f o r emulation (one of the most widely p r a c t i c e d means used t o achieve u n i formity throughout the system) the centre c i t e d one r e g i o n i n which seventy-  -49-  seven plants had cooperated to produce a single tractor (SCMP 5982, 13 Nov. 19753 76). This practice, the centre argued, permitted a reduction i n the num-  ber oif new factories being b u i l t , limited the demand for labor by. taking adr  vantage of mass production and s a t i s f i e d the demand for uniform-standards of production while reducing o v e r a l l ! costs. The actual impact of these attempts to reorient and restrain commune and brigade industrial practices remained frustrated throughout the 1972-1976 period by the increasing intensity of the power struggle between 'moderates' crand 'radicals' being waged at the centre. This struggle, which i n 1976 became an open conflict over the rights to succession, involved i n i t s broadest implications the right to determine the direction which China's future development would take. In a more limited sense, the conflict revolved around the question of p r i o r i t i e s with respect to the role of social organization as.opposed to technological change i n promoting s o c i a l i s t development. The implications of the above conflict for the distribution of adminis-r trative power and responsibility within the system remain obscure.'; The Party (particularly the l o c a l party committee) stood to gain i n administrative i n f l u ence from a policy relying on the mobilization of the masses primarily through the use of ideological exhortation,to expand the basis of collective ownership. In contrast, industrial development on the basis of technological change would encourage the introduction of systems and standards of production, foster the role of expertise and the use of material incentives to reward excellence In production performance ,and i n general, would enhance the role of specialized state industrial branches i n directing r u r a l i n d u s t r i a l development. The strategy preferred.by the 'radicals' was one of expanding the commune economy on the basis of rapid growth achieved through l o c a l i n i t i a t i v e and ~.'.oz  -50l o c a l planning r e s p o n s i b i l i t y . I t therefore envisioned a s u b s t a n t i a l d e v o l u t i o n of planning a u t h o r i t y to the l o c a l i t y while the l o c a l party committee, through i d e o l o g i c a l education, would shoulder the r e s p o n s i b i l i t y o f guiding l o c a l economic development along the l i n e s of n a t i o n a l o b j e c t i v e s . The  local  party committee was t o act as a check on narrow economic l o c a l i s m . This approach, the moderates charged, had l e d t o anarchy I n production planning and had encouraged the growth of c a p i t a l i s t tendencies among commune and brigade-run enterprises''(FBIS, 6 A p r i l 1978,  E l l ) . To the moderate f a c t i o n  i t was p r e c i s e l y because of the increased economic importance o f the commune and brigade-run e n t e r p r i s e s i n the o v e r a l l economy that I t was deemed imperat i v e that higher l e v e l c o n t r o l be exercised. The production i n e f f i c i e n c i e s , high costs and economic i n s t a b i l i t i e s of these b a s i c - l e v e l i n d u s t r i e s could no longer be t o l e r a t e d i n a system i n which t h e i r economic r o l e had advanced t o the point of threatening o v e r a l l economic s t a b i l i t y . "This s t a t e o f a f f a i r s " the leadership argued, "must be changed r a p i d l y . The development of communerun and brigade-run e n t e r p r i s e s i n c l u d i n g t h e i r production, supply and marketi n g a c t i v i t i e s must be included i n the l o c a l plans a t and above the county level."  (FBIS, 6 A p r i l 1978,  E12; emphasis added).  Witfththis d e c i s i o n , the a u t h o r i t y which had devolved to the commune and brigade l e v e l s of i n d u s t r y (by v i r t u e of t h e i r i n c l u s i o n i n the unplanned sector of the economy) ended. Of p a r t i c u l a r i n t e r e s t i n r e l a t i o n t o the above d e c i s i o n was the u n i v e r s a l i t y w i t h which i t was t o be a p p l i e d . Even those i n d u s t r i e s which were economically operated at the commune l e v e l were t o be included under a higher l e v e l planning a u t h o r i t y . I n contrast t o Maddick's proposal that l o c a l a d m i n i s t r a t i v e maturity.should b r i n g added a u t h o r i t y t o the l o c a l i t y , the Chinese case since 1976  Indicates the d i f f i c u l t i e s involved  i n d e c e n t r a l i z i n g a u t h o r i t y over economic development when the economic  importance of l o c a l industries begins to affect national economic concerns. The decline i n commune and brigade authority i n setting out plans for the development of their own enterprises did not signal an increase i n the importance of the county-level planning authority. At the Second National Conferences on Learning Prom Tachai i n Agriculture and Prom Taching i n Industry held In December 1976 and A p r i l 1977 respectively, the division of competence between hsien and provincial authority with respect to the r u r a l industrialization program was outlined. In building Tachai-type counties, the hsien party committee was to act i n the capacity of a key l i n k blished by Chairman Hua Kuo-feng.  according to the s i x c r i t e r i a esta-  This did not mean that the county would  provide the main i n i t i a t i v e i n promoting r u r a l i n d u s t r i a l development. The primary role of the hsien was to act as a coordinating l i n k for p o l i c i e s and plans established higher up i n the administrative hierarchy, and to mobilize the energies of the masses to f u l f i l l the ambitious plans of the leadership. The i n i t i a t i v e i n the movement was to come from the provincial and/or prefect u r a l levels (P.R., No. 2, 7 Jan. 1977, 17).  .  As far as agricultural mechanization was concerned, the provinces were clearly to take the lead: The situation w i l l improve rapidly i f the provinc i a l party committee firmly keeps leadership of agricultural mechanization i n i t s own hands, the secretaries take command of i t and the whole party takes action to integrate agricultural mechanization with the movement to learn from Tachai i n agriculture and develop agriculture and industry at the same time. (FBIS, 2 June 1977, El4). To meet this demand planning and coordinating agencies have been set up at the provincial levels to oversee commune and brigade industrial operations (Riskin, 1978b, 686). In addition, higher party cadres at the level of the provinces',' • municipalities and central departments have been urged to become 'experts' In  -52-  understanding economic development as well as paying attention to ideological work and class struggle (P.R., No.2, 7 Jan. 1977, 17). This emphasis on expertise may represent an attempt by the Party to avoid suffering a loss of influence v i s a. v i s the state planners where planning decisions of a highly technical nature need to be taken. The concentration of effort on acquiring the requisite s k i l l s to make such decisions at and above the l e v e l of the province suggests that much of the planning and decision-making concerning industrial development w i l l be supervised, i f not actually undertaken, by party experts i n the t r a d i t i o n a l centres of i n d u s t r i a l a c t i v i t y . At the same time, organizational s k i l l s and ideological fervor remain important features of the county-led strategy to promote the physical transformation of the countryside through the use of mass campaigns. The emphasis of the i n d u s t r i a l strategy i s clearly on expanding the basic industries i n s t e e l , mining, chemicals, fuel and power, industries to be undertaken by the'"Centre and the provinces. Attention therefore i s to be paid to the conservation of materials, energy, and capital i n the mechanization of agricultural production, a strategy which demands a higher l e v e l of authority i n planning the allocation of these s t i l l scarce resources. In terms of the planning authority for r u r a l industry, the present system represents a f a i r l y substantial reconcentration of power In the hands of the provincial party apparatus. In comparison to the 1968-1972 period, the hsien has declined i n importance as the planning l e v e l for much of the indust r i a l expansion at and below the county. The hsien  now appears to be much  more important as a supervisor of coordinator of lower l e v e l i n d u s t r i a l development a c t i v i t y  acting i n the capacity of a f i e l d administration for the .  provincial i n d u s t r i a l planning apparatus, while the largest portion of r u r a l Industrial a c t i v i t y i s now occurring i n the communes. At the same time, both  -53-  the provinces and; the hsien have deconcentrated at least some administrative authority to workteams sent down from higher levels to oversee the implementation of Party policies but also to provide the necessary first-hand observation of l o c a l reactions to plans formulated by higher levels. Although o f f i c i a l Party pronouncements i n s i s t that l o c a l input into r u r a l i n d u s t r i a l planning i s significant, the emphasis on technological improvements and economic e f f i c i e n cy and the p r i o r i t y given to developing the basic industries suggests that such input as there i s from the l o c a l i t y must necessarily be limited. I t should be emphasized that the present Industrial planning system does not represent a return to the highly centralized planning apparatus which dominated the early 1950s. Nor i s there evidence of the centrally-operated trusts which, during the I96I-I965 period, began to operate as v i r t u a l l y  independent/  industrial systems beyond the reaches of l o c a l governments. There continues to be a substantial devolution of authority fnom the centre to the provinces with respect to i n d u s t r i a l planning, and formal Party statements indicate that regional economic development (referring to the s e l f - r e l i a n t development of the six major t e r r i t o r i a l regions of the north, northeast, northwest, southwest, z central-south, and east China) w i l l continue to dominate the Chinese approach to planned economic development (P.R., No. 22, 27 May 1977,  17).  