CHINESE PERCEPTIONS OF REQUIRED S&T MODERNIZATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05T00280R000200110001-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 14
• Document Creation Date: December 21, 2016
• Document Release Date: July 22, 2008
• Sequence Number: 1
• Publication Date: August 1, 1980
• Content Type: REPORT

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('onfidcnl ial
Scientific and Technical
Intelligence Committee
Chinese Perceptions of
Required S& T Modernization
('onfidcntii~~l
sTic so-oc~~
Auqutt 1980
i_ c, ~v
F G ~ ~r
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The Scientific and Technical Intelligence Committee (STIC) is the DCI Committee whose mission in part is
to advise and assist the DCI with respect to production of intelligence on foreign sciences and
technologies; to advise the National Foreign Intelligence Board; and to coordinate collection activity,
information processing, and analyses in These areas. STIC reports to the DCI Through his Deputy Director
for National Foreign Assessment and to NFIB through the Board's Secretariat.
STIC assessment reports integrate analyses from components of the Intelligence Community and where
appropriate present a unified view. Where a substantial difference of views exists, alternative
interpretations and rationales are presented in italics.
(Chairman)
Ronald W. Ewing
Bertram B. Smith
Max Koomtz
James Chamberlain
Seymour Jeffery
Julio L. Torres
Douglas Tanimoto
National Security
Information
Department of the Air Force
Central Intelligence Agency
Defense Intelligence Agency
Department of the Army
Department of the Navy
National Security Agency
Department of State
Department of Commerce
Department of Energy
Defense Advanced Research Projects
Agency
Office of Under Secretary of
Defense for Research and
Engineering
Central Intelligence Agency
Unauthorized Disclosure
Subject to Criminal Sanctions
25X1
L~X1
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c~onrtlcntia~~
('hinese Perceptions of
Required S & T :~1odernization (u)
Introduction The Pcoplc~s Republic of China (PRC) Sit"[~ y~'urkin.t Group ~~,~,
cst,~~blished to assess prospects I~~r the modcrnir~~~ l ran~~cr
(~. I~:ducatiun and ~I~r,iining
I). ~ganagcmcnl and ,ndn~ini,trati~m
~~;~r,tiuirnt, and (~~rnclu,ihrh see all othrr aria , ~,
det~rcndcnt upon ~&l~ nwdrrnirrtiun ui urdrr to
upgrade agricultural, industrial, and military
capability. S& l~ nux}erni~atiun, lil.c niilit u~y m.~~leni
irrtiun, is dependent upon the agri~ulturai and Indus
tt ial vector to produce capital needed to p~~rr~ hair
necessary research and to>t egnipnrrnt, tun~i re.r;irrh
~lgrirulturc is cunsidcnx} China"s number one modern-
i~atiun hrionty; there ahpcars to be general consensus
among the PRC leadership on this point. With KO
percent ~rf China"s population (approximately 1 bil-
lion) ernpluycd in agriculture, Chinese leaders see
modernization in this sector as the principal means of
acquiring capital to finance overall modernization and
as the quickest means of improving the quality of life
fur most Chinese. Success here is the key to success of
the entire plan.
Industrial modcrnilatiun is seen as contributing to
Chinas economic and political status in the world
arena a, well as imhroving living conditions within the
cuuntn. Chinese leaders have increasingly emphasized
development of light industry, to include energy
resources" as a principal means oC capital accumula-
tion. The products of light industry arc to be geared to
both domestic and furcign amsumptii.m. Exploitation
of China"s energy resources is critical to the acquisition
of furcign exchange and to the support of heavy
industry. Modernization of Chinn"s heavy industry has
been made more of a lung-term priority" but it is still
vital to f financing o1 the nwdcrnizution program and to
impnrving the milit~rry industrial base
The need fur military nu~dcrnization has been stressed
by the Chinese in both their words and actions (for
example, solicitation of foreign military technology).
While an enhanced national defense could well be the
priority nrutiva~in~,=. force in China"s modernization,
Chinese leaden have provided little insight as to their
specific plans for nx~dcrniz~ition in this sectur.~~
activity, and educate S& 1 hcrsonncl
B. S & ~i" Modernization Goals
China"s eight-year Shi~h nu~dcrni~atiun pion ~y.i,
announced by the Minister fur S&~I~, Fang-1'i, ;it the
National Science Cunferencc held in March 1'~ %~.
