^1. In a meeting with members of the Japanese Diet in April 1981, Deng Xiaoping stated: “China aims at increasing its GNP to U.S. $1,000 per capita…. Our GNP is $250 at present. We want to increase this to $500 in ten years and double it to $1,000 in the next ten years.” Mainichi shimbun, Tokyo, 15 04 1981, p. 7Google Scholar. See also Xiaoping, Deng, Building Socialism with Chinese Characteristics (Beijing, 1984), pp. 37, 40Google Scholar. This goal was later formally adopted by the Chinese Communist Party. Ziyang, Zhao, “Advance along the road towards socialism with Chinese characteristics,” Renmin ribao (People's Daily, hereafter RMRB), 4 11 1987, p. 2.Google Scholar

^2. These are very broad issues. For obvious reasons, one can only explore selected aspects. Some important issues that have not been covered here include regional economic growth patterns, income distribution and balance of payments.

^3. The problems with the Chinese national income accounts are too numerous and complex to discuss fully here. For details, see the forthcoming study by the World Bank, China, Statistical System in TransitionGoogle Scholar. Essentially, the shortcomings of the data include, first, that the series in comparable prices for the period 1952–80 is a chain index linking the constant price series for sub-periods 1952–57, 1957–70 and 1970–80. The series for 1952–80 therefore is not strictly in constant prices. More seriously, biases in the series for the sub-periods are embedded in the comparable price series. Secondly, the constant price series for each sub-period is derived by a single deflation method, assuming the price changes for inputs and outputs are proportionately the same. In some cases, such as in agriculture during 1952–57, this assumption is not-valid. Thirdly, some deflators are apparently understated so that an upward bias is imparted into the output series. For example, the factory price indexes during 1984–88 given in Bongding, Hu, Zhongguo wujia nianjian 1989 (China Price Yearbook 1989) (Beijing, 1989), pp. 413, 471Google Scholar, rise much faster than the implicit deflator for gross value of industrial output given in State Statistical Bureau, Zhongguo tongji zhaiyao 1991 (A Statistical Survey of China 1991) (Beijing, 1991)Google Scholar, (hereafter TJZY 1991), pp. 9–10Google Scholar. In the case of rural industries, the gross output included in the constant price series has reportedly not been deflated for lack of data. All these considerations suggest that the growth rate based on official data is biased upwards.

^4. State Statistical Bureau (SSB), “Communiqué on national economic and social development in 1991,” RMRB, 29 02 1992, p. 2.Google Scholar

^5. Bin, Ma, Lun Zhongguo renkou wenti (On China's Population Problem) (Beijing, 1987), p. 1.Google Scholar

^6. For the actual growth rates, see TJZY 1991, p. 14Google Scholar. For the planned growth rates, see Ziyang, Zhao, “Report on the Sixth Five-Year Plan,” Guangming ribao (Guangming Daily), 14 12 1982, p. 2Google Scholar, and State Statistical Bureau, “Economic and social development during the Seventh Five-Year Plan period in retrospect,” Liaowang (Outlook), No. 47 (19 11 1990), p. 7.Google Scholar

^7. Wei, Qu, “China's population situation and measures to cope with the problem,” Qunyan (Popular Tribune), No. 4 (7 04 1989), pp. 4–10, 22Google Scholar. Apparently the change in population control targets had been influenced by the upward revision of population projections. For example? the projection for the year 2000 by Song Jian and others in 1982 was 1.13 billion. Jian, Song, Xueyuan, Tian, Jingyuan, Yu and Guangyuan, Li, Renkou yuce he renkou kongzhi (Population Projection and Population Control) (Beijing, 1982), p. 173Google Scholar. In 1986, a study by the State Council projected a total of 1.25 billion. Hong, Ma (ed.), 2000 nian de Zhongguo (China in the year 2000) (Beijing, 1989), p. 98Google Scholar. In 1990, Tian Xueyuan provided an estimate of 1.3 billion. Guangming ribao (Guangming Daily), 19 12 1990, p. 2Google Scholar. Similarly, demographers with the World Bank raised their projections from 1.2 billion in 1985 to 1.29 billion. World Bank, World Development Report, issues for 1985, 1987, and 1991 (New York, various years).Google Scholar

