CHINA'S SECOND REVOLUTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00155R001000060008-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 27, 2016
• Document Release Date: January 28, 2013
• Sequence Number: 8
• Publication Date: May 1, 1986
• Content Type: NIE

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Director of
Central
Intelligence
MASTER FILE COPY
DO NOT-GPM NT
OR MARK ON
China's Second Revolution
National Intelligence Estimate
5oeref
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S? et
NIE 13-7-86
May 1986
Copy 445
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and the
Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
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NIE 13-7-86
CHINA'S SECOND REVOLUTION
Information available as of 15 May 1986 was used in the
preparation of this Estimate, which was approved by the
National Foreign Intelligence Board on 15 May 1986.
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CONTENTS
Page
SCOPE NOTE
1
KEY JUDGMENTS
3
DISCUSSION
9
Origins of the Reforms
9
The Political Agenda
9
Revitalizing China's Economy and Society
11
Military Reforms
12
Accomplishments
12
Reform Obstacles
13
Deng's Mortality
15
External Influences
15
China's Future: The Most Likely Prospect
16
A Less Likely Alternative: The Reforms Collapse
17
Can China Dramatically Succeed or Fail Beyond
Our Expectations?
18
Implications for the United States
18
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ANNEX B: Short Biographies of Key Chinese Leaders
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SCOPE NOTE
Chinese leader Deng Xiaoping in March 1985 characterized the
reforms conducted since the Third Plenum of the 11th Central
Committee in December 1978 as a "second revolution," which "is an
unprecedented thing in China's history of thousands of years." These
reforms involve fundamental political, economic, and social changes,
probably the most comprehensive and systematic ever undertaken by a
Communist regime. This Estimate considers what the second revolution
is, how it is affecting Chinese institutions and society, and how it is like-
ly to develop over the next 10 years. It also considers various courses
these reforms might take and how they are likely to affect US interests.
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SR-RFT
KEY JUDGEMENTS
China's far-reaching reform effort?unprecedented in Communist
experience?has already achieved certain notable successes and is likely
to continue, albeit at a somewhat reduced pace, over the next decade.
This means that in the broader overall context China's power and
influence will grow, a prospect that will offer both significant new long-
term opportunities and challenges for the United States.
The principal goals of the reform movement?which in their
totality clearly constitute a "second Chinese revolution"?are:
? To restructure, reorient, and rejuvenate the political leader-
ship. This entails reorganizing and reforming the party; separat-
ing party and state functions; revamping ideology along more
pragmatic lines; establishing stronger legal and institutional
structures; and bringing younger, better educated, and more
qualified personnel into positions of responsibility.
? To expand the economy. This entails narrowing the scope of
central planning and gradually allowing market forces to deter-
mine more economic activity; improving efficiency, productivi-
ty, and quality in production; raising the standard of living;
developing more effective financial institutions; gradually elim-
inating government involvement; promoting development of a
relatively unregulated tertiary sector; opening China's economy
to foreign participation; and giving priority to existing industrial
bases.
? To fashion a leaner, more professional military establishment.
This entails establishing a younger and more educated officer
corps; reducing the overall size of the armed forces; constricting
the role of the military in the economy and in politics;
reorganizing military regions and commands; and acquiring and
deploying improved weapons and equipment from domestic
and foreign sources.
? To create a society less constrained by political and social
controls.
? To expand ties to the outside world that will assure China
breathing space that will enable it to concentrate on its ambi-
tious efforts to modernize and provide access to economic,
scientific, and technical support.
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In seeking these ends, there will be significant constraints that will
fashion, slow, and under certain circumstances, possibly halt certain of
the reform efforts for a time:
? Deng Xiaoping and his supporters face the extremely difficult
task of loosening certain controls?in order to stimulate the
receptivity, creativity, and flexibility necessary to achieve the
goals of reform?without, in the process, losing their own
monopoly of power. This basic contradiction may prove to be
the single most vexing problem these leaders will confront,
inasmuch as they believe they can establish far-reaching eco-
nomic reform and yet maintain the leadership of the Party and
the Marxist-Leninist character of the society.
? Sharp differences exist among the leadership on some issues of
the scope and pace of reform. While we believe that the broad
thrust of reform will continue, the implementation of various
policies will be highly uneven, owing to these internal
difficulties:
? Traditional endemic systems of guanxi (personal relationship)
networks, favoritism for relatives, going through the "back
door" and other traditional methods of doing business will not
speedily be abolished, if at all.
? Senior officials who fear that retirement will bring loss of
power, prestige, and perks will continue to resist some ele-
ments of reform.
? Concerns will abide, especially among lower ranking cadres,
that the reforms will not endure.
? There will also be concerns that the rapid opening to the West
will allow "unhealthy influences" to enter China and will also
make it too dependent on foreign countries.
? A myriad of technical, financial, and managerial obstacles will
impede the ability of China, a huge, still backward LDC, to
meet its reform goals. Some of these problems are not wholly
within China's own ability to control and are crucially impor-
tant infrastructure gaps in energy and transportation.
? Finally, the effort to modernize will create disruptive economic
and social problems such as inflation, corruption, income dispar-
ities, regional inequalities, and occasional outbursts of social
discontent.
How the party approaches these issues, and the particular scope,
character, and pace of reforms over the next few years, will be
influenced significantly by how well the succession to Deng takes place.
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We now believe that the mechanisms are in place for a fairly orderly
succession, and that the leadership that follows Deng, for the most part,
will share the goals and priorities he has set. These successors will be
prepared where necessary to adjust the pace of reforms, from time to
time, when faced by marked political hesitance and economic/techni-
cal constraint.
The maintenance of reforms will also be affected significantly by
external forces. China's ambitious revolution will not be taking place in
a vacuum but in a broad context of interacting outside pressures on
China: most notably from the USSR, the United States, and Japan. In
this setting we believe that the Chinese will continue to perceive that
they are not imminently threatened by the Soviet Union and will have
time to concentrate resources on economic modernization. China will,
meanwhile, continue to value its economic ties to the West and japan
and will continue to push strongly for infusions of foreign technology
and investment.
Despite the many hazards that will confront China's modernization
effort, we believe the most likely outcome over the next decade will be
a general continuation of reform and an uneven but gradual growth
of China's economic strength, stability, and power. This means that, in
broad terms:
? The reforms will for the most part bring reasonable prosperity
and will give most of the populace a stake in the continuation of
reform.
An avowedly centrally planned economy will attempt to make
increasing use of both market forces and political intervention
and will encourage flexibility and competition within certain
carefully prescribed sectors.
? The economy and the society will in many respects be opened
up still more than at present but without the party losing its pre-
eminence and control or the society losing its distinctively
Chinese Communist character.
