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p China’s weak economic basis, subject to the constant pressure of a growing population, proved incapable of sustaining the burden of a modern industrial apparatus, which in 1956 119 was inflated out of all proportion to the possibilities of accumulation and marketing. This, added to the Peking leaders’ crash campaign to effect sweeping co-operation in agriculture, the handicrafts and capitalist industry and trade, served to disrupt the weak material and financial basis of modern industry, to deepen the existing economic disproportions and create fresh and major ones.

p Here are the main disproportions which had emerged by the end of the first five-year period.

p “The disproportion between the modern industry and the backward agricultural basis. The Chinese economist Tseng Wen-ching estimated that to boost China’s farming to a productivity level that would ensure the normal supply of the population with food and industry with raw materials, it had to be provided with the following modern technical facilities: 1.2-1.5 million tractors, 6 million tons of oil products for the latter, 20 million tons of nitrogenous fertilisers and many million tons of phosphates and potash fertilisers. Another estimate puts the need in mineral fertilisers at 100 million tons.^^13^^ At the end of the first five-year period, however, China was yet to put out its first tractor, whereas the plan for the second period provided for the launching of only one modern tractor plant with a capacity of 15,000 a year and the building of two small tractor works at Tientsin and Nanchang. By the end of the first period, China had imported less than 25,000 tractors. By 1957, it was producing no more than 630,000 tons of mineral fertilisers, whereas all the new projects put in hand during the first period were to produce less than 1 million tons.

p The output of crude oil (natural and synthetic) was only 1.5 million tons, most of that going into industry and transport, as well as 1.5 million tons of imported oil and oil products. Distribution of the output of heavy industry between industry and farming ran on a typical pattern: 86 per cent of all rolled metals went into industry, and 0.1 per cent—into farming; the figures for electric power were 85 and 0.7 per cent, respectively, for machine-tools—70 and 8 per cent, and cement—30 and 10 per cent, respectively. The horse-drawn ploughs and harvesters produced for agriculture often lay idle for lack of draught animals. Without chemical fertilisers and modern machinery, farming was 120 utterly dependent on the weather, so that during crop failures the state had not only to supply food to the towns, but also to use a large part of its procured food to supply the disaster areas. Bad harvests tended to reduce the tax revenues from farming and the rural population’s purchasing power in respect of industrial goods, the main source of accumulation for the state budget.

The disproportion between the capacities of the light industry and its raw material basis. The development of synthetic materials being embryonic, the raw material basis of the light industry was totally dependent on agriculture. During the first five-year period, 86-92 per cent of all the consumer goods were made of farm produce. But since farming itself was very weak, productive capacities in footwear in 1956 were underloaded by 67 per cent, fabrics—47 per cent, paper—29 per cent and cigarettes—80 per cent. The dependence of the light industry on the state of farming was particularly pronounced in the cotton industry (Table 2).

Table 2 Correlation Between the Cotton Crop and Output of Fabrics (per cent over the preceding year) Year Cotton crop (per cent) Year Output of fabrics cent) (per 1952 126 1953 122 1953 90 1954 112 1954 91 1955 87 1955 142 1956 127 1956 95 1957 87

p Agriculture’s inability to ensure steady raw material supplies for the light industry resulted in sharp annual fluctuations in growth rates, which most clearly brought out the weakness of the country’s economic basis. Thus, in 1953 and 1956 (years following upon good harvests), industrial production increased by 30.3 and 24.8 per cent, whereas in 1955 and 1957 (years following upon crop failures), it was up by only 5.3 and 11 per cent respectively.

Declining growth rates in the light industry also had an effect on the heavy industry, which dependent on revenues

121 from the former and supplied it with part of its product.

p The disproportion between the extracting and manufacturing sectors. The weakness of industry’s economic basis made itself felt in the lag not only of agriculture, but also of the extractive branches of the heavy industry, even despite the relatively high level of investment in these branches. The lag was evident in the iron ore, coal and oil industries, which, in the later years of the first five-year period, proved incapable of providing adequate raw materials (iron ore, coke and additives) and semi-manufactures (rolled metals) to metallurgy, engineering and partly to the chemical industry. In 1956, underloading of facilities as a result of rawmaterial shortages was 72 per cent in the chemical industry and 66 per cent in engineering. In some areas, there was a disproportion between electric-power requirements and power station capacities. All these disproportions sprang from the inordinate growth rates in the manufacturing sectors, arising from a desire to make industry self-sufficient.