^8. “CPC Central Committee's proposals for Ten-Year Development Program and Eighth Five-Year Plan,” Beijing Review, No. 8–9 (18 02–3 03 1991), p. 25.Google Scholar

^9. For crude birth rates and mortality rates since 1949, see TJNJ 1990, p. 90Google Scholar; TJZY 1991, p. 14Google Scholar; RMRB, 29 02 1992, p. 2.Google Scholar

^10. Changli, Yao, “Warning: China's population exceeds 1.1 billion,” Liaowang (Outlook), No. 15 (10 04 1989), p. 15.Google Scholar

^11. The average number of women of childbearing age during 1991–95 is estimated to be 322 million, notably larger than the 298 million for 1985–90. Chin, Li, “Population control for this and the next century,” Liaowang, No. 34 (26 08 1991), p. 39Google Scholar. The SSB projected a total of 340 million by the year 2000. RMRB, 14 04 1989, p. 5.Google Scholar

^12. The average crude birth rate rose from 21.03 for 1981–82 and 1984–85 to 22.43 per thousand in 1986–89. The relative share of women of reproductive age in the corresponding periods was 25.39 and 26.9 per cent respectively. For sources, see TJZY 1991, p. 14 and Table 3.Google Scholar

^13. For example, the birth rates for these two groups in 1981 were 146.6 and 238.7 per thousand, compared to the next highest of 86.5 per thousand for those of age 30–34. Chengrui, Li, Zhongguo renkou pucha he jieguo fenxi (China's Population Census and Analysis of the Results) (Beijing, 1987), p. 144Google Scholar. See also data for 1989 in TJNJ 1990, p. 100.Google Scholar

^14. Peiyun, Peng, “Controlling population growth to achieve economic prosperity,” Liaowang, No. 1 (1 01 1990), p. 7.Google Scholar

^15. Chin, Li, “Population control,” p. 34.Google Scholar

^16. Chengrui, Li, Population Census, p. 141.Google Scholar

^17. Meier, Gerald M., Leading Issues in Economic Development, 5th ed. (New York, 1989), p. 445.Google Scholar

^18. Indicators of this trend include a drop in the average age of first marriage from 25.5 to 23.7 for men and from 22.8 to 21.0 for women between 1982 and 1987, a rise in the proportion of early marriages in total marriages from 15 to 20% and an increase in the proportion of males aged 15–24 and women aged 15–19 who were married from 3.24% in 1982 to 4.91% in 1987. RMRB, 14 04 1989, p. 5Google Scholar; SSB, “China's population structure,” Beijing Review (5–11 12 1988), p. 28.Google Scholar

^19. Yunchung, Yu, Shiyi yi ren (1.1 Billion Population) (Beijing, 1990), pp. 35–36.Google Scholar

^20. For example, the birth rates of this group tripled between 1982 and 1987. SSB, “China's population structure,” p. 28.Google Scholar

^21. Huaiyang, Sun, “Solving the population problem is crucial if we hope to become comparatively well off,” Zhongguo renkou bao (China's Population Bulletin), 9 09 1991, p. 2Google Scholar, translated in JPRS-CAR-91–064, 15 November 1991, p. 55.

^22. State Statistical Bureau, “Communiqué on the major statistics concerning the 1990 population census, no. 9,” Zhongguo tongji (China Statistics), No. 9 (1991), p. 5.Google Scholar

^23. See results of a survey reported in Jingji yanjiu (Economic Research), hereafter JJYJ, No. 6 (1982) p. 56Google Scholar. Supporting evidence of the preference for sons can be found in the fact that the relatively large proportion (about two-thirds) of the couples that have pledged to have one child were parents of baby boys. The Economist, 29 01 1983, p. 4Google Scholar. For 1991, about 92% of all old people in the countryside depend on their children for support. Shutian, Guo, “Rural population problems and countermeasures,” Zhongguo renkou bao (China's Population Bulletin), 7 10 1991, p. 2.Google Scholar

^24. For example, in 1989 the total cost of raising a child during the first 16 years was estimated at 2,909 yuan, of which the peasant contributed 2,542 yuan. RMRB, 29 01 1989, p. 8Google Scholar. The average annual cost was therefore about 159 yuan, or 6% of the average farm household income in 1989. TJZY 1991, p. 48.Google Scholar