? The pace of reform will be uneven, progress will be start and
stop, there will be incessant disputes over priorities and scope,
and leadership shifts will occur as various members of the
second generation attempt to strengthen their respective power
and authority. But, we believe such developments will not lead
to major turmoil, as occurred during the Cultural Revolution,
and will be more or less confined to the type of political struggle
we have witnessed over the last eight years or so.
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? China will develop an extensive web of interlocking trade,
technological, and financial relationships with other countries?
mainly Western countries and Japan?but this will include
markedly expanded ties to the USSR.
? China will conduct a foreign policy that is more activist,
including competing more assertively with newly industrialized
countries to sell to foreign markets, maintaining an aggressive
policy of arms sales abroad, and playing one country off against
another in order to obtain the best possible terms for foreign
markets and investments. Beijing's foreign policies will nonethe-
less seek above all to avoid such external conflicts as might
interfere seriously with China's primary focus on moderniza-
tion.
Should this -most likely- projection prevail, with China's modern-
ization effort meeting modest success, the significance for the United
States will be profound. Among the principal consequences:
The growth of Chinese power will be gradually accompanied by
a corresponding expansion of Chinese regional and global
interests. China will feel more confident and capable of promot-
ing its interests in the strategic triangle and probably will
genuinely move toward its avowed objective of an -indepen-
dent- foreign policy.
China will continue, and perhaps escalate, its pressure on the
United States to reduce arms sales to Taiwan, and will increas-
ingly pressure the United States to convince Taiwan to accept
Beijing's terms for national reconciliation.
There will be continuing opportunities for US trade and
investment, as China will want to continue its favorable eco-
nomic and other ties to the United States and other Western
countries. How willing Beijing will be to continue to mute some
of its more nationalistic goals?such as recovery of Taiwan?to
achieve these benefits, as it has in the past, is uncertain.
There will also be some opportunities for a limited expansion of
US military cooperation with China, primarily in the regulariza-
tion of exchanges at various levels. However, China will not
wish to rapidly expand military hardware acquisitions from the
United States.
? The gradual growth of Chinese power and influence will
complicate US relations with other countries in East Asia. Some
countries will increasingly try to persuade the United States to
place restraints on its assistance to Chinese military
modernization.
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? China will continue to be wary of the Soviet strategic threat and
of Soviet intentions, but will likely be increasingly willing to
engage in various forms of economic and other exchange with
the USSR; China may also eventually be willing to restore party
ties. However, these improved economic and political ties will
not lead to Chinese cooperation with the Soviets against the
United States, because the United States and the West will
remain more important than the Soviets as a source of technol-
ogy, investment, and other economic advantages.
Though less likely than the projection posited above, another
plausible scenario is one in which the technical and political problems
we have noted gradually overwhelm the reforms. Such an outcome
would be one stopping short of total collapse or total failure of reform,
but one most likely to result in a permanent recentralization of
authority and a tightening of economic controls. A more centralized and
repressive regime probably would not be able to resolve China's
economic problems, and popular support would dwindle over time.
This alternative is also likely to be accompanied by an upsurge in
Chinese nationalism. The Chinese probably would blame the developed
countries for their problems, but are also most likely to be suspicious
and hostile toward the USSR. China probably would escalate rhetoric
identifying with various Third World causes and might allow territorial
problems with its neighbors to become more serious. We believe,
however, that the political unrest and nationalistic excesses on the scale
of the Cultural Revolution would be unlikely.
If this scenario were to unfold, there would be greater challenges
for the United States since China probably would become even more
stubborn in asserting its regional demands. The Hong Kong settlement
could unravel, causing the Taiwan issue to become more difficult.
There would likely be setbacks across the board in economic, scientific
and technical, and cultural cooperation, though we do not believe these
would be abandoned altogether. Suspicion and hostility toward China
by Japan and Southeast Asian countries could increase, and these
countries would likely put greater pressure on the United States to avoid
policies that had the appearance of strengthening China. Some Chinese
leaders might want to further reduce tension with the Soviet Union and
perhaps even develop closer ties to replace links to the West, but others
would continue to resist, harboring lingering suspicions of Soviet
intentions.
As for other alternative futures, we believe that there is almost no
likelihood that either a dramatically more rosy or a dramatically more
pessimistic scenario for China will prevail. For China to succeed in its
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reforms well beyond our projections, it would require fundamental
changes in the political, economic, and social system that are not in the
cards during the period of this Estimate. Likewise, we believe that the
party and people would not countenance a new "Cultural Revolution,"
even if the reforms failed miserably. Even if either possibility occurred,
the forces that would produce such a change would be so cataclysmic as
to preclude an effective estimate of how US interests might be affected.
It is safe to say, however, that either a much more powerful China, or
one that is wracked by turmoil, would pose greater albeit different
challenges to the United States and would not be in our interest.
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DISCUSSION
Origins of the Reforms
1. At the heart of China's second revolution is the
question of how China will modernize, an issue that
has animated all Chinese political groups in the 20th
century. With the ending of the Cultural Revolution
and Mao Zedong's death in 1976, many Chinese were
convinced that Mao's course had been disastrous. The
Communist Party's leadership was seriously ques-
tioned; the economy was in bad shape and getting
worse, and a sense of malaise throughout society was
growing. This situation enabled Deng Xiaoping to
make a comeback and to be 'n to reestablish and
consolidate his position.
2. Since the Third Plenum of the 11th Central
Committee in December 1978, Deng has effectively
led a group of other reform minded leaders in achiev-
ing major political and economic renovations, which
are now also producing fundamental social change as
well. These leaders, while accepting and defending the
primacy of the Communist Party and the maintenance
of a Marxist-Leninist state, have rejected many of the
policies identified with Mao, particularly the extrem-
ism of the Cultural Revolution. Though not entirely in
agreement among themselves as to the scope and pace
of change, they have identified key areas in which
change is necessary if China is to enter the next
century as a modernized, unified, stable, and powerful
state. In their view:
? The leadership of the Communist Party and the
vitality of the state can only be assured if
authority is successfully institutionalized rather
than being vested in one charismatic leader.
? Comprehensive economic modernization and
improvements in the standard of living require
material incentives and cannot be achieved by
relying principally on normative exhortations
and coercive campaigns.
? Modernization also requires that ideological pre-
cepts endorse scientific and technical rationality
rather than undermining it as Maoist dictums on
"red versus expert" did.
? To obtain the necessary ingredients for modern-
ization, China must increasingly interact with the
outside world, particularly the West and Japan.
