CHINA'S SCIENCE AND TECHNOLOGY REFORMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01058R000101220001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 22, 2016
• Document Release Date: April 19, 2010
• Sequence Number: 1
• Publication Date: March 29, 1985
• Content Type: REPORT

Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0 -25X1
Central Intelli
ence A
enc
g
g
y
/Z2
DIRECTORATE OF INTELLIGENCE
29 March 1985
China's Science and Technology Reforms
Summary
The Central Committee's Decision on S&T reforms
of 13 March gives the highest official endorsement
to modernizing China's S&T structure. The reforms--
which rely heavily on economic incentives and market
mechanisms--are aimed at overcoming chronic
management problems that have hobbled the Chinese
S&T system and increasing its contribution to
national development. China's determination to
reform its S&T system is also reflected in the
appointment of technocrat Song Jian as Minister-in-
Charge of the State Science and Technology
Commission and in proposed plans for the
reorganization of the Chinese Academy of Science.
The reforms could radically change the Chinese S&T
structure, but we believe implementation will be
slow.
The Decision reaffirms China's opening to the
West in science and technology and some of the
reforms are based on US experience in managing
S&T. As China focuses its domestic resources on
applied research and development work, we believe it
will push for greater technical cooperation with the
United States as opposed to cooperation in basic
This memorandum was prepared byl lof the Office of
East Asian Analysis in response to a request from the Office of
Cooperative Science and Technology Programs, Department of
State. Questions and comments are welcome and may be addressed
to Chief, China Division, at
25X1
25X1
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
research. Nevertheless, the proliferation of
players and the potential loosening of central
oversight implied by the reforms may complicate the
course of US-PRC S&T cooperation.
Introduction
Since 1981, Beijing has tried to increase the contribution
of S&T to national development by emphasizing applied rather than
basic research and by working to overcome S&T management
shortcomings. The Chinese research and development structure has
long been hampered by:
-- Lack of coordination between research institutes,
-- Inefficient use of resources; overemphasis on
theoretical research,
-- Inability to apply research results to production,
-- Lack of incentives for quality performance;
interference by party cadre, and technically
unqualified managers,
-- Lingering suspicion of intellectuals.
In 1982 and 1983, Beijing instituted several organization
reforms. The State Science and Technology Commission (SSTC),
which had been the leading body for planning and coordination of
S&T activities, was forced to share its planning functions with
the State Economic Commission and the State Planning
Commission. China also established a Leading Group for Science
and Technology directly responsible to the State Council and
chaired by Premier Zhao Ziyang. A second Leading Group was set
up to oversee the key electronics industry. Under these groups,
China began to experiment with new mechanisms for managing S&T
and increasing the contribution of S&T to the economy. (See
Appendix for Chinese S&T Organizations.)
Party Decision on S&T Reform
China's leadership underlined its support for S&T reforms in
early March when nearly the entire Politburo attended the
National Scientific and Technological Work Conference. A host of
party and government leaders spoke about the importance of
reforms, including Deng Xiaoping, Party Chairman Hu Yaobang,
Premier Zhao Ziyang, Minister-in-Charge of the State Planning
Commission Song Ping, State Councillor Fang Yi and Song Jian.
The Central Committee's 13 March "Decision on the Reform of
the Science and Technology Management System" gives the party's
political affirmation to structural changes that S&T reformers
have been advocating for several years. Although embassy
F- 2 -1 25X1
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
I I
officials report that the decision was drafted primarily within
the SSTC rather than in party organization, the party's stamp of
approval is necessary for such a major reform effort. Party
approval is particularly important since some of the opposition
to S&T reforms in the past has come from party members.
The document calls for using economic levers and market
regulation in science and technology management. Deng linked S&T
reforms to the sweeping economic reforms--announced last fall--in
his speech to the conference, calling on the S&T community to put
the two reforms together to solve the longstanding question of
the "disconnection" between S&T and the economy.
The decision--like the reforms of the economic system--
represents an exhaustive wish list for changes in S&T
management. It calls for reforming the funding system, greater
exploitation of technology, less state control, and greater use
of economic levers to control S&T work and encourage
initiative. Specific reforms include:
-- Funding. State funding will gradually be reduced for
institutes involved in development and applied
research. These institutes are to become self-
reliant within three to five years through reliance
on contracts for research projects, consulting
services, technology transfer, and joint venture
arrangements with enterprises. A system of science
funds will be introduced to support basic and some
applied research projects with state funds.