^25. Yangzhong, Ye, “A preliminary exploration of the peasants' concept of fertility,” Renkou yanjiu, No. 4 (1988), pp. 29–30.Google Scholar

^26. TJZY 1991, pp. 44, 48.Google Scholar

^27. The experience for China, that an increase in per capita income led to more births, seems to contradict the empirical finding that in general the level of per capita income is negatively associated with the total fertility rate. For example, the total fertility rates for low-income, middle-income and high-income economies in 1989 were 3.9, 3.7 and 1.8 respectively. World Bank, World Development Report 1991 (New York, 1991), pp. 256–57Google Scholar. However, the contradiction is apparent rather than real. The cross-section data on income and fertility for China actually confirms the general experience of other countries. In 1987, the average net material product per capita in Beijing, Tianjin and Shanghai was 2,000 yuan and that in Qinghai, Yunnan and Henan was below 700 yuan. The corresponding total fertility rates were 2.1 and 2.99. RMRB, 14 04 1989, p. 5Google Scholar. There is apparently a critical value of per capita income below which the total fertility rate rises with income and above which the reverse is true. The critical value has been estimated at 1,400 yuan per person in 1987 (ibid.). Elsewhere in Liaoning, it has been found that rural households with an only daughter chose not to have a second child when their per capita income reached 1,000 to 1,500 yuan. Jingchun, Cao, “On the development of the commodity economy and rural family planning,” Renkou yu jingji (Population and the Economy), No. 1 (25 02 1989), pp. 16–21Google Scholar, translated in JPRS-CAR-89–058, 5 June 1989, p. 29.

^28. Even though children born outside the family planning quota are not entitled to acquire land at birth, they become eligible once they reach the age of 14, a delay that many farmers find easy to accept. Xiangfeng, Meng, “Difficulties in rural family planning policies,” RMRB, 17 05 1991, p. 4.Google Scholar

^29. Couples were often permitted to have a second child if the first one was a girl. Consequently, the number of second children born increased from 4.6 million in 1984 to 7.8 million in 1987. Angang, Hu, “Causes of losing control of China's population and countermeasures,” Liaowang, No. 10 (6 03 1989), pp. 17–18Google Scholar. See also Bin, Ma, On China's Population Problem, p. 17.Google Scholar

^30. The one-child policy applies only to minorities with a population exceeding 10 million. Those with a smaller population are permitted to have two or even three children per family. RMRB, 22 05 1988, p. 8Google Scholar. As a result, the average annual growth rate for minorities was 3.87% during 1982–90, compared with 1.48% for the entire nation. Beijing Review, 12–18 11 1990, p. 23.Google Scholar

^31. By 1991, China had a transient population of 70 million. China Daily, 09 1991, p. 1.Google Scholar

^32. Xiaobing, Yang, “Countering the surge in population,” Beijing Review, 13–19 03 1989, p. 4.Google Scholar

^33. See Chengrui, Li, Population Census, p. 145Google Scholar; China Daily, 16 12 1987, p. 3Google Scholar; RMRB, 14 04 1989, p. 5Google Scholar; TJNJ 1990, pp. 101–103Google Scholar; Xizhe, Peng, “Major determinants of China's fertility transition,” The China Quarterly, No. 117 (03 1989), pp. 3–37.Google Scholar

^34. State Council and Ministry of Agriculture, Zhongguo nongcunjingji shehui tongji zhiliao (Rural Economic and Social Statistics of China), (no place or date of publication), p. 129Google Scholar; SSB, Zhongguo nongcun tongji nianjian 1990 (China Rural Statistics Yearbook 1990) (Beijing, 1990), p. 230.Google Scholar

^35. A survey in 1987 showed that 44.2% of rural women age 12 or over were illiterate, compared with 31.5% for both sexes. Shutian, Guo, “Rural population problems.”Google Scholar See also Renzhou, Xin and Yuxian, Zhang, “Causes of rural population growth and countermeasures,” Zhongguo nongcun jingji (China's Rural Economy). No. 7 (20 07 1990), pp. 8–12.Google Scholar

