The following sections describe in some detail the role of government organizations in the formulation and implementation of economic plans.

Role of the State Council

The State Council, the highest executive organ of the government, is responsible for preparing and carrying out the national economic plans. The State Council has established three economic planning commissions the State Planning Commission, the National Economic Commission, and the State Capital Construction Commissionwhich function as staff departments for planning purposes. A fourth, the Scientific and Technological Commission, has important ramifications in the economic field. The actual transformation of party policy decisions into annual and long-run plans is accomplished in these commissions of the State Council. Some of the officials of these commissions, in their role as party members, have also participated in the formulation of economic policy in high-level party councils. The commissions themselves have no direct authority over execution of the plans. The State Council hands down to the lower units its instructions on the execution of plans through economic ministries of the central government and through local governments. Annual planning-National Economic Commission

The annual national economic plan, which is a basic element of a planned economy, governs the operation of the economy for the year. In Communist China this plan is prepared by the National Economic Commission. Formulation of the annual economic plan commences when the party sets forth the major economic objectives for the year. These objectives, which may include targets for key commodities, have been established only after considerable consultation with the many regional officials and economic ministries and within the planning commissions of the State Council. Once determined they provide the broad framework within which the National Economic Commission prepares the annual economic plan.

The process of formulating the annual plan is as follows: The National Economic Commission establishes, ideally in July or August of the preceding year, aggregate targets for all sectors of the economy, such as the level of production for major commodities, the amount and types of capital construction, and the allocation of labor and materials. These control figures-so called because in all stages of planning and execution they serve as bench-marks for the evaluation of production and the revision of plans are sent down to the operating units through the vast economic control structure under the direction. of economic ministries and local governments. On the way down, specific details are filled in by each intervening administrative level. Ministries and local governments break down the assigned figures and add new and additional ones of their own. They may add targets for commodities which are not of national concern, and they determine standards for output per worker, total value of production, cost reduction, and trial manufacture of new products.

After the plan has reached the producing units themselves, the procedure is reversed and the plans of individual enterprises are forwarded back up through the administrative hierarchy to the National Economic Commission. Lower levels of the planning structure-especially the producing units which know that fulfillment of targets rests

there-may seek acceptance of targets easy to carry out. Considerable bargaining may go on before a compromise is reached, but the relatively weak bargaining power of lower units means their targets will be largely imposed from above. By November, if all goes well, the National Economic Commission has the information necessary to prepare the draft of the national economic plan. The draft becomes the plan of operation for the following year after approval by the party. The approved plan is routed through government channels to the State Council for execution.

The economic control structure in Communist China requires periodic reporting on plan progress by all operating units. These statistical reports are prepared according to uniform standards and procedures established by the State Statistical Bureau, which is attached directly to the State Council and works very closely with the planning commissions. The annual operating plan of each basic production unit is broken down into semiannual, quarterly, monthly and even 10-day periods. At the end of each time period the unit reports to its supervising authority on the degree of fulfillment. The individual reports, added together at the national level by the State Statistical Bureau, provide central planners with a periodic bird's-eye view of how the plan is working out. Armed with data of this type, the top-level administrators may call for adjustments in the allocation of men and materials in order to ensure fulfillment of the annual plan, or targets in the plan may be revised. The key role of the party in the revision of annual plans is demonstrated by the major downward adjustment of targets of the 1959 plan in August 1959. These revisions were made only after the Central Committee had so decided. Long-run planning-the State Planning Commission

Long-run planning, the responsibility of the State Planning Commission, has generally been for periods of 5 years. Designed to serve as a general guide for economic development, a long-run plan is less detailed and more flexible than an annual plan. Targets are frequently changed-China's second 5-year plan (1958-62) targets, for example, were in part outdated by accomplishments in the very first year of the plan.