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3. Since the Third Plenum, Deng has had to con-
tend with various forms of opposition to his reform
agenda. He has compromised when necessary but has
been highly effective in getting much of his agenda
adopted. There has been significant change in the
nature of the Chinese policy debate in the past seven
years. Unlike the earlier period of Communist rule in
which wide policy oscillations were the norm, the
reform program has progressed to the point where
debate and policy conflict are over pace, scope, and
tactics rather than on whether reform is needed. In
other words, even Deng's opponents favor reform.
Even if the Chinese only "muddle through" in the 25X1
next few years, it is unlikely that there will be
dramatic leadership or policy shifts over whether
reforms are desirable
The Political Agenda
4. Deng and his supporters have said that for the
entire reform agenda to succeed, both political struc-
tures and key personnel must be changed. They have
championed a number of institutional changes to
enhance the efficiency and legitimacy of the party.
These involve:
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? Reorganizing the party. The key changes in-
clude the rehabilitation of the Secretariat, the
abolition of the Chairmanship, and the restruc-
turing of commissions within the Central Com-
mittee. The purpose is to provide more discipline
and responsiveness to party organizations.
? Separating party and state functions. There has
been a major reorganization of the state appara-
tus, including the restoration of the position of
President of the People's Republic, a reduction in
the number of ministries in the State Council
with a corresponding reduction in the number of
Vice Premiers, and an effort to set up a new state
military commission. Deng has said that the
party should withdraw from a policy implemen-
tation role and should focus on leadership. The
purpose here is to prevent the concentration of
power in one organ or person, an abuse that
Deng believes led to the excesses of the Cultural
Revolution.
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Reform Benchmarks
January 1975?First Session, Fourth National Peo-
ple's Congress. Premier Zhou Enlai's report calls for
increased efforts to promote the -four modernizations":
of agriculture, industry, national defense, and science
and technology. Political infighting in the Politburo
delayed implementation of specific policies.
December 1978?Third Plenum, 11th Central Com-
mittee. Deng Xiaoping begins to assume leadership,
eclipsing Party Chairman and State Council Premier
Hua Guofeng; reform program initiated.
February 1980?Fifth Plenum, 11th Central Com-
mittee. Some key opponents of reform purged thereby
weakening "leftist" influence in the Politburo; Party
Secretariat established.
August-September 1980. Deng proposes separation of
party and government functions, emphasizes collective
leadership and retirement of superannuated officials to
open door for more highly qualified personnel; Hua
replaced as Premier by Zhao Ziyang.
December 1980. Politburo suspends Hua from offi-
cial duties. Deng assumes leadership of Central Com-
mittee Military Commission; Hu Yaobang takes charge
of party bureaucracy.
June 1981?Sixth Plenum, 11th Central Committee.
Hu replaces Hua as Party Chairman; over some opposi-
tion, Deng wins approval of "Resolution on Party
History," which is sharply critical of many of Mao's
policies and some of his ideological precepts.
September 1982-12th Party Congress. New party
constitution abolishes Chairmanship; Hu becomes Gen-
eral Secretary; Agricultural -responsibility system" im-
plemented on national basis.
November 1982?Fifth Session, Fifth National Peo-
ple's Congress. New state constitution adopted, which
restored position of President, Peoples Republic of
China, fixes terms of office for most top state officials at
five years, and replaces communes with townships as
basic administrative unit.
October 1983?Second Plenum, 12th Central Com-
mittee. Kicks off party "rectification" campaign de-
signed to weed out "leftist" and incompetent cadres at
all levels of the party.
October 1984?Third Plenum, 12th Central Com-
mittee. Resolution adopted extending reform to include
government control of industry, some price controls,
and central planning.
September 1985?Party Conference of Delegates.
Retires large number of aged party, government, and
military leaders; approves the principal direction of the
Seventh Five-Year Plan.
March 1986?National People's Congress. Approves
Seventh Five-Year Plan, which calls for modest eco-
nomic growth and reaffirms China's commitment to
reform and the "open door" but contains no new
reform initiatives.
? Revamping ideology. While defending the legiti-
macy of "Marxism-Leninism-Mao Zedong
Thought," the reformers are redefining it to
support their pragmatic policies. Gone is the
emphasis on "class struggle," "better red than
expert," and other Maoist ideological exhorta-
tions. Now ideology must make acceptable mar-
ket forces in the economy, foreign investments,
and other policies that "seek truth from facts";
the legitimacy of party authority increasingly is
explained in economic performance terms rather
than more obscure theoretical constructs.
? Establishing the principle of legality. Besides
reinvigorating legal institutions, such as the proc-
uracy (which prosecutes cases) and the courts,
and enacting a legal code and new laws affecting
all facets of society, Deng and his associates have
created the expectation that there will be some
limits on the exercise of authority by the state.
Increased predictability and controls on the arbi-
trary exercise of authority will enable the regime
to obtain greater commitment from its citizens,
especially the intellectuals whose willing partici-
pation is required if modernization is to work.
5. A major effort is also being made to invigorate
institutions by recruitment policies that favor younger
and more educated people. Without completely abol-
ishing widespread family favoritism and guanxi (per-
sonal relationship) networks, Deng and his supporters
are implementing a personnel system which:
? Establish an age limit for various offices in
party and government. An age limit of 65 for
government ministers and 60 for vice ministers
has been established. The age limit is 68 for
ordinary Central Committee members but for
Politburo members the age is uncertain; press
sources indicate that it ranges from 70 to 72.
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According to Deng, 81, a "few old cadres" will
keep their positions "for a while." According to
General Secretary Hu Yaobang, 70, the retention
of some older veterans who are still in good
health is the "common desire" of the entire party
membership and "in their fundamental interest."
Since 1984, 47 ministers and directors of Central
Committee and State Council Departments have
been replaced, along with 80 of their deputies. At
the provincial level, 14 of the 27 provincial-level
administrative units have had new party secre-
taries, and 10 have had new governors. Nearly all
of these changes reflect the new age limitations.
? Ensures that better educated and more quali-
fied personnel are appointed to party and gov-
ernment positions. More than three-fourths of
the 64 new members of the Central Committee
appointed at the September 1985 National Con-
ference of Delegates had received higher educa-
tion?meaning a college degree or training at a
technical school or military staff school. This
emphasis on educational qualifications now ex-
tends throughout the system.
? Promotes persons who will be supportive of the
reforms. The age restrictions have enabled Deng
to remove some senior leaders opposed to his
policies, while the new recruitment guidelines
help him to place his proteges in key positions.
6. Deng and his supporters believe that these politi-
cal changes are vital if China is not to experience the
excesses of the Cultural Revolution, when one individ-
ual was able to manipulate the levers of power,
wreaking great havoc on the nation
7. These changes do not mean that the system of
favoritism for relatives and guanxi networks endemic
to Chinese political life will be speedily abolished.