^36. State Council and Ministry of Agriculture, Rural Economic and Social Statistics and SSB, Rural Statistics Yearbook. The government remains optimistic about the educational level of the total population in the near future. By 1995, the proportion of total population that has received at least a primary education is projected to reach 93% compared with the current 72%. China Daily, 4 01 1992, p. 1Google Scholar. Given the total population in 1991, 1,158 million (RMRB, 29 February 1992, p. 2), and the projected total of 1,227 million for 1995 (a target for population control given by Peng Peiyun, reported by Xinhua, Beijing, 27 03 1992Google Scholar, translated in FBIS-CHI-92–069, 6 04 1992, p. 26)Google Scholar, the total number of people having at least a primary school education would be 834 and 1,141 million respectively. The net increase in four years, 307 million, implies an annual increase of 77 million, which is more than four times the 18.6 million primary school graduates in 1990 (JJNJ 1991, p. VIII–129.)Google Scholar It seems unrealistic to project so abrupt and such a large increase in primary school graduates.

^37. World Bank, China: Long-Term Issues and Options, Annex A: Issues and Prospects in Education (Washington, D.C., 1985), p. iiGoogle Scholar. A serious dropout problem is also noted in Guo Shutian, “Rural population problems.”

^38. The urban population had remained at around 18% in the 1960s and 1970s, but it began to rise steadily from 19.4% in 1980 to 26.4% in 1990. TJNJ 1990, p. 89Google Scholar; TJZY 1991, p. 14Google Scholar. The definition of urban was changed several times by the SSB (in 1953, 1955, 1963, and 1964). See SSB, China Population Yearbook 1988, p. ivGoogle Scholar. Because of this the data are not always comparable. For example, urban population in 1989 is given at 51.7% in TJNJ 1990, p. 89Google Scholar, and 26.2% in TJZY 1991, p. 14Google Scholar. For a discussion of the intricacies of the Chinese urban population statistics, see Chan, Kam Wing and Xu, Xueqiang, “Urban population growth and urbanization in China since 1949: reconstructing a baseline,” The China Quarterly, No. 104 (12 1985), pp. 583–613.Google Scholar

^39. In 1980–87, the population in towns increased by 316% and that in cities by only 94%. SSB, China Population Yearbook 1988, p. 206.Google Scholar

^40. For example, in 1987 the share of agricultural population in total urban population was 62%. Ibid.

^41. According to the Minister of the Family Planning Commission, China will have the highest birth rate in the early 1990s. The annual net increase during 1991–95 will be around 16 million and the growth rate about 14 to 15 per thousand. Peiyun, Peng, “The 1990s are a crucial decade for controlling population growth in China,” Liaowang, No. 1 (1 10 1990), p. 7.Google Scholar

^42. According to the SSB, the decline was due mainly to the implementation of the Decision by the Party Central and the State Council to tighten population control in 1991, and partly to the people's decision to postpone having births in 1991 for superstitious reasons. RMRB, 29 02 1992, p. 3Google Scholar. If true, there is uncertainty as to what the people's decision may be in the future. For the Party Central's Decision, see Xinhua, Beijing, 12 06 1991Google Scholar, reported in FBIS-CHI-91–119, 20 06 1991, pp. 33–36Google Scholar. For reports of more rigorous efforts to implement population control, see RMRB, 29 04 1991, p. 1Google Scholar; New York Times, 16 06 1991, pp. 1, 4.Google Scholar

^43. Banister, Judith, “China's population changes and the economy,” in Joint Economic Committee, China's Economic Dilemmas in the 1990s: The Problems of Reforms, Modernization, and Interdependence (Washington, D.C., 1991), pp. 234–251.Google Scholar For other projections, see Yi, Zeng and Vaupel, J., “Some problems of future demographic processes in China,” Social Sciences in China (01 1992), pp. 43–53.Google Scholar

^44. For surveys of a large body of literature on the subject, see Birdsall, Nancy, “Economic approaches to population growth and development,” in Chenery, Hollis and Srinivasan, T. N. (eds.), Handbook of Development Economics (Amsterdam, 1988)Google Scholar, and Kelly, Allen C., “Economic consequences of population change in the Third World,” Journal of Economic Literature, Vol. XXVI, No. 4 (12 1988), pp. 1685–1728.Google Scholar

^45. Kelly, , “Economic consequences of population change,” pp. 1715–1720.Google Scholar