The Decline i n Basic-level Production and Financial Management After As M  1972:  the case with respect to economic planning, the 1970s have w i t - ^ •  nessed a gradual decline i n l o c a l authority and control over production and financial management i n the producing units and r u r a l enterprises. Two trends, i n fact, appear to be underway simultaneously. The present period of economic mobilization has encouraged a movement toward higher level control over the management and accounting practices,of r u r a l Industries by making them accountable, not to.'the ;demanas:of the l o c a l population or authorities, but to plan-r.  .  -54-  ners at higher levels of the state administration. This reflects the overall trend i n i n d u s t r i a l development to respond to functional rather than to t e r r i t o r i a l branches of the admirristfative.'apparatus. A second trend, marked by the recent s h i f t toward the adoption of prof i t a b i l i t y as a means of evaluating the performance of an enterprise, suggests that at least some of the production decisions have devolved t o the enterprises themselves as they respond to the demands of the market for their goods. In general, the pattern appears to be one of establishing management principles and practices as well as accounting procedures and production standards at '..A. higher levels while leaving to the factory management the responsibility to " make the necessary decisions concerning how the c r i t e r i a of p r o f i t a b i l i t y , g i v e n the limited a v a i l a b i l i t y of l o c a l talents and material resources, i s to best be met. Self-reliance i n r u r a l i n d u s t r i a l development does not, as Perkins points out, mean that each l o c a l enterprise i s to become completely s e l f - s u f f i c i e n t i n production but rather that the enterprise expects to receive inputs from within the planning system i n which i t operates (Perkins, 1977, 15). In pracfe:! t i c e , commune and brigade-run enterprises receive the majority of their inputs from within their own county while the county, i n turn, receives inputs from the major urban factories controlled by provincial planners (SCMP 5906, 7 Oct. 1975, 213-214). This assistance comes to the factories i n the form of advice from technical experts, transfers of technology and used equipment. Only i n the most backward communes and brigades or i n the case of natural disasters can the l o c a l units expect financial or material assistance from the State (SCMP 5982, 13 Nov. 1975, 73-77). To speak of enterprise autonomy therefore one must speak only i n relative terms for the dependency of lower level units upon prov i n c i a l or central inputs of advanced technologies necessarily l i m i t s the  -55-  degree of freedom with which the l o c a l authorities are able to execute their plans. As basic level plants are pushed to adopt more advanced production techniques requiring even greater inputs of modern technology and up-to-date equipment, the independence of r u r a l enterprises i s l i k e l y to be increasingly compromised. The choices made by policy-makers i n terms of the promotion of modern techniques versus indigenous technological innovation w i l l have a large impact on the management autonomy of l o c a l f i r m s . ^ The autonomy of l o c a l i n d u s t r i a l undertakings i s also affected by the extent to which the policies adopted- by the Centre.encourage the development o of small but complete l o c a l industrial systems as opposed to greater specialization and production of components. The former reduces the demand f o r expanded transportation networks and f o r the v e r t i c a l coordination 6S production. The disadvantage l i e s i n the restricted market which the plant can serve which w i l l ultimately l i m i t growth. A policy favoring small complete plants also encourages a duplication of production and a subsequent waste of scarce raw materi a l s since the smaller plants t y p i c a l l y have less e f f i c i e n t production processes."' It:;;might, however, be economically e f f i c i e n t i n the short-run as i t en-r" bles the employment of r u r a l labor i n the offseason and at wage rates below those of the larger urban enterprises. I t also makes possible the use of i n f e r i o r inputs i n the form of raw materials and equipment and depends less oh the standardization of product quality. The choice of large-scale specialized production on the other hand, while taking advantage of economies of scale, requires extensive interplant coordination. I t also increases the pressure f o r standardization of product.size and quality, f o r more accurate:: plarning and detailed output targets, and an e f f i cient transportation and communication network which w i l l ensure that the f i n a l  -56product w i l l be assembled and d e l i v e r e d where and when i t i s needed. The  ad-  m i n i s t r a t i v e demands of t h i s strategy are therefore much more complex than those required.by the small and complete model. More importantly i n terms of the present d i s c u s s i o n , the a d m i n i s t r a t i v e requirements of the l a t t e r p a t t e r n of i n d u s t r i a l i z a t i o n n e c e s s a r i l y involve a higher l e v e l of a u t h o r i t y and r e s p o n s i b i l i t y both f o r planning and f o r economic management i n order to c o o r d i nate the production e f f o r t s of m u l t i p l e l o c a l firms. The decisions of policy-makers over whether to adopt a r u r a l i n d u s t r i a l i z a t i o n program based upon small but complete u n i t s versus l a r g e - s c a l e s p e c i a l i z e d production and indigenous l a b o r - i n t e n s i v e techniques versus modern technology and greater c a p i t a l requirements w i l l be influenced both by the a v a i l a b i l i t y of the necessary resources f o r the adoption of e i t h e r strategy and by the preferences of the leadership, on p o l i t i c a l , s o c i a l or economic grounds, f o r one strategy over the other. In the 1950s, China had n e i t h e r the necessary i n f r a s t r u c t u r e nor s u f f i c i e n t c a p i t a l to choose the modern, s p e c i a l i z e d system of i n d u s t r i a l organization unless i t was w i l l i n g to l i m i t r u r a l i n d u s t r i a l development f o r an extended period o f time, r e l y h e a v i l y on f o r e i g n assistance to subsidize the modern i n d u s t r i a l s e c t o r , and forego i t s p o l i t i c a l goals o f r e ducing the gap between c i t y and countryside, workers and peasants, and mental and manual labor. By the 1970s, however,' many of these conditions had changed. Improved t r a n s p o r t a t i o n and communication. systems, an expanded modern 1  i n d u s t r i a l and t e c h n o l o g i c a l base, greater numbers of experienced administrat o r s and s k i l l e d technicians had by the 1970s increased the p o s s i b i l i t y of developing modern i n d u s t r i a l networks l i n k i n g the r u r a l areas to the c i t y . This base was not so large nor so improved as to achieve the simultaneous development of v e r t i c a l l y integrated modern i n d u s t r i a l networks on a country-wide  basis. Some of the more i n d u s t r i a l l y advanced plants and regions could be expected to benefit i n i t i a l l y from the stimulus to production which the integrated systems would create while others would for some time be required to f a l l back on their own resources. As an alternative the leadership could opt for the development of independent l o c a l industrial systems relying on both modern and indigenous inputs which would be coordinated with developments i n education, culture, health and welfare services on a t e r r i t o r i a l basis perhaps at the level of the hsien. This model would provide for slower growth i n the i n i t i a l stages and would s t i l l require some dependence upon outside technical assistance as well as a higher level redistributive process to offset the imbalances i n the distribution of natural resources but would also induce l o c a l plants to produce to meet l o c a l needs and encourage mass i n i t i a t i v e i n advancing community development. The strategy, adopted by the leadership since 1976 appears to conform more closely to the pattern of v e r t i c a l l y integrated specialized production processes than to the l a t t e r model discussed. The present rural i n d u s t r i a l policy represents an attempt to f u l l y exploit the resources of communes, b r i gades and production teams to feed the expansion of v e r t i c a l l y controlled specialized i n d u s t r i a l systems operated by the provinces. Agriculture and mainly sideline production w i l l supply the inputs to achieve the rapid expansion of commune and brigade industries using indigenous techniques of production which w i l l , i n turn, generate the capital to "provide the modern technical inputs to county and provincial industries. The process i s best Illustrated i n the following account of Chairman^Hua's statements to the F i f t h National People s Congress: 1  In order to rapidly develop agriculture, i t i s essential to engage i n s o c i a l i s t agriculture i n a big way, carry out large scale farmland capital  n  :o,.\.  -58-  construction, and use modern technology to mecha-. ize agriculture. A l l this requires large amounts of capital equipment and. technical forces. Where does the capital come from? Since agriculture's financ i a l accumulation i s very low, the problem should be solved by relying mainly on the efforts td develop r u r a l sideline occupations and on the financial accumulation of the commune-run and brigade-run enterprises. (FBIS, 6 A p r i l 1978, E10). In those areas i n which commune industries are more advanced they w i l l also serve large Industries (FBIS, 27 Feb. 1978, E10). In other words, the advanced commune-run industries are, l i k e the county-run factories, to be integrated into the provlncially controlled v e r t i c a l i n d u s t r i a l systems which w i l l supply agriculture with i t s needed machinery. The cycle i s thereby completed without large-scale capital inputs into agricultural machinery production from the Centre.  