Evidence suggests that children of high-ranking offi-
cials are heavily favored in recruitment for desirable
positions in government and industry, 1 and guanxi
plays a very significant role in determining who will
be promoted. For example, it is strongly believed that
the newly appointed Ministers for Public Security and
State Security were chosen not primarily because of
their qualifications, but because of their personal ties
to Hu Yaobang.
8. Reformers are not political liberals who favor
individual rights and democratic procedures. Quite
the contrary, they are deeply committed to what they
'For a discussion of this issue, see CIA Research Paper EA 85-
10207 December 1985, The -Princes' Party"
Cadre Offspring in China
"Socialist democracy is not capitalist democracy nor
individualistic democracy but a democracy for the majority
of people. It can be separated neither from dictatorship over
our enemies nor from centralism based on democracy . . . .
We should not . . . pursue capitalist liberalization. Pursuing
capitalist liberalization in our country is equal to following
the capitalist road, which will inevitably do great damage to
the political situation of stability and unity and the four
modernizations program."
? From an article by "Commentator" in Hongqi
(Red Flag), 16 November 1985.
term "the four basic principles," namely, adhering to
the socialist (Communist) road, upholding the people's
democratic dictatorship, upholding the leadership of
the Communist Party, and adhering to Marxism-
Leninism and Mao Zedong thought as interpreted by
them
Revitalizing China's Economy and Society
9. As Deng and his supporters seek to reform
Chinese politics, they also recognize that the success of
the second revolution also hinges on achieving eco-
nomic progress. Among the most important areas are:
? Narrowing the scope of central planning and
gradually allowing market forces to determine
more economic activity, while maintaining eco-
nomic stability by means of monetary and fiscal
policies.
? Improving efficiency, productivity, and quality
in production by providing enterprise managers
and farmers more authority over planning,
output, and marketing; by demanding greater
fiscal responsibility; and by breaking up vertical-
ly organized relations and encouraging competi-
tion between economic units.
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? Raising the standard of living by allowing more
individual freedom to exercise entrepreneurial
skills and accumulate wealth, and by promoting
more production of consumer goods while devel-
oping new policies to help the economically
disadvantaged.
? Developing more effective financial institutions
to improve allocation of funds, monitor enter-
prise activity, and influence the rate and direc-
tion of economic development.
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? Gradually eliminating government intervention
that stifles economic growth, such as controls on
prices, rents, and wages.
? Promoting development of a relatively unregu-
lated tertiary economic sector, such as service
industries, small-scale transport, and marketing.
? Opening China's economy to foreign participa-
tion in order to acquire advanced technology,
investment capital, and management skills.
? Giving priority to existing industrial bases.
10. The political and economic reforms are being
accompanied by social changes as well. Chief social
goals include:
? Revamping the education system, giving priority
to scientific and technical skills. Admissions to
colleges and universities are to be based on
qualifying examinations, and a system of degrees
has been restored.
? Easing limits on artistic and cultural expression.
? Giving intellectuals a more prominent role in
party and government affairs and extending
greater prestige to intellectual endeavors.
? Easing public restraints over religious observance
and over cultural expression by national
minorities.
These social changes are seen as necessary for creating
greater popular support for the party. Nevertheless,
some key controls will remain in place: birth control,
migration, and labor unions
Military Reforms
11. Deng and his reformist colleagues want a mili-
tary that is leaner, more professional, and better
trained and armed. In pursuit of this objective they
have:
? Pushed for a younger and more educated officer
corps with greater technical specialization. Older
officers have been forced into retirement and
younger ones promoted.
? Begun implementing a reduction in the overall
size of the armed forces by over 1 million
personnel, from about 4.5 million to 3.5 million.
This is being done to save money and improve
the quality of recruits.
? Reduced the role of military units in the econo-
my?for example, they have taken the Railway
Construction Corps and the Capital Construc-
tions Engineer Corps out of PLA control?while
at the same time using many defense industries
for civilian production.
? Reorganized military regions and commands to
simplify command and control.
? Acquired and deployed improved weapons and
equipment from foreign and indigenous sources.
12. Through these changes in the PLA, Deng be-
lieves that its mission of providing national security
can be accomplished more effectively and less expen-
sively. At the same time, the military as an institution
may become less likely to play a significant domestic
political role to the degree it did during the Cultural
Revolution. Thus far, there have not been substantial
increases in the military budget?the published mili-
tary budget has actually been somewhat reduced since
1979?but should the PLA go forward with an-
nounced intentions of improving weapons technology,
costs could increase substantially. In any case, the
success of the military modernization depends on the
success of the economic program. We believe that the
reformers will hold to their policy of selectively and
gradually improving weapons technology, avoiding the
expense that would be entailed in a rapid buildup.
Accomplishments
13. The reforms have already had a fundamental
impact on Chinese politics, economics, and society.
More than 1.2 million cadres at various levels have
been retired. Of 200,000 younger cadres promoted to
posts at or above the county level, 60 percent have
college or university degrees. At the most recent party
conference of delegates in September, 10 elderly
members of the Politburo resigned and were replaced
by six younger persons, and 64 older members of the
Central Committee resigned in favor of younger and
more technically qualified persons.2
14. Even more dramatic have been the economic
changes in China. Annual growth over the past few
years has been running at about 9 to 10 percent, well
above the growth target Beijing needs to accomplish its
goal of quadrupling the total value of industrial and
agricultural output by the year 2000 (see table). The
For an analysis of developments at the Party Conference, see
Intelligence Assessment EA 85-10197. Novem-
ber 1985, China's Party Conference: The Waning of the Ancien
Regime
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China's Goals for Economic Development
(Gross value of industrial
and agricultural output
[GVIAO] in billion yuan)
Acutal Production
Current Prices
in Production in 1980 Yuan in Comparable Prices
GVIAO
GVIAO
GVIO
GVAO
1975
447
480
316
170
1980
708
708
490
218
1985
1,327
1,186
840
341
1990 a
1,677
1,205
415
1995b
2,179
1,537
602
2000 b
2,831
1,959
872
Total may not add due to rounding.
a Projected. Source: Premier Zhao Ziyang's report on Seventh Five-
Year Plan, March 1986.
b pojected. Source of target for the year 2000 is CPC Central
Committee's goal of quadrupling 1980 GVIAO. Goal for 1995 is
derived as midpoint between 1990 and 2000 goals. If targets of
Seventh Five-Year Plan are reached (1990), subsequent goals will
likely be raised.
"contract responsibility system" has led to an unprece-
dented boom in many of China's rural areas both in
terms of productivity and peasant income.