^46. There is no reliable data on GNP, so growth rates of NMP are used here. Because services expanded rapidly in the 1980s, growth of factor productivity would probably be higher if GNP growth had been used. There are other statistical pitfalls. For example, the NMP growth rates are based on an index in comparable prices and may well be higher than if they were calculated from constant prices. The depreciation rates are generally understated so that the growth of capital stock is probably too high. The growth of labour input during the period of collectivized farming (1957–78) is probably slower than the growth of agricultural employment. But the crudeness of the data probably does not significantly change the overall picture. For other estimates of factor productivity growth, Junkuang, Zhang, “A comprehensive analysis of economic effects during the Seventh Five-Year Plan period,” JJYJ, No. 4 (1991), pp. 8–17Google Scholar; Feng, Li, “On the role of technological advance in economic development,”Google Scholar and Jianbai, Yang, “Speed, structure and efficiency,” JJYJ, No. 9 (1991), pp. 15–22 and 36–44Google Scholar; Pei, Jin, “Technical progress in China's industrialization process,” Zhongguo gongye jingji yanjiu (China Industrial Economics Research), No. 9 (1991), pp. 14–21Google Scholar; Kuan, Chen, Hongchang, Wong, Yuxin, Zheng, Jefferson, Garry H. and Rawski, Thomas G., “Productivity change in Chinese industry: 1953–1985,” Journal of Comparative Economics, No. 12 (1988), pp. 570–591CrossRefGoogle Scholar; Jefferson, Gary H., Rawski, Thomas G. and Zheng, Yuxin, “Growth, efficiency and convergence in China's state and collective industry,” Economic Development and Cultural Change, Vol. 40, No. 2 (01 1992), pp. 239–266CrossRefGoogle Scholar; World Bank, China: Long-Term Issues and Options, The Main Report (Washington, D.C., 1985), p. 157.Google Scholar

^47. World Tables 1991, p. 185.Google Scholar The discussion in this section focuses on fixed investment. Because this is by far the larger component of total investment, and because working capital is closely related to fixed capital, this is also directly relevant to total investment.

^48. For a discussion of these problems, see the section on factor productivity below and the article by Kambara in this issue.

^49. Shuguang, Zhang, Jingji jiegou he jingji xiaoguo (Economic Structure and Economic Returns) (Beijing, 1982), pp. 133–34Google Scholar; Yuanchun, Dai, “Several problems concerning replacement of fixed capital,” JJYJ, No. 10 (1982), pp. 64–70Google Scholar; China Daily, 19 12 1986, p. 4.Google Scholar See also Xingmin, Tan and Yuanjing, Wang, “Tentative comments on investment strategy for the 1990s,” Jingji cankao bao (Economic Information), 21 01 1991, p. 4.Google Scholar

^50. RMRB editorial, 23 10 1991, p. 1.Google Scholar

^51. For reports of poor conditions in urban housing, urban public facilities and environmental protection, see China Daily, 27 11 1990Google Scholar, 12 August and 8 October 1991; The Economist, 18 02 1989, p. 34Google Scholar; Wen hui bao, 5 09 1990, p. 10Google Scholar; Guangming ribao, 19 01 1987, p. 2Google Scholar; Zhunming, Xiao, “Greater effort is needed to construct urban public facilities,” Jingji ribao (Economic Daily)Google Scholar, hereafter JJRB, 20 10 1990, p. 2Google Scholar; State Environmental Protection Bureau, “Communiqué on China's environmental situation in 1990,” RMRB, 5 06 1991, p. 3Google Scholar; Dibin, Li, “Memorandum on China's environmental problem,” Liaowang, No. 46 (1988), pp. 5–7.Google Scholar

^52. Xingmin, Tan and Yuanjing, Wang, “Tentative comments.”Google Scholar

^53. Total investment in residential housing during 1979–90 was 280 billion yuan, and the investment needs for 1991–2000 are projected at 495 billion yuan. RMRB, 10 and 14 October 1991.