The establishment of interdependent systems such as that presently pursued by the Chinese leadership w i l l have certain obvious repercussions on the freedom of l o c a l enterprises and production units to control their own production and financial processes. In the f i r s t place, since agricultural mechanization i s dependent upon l o c a l l y generated c a p i t a l , i t becomes extremely important that commune and brigade-operated factories produce e f f i c i e n t l y and operate profitably. At the same time care must be taken to insure that communes and brigades do not violate the rights or property of the production teams, compete with agriculture for resources or i n any way disturb the agricultural cycle. Both of these objectives require increased higher level control and supervision since, as was argued e a r l i e r , the natural i n c l i n a t i o n of the commune and brigade enterprises i n responding to higher level pressures to increase production w i l l be to squeeze the production teams for labor, capital and i n d u s t r i a l crop production. The f i r s t signs that the commune and brigade-run factories were to play  -59a s t r a t e g i c economic. r o l e i n the o v e r a l l strategy t o r a p i d l y develop r u r a l industry appeared a t the N a t i o n a l Conference on Learning From Tachai h e l d i n September 1975. F o l l o w i n g three years o f a t t a c k s against the excesses  committed  by. commune and brigade i n d u s t r i e s , the c l e a r emphasis attached t o t h i s l e v e l o f i n d u s t r i a l i z a t i o n by V i c e - Chairman Hua Kuo-feng signaled the i n t r o d u c t i o n o f the new r u r a l p o l i c y : The expansion o f commune and brigade-run e n t e r p r i s e s strengthens the economy a t the commune and brigade l e v e l s ; i t has e f f e c t i v e l y helped the poorer brigades and teams, a c c e l e r a t e d farm production, supported na^Iovr. t i o n a l c o n s t r u c t i o n and speeded up the pace o f mechan i z a t i o n of a g r i c u l t u r e . I t c o n s t i t u t e s an Important m a t e r i a l guarantee f o r the f u r t h e r development o f the people's commune system. (P.R., No.44, 31 $ct. 1975, 10). The conference c a l l e d f o r the r a p i d expansion o f the e n t i r e farm machinery i n dustry and f o r the development o f 100 Tachai-type counties t o be r e a l i z e d i n each o f the f o l l o w i n g f i v e years. I n concrete terms the strategy aimed at the mechanization o f 70 percent o f the major jobs i n farming, f o r e s t r y , animal husbandry, s i d e l i n e occupations and f i s h i n g by the year 1980 (P.R., No.48, 28 Nov. 1975, 9 ) . The movement, according t o Hua, was comparable i n importance and scope t o that o f a l l preceding experiences i n the s o c i a l i s t transformation o f a g r i c u l t u r e . As i n previous campaigns, f i r m c e n t r a l i z e d Party leadership was e s s e n t i a l , he argued, f o r the v i c t o r y o f the movement. Despite the ambitious goals expressed a t the conference i t soon became apparent that the leadership was not':interested i n the unplanned expansion o f the  m u l t i p l e small-scale^undertakings a t the commune and brigade l e v e l s .  P r o v i n c i a l l e v e l party committees were d i r e c t e d t o strengthen t h e i r leadership over the movement (SCMP 5974, 12 Oct. 1975, 167). P r i o r i t y was t o be given t o the planned production o f parts and a d i v i s i o n o f l a b o r e s t a b l i s h e d between province, county, and commune i n d u s t r i a l production w i t h the major concerns  -60-  .  concentrated at the top and minor manufacturing and repairs further down the administrative ladder. Paralleling this division of competence with respect to i n d u s t r i a l undertakings the leadership envisioned the establishment of v e r t i c a l ly integrated systems of production i n which a division of labor would be worked out between levels producing specialized parts. "In this way" i t was argued, "the potential of the existing factories i s f u l l y u t i l i z e d and mass production ... made possible without more new factories. As a result, investment needs are small... standards high and costs kept low." (SCMP 5982, 13 Nov. 1975,  76).  In Anwhei Province more than 100,000 provincial l e v e l cadres i n the form of work teams were sent to the basic levels to oversee the implementation of the Party policy, a pattern which was repeated dn a similar- scale i n numerous other provinces and regions throughout 1976 13 Jan. 1977,  (FBIS, 4 Jan. 1977,  G l - 7 ; K3; L5;  M7).  In spite of the intensified campaign to increase the efficiency of existing enterprises, the impact on agricultural performance by the end of 1976  had  been negligible. According to l a t e r reports serious disruptions to the economy had occurred i n several provinces as a.result of the negative impact on product i o n by the Gang of Four' (P.R., No.2, ;,  7 -Jan.  1977,  10-12). whatever the ex^...  tent of the damage done to the economy by the struggle for power at the Centre, the winning faction, under the leadership of Hua Kuo-feng clearly intended to make up for past shortcomings. At the Second National Tachai Conference held In December 1976,  Ch'en Yung-kuei, vice-premier of the State Council, l a i d the  groundwork for the leap into mechanized farming: We must race against time, surmount a l l d i f f i c u l t i e s and resolutely push forward farm mechanization work ...rely on the masses... and the s p i r i t of self-re eiiance, make f u l l use of l o c a l resources and energetically expand small l o c a l industries and manufacture of farm machinery...(P.R., No.2, 7 Jan. 1977, 15).  At the l e v e l of the production team, the e f f e c t s o f the m o b i l i z a t i o n campaign spread t o nearly every aspect o f team competence. The team's authori t y t o d i r e c t i t s own f i n a n c i a l and management a f f a i r s has been circumscribed by the presence o f p r o v i n c i a l l e v e l work teams sent down to correct lags i n p l a n t i n g , f a i l u r e s to meet the plans f o r f e r t i l i z e r c o l l e c t i o n and I n d u s t r i a l crop production, and most importantly, f a i l u r e t o implement the Party's p o l i c y w i t h respect to work point d i s t r i b u t i o n . The p r a c t i c e o f a l l o c a t i n g work p o i n t s on an e g a l i t a r i a n b a s i s had, i t appears, become a f a i r l y widespread phenomenon among the production teams. Now a uniform system o f workpoint a l l o c a t i o n based upon quantity and q u a l i t y o f work performed was to be implemented and, i n some cases, the o l d piece-rate system i s to be re-introduced. Commune and brigade i n v e s t i g a t i o n teams have gone,into i n d i v i d u a l households t o demand a r e t u r n of overpayments. Team ;,:o~v\ accounts and warehouses have been examined f o r instances o f hoarding'(FBIS, 18 Jan.  1978, H2; 1 March 1978, H4). I n Kwangtung, work teams o f county-level  banking cadres were sent down to the basic l e v e l s to work out d i s t r i b u t i o n plans and to persuade advanced teams t o supplement backward teams I n f u l f i l l i n g state quotas (FBIS, 23 Jan. 1978,  H4).  Labor management 'systems' have been set up by communes and brigades (under higher l e v e l d i r e c t i o n ) to cover most farming tasks t o which f i x e d production quotas based upon s k i l l , quantity and q u a l i t y o f labor are t o be a p p l i e d . I n d i v i d u a l r e s p o n s i b i l i t y , or what has been termed 'post' responsib i l i t y , has been assigned t o team members f o r the f u l f i l l m e n t o f s p e c i a l i z e d tasks (FBIS, m  March 1978, J l ) . F a i l u r e to meet the c r i t e r i a e s t a b l i s h e d by  these systems r e s u l t s i n l o s t work p o i n t s . Overproduction w i l l be rewarded. In order t o create a d d i t i o n a l s t a b i l i t y and p r e d i c t a b i l i t y i n income d i s t r i b u t i o n management production teams have been d i r e c t e d t o set up  -62permanent f i n a n c i a l management groups c o n s i s t i n g of cadres, f i n a n c i a l personnel and poor peasants whose r e s p o n s i b i l i t i e s w i l l include the checking of team accounting p r a c t i c e s (FBIS, 22 March 1978,  G5). The leadership has a l s o  I n s i s t e d that b a s i c - l e v e l accountants not be t r a n s f e r r e d from one u n i t to .rr'.; n  v  another and has attempted to r e i n f o r c e t h i s emphasis upon o r d e r l y and uniform p r a c t i c e s by i n s u r i n g t h e t s t a b i l i t y of the production teams' leaders as w e l l (FBIS, 22 Feb.. 1978,  G l ; 27 Jan. 197.8, G5)?