Although there has been a gaud deal of discussion ul~
the politicai differences and shades of cm Khasi; ~ Ii;it
emerged at lhi. Confcrencc, the statcnrcnt of nri j~u~
goals which emerged rcnr,rins the mint authoritative
outline of China"s science and technology prugr,inr fur
the next eight years. Four broad goal, were shrc ificd:
? To approach or reach advanced world Irveh of the
1970s in unspecified S&~h areas by 19hh.
? To increase the nwi~ber of pnrfcssiunal resear~ h
workers to K00,000.
? To build ;r number of up-tu-date research centcr~
? To complete a nationwide system of scientific .nni
technological research.
With regard lu the first goal, the Chinese pcrrenr
themselves to be 10 to ?~ years behind the advanced
nations in must areas of science and technology. ~1hile
they plan Lo reach 1910 levels of Western ta~hnology ui
some unspecified fields by I ~>~iti, they hut,c to r~;u;il ur
surpass the ~'~'est in other areas by thr turn of the
century Chinese leaden have stated that they I.rt~c.ed
20 to 25 wars behind in hir~h energy hhy;irs, aenrul
lural machince_v, steel plants" radar trchnolo~y, .uu1
most areas of telccummunications. E hey believe they
arc only 10 to I ~ years behind in the .irc,is of
computers. microelectronics, and integrated cin_uitti.
Chincsc Ic~rders are particularly disturbal, ho~yr~?cr.
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that the past 10 to 12 years have seen a widening of the
technology gap between the advanced nations and the
PRC.
China recognizes that an enhanced educational system
is central to the realization of each of its four broad
S&T goals. The PRC has made it clear that it intends
to place renewed emphasis on academic excellence in
its universities and technical schools and to raise the
S&T expertise of students and technical workers both
by sending some abroad for study and by inviting
foreign experts to teach and lecture in China. Nonethe-
less, the goal of 800,000 researchers will also depend
upon exploitation of exisiting talent. Thus, extensive
efforts have been made to remotivate scientists dis-
couraged from research work by the antiscience
policies of the late sixties and early seventies, but many
scientists remain wary of this shift in policy
While a system of nationwide research has existed for
some time, over the past two years steps have been
taken toward rejuvenating it as called for by Fang-Yi.
Science conferences have been held in virtually all
provinces and major cities to bring together provincial
S&T personnel and to spur plans to develop S&T in
the provinces. Lectures on scientific subjects have been
given to provincial cadre to raise their scientific
awareness, and the Guangming Daily and the Liber-
ation Army Dally have both instituted science sections
to popularize science. Administrative and structural
reorganizations intended to improve the science system
have been made in the Chinese Academy of Sciences
and in universities. Personnel in these organizations
have been shuffled so as to give more authority to
professional scientists as opposed to political activists.
Most of the professional societies have been reacti-
vated along with their parent organization, the Chinese
Science and Technology Assocation, which was
reestablished in 1977 after a 10-year hiatus. These
societies have again begun to publish their scholarly
scientific journals
China's overall modernization program is geared
toward what appears to have become an overriding
national objective: transforming China into a modern,
powerful, socialist country by the end of the century.
Chinese officials have constantly stressed the impor-
tance of science and technology and education in
attaining this objective
C. Priority Areas for S & T Development
As revealed through accounts of Fang-Yi's address to
the 1978 National Science Conference, the eight-year
S&T modernization plan provides for research in 27
separate fields and enumerates 108 key research
projects. These fall within eight areas which have been
designated as priority "Pace Setting" spheres of
endeavor:
Agriculture
Energy
Materials
Electronics
Lasers
Space
High Energy Physics_
Genetic Engineering
Perhaps the clearest statement of these priorities was
offered in mid-1978 by Zhou Peiyuan, a top Chinese
spokesman in science. According to Zhou, there were
three levels of priority for the PRC:
? At the top was the "production-related sector"
(including agriculture, energy, and materials) to be
developed first.