Institutes involved in research on selected topics
such as public health and disaster prevention will
continue to receive state appropriations.
-- Greater Management Autonomy. Research institutes
will be granted more decisionmaking power in matters
such as planning, outlays, personnel management,
rewards, and internal structure. Directors of
institutes, who will still be appointed by higher
authorities, will take full responsibility for their
decisions. Project team leaders will be given
increased authority, and project teams may be made up
of personnel hired by the team leader or through free
association. Collectives and individuals are now
permitted to set up scientific or technical service
organizations for profit.
-- Personnel Management. The document calls for
training more S&T personnel and administrators,
giving talented persons positions of responsibility,
improving working and living conditions for S&T
personnel, promoting a rational flow of S&T
personnel, allowing research institutes and schools
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0 25X1
I I
to adopt a hiring system. S&T personnel are to be
permitted to take up appropriate side jobs, and free
discussion in academics is to be guaranteed.
Exploitation of Technology. The document recognizes
technology as a commodity and calls for: changing
the practice of uncompensated transfer of
technological achievements; actively promoting
technology transfers through technology markets and
other services; enacting laws to protect rights of
buyers and sellers of technology; and determining
market prices of technology through negotiation
without state restrictions. Institutes are
encouraged to set up partnerships with production
enterprises. Defense research institutes are also to
establish a system to increase their contribution to
economic development.
Changes in SSTC Leadership
The party decision is only the latest in a series of moves
by Beijing to promote S&T reform. Last summer Fang Yi was
removed from his position as Minister-in-Charge of the SSTC, a
change we believe reflects Beijing's dissatisfaction with his
management of the SSTC and frustration at continuing problems in
S&T management. In addition, Fang had been closely identified
with basic research projects in the past, and may have been seen
as not vigorously implementing the policy of favoring applied
research. Fang, however, retains his position as one of two
deputy heads of the S&T Leading Group and remains the preeminent
spokesman for S&T.
Song Jian, Fang Yi's replacement, is experienced in managing
large-scale technology projects and has a vigorous management
style. Song was formerly a vice minister of the Ministry of
Astronautics with responsibility for China's satellite
programs. He is much more active in the daily operations of the
SSTC than Fang Yi was. Song reportedly has been a major player
in the current process of formulating S&T reforms through his
position at the SSTC and in his capacity as director of the
office of the S&T Leading Group. Song may be trying to
reestablish the SSTC's former role as the leading S&T policy
organization.
Four new vice ministers for the SSTC have been appointed
under Song Jian, strengthening the SSTC's ties to important
segments of the R&D community. One of the appointees is being
promoted from within the SSTC, another from the Ministry of
Machine Building, a third from Qinghua University, and the fourth
is deputy director of the office of the S&T Leading Group as well
as being active in high energy physics programs. The
4
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
I I
appointments, which run counter to the trend of reducing vice
ministers throughout China's bureaucracy, suggest Song is moving
aggressively to surround himself with the personnel needed to
carry out reforms.
Proposed CAS Reforms
Lu Jiaxi, President of the Chinese Academy of Sciences (CAS)
and other CAS spokesmen have already announced plans to change
funding mechanisms, permit greater mobility for S&T personnel,
and increase the autonomy of individual institutes. Most
striking is Lu's stated goal of divesting CAS of from one- to
two-thirds of its 118 institutes in order to decentralize control
over S&T and promote closer links between research and production
enterprises. The institutes may be placed under local control,
combined with other institutes, turned over to other ministries,
or disbanded. The party Decision notes the need for CAS
institutes involved in technology development to set up
partnerships with enter rises and the importance of CAS basic
research institutes.
Prospects for Change
Several factors bode well for the reform of China's S&T
system. Beijing apparently is united behind the reforms, with
both party and government authorities lined up in support. Song
Jian has been actively working on the reforms and assembling an
effective management team. The top leaders within CAS are
advocating the reforms, and most of the CAS research directors
have been replaced in recent years with younger, presumably more
progressive, individuals who should favor the reforms.
