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Conditions and Prospects for Economic Growth in Communist China*
Published online by Cambridge University Press: 18 July 2011
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Regardless of whether a detailed Five-Year Plan is in operation or not, there is in Communist China every indication of a determined, relentless, and massive effort to pursue a program of industrial expansion. The rapid rate of recovery, the restructuring of the institutional framework, the possession of an industrial base in Manchuria, the termination of hostilities in Korea, and, above all, the application of political and social power to the mobilization of resources in the hands of the state are all factors that have enabled the regime to raise the rate and level of investment considerably above that of the past. At the same time, the regime is mobilizing not only capital, but technique and entre-preneurship as well. In essence, the Chinese economy—after being more or less stationary for centuries, with only erratic and partial spurts of growth in recent decades—seems to be entering, for better or for worse, a self-sustaining growth process.
Barring another world war or a major agricultural crisis in China, the long-run question before us is not whether the Chinese Communist economy will grow at all, but whether the rate of growth will be sufficiently rapid so that the forces of the industrial revolution will be in a position to defeat the Malthusian counterrevolution. Given the previously discussed conditions and limitations, how rapidly may industrialization be expected to proceed? Obviously, these questions can only be answered conditionally and hypothetically. However, before approaching this problem, it may be well to take a schematic look at the “size” and “structur” of the Chinese mainland economy in 1952, which may be considered as the point of departure for the upward climb.
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- Copyright © Trustees of Princeton University 1955
References
1 This relates the share of gross investment to gross national product. Derived from Mukharjee, M. and Ghosh, A. U., “The Pattern of Income and Expenditure in the Indian Union,” Bulletin of the International Institute of Statistics, XXXIII, No. 3 (December 1951), pp. 49–68.Google Scholar
2 Soviet investment figures cited here refer to the period of the first two Five-Year Plans and are based on Norman Kaplan's study, Capital Investments in the Soviet Union, 1924–1951, Rand Research Memorandum 735, Santa Monica, Calif., November 1951.
3 Capital-output ratios used here specifically refer to incremental ratios designed to measure the increment in product associated with a given amount of additional (new) net investment.
4 See Eckstein, Alexander and Gutman, Peter, “Note on the Soviet Incremental and Average Capital-Output Ratios,” CENTS Econ. Devt., A.I.6, Cambridge, Mass., March 18, 1954 (mimeograph).Google Scholar
5 Tsuru, Shigeto and Ohkawa, Kazushi, “Long-term Changes in the National Product of Japan Since 1878,” Income and Wealth, Series III, Cambridge, Eng., 1953Google Scholar; Yuzo Yamada and Associates, Notes on the Income Growth and the Rate of Saving in Japan, Mimeo. 19, Tokyo, 1953Google Scholar; Clark, Colin, The Conditions oj Economic Progress, 2nd ed., London, 1951, pp. 136–38.Google Scholar
a These rates applied only after 1957, on the assumption that even some oE the new capital will have to begin to be replaced after a few years.
6 See Lockwood, W. W., The Economic Development of Japan, Princeton, N.J., 1954, pp. 25–34.Google Scholar
7 Tso-fan, Koh, “Capital Stock in China,” Problems of Economic Reconstruction in China, China Council Paper No. 2Google Scholar, IPR, Eighth Conference at Mont Tremblant, December 1942; Pauley, Edwin W., Report on Japanese Assets in Manchuria to the President of the United States, July 1946.Google Scholar
8 This applies to Japan approximately between 1890 and 1915 and to the Soviet Union between 1928 and 1938.
9 See Hsiao-ping, Teng, “Report on the 1954 State Budget,” in NCNA Daily Bulletin, Supplement No. 204, London, June 29, 1954.Google Scholar
10 Bergson, Abram, ed., Soviet Economic Growth: Conditions and Perspectives, Evans-ton, I11., 1953, p. 9.Google Scholar
11 The term “resource base” is used here in its broadest sense. Thus, China is comparatively better endowed with mineral resources, while Japan faced an expanding world market and a different international climate. For further details, see Table 7 and Section IIIA.