? The "new" science of electronics, lasers, and space
was assigned second importance.
? The "basic sector" (meaning S&T development
involving basic rather than applied research) was
third. It includes high energy physics and genetics.
Two fundamental constraints to S&T development,
limited finances and limited quantities of trained
manpower and equipment, became apparent to the
PRC leadership in mid-1979. At that time the Chinese
scaled down some S&T projects, emphasizing those
with near-term applications.
1. Agriculture. PRC leaders hope to expand agricul-
tural output by up to 4 percent. With only about
two-thirds as much arable land as the United States,
China must feed a population that is more than four
times as large and is increasing at a rate estimated at
1.2 percent annually. Consequently, China's most
persistent challenge is to expand food production at
least as fast as the population growth rate without the
option of a sizable increase in cultivated area. Accord-
ingly, applied research in plant breeding and protec-
tion has received top priority in China's agricultural
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rescarcl~~. ;ind the Chinese hope that these, together
~~ ith ne~ti irngatiun techniques and expanded use of~
(rrtili~cr, will Icad to self-sufficiency in food produc-
tiu n
I;nerKy. Beijing. believes that the succe,s of~ its
rrunumrc and industrial modernization is largely
drpcndcnt un its ability to provide adequate energy to
run and build its industrial machine and to earn extort
in~umr farm rnergy sales abroad. Chinese investments
to d,rte have been must significant in the energy areas
u( fussile fuels and electric power. fanphasis is to be
pl;rcrd upon inrpnroed processing and utilization tcch-
niques as well as upon technologies for hydroelectric,
thermal. ;+nd ~~;+terpu~wer generation. The Chinese
h;n~e shown the greatest interest in nuclear energy, but
rrniain rn an inaestigative phase
t_ 1luterial.c. t'nder this ublcctive in their plan, the
Chinese lumped a ~+ide number of S&T efforts ranging
from the improvement of steel and other metallurgical
processes, through the upgrading of the metals mining
industry, and including the devcloprncnt of better
capabilities in the newer materials technologies such as
rcinfurccd plastics and metal-plastic composites. Like
thr energy field, the improvement of China's metallur-
grcal technology, including that of nonferrous metals,
is of major importance to its economic modernization.
China has considerable raw materials (for example,
tungsten, copper, and so forth), but lacks the technol-
ogy to extract, trrnipurt, and process them adequately,
;rnd therefore is left dependent upon foreign sources.
q Electronics. < hina has designed and now produces
in limited quantities a wide range of communication,
industrial electronic, and computer equipment using
nu~dern digital circuitry, solid-state components, and
medium-scale integration of components. Such cquip-
ment, however, is inadequate in such important areas
as high capacity communication systems, geophysical
prospecting, precision instrumentation and test equip-
ment, and high-speed, high-capacity computers fur
handling and analyzing large amounts of data. The
Chinese view electronics as su critical to modernization
that they have established three-year goals within this
rrca Special attention has been given to the solution of
scientific and technical problems in the industrial
production ul large scale integrated circuits
ti. lasers. l~hc Chinese ha~~c cxprrssrd grr;rt intrrest in
laser development, and have ~xmductccl tau r K I )1 .~
for civil and military uu~s. In runvrntrun;rl, nun
strategic anplicatiunr; of lasers (liar cxamplr, sa; ern.
surveying, and ~~clding), thr Chincsr brlie~e thr~ :rrr
rapidly apprtraching a par ~~ith the V1~rst ;unf J.r~~;rn.
(,..S~ace. nlthough the published version of I;+?rg l~i~,
report nrufc nu mention of the military signific rn~x of
space science, it is clear that the Chinese ~ir~+ rp.ic~'
technology as Vital to (heir n.~tiunal defense :r>; ;~rll Its
to the development of their natural resuurrr potential
The Chinese have 1i~cused their span te~?hnulut,>
priorities tno,llti on two fields during the past ~ car-.
