Harvard experts agreed yesterday that China's newly announced economic plan, which appears to favor private enterprise, is a continuation of its present policy. A Chinese student at Harvard, however, termed the program a "radical change."
Yao Yillin, China's deputy prime minister and head of its State Planning Commission, announced Saturday that China will sharply cut government spending and respond to supply and demand in planning its economy, aiming at gradual gains rather than the "quick results," sought under previous programs.
He said the Chinese government would "regulate the economy according to the pressures" of the market, but "within the state plan," with cuts coming primarily from heavy industry and defense. Although the government would intervene "where necessary...to avoid economic anarchy," Yao also said the developments of private business would be encouraged.
Ezra F. Vogel, professor of sociology, said yesterday the plan did not represent a great departure in Chinese policy. He said China "has been trying to cut the budget for some time" because its economy is in a "terrible mess."
He added that the policy attempts to introduce more flexibility in the economy to "be more responsive to needs and demands and prices."
Agreeing with Vogel, Dwight H. Perkins, professor of Modern Chinese Studies and Economics, said yesterday that China's policy is a "continuation of a process which began in the middle of 1979 when China felt it had overreached itself" in earlier programs. Perkins said that the shift from heavy industry to consumer goods has been underway since the goals of the Cultural Revolution were "fundamentally abandoned" in 1977.
Perkins noted that some of the cuts may hurt China's relationship with foreign companies. Citing the Baoshan steel complex near Shanghai, Perkins said China has already cancelled some projects with German and Japanese firms.
He said the emphasis on responsiveness to market conditions is "three-fourths talk and one-fourth action," but said that the "basic measures are completely sound."
The First Time
A Harvard student from the People's Republic of China termed the plan "pretty amazing," because it is "the first time that so much emphasis has been given to supply and demand." The student, who asked not to be identified, said that for the past two years, China concentrated on capital construction rather than light industry and agriculture. He added that the development of private business is against Communist doctrine and thus represents a deep change in ideology.
The student also said that Yao entered his present office with an "emphasis on supply and demand rather than central planning." He added he expected this more moderate policy to continue, and predicted that the long-term effects of the plan would be beneficial to China's economy.
John K. Fairbank '29, Higginson Professor of History Emeritus, was also optimistic, saying he was "quite reassured" by this plan in contrast to previous ones "which had been so hurryup."
"The thing that impressed me the most," he said yesterday, referring to an account of the program in yesterday's New York Times, "was that China had a good crop, that the standard of living of the peasantry was being maintained."
Fairbank agreed with Vogel and Perkins that the Chinese have not greatly changed their policy but said Tao's announcement represents a "carrying out of a consistent policy." He added that it was sensible to combine planning and marketing