JPRS ID: 9270 USSR REPORT MILITARY AFFAIRS

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000300080042-4
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 8
• Document Creation Date: November 1, 2016
• Sequence Number: 42
• Content Type: REPORTS

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- JPRS L/9559
19 February 1981
- China Re ort
~
ECONOMIC AFFAIRS
CFOUO 1 1 J
~
_ FBIS ~OREIGN BROADCAST INFORMATION SERVICE
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JPRS L/9559
~9 February 1981~
CHINA REPORT
ECONOMIC A FFAIRS ~ .
(~ovo 1/si)
_ CONTENTS
NATIONAL POLICY AND ISSUES
Editorial Notes China's Economic Problems
(Editorial; THE DAILY YOMIURI, 1 Feb ~il) 1
ECONOMIC PLAI~IING
Minister Predicts Oil Production in PItC To Decrease
(ASAHI SHIMBUN, 4 Sep 80) 3
- a - [III - CC - 83 FOUOJ
sn~ nr.c.rr. T r rc~ nwrT v
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NATIONAI, POLICY AND ISSUES
EDITORIAL NOTES CHINA'S ECONOMIC PROBLEMS
Tokyo THE DAILY YO~SIURI in English 1 Feb 81 p 2
[Editorial: "China Econumy Faces Crisis"]
(Text]
China's decision ~o suspend work on three petro-
chemical complexes being constructed w~ith Japanese
help has put Japan-China ecnnomic relations in a
' quandan~.
The main reason for China's suspension of the
thret prnjects, which follow the stoppage of
second-stage work on the Baoshan steel complex, is
its miscalculation on oil development. China tried to
develop 10 oil fields under a 10-year program and
import advanced technology in return for its crude
oil exports in order to carry out its modernization in
a hurried manner. But. it failed to achieve this aim.
It has now become apparent that China cannot expect
_ an increase in its crude oil output in the first half
_ of the 1980s.
in the "readjur3tment processes" since 1979 of
China's originally too ambitious modernization pra
gram, leading proponenta of oil development, includ-
ing State Energy Commission Minister Yu Qiuli,
have been diamissed.
Three Ma jor Problema
It seems that Chairman Hua Guofeng may have
been forced to submit his resignation pazrtl,y due to
his failure to steer the national econom~. But why
- ahould all the responsihility be taken by Hua and
those in favor of modernization based ori oil develop-
ment?
The policy ot using oil revenues for modernization
is the core of China's four-point modernization pro-
gram being. advocated by senior Vice��Premier Deng
Xiaoping.
- China is faced w�ith three major problemg--deficits
in government finances, inflation and unemployment.
China's economic trouble.s have also been caused by
1
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_ `
the economic reformation carrizd out by Premier
Zhao Ziyang, the right-hr~nd man of Deng.
The root cause of de~icits in government fin~nces
is too much spending for public works projects. And
in its economic r~eformation program, China gave
more autonomy to provinces and enterpri.ses for tne
aim nf cutting down control of the central govern-
ment.
- ,Inflation has been caused by excessive issuance of.
notes and Zhao's decentralizing of economic policies
w~hich gave birth to blaci~ market
Coping With Newr Situatior:
To c~ntrol the situation, China is now at,rengthen-
in~ centralization of basic economic aectors, reducing
note iasuance, concei~trating more on economic read-
~ juR~ment rather than on economic refo:-m and ad-
vocating the necessity of market control. But the
= shift in it5 economic policies has been so swift as tr~
give the impression of inconsistancy. It also gives the
- impreasion of an ongoing power st:-uegle, which is
delaying the Politi~al timetablc. `~'e believe this con-
f~asion will continue for some time.
~ H~nti~ will China cor:zgensate the loss which the
Japanese enterpri.ges ~oncerned are liable to suffer?
China's ci~edibility is an stake here. Of course the
companies involved and the Ja~:~anese Government
a�ill have to discusa the matter f~.illy with China.
But we wonder why Japanese enterpris~s obsessed
with China fever did not foresee this possibility. Iic
seenis that they did not cany ou~ er.,ough preparatory
surveys. They mu~~t bear the blame for this.
_ IFebruary 1) _
COPYRIGHT: THE DAILY YO~SIURI, 1981
CSO : 4120
2
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ECONOMIC PLANNING
MINISTER PREDICTS OIL PRODUCTION IN PRC TO DECREASE
Tokyo ASAiiI SHIMBUN in Japanese 4 Sep 80 p 1[American Embassy translation]
[Text] Oil Production in China Will Decrease for Several Years: Vice-
Premier Yao to ITI Vice-Minister; Effects on Japan-China Trade Will Be
Serious
[Beijing, September 4, Special Correspondexit Funahashi]--According to what
was revealed by a source concerned on the 4th, the Chinese side, in the ser-
ies of talks between ITI Administrative Vice-Minister Yano and Vice-Premier
Yao Yilin (chairman of the State Planning Co~nittee), Vice-Premier Kang
Shien, and State Planning Committee Deputy Chairman Fang Weizhong, which
s' talks were held in Bei~ing on the 3d, showed the prospect that "Oil pro-
duction in China will continue to decrease until the latter half of the
1980's." At the same time, it clarified the following points in regard to
the New 10-Year Economic Plan which is scheduled to be started from 1981:
(1) The rate of growth in industrial production will be 5.5 percent in the
first half and 6 percent in the latter half; and (2) the number of newly
employed persons will be five million annually.