*Tn contrast to the mass-line  emphasis o f the 1968-1972 p e r i o d , the present s t r e s s (at l e a s t i n terms of f i n a n c i a l and managerial r e s p o n s i b i l i t i e s ) i s on the establishment of permanent posts of r e s p o n s i b i l i t y w i t h the primary q u a l i f i c a t i o n being the posses^s i o n or a c q u i s i t i o n of s p e c i a l i z e d a d m i n i s t r a t i v e s k i l l s . In compliance w i t h c e n t r a l d i r e c t i v e s to apply c r e d i t r e s t r a i n t , teams have been r e q u i r e d to repay outstanding loans'", to the S t a t e . Where i n d i v i d u a l households are unable to meet these requirements, the team accumulation fund i s to be used to provide the balance (FBIS, 22 Nov. 1977,  L-4). This i s a l l a  part of the n a t i o n a l campaign to cut down on unproductive expenditures, t o promote the usage of m a t e r i a l i n c e n t i v e s among the masses and to increase the f i n a n c i a l resources of the S t a t e . Beyond t h i s , however, i t i s apparent that i f the r u r a l e n t e r p r i s e s are to be i n c l u d e d i n the s t a t e plans at and above the l e v e l o f the h s i e n , and i f the major p o r t i o n of the iresources s u p p l i e d to t h c ^ these i n d u s t r i e s sis'- to come from a g r i c u l t u r e , i t i s incumbent upon the leadership to provide some degree of s t a b i l i t y and p r e d i c t a b i l i t y i n the accounting p r a c t i c e s and income d i s t r i b u t i o n work of the production teams. This i s a l s o the main r a t i o n a l e f o r the recent i n t e r f e r e n c e by higher l e v e l cadres I n the team's management of i t s production a c t i v i t i e s i n c l u d i n g crop s e l e c t i o n and f e r t i l i z e r c o l l e c t i o n . The r a p i d development o f the commune economy based upon  -63-  the development of l o c a l enterprises rests on the capacity of the production teams to expand their output,and cut down on waste. The presence of a higher level authority i s intended to insure that both of these conditions are being met. In the majority of the cases reported i t has been the provincial and county level work teams which have been employed to oversee these changes In production team practices. Commune and brigade-led r e c t i f i c a t i o n has been limited, i n a l l probability, due to the fact that they too have come under f i r e from higher levels especially i n the area of financial mismanagement and i n the misappropriation of team labor and funds. Under threat of higher level disciplinary actions communes and brigades have been warned not to engage i n any unplanned construction, to cut back on the spending of social organizations, and to reduce the numbers of unproductive personnel to a minimum (FBIS, 22 Dec. 1977» E6). I t i s i n the area of enterprise management, however, that communes and brigades have experienced the greatest degree of provincial and county Party interference. Beginning i n January 1977, provincial l e v e l work teams and public security organs began to appear i n communes and brigades to check on the implementation of party policy, conduct r e c t i f i c a t i o n campaigns and restore order (FBIS, 19 Jan. 1988, H9)/ Following t h i s , the attention of provincial leaders has shifted to questions of enterprise management, income distribution within communes and profit-making undertakings. Frequent regional and provincial level meetings were held to discuss these issues and work teams sent out to assist communes and brigades i n setting up correct management practices in"'their en^;. terprises involving the establishment of uniform procedures governing management and accounting practices, wage assessments on the basis of work points, and the strengthening of Party leadership over management (FBIS, 3 Nov.11977,  -64-  M2). In November 1977, i t was announced that the revolutionary committees, or"  -  organs of mass representation i n the factories, were to be abolished. Taking their place would be 'more functional systems' consisting of one and two-man directorships (FBIS, 15 Nov. 1977, E l ) . Special 'organs' are to be set up to 'take charge' of the work of management reform, to assist i n the formulation of commune and brigade enterprise production plans and 'gradually bring these enterprises onto the track of the s o c i a l i s t economic plan' (FBIS, 22 March 1977, Jl-2).  In conjunction with the rationalization of basic-level enterprise production, provincial telephone conferences urged the establishment of special organizations under Party auspices to ensure that a l l enterprises realized a p r o f i t (FBIS, 26 Oct. 1977,  K4). P r o f i t a b i l i t y , not service to the l o c a l com-  munity, was to be the yardstick by which the success of the enterprise i n f u l f i l l i n g the objectives of the Tachai and Taching campaigns was to be measured. In a f i n a l effort to reduce the accountability of the l o c a l industries to their owners, commune and brigade-run enterprises were directed to assume the responsibility for their own profits and losses; they are to become individual units of accounting (FBIS, 22 NOv.  1977,  L3). These enterprises now w i l l be  responsible only to higher level planning authorities i n meeting the goals and regulations established by them and to the market as a guide to production ac^ tivities. In January 1978, the People's Daily published an e d i t o r i a l on the reorganization of the farm machinery which effectively spelled the end to small-scale general production of farm machines. Citing proof of the increased productivity of large-scale specialized production, the e d i t o r i a l urged the universal adoption of "specialized and coordinated production techniques... including communerun enterprises." (FBIS, 25 Jan. 1978, E12). Beyond the concern for increased  -65p r o d u c t i v i t y was the problem o f l o c a l designing and manufacturing which ignored uniform product standards. Parts were not interchangeable and machines were standing i d l e . The answer, according to the present l e a d e r s h i p , i s the a d o p t i o n Qf.3 s p e c i a l i z e d production of a small range of components by each e n t e r p r i s e (P.R., No.8,  24 Feb. 1978,  13-14). This atomization of production ( i f i t does  occur), w i l l e f f e c t i v e l y destroy the b a s i s f o r b a s i c - l e v e l t e c h n o l o g i c a l innov a t i o n which the small complete p l a n t could provide. This point was argued by the opponents of s p e c i a l i z a t i o n i n 1966 time (Andors, 1974,  28).  and remains a v a l i d c r i t i c i s m at t h i s  I t excludes the r o l e of mass i n i t i a t i v e i n techno-  l o g i c a l innovation and encourages the r o l e of higher l e v e l s c i e n t i f i c research which i s underway at present. I t almost c e r t a i n l y eliminates the p o s s i b i l i t y c\? of l o c a l f l e x i b i l i t y i n p l a n Implementation and w i l l f u r t h e r the dependence of the l o c a l f i r m on inputs from above. The i n t r o d u c t i o n of uniform managerial and accounting p r a c t i c e s , the s t a n d a r d i z a t i o n o f product design and q u a l i t y , and the emphasis oh' the product i o n o f parts r a t h e r than of e n t i r e u n i t s represent attempts to b r i n g a greater measure of c o n t r o l , s t a b i l i t y and p r e d i c t a b i l i t y t o the l o c a l economies and thenceforth to the n a t i o n a l economy as a whole. The reforms s i g n a l an attempt to b r i n g order to the f u n c t i o n a l d i v i s i o n of labor w i t h respect t o i n d u s t r i a l i z a t i o n between the various a d m i n i s t r a t i v e l e v e l s such that the d e s t r u c t i v e and d e s t a b i l i z i n g competition f o r scarce resources which appeared during the e a r l y 1970s can be avoided. They are a l s o i n d i c a t i v e of the trend toward the future development of r e g i o n a l l y i n t e g r a t e d i n d u s t r i a l systems l i n k i n g b a s i c - l e v e l production a c t i v i t i e s to the primary centres o f modern i n d u s t r i a l a c t i v i t y . I n a d m i n i s t r a t i v e terms, these reforms have involved a reconcentration of decision-making a u t h o r i t y i n the hands o f the provinces and t h e i r s p e c i a l i z e d commercial and i n d u s t r i a l departments. At the same time, through  admini^  -66s t r a t i v e deconcentration, p r o v i n c i a l and h s l e n - l e v e l work teams have been delegated the a u t h o r i t y to supervise the implementation o f higher l e v e l i n i t i a tives., to educate the l o c a l population as to the o b j e c t i v e s of programs and. p o l i c i e s designed at higher l e v e l s of the a d m i n i s t r a t i o n as w e l l as i n the  ac~  q u i s i t i o n o f i m p o r t a n t . s k i l l s (accounting and managerial as w e l l as t e c h n i c a l ) , and f i n a l l y , to act as a channel of communication between the b a s i c - l e v e l u n i t s and t h e i r planning a u t h o r i t i e s . To what degree t h i s i s representative o f the 'mass l i n e ' i n a c t i o n i t i s d i f f i c u l t to assess. However, the recent d e c i s i o n to do away w i t h the production u n i t r e v o l u t i o n a r y committees would suggest t h a t . the p r o v i s i o n f o r mass inputs Into the decision-making process i s not a high p r i o r i t y i s s u e , at l e a s t f o r the  present.  I n a d d i t i o n to the a d m i n i s t r a t i v e changes noted above, there i s a t h i r d process underway i n v o l v i n g the devolution of at l e a s t some a u t h o r i t y t o respond to the demands of the market to the production u n i t s themselves. Both t h i s and the independent a c c o u n t a b i l i t y of the l o c a l e n t e r p r i s e s i n d i c a t e a weakening of c o l l e c t i v e i n f l u e n c e over decisions taken by the firms and production teams,".], although which decisions these are and how much a d d i t i o n a l r e s p o n s i b i l i t y they represent remain matters of speculation. One can only surmise, based l a r g e l y on c i r c u m s t a n t i a l evidence, that the move to e s t a b l i s h one-man e n t e r p r i s e d i r e c t o r s h i p s held accountable to commune andubrigade'' industrial-branches organized  at the p r o v i n c i a l l e v e l must dlrnlnish the number of i n i t i a t i v e s  o r i g i n a t i n g at the s u b p r o v i n c i a l l e v e l of a d m i n i s t r a t i o n . Prom the perspective of the l o c a l a u t h o r i t i e s (hsien,.commune and brigade) power has moved out of t h e i r hands i n both an upward and a downward (or outward) d i r e c t i o n simultaneously.  I n comparison to the 1968-1972 p e r i o d , the  a u t h o r i t y to i n i t i a t e i n d u s t r i a l strategy at these l e v e l s i s s u b s t a n t i a l l y r e duced. Their primary f u n c t i o n w i t h regard to the managerial and f i n a n c i a l ," •:  -67-  decisions r e l a t i n g to l o c a l enterprise performance, appears to be a supervisory one. In support of this conclusion i s the establishment by the Party of 'special' organizations at the l o c a l administrative levels to oversee the implementation and fulfillment of the reform measures introduced by the provinces. This would appear to represent an attempt by the Party to avoid the excessive production unit autonomy associated with the e a r l i e r reforms of the  1961-  I965 period as. well as the narrow economic localism which characterized the 1968-I972 era when l o c a l Party influence over economic decision-making was at i t s height.  