acquiring geustationary annmunicatiun satclhtrs and
impnwing their ability to use rcmutr sensing data
obtained front satellites ~~s part of their ti~ti~l~ nrudrrn
izutiun program the Chinese announced plans fur ,r
manned space prugrani b~ I ~~yh
7. Hit;h h'nert;y Physics. In ihrir scirncc plan, ~hc
Chinese stated an intention to build a ~~urld-Ire-rl
program in high-energy physics (III~I'), includ~rg
construction of a ~O-Eiillicm-electron-vul~ prutuu arrrl~
orator as a hirst step. PRC leaders sec thr ~.1rvr'~upnrrnt
of { IFJ' capability as s~ mbulic of their commit nrnt t~~
take a serious rule in hrlping with basic scicntil~i:
research in the world, but this is unc of um prup~r,uns in
which they indicate reducal emphasis
fi. Genetic En~;incerin~;. ~l~hc (hincsc intcntron ~.>>th
genetic engineering, like high-energy ph~sirs, is to
begin studies in a new prestigious area sn iha: ~ hr~ r.rn
claim to be in a vanguard of science. China has
indicated that efforts in this field, at Icast in their
initial stages, will c~,mcrntrate un arras related to
agriculture (aninwl husb;uxlry, crop inrpruvrrirnts_
pesiticidcs, insect control). ~Iscr, the Chinese hair
mentioned the possibility of improving drugs ,ind
combating genetic diseases through nuarral r~~scrrrh
in this area.
Chinas nu~derninttion goals arc clrarl~ anrhniuus, and
her leaders have recognized that arhir~cnuunt ul these
goals will require significant changes in sums
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longstanding policies, both domestic and international.
These two factors create several key issues, the
handling of which will largely determine the extent to
which China's modernizaton goals are realized. These
key issues deal generally with:
? Political consensus
? Technological acquisition
? Education and training
? Organizational management and administration.
A. Political Consensus
The success of the S&T program is inextricably linked
to domestic politics and foreign policy debates. At
present, a solid consensus exists among the PRC
leadership on the need to modernize. It must be
recognized, however, that leadership succession
struggles or improved or worsened relations with one of
the "superpowers" possibly could upset this consensus.
In the middle 1970s, for instance, the radical-moderate
struggle for power dampened efforts to begin and later
to resurrect the four modernizations. While the
radical-moderate struggles ended with the purging of
the Gang of Four, differences of approach among the
moderates still exist. With regard to this issue of
political consensus, a number of questions remain:
1. Can the leadership mold and/or continue to
maintain a consensus in both political and scientific
circles sufficient to achieve modernization?
2. Will disagreements over pace and means become
profound enough to disrupt plans significantly?
3. How would the death of a key leader such as Deng
affect consensus? What is the depth of commitment to
modernity?
B. Technology Transfer
Chinese leaders perceive their modernization program,
and particularly S&T modernization, to be highly
dependent upon the acquisition of foreign technology
and expertise. They are concerned with a wide range of
technology-related issues: military, industrial, scienti-
fic research equipment and materials, manufacturing
plants, literature, education and training, and manage-
ment know-how. This is evidenced by dramatic in-
creases in volumes of purchases, in new orders for
goods, and in stated interest in acquiring new technol-
ogy. China's extensive negotiations for acquisition of
foreign technology raise serious questions concerning
its ability to finance such acquisitions. The Chinese
clearly perceive the means for the acquisition of
foreign technology to be largely dependent upon the
development of an export-led economy and the adop-
tion of modern financial and business practices.
STIC believes the following questions are central to
the technology transfer issue:
1. Can China assimilate the technology it acquires?
2. How far will countries go in providing China with
technology?
? Might the current willingness to sell abate?
? What pressures might the USSR apply to trading
partners and what will the effect be?
3. Can China afford to purchase the technology and
expertise it needs?
? Can sufficient capital be generated through indus-
trial and agriculture goods?
? Will credit ratings remain good through the mid-
1980s?
? Will capital developed through exports, loans, and
foreign investment be sufficient?
? Can new economic management tools such as
budgeting systems, modern banking practices, and
methods for capital formation be adopted that will be
as effective as those of the technologically developed
C. Education and Training
Chinese leaders recognize that success in S&T mod-
ernization will depend upon a far greater capability to
assimilate foreign technology and to spawn technologi-
cal innovation than currently exists within the PRC.