15. The overall standard of living of the Chinese
people has improved considerably. Coupon rationing
has ended for clothing and most foods. Rural dwellers
have seen their annual per capita income more than
double since 1978, up to about 300 yuan. The gap
between rural and urban living standards has nar-
rowed significantly. There is a wider variety of prod-
ucts and consumer goods available.
16. The reforms are perceived by most Chinese as
having delivered the goods thus far, and the reformers
are counting on popular support to keep the momen-
tum going. Chinese leaders repeatedly assure foreign
visitors that the reforms are highly popular and for this
reason can be successfully continued.
Reform Obstacles
17. In spite of these accomplishments, the pace of
reforms and the degree of implementation have been
and will be uneven because of both technical obstacles
and political resistance. Among the chief technical
obstacles are:
? Problems in developing the managerial talent.
Many economic managers have successfully
achieved goals based on quantitative production
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but are now expected to perform in an environ-
ment that demands quality, innovation, market-
ing skill, and profits. The educational system will
have great difficulty providing the skilled man-
agers China needs.
? Shortcomings in financial capabilities. As the
1985 foreign exchange scare?in which the Chi-
nese discovered their reserves were being deplet-
ed much more rapidly than anticipated and
moved quickly to regain central control over
outflows?amply demonstrates, China may have
difficulty committing the financial resources
necessary for infrastructural development at the
appropriate time. Additionally, the unleashing of
strong inflationary pressures by the reforms has
disrupted both investment and planning.
? Difficulties in acquiring and absorbing technol-
ogy. Certain technologies are unavailable owing
to COCOM restrictions or because Western en-
terprises refuse to provide it, fearing that the
Chinese will subsequently use it to compete with
them. Even so, a number of reports suggest that
Beijing has acquired expensive technology from
abroad only to have it remain unused for want of
trained personnel.
? Infrastructure gaps in such crucial areas as
energy and transportation. China's short-term
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Special Economic Zones:
A Test of the Reforms a
At the urging of Deng Xiaoping, in 1979 the State
Council authorized the creation of special economic
zones as part of a policy directed at liberalizing the
foreign trade system and opening the economy to the
West. Four zones were established to spur and concen-
trate foreign investment, Xiamen and Sharitou designed
to concentrate on developing export processing indus-
tries and Shenzhen and Zhuhai, bordering on Hong
Kong and Macao respectively, designed for more diver-
sified development. All four zones offered investors
low-cost labor, reduced rents and taxes, and scaled
down or waived customs duties. They sought to attract
foreign investment in infrastructure projects as well as
in industries that would promote exports and enhance
technological development. Responding to the charge of
critics that the Special Economic Zones (SEZs) were like
the treaty ports of the past, the reformers asserted that
unlike the situation in the past, foreign involvement
would be on Chinese terms, not forced by the foreign-
ers.
Initially, the development of the SEZs was sluggish,
but beginning in 1983 there was rapid expansion,
particularly in Shenzhen. By 1984 Shenzhen had at-
tracted 70 percent of the total foreign funds invested in
SEZs and 15 percent of total realized foreign investment
in China. This, together with heavy state investment in
infrastructural projects, resulted in a major boom. In
early 1984, Deng visited Shenzhen and praised the
results. His visit seemed to allay concern that the SEZ
experiment would be short lived. Indeed, the gross
value of industrial and agricultural output in the four
zones went from 2.1 billion yuan in 1983 to 3.3 billion
yuan in 1984, with Shenzhen accounting for about 50
Percent of the growth. (s NF NC)
a See INR Report 1120-AR, China's Special Economic Zones: Less
Progress than Meets the Eye, 2 July 1985
However, some unforeseen results caused Chinese
policymakers to again have second thoughts. Most of the
investment has gone into construction rather than in-
creases in production; also, only about one-third of sales
from the SEZs have been made abroad, while two-
thirds have been in China. Export goals for Shenzhen
were supposed to reach US $5.2 billion by 1990, but
between 1980 and 1983 they increased only from US
$11.2 million to $21.1 million, a tiny fraction of official
projections. In 1984 the four zones ran a trade deficit of
US $2 billion. In general, the SEZs have failed to serve
the anticipated investment function and have failed to
attract technology-intensive industry. Also, there is
some consternation that they have led to corruption and
the spread of -spiritual pollution- in China.
In mid-1985 Chinese leaders seemed to be hedging
their bets on the SEZs. Deng referred to them as
'experimental- and suggested that they could be shut
down if their purpose was not achieved. Cu Mu, who
carried the SEZ portfolio in the Secretariat, gave SEZ
performance a mixed review in a newspaper interview
in April 1985. Cu was removed from the Secretariat at
the Party National Conference of Delegates in Septem-
ber.
The SEZ's lackluster record in obtaining key objec-
tives has probably tarnished the credibility of the
policy, if not the policymakers. Reformers are nimbly
switching their strategy for China's modernization and
are now focusing on upgrading technology in major
industrial centers through licensing agreements and
joint ventures. However, it seems unlikely that the SEZ
concept will be abandoned; rather, they will most likely
record modest gains as they compete with other open-
ing Chinese industrial cities for foreign investment.
energy approach involves dependence on coal-fired
plants, which create pollution and place an added
burden on mining and transportation. The long-term
plan calls for expensive nuclear and hydroelectric
projects, which will have no payoffs until the 1990s.
Transportation is a serious problem, which only sub-
stantial investment can help to solve. Chinese railways
are 70 percent overbooked, and port congestion is
extremely severe. Attempts to increase highway use
for short haul commerce will be costly and will
increase demand for fuels that the energy sector may
not be able to provide.
18. Reform policies have generated or exacerbated
a host of serious difficulties in China's economy.
Among these problems are double-digit inflation, a
rise in official corruption, socially disruptive income
disparities, and regional inequality. These problems
have generated both social discontent, as measured by
student demonstrations, and political controversy at
the highest levels.
19. There is also political resistance to the reforms.
Significant issues include:
? Strong differences among the leadership as to
the extent and pace of reform. Some leaders
have tried to slow and modify the reforms
because they believe that moving too rapidly and
too far is undermining party authority.
? The fear of losing power and perks among
senior officials who are being retired.
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We must intensify ideological and political work and
preserve the prestige of the party's departments in charge of
this work. There are now some people, including some party
members, who have forsaken the socialist and Communist
ideal and turned their backs on serving the people. Some of
them have become rich by unlawful means such as specula-
tion and swindle, graft, and acceptance of bribes. In their
dealings with foreigners, they have no consideration of
personal or national dignity. These problems can be attribut-
ed to the relation of ideological and political work and the
decline in the function and authority of departments in
charge of such work. We should take this as a lesson. Party
organizations at all levels should conduct ideological and
political work in earnest and safeguard the authority of those
departments.