^54. The Economist, 15 02 1992, p. 40.Google Scholar

^55. China Daily, 5 11 1991, p. 1Google Scholar; TJZY 1991, p. 25.Google Scholar

^56. The official estimate of investment cost for the project is 57 billion yuan at 1990 prices, or US$12 billion at the official rate of exchange. RMRB, 27 12 1991, p. 1.Google Scholar But some experts have placed the final cost as high as US$100 billion. Far Eastern Economic Review, 19 09 1991, p. 39.Google Scholar

^57. For different estimates see World Bank, Long-Term Issues, p. 115Google Scholar; Shuqing, Guo, “Consumption, investment and savings,” JJYJ, No. 4 (1990), p. 13Google Scholar; Qian, Yingyi, “Urban and rural household saving in China,” International Monetary Fund Staff Papers (12 1988), p. 594.Google Scholar The World Bank study shows a rising share of business savings in total savings whereas Guo indicates a decline during the period 1982–88, and Qian's data show no discernible trend during 1978–84.

^58. Estimates of enterprise income as based on its share in GDP given in SSB, Qiwu shiqi guomin jingji he shehui fazhan gaikuang (National Economic and Social Development During the Seventh Five-Year Plan Period) (Beijing, 1991), p. 30Google Scholar; and GDP given in TJZY 1991, p. 5.Google Scholar

^59. For profits of industrial enterprises including state-owned, collective and private enterprises, see SSB, Zhongguo gongye jingji tongji nianjian 1990 (Beijing, 1990), p. 124.Google Scholar

^60. The burden falls almost entirely on enterprises. See TJNJ 1990, p. 816.Google Scholar See also the results of a survey of 400 industrial enterprises in 20 cities in 1986 reported in JJRB, 20 01 1987, p. 1.Google Scholar

^61. By the year 2000, the number of retirees is expected to reach 400 million and total pension payments over 100 billion yuan. China Daily, 2 03 1991, p. 1.Google Scholar

^62. RMRB, 17 08 1988, p. 2.Google Scholar

^63. China Daily, 6 11 1986, p. 3.Google Scholar

^64. A survey of enterprises in Shaanxi and Sichuan revealed that forced donations amounted to 5 to 15% of their annual income. China Daily, 11 09 1986, p. 3.Google Scholar Levies in Shangtong came to 20% of the enterprises' retained earnings. RMRB, 2 04 1987, p. 3.Google Scholar Rural enterprises in Yunan had to contribute payments equal to their taxes. JJRB, 14 05 1988, p. 1.Google Scholar

^65. According to one report, 70 to 80% of retained profits of many enterprises have been paid to workers as bonuses or welfare payments. Jiefang ribao (Liberation Daily), 25 12 1987, p. 1.Google Scholar See also Yungchen, Dai and Hanming, Li, “Wages squeezing profits,” JJYJ, No. 6 (1988), pp. 3–11.Google Scholar

^66. Mikesell, Raymond F. and Zinser, James E., “The nature of the savings function in developing countries: a survey of the theoretical and empirical literature,” Journal of Economic Literature, Vol. XI, No. 1 (03 1973), pp. 8–10Google Scholar; Gersovitz, Mark, “Saving and development”Google Scholar in Chenery, and Srinivansan, , Handbook of Development Economics, p. 416.Google Scholar

^67. Gang, Fan, “Understanding the increase in savings in China during a period of economic retrenchment,” Caimao jingji (Economics of Finance and Trade), No. 5 (1991), p. 5.Google Scholar

^68. In a national survey in 1987, the largest percentage of those interviewed listed this as the motive to save. Jiacheng, He and Ronggang, Zhang, “New changes in Chinese resident's consumption and savings deposits,” RMRB, 18 03 1988, p. 5.Google Scholar Surveys of residents in Beijing, Shanghai and Taiyan show similar findings. Yu, Liang and Peiang, Xu, “An analysis of motivations behind people's saving behaviour,” Xinhua wenzhai (New China Digest), No. 1 (1991), pp. 54–55Google Scholar; Jiefang ribao, 1 08 1990, p. 5Google Scholar; JJRB, 10 06 1990, p. 2.Google Scholar

^69. One possible factor is income distribution. There is a hypothesis that increasing inequality of incomes increases savings. Kuznets, S., “Quantitative aspects of the economic growth of Nations. VII. The share and structure of consumption,” Economic Development and Cultural Change, Vol. X, No. 2 (01 1962), pp. 6–8.Google Scholar But whether and to what extent income distribution will become less equal in China remains unclear.