Summary The strategy adopted by the leadership i n the 1970s to achieve rapid r u r a l industrialization has once again called for a shift i n the planning and management responsibilities between the various economic actors i n the PRC. Since 1972,  and particularly since 1976,  the party leadership has been engaged  i n an attempt to bring a l l levels of the Chinese economic system more firmly under a higher planning authority. Unlike the Cultural Revolution strategy which preceded i t , the present approach to r u r a l i n d u s t r i a l development i s not designed to be a comprehensive policy of r u r a l development. I t i s not a policy geared to the establishment of independent l o c a l i n d u s t r i a l systems. I t i s rather an attempt to establish the basis of comprehensive i n d u s t r i a l networks relying on modern technology which w i l l l i n k the r u r a l sector of industry to the modern industrial sector. The objective of the present campaign i s to achieve the rapid but controlled expansion of modern industry. I t involves the rationalization of economic relationships from the top of the system down to the grassroots factories and production units. Material gain i s the prime motivating forcerin the campaign  - 6 8 -  supported by a system of rules, regulations, standards of production, quality and quantity even to the levels of the production teams themselves. Linking each level of industrial a c t i v i t y and overseeing the implementation of these regulatory mechanisms are party-organized management and coordinating bodies, special organs linked to higher level organs under various functional departments . The renewed emphasis on functional hierarchies l i n k i n g industrial and communications departments at a l l l e v e l s , l i n k i n g banking and commerce as well as credit f a c i l i t i e s indicates that, i n addition to increased economic e f f i c i e n cy, improvements i n administrative efficiency are among the order of p r i o r i t i e s of the present administrative reforms. A further sign that the present leaders ship'-..continues to be occupied by attempts to close the age-old gap between the formal administrative apparatus and the grassroots society i s the increase i n the numbers of state cadres who have been permanently allocated to positions i n the system below the level of the formal administrative structure! In Ay-*--. 1  stressing the v e r t i c a l loyalties of these f i e l d agents to t h e i r particular functional departments, the centre can hope to avoid the administrative confusion which has resulted from the dual responsibility system a r i s i n g from the accountability of l o c a l cadres totboth t e r r i t o r i a l and functional branches of administration. The emphasis on functional divisions of labor among administrative cadres may also assist i n cutting down on administrative costs a r i s i n g from a duplication of responsibilities and f a c i l i t a t e the return of a large number of administrative cadres to productive labor. As indicated e a r l i e r , the divisions of competence. with respect to the present mobilization campaign also appear to conform to functional principles of administration. Agricultural and Industrial Bureaus l i n k i n g province, hsien, and commune have become the main.channel of communication from top to bottom.  -69There a l s o seems to be developing a d i v i s i o n of functions w i t h respect to industry and a g r i c u l t u r e between the p r o v i n c i a l and county l e v e l s o f admini=tr' s t r a t i o n . The county i s to provide the leadership o f the Tachai campaign and to formulate i t s program f o r the achievement of the c r e a t i o n of Tachai-type counties as set out i n the s i x c r i t e r i a . The'-prbvinc'es":and:''mun±eipalities are to provide the d i r e c t i o n f o r the r u r a l mechanization campaign with the Taching o i l f i e l d s as a model. Having s a i d t h i s , however, there are a l s o signs t h a t the f u n c t i o n a l d i v i s i o n of r e s p o n s i b i l i t i e s i s r e l a t e d to the s i z e o f the p r o j e c t to be undertaken as w e l l as to i t s nature. I n contrast to the emphasis on small-scale l ^ c l o c a l l y organized land.improvement schemes which characterized the 1968-1972 period, the present trend i s toward the c r e a t i o n o f massive water conservation and farmland c a p i t a l construction schemes employing m i l l i o n s o f peasants i n intercounty cooperative e f f o r t s . The locus of a u t h o r i t y f o r these mass movements of men and materials i s the province,' a suggestion that even here the oo county may not be as important i n i n i t i a t i n g programs of t h i s nature as i t has been i n the past. For similar:': reasons, the importance of the brigade i n t h i s 0  respect i s a l s o seen to have d e c l i n e d . A f u r t h e r major departure from the C u l t u r a l Revolution strategy f o r r u r a l i n d u s t r i a l development i s seen i n the d e c l i n i n g r o l e o f mass: organizations i n volved i n the decision-making  processes^:; of the production u n i t s , the primary  i n d i c a t i o n being the a b o l i t i o n of e n t e r p r i s e r e v o l u t i o n a r y committees. Taking t h e i r place as the main channels of mass influence i n the system w i l l be the revived mass organizations which came under such severe attack during the Cult u r a l Revolution as bastions of conservatism  (P.R., No.20, 19 May 1978,  10).  The i n d i c a t i o n i s , however, that these w i l l serve more as channels of m o b i l i z a t i o n f o r c e n t r a l p o l i c i e s than of instruments of mass i n f l u e n c e upon the o ^ i  -70c'entre. \ For the moment, the Party continues to play the l e a d i n g r o l e i n thero. r u r a l i n d u s t r i a l i z a t i o n d r i v e . I t i s , at l e a s t f o r m a l l y , considered t o be the guiding force i n the two mass campaigns g r i p p i n g the country. I t s continued predominance w i l l depend, however, on how q u i c k l y party cadres are able to grasp the r e q u i s i t e s k i l l s and s p e c i a l i z e d knowledge necessary t o l e a d a movement that depends upon e x p e r t i s e and s c i e n t i f i c t r a i n i n g . Present already are pressures from the Party hierarchy upon l o c a l cadres t o acquire these s k i l l s . How. t h i s i s to be accomplished without running i n t o the problems of bureauc r a t i c p r i v i l e g e and the b u r e a u c r a t i z a t i o n of the Party which arose during the I96I-I965 p e r i o d remains unanswered. I f h i s t o r i c a l references are to provide t the c l u e s , the leadership may be s a c r i f i c i n g the long-run p o l i t i c a l s t a b i l i t y of the country to. the immediate economic gains o f the present strategy.  (71)  Conclusion: The case study provided by the preceding chapters i l l u s t r a t e s v i v i d l y the complexities involved i n the attempt to achieve an optimal balance between central andtlocal administrative authority I n the PRC. The evidence presented here suggests that the concept of a progressive linear decentralization df authority over l o c a l l y relevant developmental issues may represent a far too simplistic approach to the development of administrative relations i n the modernizing state. Administrative developments i n China since 1958 indicate that administrative reform i s more l i k e l y to be an almost continual process of realigning powers and responsibilities i n response not only to changing objective circumstances but also to variations i n leadership preferences which arise with the changing circumstances of p o l i t i c a l e l i t e s . The Chinese case also suggests that a concept of administrative development which f a i l s to account for centres of influence outside of the formal administrative apparatus i s l i k e l y to provide an insufficient guide to administrative r e form i n the majority of developing states today. Each phase of the r u r a l industrialization program outlined i n the pages above has been marked by major readjustments i n the distribution of authority between different levels of the administrative apparatus, between State and Party, and between both of these and enterprise management. Yet at no one time has the direction of the flow of power been the same for a l l of the actors i n the system. The concept of a c y c l i c a l process of centralization followed by a phase of decentralization and then a re-centralization of aaministrative power implies a unifctmity^within each phase which the evidence clearly f a i l s to support. In addition, i n each of the periods discussed, there are indications zr>: • that a more f r u i t f u l approach to the study of administrative decentralization must take into account the various aspects of authority which make up the -t;-.v:-.G!  (72)  entire gamut of economic relationships. The present study has examined only t " two of these variables, administrative planning and enterprise management. I t has touched only b r i e f l y questions of f i s c a l and monetary powers. In separating the two functions of planning and management i t has become obvious that while a concentration of planning authority may be taking place, i t may be accompanied by a marked deconcentration of production unit management. One could go a stage further and suggest that even these variables have been far too general i n attempting to ascertain the flow of power and that a further breakdown w i l l be necessary before a more accurate picture of administrative relations can be revealed. Despite the d i f f i c u l t i e s encountered i n making generalizations with respect to administrative developments i n China i t i s possible to describe some of the processes underlying administrative reform during the past two decades. The materials examined indicate a development -of a pattern of functional d i v i sions of labor between t e r r i t o r i a l administrative units i n connection with v rrural i n d u s t r i a l developments. An examination of the role of the hsien i n this regard offers an interesting example of leadership attempts to align adminis-s-' trative functions with resource a v a i l a b i l i t y . The hsien has been a remarkably stable unit of administration for centuries. Although i t has been adjusted i n size from one period to another i t s geographical boundaries have remained unaltered since 1958. This may be due to the resistance to change of traditional reinforcing patterns of s o c i a l , p o l i t i c a l , and economic interactions, or to the discovery that the hsien i s an e f f i c i e n t unit of administration i n terms of costs (Whitney, 1970, 167 and 170). I t may also be due to shifts i n the r u r a l i n d u s t r i a l strategy i n the early 1960s which b u i l t upon the.~ strength of these t r a d i t i o n a l patterns. :  In the administrative reforms following the Great Leap Forward (1958-1961)  .  (73)  the hsien assumed a strategically important role i n r u r a l i n d u s t r i a l development serving as a major coordinating l i n k between the modern provincial indust r i e s and the communes and brigades and f o r the development of a modern agros c i e n t i f i c network. I t also began to serve as the Industrial base f o r the development of agricultural support industries producing water pumps and chemical f e r t i l i z e r s . The Importance of the hsien i n the new r u r a l strategy stemmed from the traditional position of the hsien capital as a centre of r u r a l economic interaction. The rural industrialization strategy which began i n the early 1960s shifted the emphasis away from a reliance upon the development of v i l l a g e industries toward the development of a rural Industrial network based i n the towns; i t represented a balance between a strategy emphasizing the support of the modern industrial sector f o r r u r a l mechanization and the Great Leap strategy emphasizing v i l l a g e - l e v e l i n d u s t r i a l developments (Sigurdson, 19.77» 15)Between 1968 and 1972, the powers of the hsien were further expanded to aaeorambdate the new emphasis i n the rural industrial strategy on the development of s e l f - r e l i a n t r u r a l economic systems. The i n d u s t r i a l base of the hsien which had been expanded i n the early 1960s now was enlarged farther to include the production of s t e e l , cement, and small farm machines, development of the infrastructure necessary to assist commune and brigade industrial expansion. After 1976, the capacity of the hsien to i n i t i a t e , industrial a c t i v i t i e s dee? .Inclined as the emphasis i n i n d u s t r i a l development shifted to give p r i o r i t y to the development of v e r t i c a l l y integrated industrial networks i n which the role of the hsien would be reduced to that of a coordinating l i n k , again between r-'the provinces and the communes. These developments In hsien-level administrative responsibilities i l l u s trate the functional approach to administrative development which has been adopted by the Chinese leadership. They also provide evidence of the importance  (74) o f various f a c t o r s i n determining the l e v e l o f a u t h o r i t y f o r a given policy." The t r a d i t i o n a l socio-economic strength- ;of vthe' hsien provided i t with the ne-eo _  cessary resources t o enable i t t o play an important r o l e i n a strategy emphas i z i n g r u r a l towns as the locus f o r r u r a l i n d u s t r i a l developments. At the same time, the d i s c u s s i o n above reveals the impact o f the choice o f strategy adopted by the leadership on the d i s t r i b u t i o n o f planning a u t h o r i t y w i t h i n the system. In the 1950s the emphasis on modern i n d u s t r i a l development l e d t o a concentrat i o n o f planning a u t h o r i t y a t the centre. The Great Leap strategy o f developi n g both modern and small-scale v i l l a g e i n d u s t r i e s simultaneously  encouraged a  concentration o f power a t the p r o v i n c i a l and commune l e v e l s o f a d m i n i s t r a t i o n . I n the 1970s, v e r t i c a l l y integrated i n d u s t r i a l production has l e d t o a concent r a t i o n o f planning a c t i v i t i e s a t the p r o v i n c i a l l e v e l . The Impact of s t r a t e g i c choice on planning i s p a r a l l e l e d by that o f  l3; .' :  leadership preferences w i t h respect t o the system o f i n c e n t i v e s and -the technology adopted, the nature o f the e n t e r p r i s e and of .the i n d u s t r i a l network on the d i s t r i b u t i o n d f a u t h o r i t y both between actors a t a given l e v e l o f administ r a t i o n as w e l l as between l e v e l s o f the a d m i n i s t r a t i o n i t s e l f . I n the 19681972 p e r i o d , the emphasis on the development o f small/plants r e l y i n g i n large part on indigenous t e c h n o l o g i c a l innovations t o produce whole machines and integrated w i t h l o c a l developments i n education, health-care, culture,-, e t c . , encouraged the adoption o f the 'mass-line' i n both planning and management of l o c a l enterprise a c t i v i t i e s . The s t r e s s on non-material  i n c e n t i v e s , on redness,  r a t h e r than expertise l e d t o a concentration o f a u t h o r i t y i n the hands o f the l o c a l party committee. E n t e r p r i s e management was t o devolve t o the workers themselves guided by the e n t e r p r i s e party committee. At present the adoption o f m a t e r i a l i n c e n t i v e s has l e d to outside i n t e r ference i n the accounting p r a c t i c e s o f production teams, communes and brigades.  -75-  The s t r e s s i s on s p e c i a l i z e d s k i l l s and on management expertise r a t h e r than on worker p a r t i c i p a t i o n i n management d e c i s i o n s . Technological modernization and product s p e c i a l i z a t i o n have taken precedence over indigenous t e c h n o l o g i c a l innovations and the production o f whole machines, a move which has l e d to the concentration of a u t h o r i t y f o r the establishment  of r u l e s and r e g u l a t i o n s  governing production i n the hands of t e c h n i c a l experts i n s p e c i a l p r o v i n c i a l i n d u s t r i a l departments. E x p e r t i s e , not i d e o l o g i c a l p u r i t y , i s the objective of recent changes i n the educational system. I t i s t h i s emphasis on the a c q u i s i t i o n of s p e c i a l i z e d s k i l l s which threatens to swing decision-making power away from the Party i n t o the hands of the b e t t e r q u a l i f i e d s t a t e cadres. The  recent  push to ensure that party cadres acquire advanced economic s k i l l s would suggest that the Party has been put i n t o the p o s i t i o n where i t must struggle to r e t a i n i t s hegemony over decisions concerning economic planning and management. The foregoing d i s c u s s i o n i n d i c a t e s that knowledge of leaders' p r i o r i t i e s with respect to the broader o b j e c t i v e s of a d m i n i s t r a t i v e d e c e n t r a l i z a t i o n ( i . e . socio-economic development, a d m i n i s t r a t i v e e f f i c i e n c y , I d e o l o g i c a l  conformity)  w i l l not provide s u f f i c i e n t information to a s s i s t administrators i n determining the p a t t e r n of a d m i n i s t r a t i v e r e l a t i o n s to be adopted. The Chinese case i l l u s t r a t e s the importance of the impact of leaders' choices of s t r a t e g i e s , and leaders' preferences w i t h respect to o p e r a t i o n a l c r i t e r i a upon the d i s t r i b u t i o n o f r e s p o n s i b i l i t i e s and the p a t t e r n of a d m i n i s t r a t i v e r e l a t i o n s adopted. A s i m i lar, conclusion regarding the impact of leaders' choices o f p o l i c i e s was reached by Moshe Lewin i n d i s c u s s i n g S t a l i n ' s r o l e i n determining the nature o f the Soviet economic system i n the 1930s: While the influence of i n d i v i d u a l s on h i s t o r i c a l phenomenal ^should not be overstated, i t cannot be ignored that i n the pyramidal power s t r u c t u r e the men or man at the top i s more than an i n d i v i d u a l : he i s an i n s t i t u t i o n ^ a powerful one. Although he i s part of a l a r g e r system that imposes r e -  -7.6s t r a i n t s on him, h i s actions can have l a s t i n g i n fluence on the h i s t o r y of the country, provided . he i s powerful enough. (Lewin, 1974,  101).  The present study a l s o suggests that a d m i n i s t r a t i v e f l e x i b i l i t y , that i s the capacity to shift, a d m i n i s t r a t i v e r e s p o n s i b i l i t i e s i n order to accoirm.odate changes i n the choice of strategy adopted, may be a more important f a c tor i n securing economic development than i s the p u r s u i t of the more r i g i d symmetrical d i s t r i b u t i o n of a d m i n i s t r a t i v e a u t h o r i t y suggested by Maddick (1963, 226).  Although the impact of the modernization process on.the' d i s -  t r i b u t i o n of a d m i n i s t r a t i v e a u t h o r i t y i s discussed i n the Western l i t e r a t u r e surveyed, f l e x i b i l i t y i s u s u a l l y discussed i n terms of a l t e r i n g the  geographical  boundaries o f the t e r r i t o r i a l u n i t s . In China t h i s has not occurred (at l e a s t since 1 9 5 8 ) ; i n s t e a d g e o g r a p h i c a l : s t a b i l i t y has been a s i g n i f i c a n t feature of administrative developments In the PRC.  Since others have pointed to the pro-  blems involved i n r e d e f i n i n g t e r r i t o r i a l a d m i n i s t r a t i v e u n i t s i n countries where geographical  l o y a l t i e s remain strong, the Chinese case may  offer a  more workable s o l u t i o n to the problems of a d m i n i s t r a t i v e f l e x i b i l i t y i n the newly developing state,(Whitney, 1970;  P a r i s h , 1976).  