It is said that oil production in China has reachec~. the limit recently. At
the third session of the Fifth National People's Congress, which is~now in
session, Vice-Premier Yao Yilin reported the severe prospect that oil pro-
duction in fiscal 1981 will hardly increase. However, it has been clarified,
for the first time, Chat China will fall into a situation where it must
actually expect a"reduced-production structure for a long period of time."
It is likely that this will have serious effects not only on the future of
China's oil exports to Japan but also on Japan-China trade as a whole,
which is moving with oil exports as the axis.
This series of talks was held in the form of the two sides' exchanging opin-
ions mainly on the New 10-Year Economic Plan which China is scheduled to car-
ry out from next year. The Chinese side pointed out that the biggest pro-
- blematical point of the said Plan lies in "stable supply of energy, espe-
- cially oil." It showed the prospect that oil production, in particular,
will decrease from 1982 on, rather than level off, and that such a situation
will continue until the latter half of the 1980's. At the same time, it
clarified the policy of making the development and saving of energy, cen-
tering on oil, a top-priority task.
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At the same time, the Chinese side e:cpressed its desire as to the period
of economic adjustment scheduled from 1979 to 1981, saying that "We know that
- it will be very difficult, but we want to complete it in three year.s, for
the time being, as scheduled." On the other hand, it said, in regard to the
framework of the said Plan, that the a.verage economic growth rate will be
- estimated at a little less than 6 percent, and that the following points will
_ be incorporated: (1) The rate of growth in industrial production will be
fixed at 5.5 percent in the first half and at 6 percent in the latter half;
and (2) the number of newly employed p~rsons will be five million annually.
Furthermore, Vice-Premier Yao Yilin clarified that China is scheduled to
draw up the draft far the 10-Year Plan, which the said Planning Committee is
preparing ar present, by the end a.f this month, send it to various areas and
sectors so that L-he intentj.ons of those who are governed will be conveyed to
those who govern, and draw up the Government plan by the end of this year.
Fails in Develcpment Investment
(Commentary) Oil production in China amounts to 106 million tons annually
at present, and China is still a prominent oil-producing nation in the world.
However, because of its failure in the domestic development investment policy
during the past several years, it seems thut a yellow light has begun to
blink on and off for the "big oil-producing nation."
The rate of growth in oil production in China last year was only 2 percent,
and it has hardly increased this year, either. As to the production plan,
_ too, the output is said to be "l0o million tons, sl~iowing no increase," as
shown in the economic report by Vice-Premiet Yao Yilin at the third session
of the National People's Con~r.ess on the 30th of last month.
However, for such reasons as that the vitality of oil fields in that country
_ is declining, and that it has lacked strategic, pre~erential oil development
investment policies during the past several years, China's oil production
structure has come to a more s~rious deadlock than expected. The judgment
that China will be obliged to reduce production for nearly five ,years from
1982 on, at least, has beer. made clear by a Chinese Government leader for the
first time. In this respect, the statements by Vice-Premier Yao Yilin and
others are important.
About the spring of this year, the Chinese side conveyed to the Japanese side
the view that it will be difficult to exp~rt to Japan 9,500,000 tons in 1981
and 15 million tons in 1982, as decided in the Long-~:rm Trade Agreement with
Japan. It can be said that the statements by Vice-Premier Yao Yilin and others
this time are designed to seek the Japanese side's better understanding of
China's painful "domestic circumstances," with the negotiations on the said
Agreement, which are to be started from the middle of this month, near at
hand.
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However, if the '"long-term reduced production st~ucture" at least up tiill
the latter half of the 1980's takes root, there will arise a change in the
mode of action by the "big oil-producing nation," which is trying to push
modernization by participating in the international economy with oil as a
weapon and purchasing advanced technology and facilities including plants,
in return for its oil exports. Also, it seems ~mpossible to avoid dark
clouds hanging over the future of Japan-China trade, which has been grow-
ing, with the form of exchange between "oil" an~a "machinery" as the axis.
- Vice-Premier Yu Qiuli was already made to take the responsibility for such
an "oil policy lacking scientific, rational management," and has been re-
leased from the post of Chairman of the State Planning Committee. He:has
been virtually demoted to the post of Chairman of the newly established
Energy Committee. Moreover, the forces of the so-called "oil faction,"
including Oil Indus~ry Minister Song Zhenming, have been made to retreat.
Under the present situation in which the Chinese economy is deepening inter-
dependence with the ini~ernational economy, with oil as a spring, and is
bound by its external pledge to export oil, unlike in the days of the
"closed economic structure" in the past, under which China produced oil to
meet only its demand, reduced production of oil in that country may lead to
"nonfulfillment of its promise." It seems impossible to consider the retreat
of the forces including the "oil faction" separately from such a~ aspect of
internationalization of the Chinese economy.
COPYRIGHT: Asahi Shimbun Tokyo Honsha 1980
CSO: 4105
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