^70. It has been estimated that each year 20% of the increase in net material product has to be used to support the new population. Zhanli, Yao, “Warning: China's population exceeds 1.1 billion,” Liaowang, No. 15 (10 04 1989), p. 16.Google Scholar

^71. Wedding costs are high in China. In 1986, the average cost amounted to three and five times the combined annual income of an average couple in the urban and rural areas respectively. Guangming ribao, 27 01 and 30 August 1987Google Scholar, and TJNJ 1986, p. 673.Google Scholar For this reason, one of the strong incentives to save is to prepare for marriages of family members and funerals. He Jiacheng and Zhang Ronggang, “New changes.”

^72. Jiacheng, He and Ronggang, Zhang, “New changes.”Google Scholar

^73. One must not equate the increase in the people's bank deposits with the increase in their savings, although the two are closely related. This is because these deposits include the operating capital of individual businesses and private enterprises, and the public or private savings of profit-making and non-profit-making units. RMRB, 9 02 1990, p. 6Google Scholar; China Daily, 9 09 1991, p. 4.Google Scholar In some localities, public and private funds account for as much as 40% of the increase in saving deposits. RMRB, 16 09 1991, p. 2.Google Scholar

^74. Some are optimistic. Guo Shuqing, “Consumption, investment and savings.” Others remain concerned. China Daily, 28 10 1985, p. 1.Google Scholar

^75. For an estimate of debt service, see Jinglian, Wu, “Prospects for China's economic development in the 1990s,” Caimao jingji, No. 2 (1991), p. 11.Google Scholar For capital inflow in 1991, see RMRB, 29 02 1992, p. 2.Google Scholar

^76. According to one report, workers and employees in state enterprises and government organizations worked only 19.2 to 20 hours a week with efficiency, even though they were supposed to work 48 hours. China Daily, 15 03 1989, p. 4.Google Scholar

^77. For example, in 1986 the urban unemployment rate for the nation as a whole was 1.8%. Those for such developed areas as Shanghai, Beijing and Tianjin were 0.2, 0.4 and 0.8% respectively, whereas those for interior provinces such as Qinghai and Ningxia were 7.7 and 3.1% respectively. Wen hui bao, Hong Kong, 18 04 1990, p. 4.Google Scholar For the Chinese definition of unemployment rate, see TJNJ 1990, p. 149.Google Scholar For a comparison of the Chinese and western concepts of unemployment, see Gangzhan, Fu, “Theory and statistical concepts of employment in China,” Tongji yanjiu (Statistical Research), No. 5 (1991), pp. 35–40.Google Scholar

^78. Xizheng, Li, “China's employment situation in the 1990s,” Jingji cankao, 21 11 1990, p. 4.Google Scholar For a different estimate presumably based on a different definition, see Huijiang, Wang and Boxi, Li, China Towards the Year 2000 (Beijing, 1989), p. 31.Google Scholar

^79. Chongwu, Ruan, “Do a good job in employment work; promote social stability,” Qiushi (Seeking Truth), No. 4 (1990), p. 37.Google Scholar

^80. Estimates of redundant workers in 1988–89 range from 15 to 30 million. China Daily, 21 09 1988, p. 4 and 3 03 1989, p. 1.Google Scholar

^81. The low estimate is that by the SSB, 60–80 million, cited in Weikuang, Mo and Chiyuan, Chen, “Transferring China's rural surplus labour to township enterprise Development,” Jingji daobao (Economic Reporter), Hong Kong, No. 42 (1990), p. 23.Google Scholar A high estimate of 150–200 million is given in Canping, Wu, “Quantity and quality of China's rural population in connection with industrial restructuring,” Zhongguo nongcun jingji (Chinese Rural Economy), No. 2 (1989), pp. 15–19, 35Google Scholar, translated in JPRS-CAR-89–058 (5 June 1989), p. 25. For other estimates ranging from 100–150 million see Wen hui bao, 10 12 1990, p. 2Google Scholar; China Daily, 5 12 1990, p. 4Google Scholar; Chang, Kao, An Estimation of Labour Surplus in Rural Mainland China (Taipei, 1983).Google Scholar

^82. For data used to calculate elasticity, see TJZY 1991, pp. 5, 15.Google Scholar

^83. Some projections put the rural surplus labour alone at 200 to 350 million. Linjin, Wang, “My views on the absorption of rural surplus labour,” JJRB, 14 04 1990, p. 2Google Scholar; Boqin, Song, “Guided relocation: a new approach to resolving the problem of surplus agricultural population,” Jingji cankao, 23 07 1990, p. 4.Google Scholar