Serious shortages of research personnel and educators
have been recognized, and China has undertaken new
initiatives to upgrade the size, capability, and produc-
tivity of its indigenous S&T work force through:
?Wider educational opportunities, both domestically
and abroad,
?Better use of S&T professionals, with five-sixths of
their time to be devoted to professional (vice political)
work.
?Greater incentives.
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~e~~erthclcss, S~TIC believes a number of key questions
remain. Thcv deal with the issue of whether domestic
SKI educ;Ilion can be upgraded quickly enough to
produce scientists and engineers of sufficient caliber
;Ind in sufficient quantity to permit effective broad-
based research by the mid-19HOs. Specifically,
In the near term, can foreign language capabilities
Eie developed sufficiently to achieve an unimpeded flow
of S& i infunnation"
~~il~i the system be capable of preparing linguisti-
;~Ily and technically l;irge numbers of students for
~wcrsca, cducatiun~'
-3. Can sufficient ideological commitment be instilled
~n Chinese overseas students to prcvcnt detrimental
yy~cstern material influence'?
~. Can the body of knowledge and cxpcricnce possessed
h~ the aged, foreign-trained cadre be replaced and
expanded through durncstic graduate schooling and
overseas education'
1). Management and Administration
Rcf~~rni in the areas of organizational management
and administration, and specifically in the area of~
tcchnulugy management, is essential to China's mud-
crnizatiun. Recent changes have bccn evident in
industrial organization, enterprise and factory man-
agement, quality control, wage policy, and so forth.
(lthcr initiatives to upgrade management which China
has either taken, ur expressed an interest in, arc:
? Centralization (for example, SSTC) at top levels,
and decentralization at local levels.
? Consolidation (for example, research network).
? Streamlining S&T organization (for example,
C:~S 1.
? Financing local agricultural and industrial pr~jccts
through bank loans rather than government
allocations.
? :lduptiun of foreign management methods.
? Increased enterprise autonomy and a form of profit
rctcntion
In terms of the management issue, SI~IC lielie~es
several questions are central:
? Can a s~~stcmatic appnrich to managcnunt and ;i
well-trained scientific m;inagemenl cadre be
achieved'?
? Can control of pnrgrtms be centralizc~_1 or ~+ill
military versus civil, regional versus national, part
versus professional conflicts prcvcnt it .'
Any use of China's S&~h plan as a baseline irons ~~ hirh
to assess prospects f~~r Chinese success in S~Al
modernization must be very cautious. l~'nc dill~iculty i.
in the nature of the plan itself. First, in view of l
intelligence assessments of current levels in Chinese
S&T, the plan appc;irs to have bccn uvcrl~ :unhitun~s
from its conception. The (~hinese thcnuel~rs h;nc
recognized the ambitious nature of the plan h~ ,cekin~~
foreign advice on the plan, by reevaluating nian~ of it,
aspects, and finally by scaling down a nunibcr ul goals
and endeavors. Finally, there is al>o cviclcnce t'iat the
Chinese approach to national economic land S.~ Il
planning has been Icss then thorough. Prior to ;he 25X~
ascendancy of economist (~hcn l'un in the spri~ig of
1979, the process of plan tiirmul;ition ag~pearcd to rely
more un the desires ~.~f national dccisiunnuikcrs t han
upon a realistic appraisal of what might he fea~,ihle.
Plans such as that fnr S&T mudcrni~atiun may ~~rll
undergo several adiustmcnts as reality tempers d~sir~s-
Thus, any attempt to assess prospects f~>r S~~l~
modernization must consider the tenuous nature of the
plan, using it only as a guide to cvaluaUun, and must
look more to the reassessments which the Chinese hair
made and to their handling of the issues previoi~sl~
identified
A. China's Reassessment of
Modernization Plans
Chinas overall modernization plan appears to ~,i;nr
been formulated with some understands ~g of the h,ui~
obstacles to the rcahzation ul~guals, but nut with ;i (ell
appreciation of the difficulty in overarming th~~tic
obstacles. In late 1978, China initiated a mai~~r
reassessment of its overall modernization prugrsun,
specifically tts strategy' for rapid ecunoniic gru~~,h.