In conclusion, a f i n a l word should be o f f e r e d i n connection w i t h the choice of a d m i n i s t r a t i v e concepts employed i n t h i s study. Although the u s e f u l ness of the concept of the progressive l i n e a r d e c e n t r a l i z a t i o n of administrat i v e functions has been brought i n t o question by t h i s a n a l y s i s of China's a d m i n i s t r a t i v e experience, the t e r m i n o l o g i c a l d i s t i n c t i o n s made between the deconcentration  and the devolution of a d m i n i s t r a t i v e a u t h o r i t y have proved to  be extremely h e l p f u l i n breaking down the monolithic discussions of decentral i z a t i o n which have been most o f t e n a p p l i e d to the Chinese case. Even the d i s t i n c t i o n s made by Schurmann (1968) between d e c e n t r a l i z a t i o n one  (1)  and  two  (2) remain far too general to provide a detailed account of the resulting d i s t r i b u t i o n of administrative authority.. Townsend (1974) too f a i l s to discuss decentralization i n China i n a l l but the most general of terms. Bastid's study of economic decision-making (1973) i s a possible exception i n this regard a l though she neglects to make a sufficient d i s t i n c t i o n between deconcentrated and devolved authority. Making the distinction between the deconcentration and devolution of administrative functions not only enables one to gain greater insight into the Chinese approach to administrative development but also increases the p o s s i b i l i t y of conducting cross-national comparisons between the PRC and other develop ing states which while sharing many of the developmental problems confronting the Chinese leadership may not share similar party-systems or state systems. Despite the neglect of the role of one-party systems i n the administrative developments discussed i n the literature surveyed, i t has been possible- to i "o identify s i m i l a r i t i e s of function between administrative f i e l d agents for example, and work teams of cadres sent down to the lower levels of administration. Terminological consistency can only add totthe potential of identifying the common features of and functions performed by different groups of actors i n other states' administrative systems.  -78Notes t o the t e x t : Chapter One: 1.  The terms devolution and deconcentration o f a d m i n i s t r a t i v e functions appear frequently i n the l i t e r a t u r e dealing w i t h l o c a l government. I have used the terms as defined by Maddick i n h i s work Democracy, D e c e n t r a l i z a t i o n , and Development (1963). Maddick defines d e c e n t r a l i z a t i o n as a combination of devolution and deconcentration o f a u t h o r i t y . Devolution r e f e r s t o the l e g a l c o n f e r r i n g of powers t o discharge s p e c i f i e d o r r e s i d u a l functions upon formally c o n s t i t u t e d l o c a l a u t h o r i t i e s . Deconcentration, on the other hand, involves a simple delegation o f o c e n t r a l a u t h o r i t y t o f i e l d s t a f f o f a c e n t r a l department and would be considered more c h a r a c t e r i s t i c of the h i g h l y c e n t r a l i z e d Soviet model of development adopted by the Chinese i n the 1950s and o f the system o f c e n t r a l l y organized and c o n t r o l l e d coordinating bodies o f the s o - c a l l e d L i u i s t p e r i o d (196l-1965)j although I would suggest, much l e s s clear-- '! cut i n the l a t t e r case. 5  Chapter Two: 1.  Considerable evidence was brought t o l i g h t as a r e s u l t of documents r e leased during the C u l t u r a l Revolution that the Party leadership was d i v i d e d on s e v e r a l major issues during t h i s time. Although much of t h i s 'evidence' has been dismissed as propaganda, several studies have shown that these charges made by the Red Guards may not be e n t i r e l y without foundation. McParquhar's study o f the p e r i o d i n d i c a t e s that there were indeed several issues o f contention among the l e a d i n g members o f Party and State a t the time. The f a c t the Mao was reported t o have been forced to go over the heads o f the o p p o s i t i o n i n the Central Committee on t h i s issue i s an I n d i c a t i o n o f the degree of d i v i s i v e n e s s a t the Centre over the desired p o l i c y t o be adopted. See R. McFarquhar. The O r i g i n s o f The C u l t u r a l Revolution:Contradictions Among The People, 1956-1957-(N.Y.: Columbia U n i v e r s i t y Press, 1974).  2.  According t o Schurmann there were two options t o d e c e n t r a l i z a t i o n o f f e r e d a t t h i s time. The form which t h i s d e c e n t r a l i z a t i o n was t o take was, he argues, determined by the perceived s o c i a l and p o l i t i c a l consequences :;/.:•. involved. D e c e n t r a l i z a t i o n 1, o r d e c e n t r a l i z a t i o n t o the l e v e l o f the production u n i t , would e n t a i l the adoption o f m a t e r i a l i n c e n t i v e s and the i d e o l o g i c a l l y undesirable consequence o f r e l i a n c e on the market f o r the a l l o c a t i o n o f resources. D e c e n t r a l i z a t i o n 2, o r d e c e n t r a l i z a t i o n t o some l e v e l of l o c a l a d m i n i s t r a t i o n , would put decision-making under Party c o n t r o l and would r e s t on s o c i a l m o b i l i z a t i o n p r i m a r i l y through normative appeals i n order t o achieve an increase i n economic growth. Apparently the controversy arose over the desire t o apply a combination of these two s t r a t e g i e s o r a l t e r n a t i v e l y , the adoption o f only the second. The d i v i d i n g l i n e seems t o correspond c l o s e l y t o that which e x i s t e d between advocates o f the strategy f a v o r i n g the adoption o f m a t e r i a l incent i v e s t o stimulate the economy and those opposed t o such a move. I n in-^t s t i t u t i o n a l terms, the struggle appears, to have been waged between the  -79State Planners whoSstood t o l o s e more a u t h o r i t y i f the second strategy :<was adopted and the Party which would gain i n power. See Schurmann(1968) p a r t i c u l a r l y pages 188-210 f o r d e t a i l s . 3.  4.  Red Guard publications, from t h i s p e r i o d s t i l l provide the best d e t a i l ,.. ed account o f the problems associated w i t h the L i u i s t strategy. Por d e t a i l s the reader should consult SCMM 605, 11 Dec. 1969; 651, 22 A p r i l 1969, 1-10; 653, 5 May 1969, 21-31. Stephen Andors and Charles Bettleheim were perhaps two o f the most o p t i m i s t i c Western w r i t e r s a t the time over the p o s i t i v e impact o f the r o l e p f these i n s t i t u t i o n s i n b r i n g i n g the i n f l u e n c e o f the workers t o bear on decisions concerning economic management. Others were not as r e a d i l y convinced. L i v l o Maitan argues that w i t h the exception o f the lowest l e v e l s (and only then a t the very e a r l y stages) the r e v o l u t i o n a r y committees remained i n PLA o r 'old cadres' hands and e l e c t i o n t o these committees eventually gave way t o s e l e c t i o n and Party approval. He concludes that no true instruments o f mass representation were permitted t o e x i s t by the leadership. Por f u r t h e r d e t a i l s o f the two sides o f the debate see Andors,S. (1974), BettleheimU974) and Maitan (1976), espec i a l l y pp.246-266.  Chapter Three: 1.  Sigurdson includes the region as an important l e v e l i n the r u r a l indus-r t r i a l strategy as an intermediate l e v e l between the province and the hsien. However, he f a i l s t o define what i n h i s study c o n s t i t u t e s a region. The number o f regions given .Tor China based upon a 1965 p u b l i c a t i o n i s placed a t 192, Since this.does n onconform t o the number o f s p e c i a l d i s t r i c t s which Barnett (1966, 115)rplaces a t 151 based on 1963 data, there i s l i t t l e reason t o assume that Sigurdson's "regions" correspond t o the t ?.c 3 " s p e c l a l i d i s t r i c t : a e v e l o f a d m i n i s t r a t i o n . Since there i s l i t t l e r e f e r ence t o the r e g i o n a l r o l e i n the press t r a n s l a t i o n s used f o r t h i s study, I have not included i t i n my a n a l y s i s . Sigurdson admits that there are a l i m i t e d number o f enterprises a t the r e g i o n a l l e v e l . (1977, 36). This may e x p l a i n the l a c k o f a t t e n t i o n i n the press. 2.  Por a coverage o f the reports o f v i s i t i n g experts t o China during t h i s p e r i o d the reader should consult B a s t i d (1973), Sigurdson (1977), and Perkins (1977) as noted i n the accompanying bibliography..  3.  These ' c r i t e r i a ' are adopted from V i c t o r Falkenheim (1972).  4.  This and the f o l l o w i n g information are adapted from Appendix B., Table B l , 165, and B2, 166-167, i n F i e l d , Robert (1975).  5-  There i s l i t t l e s p e c i f i c information regarding the a c t u a l r e d i s t r i b u t i v e mechanism a t the basic l e v e l s . Reports i n the media i n d i c a t e t h a t , at l e a s t a t and below the l e v e l o f the h s i e n , the r e d i s t r i b u t i o n o f resources occurred p r i m a r i l y through commune i n d u s t r i a l p r o f i t s r e i n v e s t ed i n commune-wide p r o j e c t s o r i n t e r e s t - f r e e ' t i e d ' loans f o r the purchase of equipment (SCMP 5445, 15 Aug.1973, 53). I n a d d i t i o n , the hsien  -80e s t a b l i s h e d a f i x e d p o r t i o n o f commune and brigade accumulation funds which were t o go toward a s s i s t i n g a g r i c u l t u r a l production and farmland c a p i t a l c o n s t r u c t i o n p r o j e c t s (SCMM 794, 20 Sept. 1974, 25).. Resources were a l s o d i s t r i b u t e d through l a r g e - e n t e r p r i s e assistance t o smaller u n i t s engaged i n the same trade (SCMP 5960, 7 Oct. 1975, 213-214). State assistance a r r i v e d i n the form of tax r e l i e f , o r through the r e duction o f state quotas t o those u n i t s which had s u f f e r e d from n a t u r a l d i s a s t e r s . Above the p r o v i n c i a l l e v e l , the degree o f r e d i s t r i b u t i o n conducted by. the c e n t r e i s h o t l y debated. Lardy (1976,340-354; .1975, 94-115), contends that a f a i r l y s u b s t a n t i a l r e d i s t r i b u t i o n o f resources from advanced t o backward provinces i s conducted by the Centre. DonrriA.: thorne (1976,328-340; 1972, 14), on the other hand r e j e c t s Lardy's t h e s i s . She argues r a t h e r t h a t , a t l e a s t since the C u l t u r a l Revolution, the centre has had n e i t h e r the power nor the i n c l i n a t i o n t o negotiate t r a n s f e r s between the provinces. 