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^85. Pengyong, Zhong, “Idle resources and China's macro-economic policies,” Xinhua wenzhai (New China Digest), No. 3 (1991), p. 55.Google Scholar

^86. Ibid. See also Hong, Ma (ed.), Zhongguo gongye jingji wenti yanjiu (Studies in Problems of China's Industrial Economy) (Beijing, 1983), pp. 203–206.Google Scholar About one-half of the industrial equipment in the early 1980s should have been scrapped. Liaowang, No. 12 (25 03 1991), p. 15.Google Scholar

^87. Chengrui, Li, Population Census, p. 118.Google Scholar

^88. Wei, Zhao, “China's education surged forward in the new epoch,” Liaowang, No. 11 (18 03 1991), pp. 28–29.Google Scholar

^89. Beijing Review, 12–18 11 1990, p. 23.Google Scholar For improvements in the educational level of the rural labour force in 1985 and 1989, see Jianwu, Wen, “A quantitative analysis of the relationship between the peasants' income and their educational level,” Tongji yanjiu (Statistical Research), No. 4 (1991), p. 27.Google Scholar

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^91. Hong, Cai, “Education is the key out of poverty,” China Daily, 5 01 1991, p. 4.Google Scholar

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^95. The shares for Japan, South Korea and India were 2.8, 1.8 and 1.2% respectively. Xian, Fan, “Open wide the channels for funding science and technology,” JJRB, 27 08 1990, p. 3.Google Scholar

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^112. The SSB has its own method of calculating the supply-demand gap. Supply and demand are defined the same way as the concepts used here, except that aggregate supply is measured in current prices, both with and without a one-year time lag. See Peibin, Wu, “On the analysis and accounting of aggregate supply and demand balance,” JJYJ, No. 10 (1991), pp. 34–39Google Scholar. Conceptually, aggregate supply and demand in current prices as ex-post measures cannot deviate from each other except for statistical discrepancies. They are therefore meaningless as a measure of the supply-demand gap. The gap based on the one-year lagged supply is meaningful, but the assumptions of the length of the lag and its constancy over the period need to be empirically tested.

^113. Total investment financed by funds outside the state budget increased from 99.6 billion yuan in 1981 to 550.7 billion yuan in 1989. Investment by the central government increased from 29.3 to 35.2 billion yuan over the same period. Total investment is derived as the sum of gross fixed investment and investment in working capital. For sources, see TJNJ 1990, pp. 47, 153, 236Google Scholar; State Statistical Bureau, Zhongguo guding zicaitouzi tongji ziliao 1950–1985 (Statistics of China's Fixed Investment 1950–1985) (Beijing, 1987), p. 8Google Scholar. The total investment derived from these sources is slightly different from that in World Tables 1991, p. 185.Google Scholar

^114. Gross value of output has been used to evaluate performance to calculate taxes and profits, and to measure labour productivity. Bin, Ma, On China's Population Problem, p. 65Google Scholar. A set of new indicators based on value added will be introduced in the second quarter of 1992. RMRB, 19 02 1992, p. 1.Google Scholar

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^117. The tax provision that allows enterprises to deduct loan repayments before applying the tax rate is an added incentive for enterprises to borrow. Hong, Ma and Shanquan, Gao, Zhongguo tonghuo pengzhan yanjiu (A Study of China's Inflation) (Beijing, 1990), p. 110.Google Scholar

^118. The SSB data show that in 1989, total fixed investment finance by loans accounted for only 21.1%. TJNJ 1990, p. 153Google Scholar. As explained in Hong, Ma and Shanquan, Gao, China's Inflation, p. 125Google Scholar, this figure understates the importance of loans, because included in “funds raised by investors themselves” are loans from non-bank financial organizations, sales of bonds and securities, and the diversion of loans for working capital to fixed investment.

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^129. In addition to higher returns to capital, the processing industries required less capital and less time to build, and their products were in demand in the 1980s.

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^135. Apparently, the leadership was reluctant to raise interest rates by a wide margin, possibly because it might push more state-owned enterprises into the red and thus increase the state budget deficit, and also because it might fuel a cost-push inflation.

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