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Through this reassessment, the Chinese leadership
apparently has come to believe that the original
modernization targets were overly ambitious and in
some case ill suited to present conditions. Thus, there
has been a scaling down of targets in the 10-year plan
announced only last year.
The central figure in the reevaluation was long-term
economics expert Chen Yun, who was reestablished as
a Politburo Standing Commitee member and put in
charge of revamping the entire modernization pro-
gram. Chen's reevaluation has led to the cancellation
or postponement of expensive noncritical projects,
reviews of existing capital construction outlays, and an
increasing emphasis on projects crucial to the develop-
ment of agriculture and light industry. Chinese plans
for nuclear power plants and a particle accelerator
were some of the major items that were either
postponed or canceled.
The most dramatic impact of the reassessment has
been a conscious deemphasis of investment in capital-
intensive, high-technology industrial projects. Simul-
taneously, there has been a refocusing upon the
problems of agriculture and light industry, recognizing
that these are the sectors that will supply the materials
and money needed for faster growth, as well as soak up
the extra purchasing power of the people, who have
been promised higher prices for farm goods and better
wages. At the second session of the Fifth National
People's Congress in June 1979, China's Finance
Minister portrayed a picture of economic recovery in
1977 and significant new economic advances in 1978.
He noted, however, that there were shortcomings:
"When our revenue multiplied at a fast tempo, we
tended to see mainly the favorable conditions, and to
pay too little attention to the problems and difficulties.
Additional investments in capital construction were a
bit too large. Importation of new technology was a bit
too hasty and the steps taken were not steady
enough."
B. Working Group Assessments
1. While S&T modernization has been identified as
critical to modernization in the other areas, Chinese
leaders have increasingly emphasized the priority of
agricultural development over all other aspects of
modernization. Agriculture offers the greatest poten-
tial for near-term creation of capital (through export of
raw and processed agricultural products) for purchase
of foreign technology and equipment. On the other
hand, agriculture also presents China's largest poten-
tial problem should scarce resources have to be
diverted from investment in other areas of moderniza-
tion to feed China's population of approximately
1 billion. Thus, the rate of foreign technology acquisi-
tion will be directly and indirectly affected by the rate
of agricultural modernization.
2. As might be expected, the Chinese have not been
very explicit about their technology requirements for
military modernization. Nevertheless, the importance
of technological advances in this area is suggested by
the large number of military delegations sent abroad in
the past year to study or discuss the purchase of foreign
military hardware. The Chinese have actively sought
the acquisition of foreign systems (military and
nonmilitary) from which they might garner technology
which could be adapted to their own defense needs.
The Chinese undoubtedly realize that they cannot
achieve military modernization through the acquisi-
tion of large numbers of foreign-made weapon systems,
but must upgrade their military-product scientific and
industrial base in order to design, develop, and produce
their own more modern systems. The 18 percent
increase in the 1979 state budget may have provided
for some upgrading.
3. Within the S&T modernization plan, a number of
areas, such as ahigh-energy physics program, are
simply not as vital to Chinese security or economic
modernization as are, for example, agriculture and
energy. The development of a major high-energy
physics research base involving construction of a large,
modern, experimental accelerator, would be extremely
expensive to pursue seriously even in the advanced and
affluent West. It would be especially burdensome for
the Chinese to develop, even with foreign assistance, on
the scale envisioned in their S&T plan. In such areas,
the Chinese have tended to do a lot of talking and
looking at foreign equipment and programs but have
made no major commitments of funds. In this, and
similar areas such as genetic engineering and perhaps
lasers, monetary restraints as well as uncertainty over
the proper technologies to buy or develop first, will
limit the scope of Chinese endeavor. In such areas, the
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t~hinese prubabl} will tend to maintain a modest
grogram while closcl~ munr[orine Wrstern nroeress for
ipplicibilits to its own needs.
