Analysis of Chinese Power: The Economic Base and Potential for Military and Political Power
Abstract : It is the purpose of this thesis to measure the economic base of China and to predict her economic potential over the next 10 years. In the next decade, Communist China cannot become a world power. Her economic base is just not adequate enough to take such a giant step in such a short period of time. The basic issues are a huge and expanding population, inability to feed the population, and the absence of the means to rapidly develop Chinese industry. This is not to say that China cannot become a world power -- for she can. She has adequate natural resources; she has human resources; she has an industrial base that is expanding slowly; she has leadership dedicated to making China a world power; she has space and land, even though productive land is scarce; she has an illiterate, but responsive, population; she has the advantage of centralized control and planning for all aspects of the economy; she has discovered the value of incentives to aid production; she shows signs of a willingness to take steps to control population growth; she has a well-supported "National Purpose" of making herself significant in the world; she has no neighbors that seek her territory; and she has a government that is in complete control and has the will and the means to direct China's destiny. In short, China's economic base is not adequate for world power now, but it has all the necessary attributes to become a world power over a period of 30 to 50 years. This time factor could be shortened considerably if China were to make herself respectable and trusted internationally. China could get much needed industrial imports much faster if she presented a less belligerent attitude toward other countries. Even now, countries like France, Canada, Australia, and others are interested in expanding trade with China.
“The Rate and Pattern of Industrial Growth in Communist China”
PROFESSOR ECKSTEIN'S reaction to my review is an understandably human one, and one can forgive his intemperate opening remarks. Professor Eckstein not only sponsored Professor Chao as a graduate student, but, according to the book's preface, he " is almost a coauthor," and the book " is virtually a joint product." However, when Professor Eckstein proceeds to lavish unrestrained praise on what to a considerable extent is his own work, it is as professionally inappropriate as it is technically unwarranted. Also, he is quarrelling with a non-existent review. He defends at length Professor Chao's dissertation per se, apparently submitted in 1962. My review dealt only with the book published in 1965. Still further, even with respect to the dissertation he appears to be in error. Professor Eckstein writes: " The Chao index was completed and presented as a doctoral dissertation in 1962, well before the national income measurements of Liu and Yen were completed or indeed became available. Chao developed his own [and Eckstein's?] methods of index number measurement without any reference to the then as yet unpublished study" (para. 4). Attention is invited to T. C. Liu, "Structural Changes in the Economy of the Chinese Mainland, 1933 to 1952-1957," The American Economic Review (hereafter referred to as AER), May 1959, and T.C. Liu and K. C. Yeh, "Preliminary Estimate of the National Income of the Chinese Mainland, 1952-1959," AER, May 1961. These are papers presented at the AEA annual meetings in December 1958 and December 1960 respectively. In 1960, both Professor Eckstein and I were members of the China panel and presumably, he received then, as I certainly did, a copy of the Liu-Yeh paper. Compare Table 1 of Liu-Yeh's 1960 paper (AER May 1961, p. 490) with T. C. Liu and K. C. Yeh, The Economy of the Chinese Mainland: National Income and Economic Development 1933-1959, RAND Memorandum, RM-3519-PR, Vol. I, April 1963, p. 94, Table 8; and Chao, p. 89, Table 20. Dispassionate readers will observe that, contrary to Eckstein's statement, the Liu-Yeh calculations of "net value-added of manufacturing factories, mining, and utilities at 1952 constant yuan" had been completed and were publicly available at
Sino-Soviet Economic Relations, 1959-1962
The peak in Sino-Soviet trade was reached in 1958-1959, when it accounted for half of China's total trade. It declined heavily in 1960-1962, as did China's trade with Eastern Europe. The decline reflected China's economic crisis as well as the Sino-Soviet conflict. Apart from the recall of Soviet experts in 1960, there is no clear evidence of overt So viet economic warfare. The Soviet Union exerted severe eco nomic pressure, but did so in the businesslike guise of cutting exports to China, in response to China's reduced ability to pay. However, the Soviet Union has tempered this closefisted atti tude with a few semicharitable gestures. Commercial rela tions, although visibly strained by the political dispute, have remained formally correct. But the collapse of China's trade with the bloc, the severe curtailment of imports other than grain from the West in 1961-1963, and poor prospects of ob taining long-term credits in the West have deprived China of the opportunities she had prior to 1960 of harnessing foreign trade to the needs of her industrialization drive. Peking's all- round intransigence, for the time being, makes China virtually the only underdeveloped country not receiving economic aid from any source.