p The disproportion between modern complex equipment at the new enterprises and the low skills of the workers, engineers and technicians. The new enterprises being built with the assistance of the USSR and other socialist countries were being continuously equipped with complex machinery and technology, which had to be operated by workers with grade 6 or 7 skills on average, but of these there were only a few. Of the 4,200,000 workers recruited to work in industry from 1949 to 1957, only 1,390,000 had previously worked at industrial enterprises, whereas the rest came from the army (190,000), the schools (980,000), the countryside (1,010,000) and the non-working-class urban sections.

p Workers were usually trained at the enterprises, individually and through apprentice teams, whereas technicalproducer schools trained no more than 300,000 workers, or under 5 per cent. In 1957, over 57 per cent of all workers had an industrial record of under seven years, and 30 per cent—under four years. About 26 per cent of the workers were illiterate, and 62 per cent had a primary education. Under the 8-grade skill set-up, it was maintained that workers at the old enterprises had skills averaging grades 5 or 6, and at the new ones—grade 4, but the actual standards were much lower, for in 1957 industrial wages 122 together with bonuses and extras averaged 637 yuans a year, or 53 yuans a month, whereas a grade 4 worker had to receive a basic wage of 56 yuans.

The situation with respect to engineers and technicians was even worse. Here is a table to show the increase in the number of engineers and technicians and their skills (according to the PRC’s State Planning Committee):

Table 3 Qualifications of Engineers and Technicians 1949 1952 1957 Specialists 1,000 persons per cent 1,000 persons per cent 1,000 persons per cent With a higher education . . . With a secondary education . . . Practitioners without education ..... 40 36 50 31.7 28.6 39.7 48 44 120 22.6 20.8 56.6 110 180 510 13.8 22.4 63.8 Total ...... 126 100 212 100 800 100

p During the first five-year period, the socialist countries helped China to launch a scheme to train engineers with a higher education and technicians in 40 technical higher educational establishments in 131 lines, which made it possible to increase the number of studens from 66,000 to 160,000 and to graduate 90,000 engineers by the end of 1957. Another 7,500 students were being trained in the Soviet Union, 2,000 of these completing the whole course. In 1952, special secondary technical schools had 110,000 students and by 1957 the figure had gone up to 259,000.

p The shortage of skilled workers, engineers and technicians tended to delay the launching of new productive capacities and made for low returns on the existing assets. In the fiveyear period, fixed assets in production increased by 126 per cent, whereas production in the modern industries was up by only 140 per cent. In 1957, fixed assets in industry totalled 33,800 million yuans, whereas gross output in the modern 123 industries was 55,600 million yuans, which meant an annual return of only 1,64 yuan per yuan of operational investment.

p At the end of the first five-year period, machine-tools were running at full capacity less than 60 per cent of the working time. The output per metal-cutting lathe, though going up from 12.6 tons in 1953 to 26.6 tons in 1957, was still no more than a quarter of the average output in the Soviet Union. The output per square metre of shop-floor area was only 60 per cent of that in the Soviet Union. Spoilage in foundry shops was 11-14 per cent, in steel smelting—7-10 per cent and in machining—2.5-5 per cent. Idle time in engineering amounted to 22.5 million machine-tool hours a year.

p The disproportion between the faster growing urban population and job openings under the priority development of the heavy industry. Over the five years, the country’s population increased by more than 65 million, the urban population going up by 20 million, both from natural growth and influx from the countryside. Total employment in all the sectors of the national economy, except agriculture, increased by less than 3 million, and in material production remained almost unchanged. The number of production workers in modern industry was up from 3.77 million to only 5.57 million. The uneven pattern of population and employment growth were due, on the one hand, to the much too rapid socialist change in capitalist industry and the handicrafts and the marked growth of the administrative apparatus, and on the other, to the specifics of the country’s industrial development.

p The growth of employment in industry lagged far behind the growth in production. In the modern and manufactory industry, the latter was 140.7 per cent and the former only 48 per cent, employment going up from 5.3 million to 7.9 million.

The low increase in employment in that sector, which accounted for 67.8 per cent of the overall increase in production throughout the national economy, was due to the fact that during the first five-year period investment was mostly channelled into the more capital-intensive and highly productive industries. But rapid growth in basic production 124 assets in these industries slowed down the increase in the number of vacancies, because upon the construction of large enterprises the share of living labour tends to go down steeply owing to the rise in the share of past transferred labour embodied in the complex machinery, equipment and other modern instruments of labour.