? Chen Yun, speech at CCP National Conference of
Delegates, September 1985.
? The concern among some officials, particularly
lower ranking cadres, that the reforms will not
endure. These officials adopt a "wait and see"
attitude and move slowly and cautiously, if at all,
in implementing directives.
? Concern that the rapid opening to the West will
allow unhealthy influences to enter China and
will also make China too dependent on foreign
countries
20. Thus far, both Deng and his opponents have
sought to avoid a showdown on the issue that must
inevitably arise: will economic modernization require
a loosening of ideological strictures and political con-
trols? To date we judge that the party remains deeply
divided on this issue. The dilemma of trading political
control for improved economic performance will re-
main for the next 10 years.
Deng's Mortality 3
21. The party's ability to overcome obstacles to
reform and to continue with the second revolution
hinges on how orderly the succession to Deng is
accomplished. The mechanisms are in place for an
orderly succession, but the future of reform depends
on the nature, character, and policies of Deng's succes-
sors. Deng has given a high priority to putting in place
those persons he deems most committed to reform, yet
On prospects for the succession to Deng, see forthcoming SNIE
13-86 May 1986, China After Deng: Succes-
sion Problems and Prospects.
he has also had to accept the promotion of proteges of
other leaders, including those who have been opposed
to some elements of the reforms. Reform success owes
much to Deng's political skills and ability to negotiate
among competing interests. We doubt that his succes-
sor will have the same commitment to reform or his
negotiating ability. Nevertheless, we believe that the
leadership that emerges after Deng for the most part
will share his goals and priorities even though it will
include some who favor a different approach
External Influences
22. China's reform effort has been perceptibly in-
fluenced by external forces and will continue to be so
over the coming decade. Of particular importance has
been the shift in Chinese perceptions of threat and a
corresponding shift in foreign policy emphasis. Chi-
nese demands for a -united front" against Soviet
-hegemonism,- heard during the high tide of Sino-US
cooperation in 1979, have given way to the declaration
of an -independent- foreign policy that seeks to treat
the superpowers more evenhandedly. While there has
been no substantive Soviet change on key issues that
divide Beijing and Moscow, Chinese perceptions have
shifted. They believe:
? The United States has increased its power and
vigilence against the Soviet threat.
? The Soviets are becoming overextended in their
activities in Afghanistan and Vietnam and are
also distracted by their problems at home and in
Eastern Europe.
? Avoiding armed conflict is essential so that China
will have time and resources to modernize.
? New Soviet leadership might be eventually more
forthcoming on China's three major conditions
for normalizing relations.
In the past few years, China's stated rationale for
cooperation with the West has progressively shifted
from the strategic countering of Soviet power to their
expressed desire for financial and technological sup-
port for China's modernization.
23. China has fostered improved ties to the Soviet
Union, and rapid gains in trade, perhaps as much as $6
billion annually by the end of the decade, are antici-
pated in the 1986-90 trade agreement concluded by
the two parties. Though far less than China's trade
with the West, this trade expansion is evidence of
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Chinese willingness to obscure or overlook some politi-
cal differences while seeking modernization. In partic-
ular, the Chinese probably will continue to use care in
dealing with especially sensitive issues in order not to
jeopardize potential Soviet contributions to Chinese
modernization.
24. The pace and degree of Chinese reforms are
partly influenced by how successful the Chinese be-
lieve they will be in acquiring modernization resources
in the West, principally from the United States. The
United States is currently the largest foreign investor
in China, after Hong Kong, and has worked to pro-
mote trade and economic cooperation. There are
15,000 Chinese students in the United States, the
largest number abroad in any country, and the re-
formers perceive that these students are a fundamen-
tal means of acquiring expertise. We believe that
Beijing is increasingly concerned with issues such as
trade, investment, student exchange, and the US role
in COCOM restrictions on China. Chinese attitudes
toward military cooperation with the United States are
mixed. Some elements of the leadership favor limited
military cooperation as a means of promoting military
modernization while others want to downplay such
cooperation
25. Chinese leaders believe that Japan can make an
important economic and technological contribution to
China's modernization, but they remain suspicious of
Japanese intentions. There are mixed feelings about
Japan's role in such projects as the Baoshan steel
project that helped to modernize China's steel industry
but at enormous expense. Deng recently stated that
continuing trade deficits with Japan were unaccept-
able, while others have complained of Japan's lack of
investment in China. Below the surface of official
good will between the two nations, there is lingering
hostility as evidenced by student demonstrations
against Japan in the fall of 1985
China's Future: The Most Likely Prospect
26. Deng and his reformist colleagues have already
scored remarkable achievements in reorganizing the
political infrastructure and improving economic pro-
ductivity in certain sectors, such as agriculture, where
reform policies have been applied most extensively.
The economic reforms in China have brought unprec-
edented prosperity and have given the people a stake
in the continuation of reform. Reform policies have
been implemented in a -two steps forward, one step
back" fashion, and we expect this pattern to continue.
We believe, on balance, that the Chinese leadership
has demonstrated sufficient success in achieving their
goals of creating a more united, stable, and powerful
China, and that the general trend of reform will
continue during the period of this Estimate.
27. Nevertheless, we believe that over the next 10
years there will be continuing political and economic
problems facing the Chinese leadership that have a
potential to threaten reform. That is, there will be
incessant disputes over the scale, pace, and side effects
of reform, and leadership shifts will occur as various
members of the second generation attempt to strength-
en their respective positions. But, we do not believe
these will lead to major turmoil, as occurred during
the Cultural Revolution, and will be confined to the
type of struggle that we have witnessed since the
Third Plenum in 1978.
28. Economic performance is most likely to support
a continuation of reform policies. Despite problems
with excessive growth, inflation, and corruption,
China's robust economy (see table) has generated
popular and political support that probably will carry
the leadership through the inevitable cyclical down-
turns and lean years. The reformers' ability to discover
and respond to problems in the economy has been an
important factor in their record of success, and we
expect this flexibility to be maintained.
29. Over the next 10 years, key features of a
developing China probably will include:
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? A party leadership that dominates policy formu-
lation across the board.
? A bureaucracy staffed by relatively young, tech-
nically capable personnel.
A social system that reflects tensions between
economic liberalization and political control.
? An avowed centrally planned economy that at-
tempts to make use of both market forces and
political intervention to influence its develop-
ment and encourages flexibility and competition
within certain carefully described sectors.
? An extensive web of interlocking trade, techno-
logical and financial relationships with other
countries, mainly Western and Japan.
? An approach to foreign policy issues that is more
activist but dominated by a desire to avoid
unnecessary external conflict that would inter-
fere with a continuing focus on modernization.
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30. As China becomes more prosperous, its foreign
policy options will increase. It will seek to play a
greater role in international and regional affairs.