In addition, a large number of institutes and enterprises
throughout China have already acquired favorable experience with
the reforms. All of the reforms outlined in the party document
have been advocated by China's S&T leadership for some time,
several in formal documents approved by the State Council. Many
have been implemented on at least a trial basis for the past
several years. Provinces have adopted measures increasing
personnel mobility and experimenting with alternative funding
mechanisms. Reports of contracts or successful technology
transfers between research institutes and production enterprises
are common. F_~
Nonetheless, potential problems remain. Critics of the S&T
reforms (similar to critics of the economic reforms) include
those who are threatened by the call for younger, better educated
personnel as well as those who object to the new market-oriented
reforms on ideological grounds. Deng and other leaders appear to
have addressed these latter critics by stressing that the reforms
are part of building a socialist society with Chinese
characteristics. In his speech to the national science
conference Deng also alluded to denigration of intellectuals as a
continuing problem. The party document calls on party cadre
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
within S&T organizations, who have resisted changes in the past,
to provide support for the implementation of the reforms and to
be enthusiastic in supporting science.
Decentralization of CAS may be difficult if personnel
associated with institutes slated for divestiture resist leaving
the prestigious umbrella of CAS for association with an
industrial ministry. For similar reasons, S&T personnel are much
more likely to want to transfer to institutes in urban locations
than to the interior where qualified personnel are needed.
Bureaucratic obstacles such as the need for housing permits may
also limit greater personnel mobility.
Resistance to the policy of favoring applied over basic
research is also likely in certain quarters, both from reluctance
on the part of basic researchers to switch research fields as
well as from a genuine concern over the possible long-term
effects of neglecting basic science. The party Decision offered
some reassurance to these critics by calling for steady,
continuous progress in basic research.
The reforms have the potential to change radically the
nature of the Chinese S&T system, but progress is likely to be
slow. The party Decision stresses that any reform must be
gradually popularized and concludes by cautioning that "we should
not expect to achieve quick results."
Implications for US-PRC S&T Relations
The party Decision reaffirmed the principles of opening to
the West in S&T and of importing technology. Chinese S&T leaders
have modeled some of their reforms on S&T structures in the
United States and are actively seeking US advice on S&T
management. F__1
Although decentralization may increase opportunities for
cooperation by allowing ministries more autonomy in developing
international cooperative relationships, any lessening of central
oversight of international S&T relationships could lead to
greater confusion in managing US-PRC protocols. Whether this
turns out to be the case depends largely on the role the SSTC is
willing to play. The SSTC recently has expressed more interest
in policy than in program coordination, but the importance of the
US-PRC S&T relationship to China is such that the SSTC is
unlikely to completely relinquish its program oversight role.
The Chinese push for greater cooperation between institutes
working on related topics may in time make it easier for several
organizations to be involved in a particular protocol.
Bureaucratic rivalry has caused problems in the past, however,
and will not disappear overnight. In addition, in keeping with
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
China's current focus on applied research and use of technology,
China may push for greater technical cooperation rather than
cooperation in basic research. The Chinese may also look for
more participation by private companies in future protocols, as
they have for the telecommunications protocol.
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 I __1
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
I I
APPENDIX
Major Chinese S&T Organizations
Figure 1 shows the major S&T policy organizations in China
today, including the layer of leading groups added in 1982. In
addition to those listed in the figure, members of the S&T
Leading Group include the Minister of Education, the Chairman of
the State Economic Commission, a Vice President of CAS, the
Minister of Labor and Personnel, the Chairman of the National
Defense, Science, Technology, and Industry Commission (NDSTIC),
and Song Jian. The diagram does not fully indicate the prominent
part the party plays throughout the S&T establishment.
China has been working toward an integration of its military
and civilian S&T structures, as illustrated in Figure 2. We
believe the appointment of Song Jian, formerly with the Ministry
of Astronautics, a defense industry, is intended to further the
merger of military and civilian organizations.
The S&T reforms primarily will affect the relationship
between the policy organizations and the research elements (shown
at the bottom of Figure 1). General guidelines for S&T
priorities will continue to come from central policy
organizations, but research elements will have much more freedom
to choose projects and personnel if the reforms are
implemented. Research institutes involved in basic research
(which should be a reduced number) will remain tied to the
central government for funding, but institutes involved in
applied and development work will be increasingly independent of
the central government as they get more of their funding through
contracts with production enterprises. Contacts between research
institutes, even those subordinate to different ministries,
should increase. If the proposed CAS reorganization takes place,
CAS will become a smaller organization more focused--if not
exclusively focused--on basic research.