25X~ -l. Education has cun.,istcntly bccn one of the must
;ontruvenial policy areas lur C}7ina~s Maoist leader-
ship; it will, of course, be the hey area lur increasing
the number of research workers required to modernize
(~hina~s scientific and technological base and fur
r,ii;ing levels of expertise necessary to nssinrilate
I~orcign technology. Ideological and resource con-
rariints, however. continue to be obstacles to achieve-
mrnt of this particular goal. Throughout the decade
follutiing the Cultural Revolution, scientific research
~.v~rs scorned. Many scientists were sent to the country-
~,id~. O[hers chose to slip into other occupations to
;iv~~id harassment..~~s a consequence, although wcl-
romed, measures to re~uvenatc science in C Nina wc~;re
treated warily by ninny scientists who hesitated to
resume their scientific activity fur fear of being
persecuted should there again be a reversal of policy.
(_~hina~s technical expert, are expected to remain wary.
The decmphasis of politics that accunipanied the first
scar under China's rnudernization program has bccn
qualified by the more recent admonition that ideologi-
cal and political work should not be weakened because
of the drive fir modernization but rather strengthened
because of it. Similarly, the surge for acquisition of
f~~reign technologies has bccn dampened by the recent
reassessment of modernization goals. 'There is in-
creascd emphasis upon older technologies "more suit-
+.blc" to China's needs, and criticism of earlier
selections of foreign technologies for import. Should
there be now ur in the near future a reversal of policy
toward the rule and prestige of scientists, the disen-
chantnicnt of (~hina~s scarce trained S&T personnel
will be a nrrjur setback to her prospects fur S&T
rnodcrnization. Similarly, if China should reject for-
eign, advanced technologies, the pace of her S&T
nuxfernization vv~ill be greatly retarded
~. ~T~hc Chinese, however, continue to view their entire
mudcrnirrtion program, particularly S&T modcrniza-
tiun, as largely dependent upon acquisition of foreign
technology and expertise. During the past two years,
PR(_~ dclcg.rtions have traveled abrrnote foreign trade:
? Delegation of greater authority fur provincial offi-
cials to deal directly with foreign business.
? Increased allocation for foreign exchange to local
production units for the purchase of foreign
equipment.
? fatablishment of special factories to deal in exp~n~t
goods.
? Establishment of corporations to deal in import;'
export goods.
? Financing ~.~f imported equipment and technology
with "pay back by product" arrangements with
foreign suppliers
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Chinese officials have been considering a number of
trade and financial agreements (previously unheard of
in China) which could significantly enhance China's
ability to purchase foreign technology:
? Long term credits and import financing through
foreign bank deposits with Bank of China.
? Barter, compensation, and coproduction deals for
plant purchases.
? Component production.
? Joint ventures such as oil exploration.
? Tourism.
7. In addition to the basic problem of transforming the
economic base, accompanying social reforms designed
to alleviate the problems of a dualistic society will be
required to sustain the total modernization program.
Among the problems considered most critical are the
following:
? Education: The acceptance of a revised educational
system based on merit, which inherently favors
urban over rural youths and those from better
educated families over those from less educated
lineage. The sudden change in political climate in
October 1976 has produced a renascent fever for
learning. The drive in education has generated the
risk that tensions may build up between the educa-
tional "haves" and "have-nots," especially those
millions in the countryside, who do not get as far as
the entrance exams.
? Standard of Living: The acceptance of an increased
gap between urban and rural living standards
resulting from the priority attached to rapid
industrialization.
? Foreign Contacts: Learning to cope with an in-
creased foreign presence (though perhaps at a lower
level than envisioned in 1978), both physical and
intellectual, resulting from such things as the impor-
tation of complete plants with their consignment of
foreign technicians and techniques, and increased
tourism as a source of revenue will also provide an
increased incidence of social contact with foreigners.
8. It appears that since early 1978 China's emphasis on
modernization, at least in the areas of agriculture and
science and technology, has remained basically un-
changed. The reassessment of its modernization goals
has certainly narrowed the scope of Chinese endeavors,
particularly in areas of technology transfer, yet a
better understanding of what is most critical and most
likely to be accomplished appears to have taken place.
The importance of increased educational opportunities
and of a greater role for the scientist and technical
expert continues to be reflected in action. Similarly,
acquisition of foreign technology, although more
selective than initially envisioned, continues to be
recognized by the leadership as a key issue in
modernization
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