6.  Although the 1978 C o n s t i t u t i o n does make p r o v i s i o n f o r the advance t o a higher stage o f ownership, the main emphasis o f the a r t i c l e s which have been exainined i n r e l a t i o n t o the present study continues t o be on the three l e v e l system o f ownership w i t h the production team as the basic u n i t o f account. As Scott H a l l f o r d argues (1976, 1-11), given the basis f o r movement t o a higher stage o f ownership e s t a b l i s h e d by Mao and s t i l l c i t e d by the leadership (that i s that the commune's income must be 50 percent o f the gross income o f the commune, brigades and teams which comprise i t before the t r a n s i t i o n can take p l a c e ) , i t i s l i k e l y to be a considerable l e n g t h of time before the changeover w i l l take p l a c e . This does not negate the f a c t that the present leadership sees the r a p i d expansion o f the economic base o f the commune as an important feature i n speeding up the t r a n s i t i o n process. I t s emphasis on the economy a t the commune l e v e l as compared t o that of the brigade may be an i n d i c a t i o n that the leadership envisages a leap d i r e c t l y from team t o commune by-passing the brigade a l t o g e t h e r .  7.  R i s k i n (1978b) notes that i t i s the hsien i n d u s t r i e s which have been made to s u f f e r the d e c l i n e i n l a b o r a l l o c a t i o n s . This he i n t e r p r e t s as an i n d i c a t i o n o f the slowing down o f i n d u s t r i a l expansion a t the l e v e l o f the hsien. I would argue that i t I s the commune and brigade-run enterp r i s e s which have s u f f e r e d from these l a b o r r e s t r i c t i o n s by v i r t u e o f the f a c t t h a t , as already noted, they are much more l a b o r - i n t e n s i v e undertakings than those i n d u s t r i e s operating a t the l e v e l o f the hsien. C e r t a i n l y i t i s the communes and brigades which have been subjected t o the most.severe c r i t i c i s m s i n t h i s regard, and i t has been the hsien. a u t h o r i t i e s who have been frequently employed i n d i r e c t i n g the r e c t i f i c a t i o n o f the communes and brigades f o r t h e i r v i o l a t i o n s o f these regulations .  8.  The reader should consult Jurgen Domes (1977, 1-18), f o r a good summary of the issues surrounding the i n t r a - e l i t e c o n f l i c t a t t h i s time.  9.  The s i x c r i t e r i a o f a Tachai-type county are summarized as f o l l o w s : (I) The county Party•committee should be a l e a d i n g core espec i a l l y i n applying Party p o l i c y , ( i i ) Poor and middle c l a s s peasants are t o lead the c l a s s s t r u g g l e , ( i i i ) County,'commune and brigade l e v e l cadres must p a r t i c i p a t e i n  I  -81labor. ( i v ) Farmland c a p i t a l construction, mechanization of a g r i c u l t u r e and s c i e n t i f i c farming are to receive p r i o r i t y and must expand r a p i d l y . (v) A l l brigades, communes and teams are to achieve l e v e l s of ^ production achieved by the most advanced u n i t s i n the county, ( v i ) S i d e l i n e production i s to play a leading r o l e i n i n c r e a s i n g the contributions to the state and i n improving the l i v e l i hood o f the masses (adapted from P.R., No.2, 7 Jan. 1977, 1" 17). 10.  Andors (197*')') opposes t h i s view o f t e c h n o l o g i c a l c o n s t r a i n t s on l o c a l l e v e l decision-making". I n a study which he conducted on the speed i n the formation of enterprise r e v o l u t i o n a r y committees (which he i n t e r p r e t s as an i n d i c a t i o n <3f? the.ease w i t h which d e c e n t r a l i z a t i o n of e n t e r p r i s e management was obtained) during the C u l t u r a l Revolution (I967-I969), he concludes that t e c h n i c a l , economic , J and! geographic f a c t o r s were l e s s s i g n i f i c a n t as obstacles to d e c e n t r a l i z e d decision-making than were l o c a l p o l i t i c a l power or the educational and t r a i n i n g backgrounds of workers and cadres. While the scope of the present study does not permit a r e t e s t i n g of Andor's hypothesis, the trends i n a d m i n i s t r a t i v e r e adjustment observed r e c e n t l y ( i n c l u d i n g the a b o l i t i o n of e n t e r p r i s e revolutionary committees) suggest that the present d r i v e f o r t e c h n i c a l modernization i n i n d u s t r i a l production i s indeed c l o s e l y a l i g n e d w i t h the reconcentration o f a d m i n i s t r a t i v e a u t h o r i t y . In a d d i t i o n , a subs t a n t i a l degree of doubt e x i s t s regarding the extent to which worker p a r t i c i p a t i o n i n management decision-making a c t u a l l y p r e v a i l e d beyond the euphoria of the I966-I968 p e r i o d . For the time-being , however, these issues remain open f o r f u r t h e r study. ;  11.  The evidence of increased state a c t i v i t y at the lower l e v e l s of the society stems from a report from Hunan Province which c i t e s a doubling i r i the number of state cadres i n the communes and the presence of at l e a s t two state cadres i n each brigade (FBIS, 14 A p r i l 1.978, H6).  -82-  Bibliograpfiical  References:  Books: Barnett, A.Doak (1967). Cadres, Bureaucracy, and P o l i t i c a l Power i n Communist China. New York: Columbia Press. B a s t i d , Marianne. (1973). "Levels o f economic decision-making." I n A u t h o r i t y , P a r t i c i p a t i o n , and C u l t u r a l Change i n China, pp.159-197. E d i t e d by Stuart Schram. Cambridge: Cambridge U n i v e r s i t y Press. Bettleheim, Charles (1974). C u l t u r a l Revolution and I n d u s t r i a l Organization i n China:Changes i n Management and The D i v i s i o n Of Labor. London: Monthly Review Press. Chang, P a r r i s (1975). Power and P o l i c y i n China. 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I n Government of Communist China, pp.288-305. E d i t e d by George P. Jan. San Fransico: Chandler P u b l i s h i n g Co. Howe, Christopher (1973) • "Labour.:.Organization and i n c e n t i v e s i n i n d u s t r y , before and a f t e r the C u l t u r a l Revolution." I n A u t h o r i t y , P a r t i c i p a t i o n , and C u l t u r a l Change. Humes, Samuel and Martin, E i l e e n (1961). The Structure o f L o c a l Governments Throughout The World. The Hague: Martinus N i j h o f f . Lardy, N i c o l a s (1975). "Economic Planning i n The PRC: C e n t r a l - P r o v i n c i a l F i s c a l R e l a t i o n s . " I n China: A Reassessment o f The Economy, pp.94-115. Leemans, A.F. (1970). Changing Patterns o f L o c a l Government. I n t e r n a t i o n a l Union o f Local A u t h o r i t i e s . Lewin, Moshe (1974). P o l i t i c a l Undercurrents Princeton: Princeton U n i v e r s i t y Press.  The Hague:  i n Soviet Economic Debates.  .-83Maddick, Henry (1963). Democracy, D e c e n t r a l i z a t i o n and Development. London: A s i a P u b l i s h i n g House. Maitan, L i v i o (1976). Books.  Party, Army and Masses i n China. London: New L e f t  McFarquhar, Roderick (1974). The O r i g i n s o f The C u l t u r a l Revolution: Contradictions Among The People, 1956-1957. New York: Columbia U n i v e r s i t y Press. Perkins, Dwight (1977).,ed. Rural Small-Scale Industry i n The People's Republic o f China. Berkeley: U n i v e r s i t y o f C a l i f o r n i a Press. Schurmann, Franz (1968). Ideology and Organization i n Communist China. Berkeley: U n i v e r s i t y o f C a l i f o r n i a Press. Seldon, Mark (1969). " "The Yenan Legacy: The Mass L i n e . " I n Chinese Communist P o l i t i c s I n A c t i o n . E d i t e d by A.Doak Barnett. S e a t t l e : , U n i v e r s i t y o f Washington Press. Sigurdson, Jan (1977). Rural I n d u s t r i a l i z a t i o n i n China. Council on East Asian Studies. 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Problems, o f  Current Scene.  Hofhelnz, Roy ( 1 9 6 2 ) . "Rural A d m i n i s t r a t i o n i n Communist China." China Quarterly. N o i l l (July/Sept., 1962):, 140-159Johnson, Graham (1965). "Modernization, Growth, and D i v e r s i t y : The Chinese Case, 1958-1963." M.A. Thesis, C o r n e l l U n i v e r s i t y . Lardy, Nicolas (1976). "Reply t o Donnlthorne's 'Comment: C e n t r a l i z a t i o n and D e c e n t r a l i z a t i o n i n China's F i s c a l Management'.." China Quarterly. No.66. (June, 1976): 340-354. • ,; Ma, Sen (1977). "The R u r a l People's Commune i n Shandong Province; 19581965: A Model o f S o c i a l and Economic Development." Ph.D. d i s s e r t a t i o n , U n i v e r s i t y of B r i t i s h Columbia. P a r i s h , W i l l i a m (1976). "China: Team, Brigade o r Commune?" Problems o f Communism. Vol.XXV, No.2. (March/April, 1976): 51-65R l s k l n , C a r l (1978a). "China's R u r a l I n d u s t r i e s : S e l f - R e l i a n t Systems o r Independent Kingdoms?" China Quarterly. No.73. (March, 1 9 7 8 ) : 7 7 - 9 8 . China."  (1978b). " P o l i t i c a l C o n f l i c t and R u r a l I n d u s t r i a l i z a t i o n i n World Development. Vol.V, No.5- (May, 1978): 681-692.  (1971). "Small Industry and The Chinese Model o f Development." China Quarterly. No.46. ( A p r i l / J u n e , 1971): 245-273. Newspapers: Foreign Broadcast Information Service (FBIS). D a i l y Report. People's Republic o f China. (Jan. 1977-May, 1978). S p r i n g f i e l d , V i r g i n i a : U.S. Department o f Commerce, N a t i o n a l T e c h n i c a l Information Service. 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