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Bold Economic Measures : China's Optimism Dims Amid Faltering Reforms

August 17, 1985|JIM MANN | Times Staff Writer

PEKING — In the last half of 1984, China found itself in a period of buoyant optimism.

China's Olympic team had surpassed all expectations in Los Angeles; its diplomats had succeeded in negotiating an agreement for the return of Hong Kong from Britain; its army had paraded its latest weapons before the world on the 35th anniversary of the People's Republic; its grain harvest was the largest it had ever known.

Most of all, China was embarking on a bold new plan to transform its economy. In a series of reforms approved by the Communist Party Central Committee, the nation's leaders agreed to reduce the role of centralized state planning, to let many prices be determined by supply and demand and to open the way for a measure of private enterprise within the socialist system.

At one point last fall, the country's top leader, Deng Xiaoping, told West German Chancellor Helmut Kohl that the new reform program should be considered "a kind of revolution."

Chinese officials and the state-controlled press urged the nation to discard obsolete ideas, to begin dressing more fashionably and to spend more money on consumer goods.

Now the atmosphere has turned to one of hard realism, even disillusionment, as the problems increase.

Trying to create a market economy in a country where prices and supplies have long been determined by the state has created wild price fluctuations and shortages. And attempting to carve out a role for a private sector in a Communist country virtually without a merchant class has led to widespread corruption.

Other Communist nations had come to look upon China as a trailblazer and possible model for emulation. Visitors from other countries, among them North Korea and the Soviet Union, have been studying China's economic changes and visiting places like Shenzhen, the special zone across the border from Hong Kong that has been the testing ground for many of the reforms.

In the West, many government officials and business leaders see China as a budding economic power that will eventually develop in the manner of its East Asian neighbors. "This place reminds me of Taiwan in the 1950s," an American official here said.

Yet within China, the view these days is much less sanguine. The Utopian vision of revolutionary change has been discarded. For the past few months the official press has been emphasizing the themes of caution, discipline and lowered expectations. In literature and in private conversation, the view is expressed that the reforms do not add up to much and that China is not changing to the extent that had been expected.

'Doonesbury' China

The movement toward rapid adoption of Western styles and values has slowed considerably. The so-called Doonesbury China that captured the imagination of American cartoonists, a China suddenly opening up to rock music and nude models, is little in evidence here this summer.

Last month, the chairman of the Chinese Musicians' Assn. called for a ban on pop songs from Hong Kong and Taiwan, songs he described as "the products of capitalist societies."

China decided not to broadcast the "Live Aid" show that raised money for famine victims in Africa, and a concert planned in Peking by Hong Kong pop star Connie Mak was shelved. In June, the authorities called off an unofficial exhibit of abstract paintings, and in July the Ministry of Culture announced that licenses will have to be obtained for theatrical and all other public performances.

The cultural chill is a reflection of uncertainty about the economy.

"The economic front has not been good," a Western diplomat observed. "Too many things have gone wrong too quickly."

Over the last two months, there have been several signs of the difficulties China is encountering and of the efforts by Deng and other leaders to foster a period of retrenchment. Among them:

--In June, less than a month after lifting price controls for vegetables in Peking, city officials reimposed state subsidies on cabbage, cucumbers and tomatoes in the face of shortages and a doubling in prices. The city acted after Premier Zhao Ziyang and other national leaders living in Peking reportedly expressed concern about the public backlash.

The vegetable supply has improved now and prices have dropped a bit. But in July there was a severe shortage of eggs in Peking and huge stockpiles of pork and beef. New prices set in May had increased the cost of beef by 120%, of pork by 37%, of eggs by 18%.

--The authorities in Peking have cracked down on local Communist Party and government officials in the biggest scandal that has come to light since the reform program was announced. The officials were said to be involved in a scheme under which bank loans of about $1.5 billion were illegally obtained to set up private companies. The firms imported tens of thousands of cars and television sets into Hainan Island, which has duty-free status, and then resold them on the mainland for huge profits.

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