China will publicly adhere to its -independent- pos-
ture and will rhetorically support various Third World
positions in the United Nations and in other interna-
tional forums. At the same time, China will continue
to emphasize orderly economic, financial, and trade
ties to the West. Within Asia, China will seek to
augment its role as a regional power, recognizing that
the United States and the USSR are actively engaged
in the region, but seeking over the longer term to
reduce that involvement. Specifically, we believe that
China will:
? Increasingly seek arrangements in Korea that will
enhance prospects for peace and stability in the
peninsula.
? Continue to demand a solution to the Cambodia
conflict that acknowledges Chinese interests and
influence in Indochina.
? Attempt to avoid military action except perhaps
in the South China Sea where overlapping terri-
torial claims involve several countries, including
Vietnam.
31. We believe that China will not move signifi-
cantly closer to the Soviet Union. Normalization of
Sino-Soviet relations may move forward, perhaps,
even including a restoration of party to party ties.
Even in that exigency, the Chinese will not cooperate
with the Soviets against the United States, because the
West will remain more important to China as a source
of technology, investment, and other economic advan-
tages. China will improve economic relations with the
USSR but will most likely continue to regard the Soviet
Union as a major competitor for influence in East Asia
and a strategic military threat.
32. Greater production of a wider range of goods
will mean that China will compete more assertively
with newly industrialized countries to sell to foreign
markets, especially in the developed countries. China
will also maintain an aggressive policy of arms sales
abroad, which, with technological improvements, will
make it increasingly competitive in this market.
China's increasing economic strength will make it
even more attractive to foreigners in both market and
investment terms, which in turn will enable the
Chinese to play one country against another in order
to obtain the best possible terms. Developing countries
in East Asia will feel increasing pressure from China's
development.
A Less Likely Alternative: The Reforms Collapse
33. We believe that another plausible though less
likely outcome is a situation in which technical and
political problems gradually overwhelm the reforms.
This would entail a permanent recentralization of
authority and a tightening of economic controls. Such
a situation could be brought about by:
? A series of major economic setbacks, such as
runaway inflation, successive poor harvests, or
stagnant industrial growth.
? Widespread demands for greater personal and
political freedoms that appear to threaten the
party's control.
? Political unrest among segments of the popula-
tion resulting from a perception of disadvantage.
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34. S ou t ese, or other potential developments,
result in the ending of reforms, we would anticipate
the following situation:
? Intensified infighting among party elites, accom-
panied by signs of policy immobilism and ideo-
logical dogmatism.
? Growing tension in the bureaucracy as technical-
ly qualified personnel lose authority to anti- 25X1
reform party ideologues.
? A social system characterized by increasing un-
rest as the regime moves to dismantle reforms
and reimpose central authority.
? The broadened application of central planning
and limitations on market forces in the economy.
? An increased emphasis on self reliance, perhaps
including attempts to limit foreign participation
in China's economy.
? A foreign policy lacking initiative but pursued in
a truculent manner.
35. This more centralized and repressive regime
probably would not be able to resolve China's econom-
ic problems, and popular support would dwindle over
time. This alternative could also be accompanied by
an upsurge in Chinese nationalism. The Chinese would
be most likely to blame the developed countries for
their problems but would remain suspicious of Soviet
intentions toward China. China would escalate its
Third World rhetoric and might allow territorial
problems with its neighbors to become more serious.
The Hong Kong settlement could unravel, causing the
Taiwan issue to become more difficult. We believe,
however, that political unrest and nationalistic excesses
on the scale of the Cultural Revolution would be
unlikely
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Can China Dramatically Succeed or Fail Beyond
Our Expectations?
36. We believe it is highly unlikely that the Chinese
reforms will succeed dramatically or fail miserably. In
order for the reforms to accomplish much more than
we anticipate:
? The role of the party would have to be further
diminished and greater political pluralism
introduced.
? Marxist-Leninist ideology would have to cease to
be the basis of legitimate authority.
? The bureaucracy would have to become much
more technically skilled and insulated from polit-
ical shifts.
? The economy would require much less govern-
ment intervention and would give primacy to
market forces.
? In exchange for Western know-how and technol-
ogy, China would have to grant much greater
foreign access to its domestic markets.
Over the period of this Estimate it is highly unlikely
that the Communist Party would countenance changes
of this magnitude, preferring to maintain control
rather than rapidly accelerate the pace of moderniza-
tion
37. It is also highly unlikely that the reforms will
precipitate a major economic or political collapse with
accompanying Cultural Revolution style xenophobia.
Causes of such a collapse would include:
? A complete breakdown of consensus among the
leadership, resulting in violent political turbu-
lence, purges, and probably military
intervention.
? The emergence of regional power centers com-
peting with Beijing for political authority.
? Extreme social polarization and the emergence
of ideological fanaticism.
? Bureaucratic paralysis leading to failure to im-
plement policies effectively.
? Stagflation, increased unemployment, crop fail-
ures and famine, or other dislocations of such
magnitude that the reforms are totally
discredited.
We believe that having come close to this type of
political and economic collapse during the Cultural
Revolution, Chinese leaders, regardless of their atti-
tude toward reform, will try to undertake whatever
steps are necessary to prevent this degree of systemic
breakdown
Implications for the United States
38. Our most likely alternative for China's future
offers a mixed but basically favorable situation for the
United States. A more politically stable and economi-
cally prosperous China with increased ties to and
interactions with the United States, Japan, and other
Western countries has been a goal of US policy for a
decade or more. In this respect, the progress of China's
reforms compliment US policy. Nevertheless, the very
success of these reforms will bring both opportunities
and challenges for US policymakers as they deal with a
more capable and confident China in the decades
ahead.
39. We believe that the key opportunities for the
United States will be:
? A potential for the expansion of mutual trade
and investment.
? Continued areas of political cooperation; specifi-
cally, both sides will wish to limit Soviet power
and influence in the region and will want peace
and stability on the Korean Peninsula.
? Some limited expansion of military cooperation,
primarily in the regularization of exchanges at
various levels; however, we believe that China
will not wish to rapidly expand military acquisi-
tions from the United States.
? Better cultural ties and understanding because
China will wish to maintain a broad level of
student, cultural, and scientific exchange.
? A potential to influence a generation of Chinese
elites, exposed to the United States through a
variety of exchanges
40. We believe that the key challenges for the
United States will be:
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? Continuing pressure on the United States to
reduce arms sales to Taiwan.
? Increasing pressure on the United States to con-
vince Taiwan to accept Beijing's terms for na-
tional reconciliation.
? Continuing, and perhaps escalating, demands
that the United States transfer sensitive technol-
ogy to China and reduce third-party transfer
restrictions.