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
r1uUKt I
China's Research and Development Community
Policy Elements
State Council
Leading Grou
for
Center for Techno- Science and Technology
p
Invigoration of
Economic Research Leading Group
Chair: Ma Hon
H
Electronics
g
ead: Premier Zhao Ziyang
Deputies: Fang Vi,
Head: Vice
Song Ping
Premier LI Pang
St
ate Economic
State Planning
State Science and
Commission(SEC)
Commission (SPC)
Technology Commission
Min: Lu Dong
Min: Song Ping
Minister: Song Jian
Vice Ministers: Guo Shuyan.
Zeng Xianlin, Wu Mingyu,
Yang Jun, Teng Teng
Commissioners:
Yang Weizhe, Wu Xing,
Hu Zhaosen
Zia Weiwen, Xie Sheoming
? SaT Policy Department
)vincial SaT
search Institutes
office for annual plans and
implementation
? National Research Center
for SaT for Development
? Institute for SaT Information
of China
Director: Lin Zixin
? Key Projects Coordination
Department
Head: As Welwen
? Bureau of Technology -
Director: Hu Zhaosen
Chinese Academy of
Social Sciences (CASS)
President: Ma Hong
Chinese Academy of Science
(CAS)
President: Lu Jiax1
Party Central
Committee
Central Mili-
Military
tary Commis-
Commission
sion
Chair: Deng Xiaoping
Chinese Association
Chair: Deng
for Science and
Xiaoping
Technology
l I
Chair: Zhou Peiyuan
National Defense
Science,
China Sal
Technology, and
Consultative
Industry
Service Center
Commission
President:
Lin Bomin
(Responsible for
national defense
Sal plans and im-
plementation in
concert with SPC
and SEC)
Ministry of Education (MOE)
Minister: He Dongchang
Industrial Ministries
Research Academies
and Institutes
Defense Ministries
Research Institutes
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
FIGURE 2
China: Evolution of the Military-Industrial/Scientific Complex
Military
Research &
Development
Civilian 41
Research &
Development
and Production
Military Civilian
Research &
Development
and Production
Military
Industrial
Complex
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
SUBJECT: China's Science and Technology Reforms
Distribution:
National Security Council
1 - David Laux, Senior Staff Member for China, Taiwan and Hong
Kong, Rm 302, EOB
Department of State
1 - Linda Kupfer, China Program Office, OES/SCT, Rm 4330
1 - Jack W. Blanchard, Director, Office of Cooperative S&T
Program, Rm 4330
3 - Donald. Anderson, Director, Office of China Affairs, Rm 4318
1 - Teresa Jones, Bureau of Intelligence and Research, Rm 6524A
1 - Larry Roeder, Office of East-West Trade, Rm 3815
1 - Chris Clarke, Bureau of Intelligence and Research, Rm 8840
Department of Defense
1 - Richard Clark, FTD/T TR Wri h atterson AFB Ohio, 45433
Department of Treasury
1 - Douglas Mulholland, Deputy Assistant to the Secretary for
National Security, Rm 4326, Main Treasury
Department of Commerce
1 - Christine Lucyk, Office of PRC and Hong Kong, Rm 2317
Office of Science and Technology Policy
1 - Walter Kornack, Senior Policy Analyst, Office of S&T
Policy, Rm 5002, New EOB
Central Intelligence Agency
1
- Executive Director (Rm 7E12)
1
- DDI (Rm 7E44)
1
- NIO/EA (Rm 7E62)
1
- NIO/S&T (Rm 5GOO)
1
- AG/NIC Attn: (Rm 7B07)
5
- CPAS/IMC/CB (Rm 7G07
1
- PDB Staff (Rm 7F30)
1
- CPAS/ILS (Rm 7G50)
1
- FBIS/NEAD/CE ( )
1
- OSWR/TTAC/TAG (Rm 6C43)
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
 Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0
SUBJECT: China's Science and Technology Reforms
Distribution: (continued)
1 - D/OEA (Rm 4F18)
1 - Research Director/OEA (Rm 4G48)
2 - C/China Division (Rm 4G32)
1 - OEA/China/DEF
1 - OEA/China/DOM
1 - OEA/China/FOR
1 - OEA/China/DEV
1 -
1 -
1 -
(Attn:
2 - OCR/ISG (Rm 1
1 - C/PES (Rm 7F24)
1 - C/EA/RR (Rm 7E10)
1 - C/D0/PPS (Rm 3D01)
DDI/OEA/China/DEV4
SECRET
29 March 1985
Sanitized Copy Approved for Release 2010/04/19: CIA-RDP85T01058R000101220001-0