Longrun plans reflect the manner in which the party wants the economy to grow. General Communist aims such as the emphasis on expansion of heavy industry relative to light industry and agriculture show up in the 5-year plan primarily in the division of national product between investment and consumption and in the allocation of investment among different sectors of the economy. The scheduling of major investment projects is therefore the basic element of 5year planning. These projects often have lead times of 5 years or more and require fairly detailed advance planning. Major construction projects such as the Lanchow-Sinkiang railway, the doubledecked Yangtze River bridge, and the Wuhan Iron & Steel complex require long-range scheduling of delivery of construction materials, machinery and equipment from domestic and foreign sources, arrangements for domestic investment funds and for foreign exchange, as well as the training of great numbers of specialists of all sorts.

The geographical distribution of industry is also a concern of 5-year planning. The first section of the first five-year plan (1953-57) was devoted to the allocation of investment between the island and coastal

port of heavy industry is indirect: that is, agriculture is tapped for manpower and may be severely limited in obtaining machinery and construction and other materials needed by heavy industry. Nevertheless, the Chinese Communist program of agricultural socialization and development has differed radically from that pursued by the Soviet Union.

The U.S.S.R.'s first attempt at attaining these objectives took place in the period of the first 5-year plan (1928-32). In the interest of increasing productivity in Soviet agriculture and at the same time increasing the industrial labor force, a threefold program of mechanizing agriculture, promoting large-scale farming, and transferring the farm population into the nonagricultural sectors was adopted. The Soviet plan devoted one-third of all state agricultural investment to farm equipment and machinery, and by the end of the plan period half of the total sown acreage in the U.S.S.R. was mechanized. The program succeeded in mechanizing agriculture, in enlarging the industrial labor force, and in transforming some of the peasantry into wageearners, but its disastrous effects on Soviet agricultural production detracted from the program's effectiveness.

The Chinese Communists, on the other hand, working toward achievement of the same overall objectives, have employed different policies. With the view of raising agricultural output through increasing yields rather than through increasing output per worker and at the same time holding the level on nonagricultural employment steady, the Chinese (1) emphasized cultivation methods in which immense amounts of labor were combined with relatively small amounts of capital and land, (2) increased the extent and intensity of irrigation, and (3) started a program for more effective employment of both organic and inorganic fertilizers. In the period of the first 5-year plan, expenditures on water conservancy and irrigation were 30 percent of all state expenditures on agriculture. The relative lack of interest in agricultural mechanization was illustrated by the fact that only 2.7 percent of the total sown area of Communist China was worked by mechanized means by the end of 1957.

The differences between the Chinese and Soviet programs arise from several factors. Soviet agricultural policies represented a radical departure from traditional Russian production patterns. The Chinese program attempted to introduce new and more intensive methods of cultivation within the framework of established production patterns. The Chinese, although partially motivated by the desire to avoid Soviet mistakes, also had different economic resources to consider. First, a low standard of living coupled with a high rate of population growth made the raising of agricultural output imperative if even the existing low level of subsistence were to be maintained. Second, Chinese industry did not need, and could not absorb, an increased labor force, and the Chinese peasant-unlike his Russian counterpart remained on the farm. Third, Chinese industry has been in no position, considering the many pressing demands made upon it, to supply appreciable quantities of machinery and equipment to agriculture.

Mao appears to have recognized that institutional changes which would accomplish the doctrinal objectives of eliminating private property in the Chinese countryside and transforming the Chinese peas

antry into wage earners could provide an excellent mechanism for implementation of the Chinese program of agricultural development. Thus the effectiveness of labor-intensive measures implicit in the Chinese agricultural development policies would be increased by institutional changes giving the state greater control and direction over the activities of the rural labor force. Mao's recognition of these possibilities and his sense of timing in initiating changes is probably the chief reason Chinese Communist agricultural policies have been relatively more successful than those of the Soviet Union at a comparable stage of development in the late twenties and early thirties.

The pace of agricultural socialization

Over the last 8 years, private property in rural China has been almost eliminated and there has been a great increase in state control over human activity in the countryside. Policy on agricultural socialization over this period falls in a pattern in which sharp accelerations of the pace are followed by qualifications and consequent slowing up of the speed of development. Mao Tse-tung has been intimately involved in each instance of speedup and only inferentially associated with the slowup which has followed. Mao appears to have been successful in his role as the most aggressive exponent of moving into higher levels of socialization for, in each case of slowup after speedup, some of the gain has always been maintained.