? Continuing pressure for US concessions on trade
and investment.
? Growing Chinese competitiveness in East Asian
markets.
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41. The gradual growth of Chinese power and
influence will complicate US relations with other
countries in the region. Many Southeast Asian coun-
tries view China as an economic competitor and will
become alarmed as China increases its access to US
and other Western markets. Increasing Chinese mili-
tary power will be viewed with concern by some Asian
countries that will try to persuade the United States to
place restraints on its assistance to Chinese military
modernization; these countries do not appreciate the
limits of US influence on China.
42. A moderately successful reformist leadership
will seek to maintain or enhance China's position
within the strategic triangle. The attitude of close,
strategic cooperation with the United States against the
Soviet Union that China evoked in the 1970s is not
likely to reoccur during the period of this Estimate.
Rather, China will most likely seek to find ways to
exploit differences between the United States and the
Soviet nun t enhance its own position in the
triangle.
43. In the event that our less likely, but plausible,
scenario unfolds, China would become a more serious
challenge to US interests because it would probably be
even more stubborn in asserting its demands. We
would anticipate that:
? Cooperative Sino-US economic ties would be
reduced.
? Beijing would most likely escalate its demands
that the United States stop arms sales to Taiwan.
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? Military cooperation with the United States
would be cut back.
? Exchanges in scientific, technical, cultural, and
other areas would falter.
? China would increasingly adopt an anti-US pos-
ture in international fora and in propaganda.
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44. Under these circumstances we could expect that
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China might renew moral and political ties to pro-
Beijing Southeast Asian Communist movements and
under some circumstances might be willing to slightly
upgrade ties to these groups. While some leaders might
also want to reduce tension with the USSR and
develop closer ties to replace links to the West, this
tendency would be mitigated by lingering suspicions
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45. Reform in China is a complex political, eco-25X1
nomic, and social phenomenon whose future course
cannot be precisely predicted. The continuity or aban-
donment of the policies and structural changes that
emerge from the -second revolution- will have impor-
tant implications for US interests in Asia and else-
where. We believe, however, that stunning success or
ignominious failure is not only highly unlikely, but are
tied to so many imponderables as to mitigate against
projecting specific implication of these alternatives for
the United States.
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ANNEX B
Short Biographies of Key Chinese Leaders
Yao Yilin
Camera Press tc./
Yao Yilin . . . 68 . . . Politburo member and Vice
Premier of State Council . . . protege of conservative
Standing Committee member Chen Yun . . . economic
decisionmaker who advocates Chen's limited growth
policies . . . shares Chen's reservations about aspects of
economic reforms, particularly on China's special eco-
nomic zones . . . graduate of Qinghua University . . .
served in State Council posts throughout 1950s and
1960s . . . purged in 1966. . . worked in foreign trade
administration after 1973 rehabilitation . . . relieved
from Secretariat September 1985 . . . handled recent
bilateral economic talks with Soviet Union.
Wang Zhaoguo
Wang Zhaoguo . . . 44. . . Secretariat member. . . di-
rector of party General Office . . . nationally celebrat-
ed as model -third echelon- cadre after promotion to
Central Committee in 1982 . . . personally promoted
by Deng Xiaoping after impressing him in briefing . . .
Youth League ties to Hu Yaobang . . . headed Commu-
nist Youth League 1982-84 . . . graduate of Harbin
University in 1966 with degree in mechanics . . . auto
plant manager in Hubei . . . studied at US-established
Dalian Management School in 1980. (u)
Wide World Cl)
Wu Xueciian
Wu Xeuqian . . . 65 . . . Politburo member, State
Councilor and Minister of Foreign Affairs . . . posting
to Politburo makes him equal of Soviet foreign minis-
ter in party protocol, extends his authority in foreign
policy . . . member of party foreign affairs oversight
group . . . highest ranking Hu Yaobang associate in
government . . . graduate of St. John's University,
Shanghai. . . joined party in 1936. . . served under Hu
as Youth League leader during 1950s and 1960s . .
purged during Cultural Revolution . . . reappeared
1972. . . deputy head of International Liaison Depart-
ment 1978-82.
Tian Jiyun
Tian Jiyun . . 56 . . . member Politburo and
Secretariat and Vice Premier of State Council . . . most
prominent Zhao Ziyang protege in party and state. . .
leading government spokesman for wage and price
reforms . . . probably a principal drafter of October
1984 party decision to reform China's economic struc-
ture . . . joined party 1945 . . . longtime finance official
in southwest . . . during 1970s helped Zhao implement
experimental economic reforms in Sichuan. (c NF)
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Li Peng
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Li Peng . . . 57 . . . member of Politburo and
Secretariat and Vice Premier of State Council . . .
adopted son of Zhou Enlai and Deng Yingchao . . .
oversees key energy, transportation, and education
sectors . . . may side with party conservatives on some
issues . . . aloof, no nonsense technician who demands
facts and figures . . . Soviet-trained expert in hydro-
power engineering . . . former Minister of Water
Conservancy and Electric Power.
Hu Qin
Hu Qili . . . 56 . . Politburo member and
Permanent Secretary of Secretariat . . . became youn-
gest Secretariat member in September 1982 . . .
protege of Hu Yaobang . . . almost certainly reinforces
Hu Yaobang's -liberal- proclivities . . . widely seen as
next party general secretary . . . graduate of Beijing
University in mechanical engineering . . . member of
Communist Youth League Secretariat during 1950s
and 1960s . . . purged in 1967 during Cultural
Revolution . . . rehabilitated 1972 in Ningxia Autono-
mous Region . . . returned to Beijing 1977, resumed
youth work . . . vice president Qinghua University
1978-82 . . . rose to national prominence as Tianjin
mayor 1980-82
Hao Jianxin
Hao Jianxiu . . . 50. . . Secretary of CCP Secretariat
. . . protege of Hu Yaobang . . . served under Hu as
member of Communist Youth League during early
1950s . . . active in women's affairs . . . one of several
Secretariat members who oversee economic affairs . . .
former textile industry model worker . . . graduated
from East China Textile Engineering College in 1962 .
. . served as Minister of Textile Industry 1981-83.
Qiao Shi
Qiao Shi . . . 61 . . . Member Politburo and
Secretariat . . . Vice Premier of State Council . . .
director of CCP's Political and Legal Commission . . .
protege of Hu Yaobang . . . considerable authority in
security and legal affairs . . . joined party in 1940 . . .
managed youth affairs in East China during 1950s . . .
headed Afro-Asian Solidarity Committee from 1965
until purged in 1967 . . . Director of party Internation-
al Liaison Department 1982-83, Organization Depart-
ment 1984-85.
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