Mao personally made sharp changes in agricultural policy twice in the last 4 years. In July 1955 he called a special conference of regional party secretaries in order to speedup the rate at which peasant households were moving from mutual-aid teams into agricultural-producer cooperatives. Mao's insistence that the movement had to be accelerated reversed the established gradualist policy which had been estimated by the Central Committee earlier in July. The effect of Mao's statement was almost immediately translated into action by the orgranizational and propaganda apparatus of the party, and 5 months later in January 1956-the regime was able to claim that virtually all the peasant households in China were in agricultural-producer cooperatives or collectives. Again, Mao's intervention was noteworthy in the 1958 headlong rush into communes. The manner in which this radical system was conceived, discussed and adopted bears a striking resemblance to the policymaking process accompanying the speedup of agricultural collectivization in mid-1955. A special regional party conference convened by Chairman Mao and plenary session of the Party Congress in the spring of 1958 provided the forum for introducing and developing in secret discussions the concept for the commune. Again, as in 1955, there was a trial period of experimentation before the policy was finally adopted and promulgated in the form of a Central Committee directive. At this point, the organizational and propaganda apparatus of the party again served as the transmission belt for implementing the policy.

It is probable that, despite the party conference forum for presentation and discussion of policy in these two cases, the occasion for genuine debate on the merits of the policy changes was an earlier meeting of the Politburo whose final decision was strongly influenced by the views of Chairman Mao.

areas.

In the second 5-year plan period, emphasis on developing industrial bases in some seven economic regions has resulted in organizing a regional planning authority in each of these regions, although so far these authorities have not been very important.

Long-run planning in Communist China also includes plans for more than 5 years, although such plans are often only a statement of general goals. Thus, the 12-year plan for agricultural development announced in 1956 contains only targets for yields per acre for a few major crops and general recommendations for the socialization of agriculture. The plan does not provide additional resources to agriculture; it simply exhorts low-level cadres to accomplish the targets and to figure out for themselves how it can be done. Where state investment funds are to be devoted to a project, much more detailed plans are compiled. For example, the 10-year (1957-67) construction program for control of the Yellow River (the first phase of a 50-year multipurpose plan for the major water network) has specific targets for investment and construction.

Longrun planning activity in Communist China suffers from a serious lack of personnel experienced in the planning process, and to a lesser extent, from inadequate statistical reporting. Deficiencies in longrun planning are indicated by the experience of the drafts of the first two 5-year plans. The draft of the first 5-year plan was not published until midway through the plan period. Targets for the second plan were presented publicly in September 1956 but have never been compiled into a draft plan of the nature of the first 5-year plan. The targets are already out of date, but no new ones have been announced.

As the leadership of Communist China becomes more adept at setting long-term economic goals, and as the number and quality of people experienced in the planning process increases, long-run planning in Communist China should approach much closer to the standards in the U.S.S.R. and the European satellites. Two underlying factors, however, make long-run economic planning in Communist China an inherently more difficult task than in other bloc nations: (1) the great extent to which fluctuations in Communist China's agriculture can upset the best laid schemes of planners, and (2) the almost religious fervor with which the top leaders of Communist China drive the economy forward, sometimes almost oblivious of the human and economic costs.

Specialized planning commissions

The other planning commissions of the State Council-the State Capital Construction Commission and the Scientific and Technological Commission-perform rather more specialized functions. The State Capital Construction Commission, as the name implies, plays a coordinating role in the construction field. The central industrial ministries in Communist China are responsible for much of their own capital construction work, and coordination of their construction plans and activities has become an increasingly complex task. It has been the responsibility of the Capital Construction Commission since the fall of 1958. The commission oversees preparation of the annual capital construction investment plan, an important section of the annual plan.