ASSESSING CHINA'S SPARK PLAN FOR RURAL DEVELOPMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00907R000300750001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 22, 2016
• Document Release Date: May 17, 2012
• Sequence Number: 1
• Publication Date: November 6, 1987
• Content Type: MEMO

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Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
6 November 1987
Assessing China's "Spark Plan" for Rural Development
Summary
Concern over lagging rural development led Beijing to initiate the
"Spark Plan." The plan seeks to use technology to improve agricultural
production, develop equipment for rural commodity production, and
improve the skills of rural workers. Initial returns include a number of
small-scale benefits, and we expect additional improvements in output, per
Nonetheless, the impact of the Spark Plan will be limited. Problems
in funding and choosing projects are hampering implementation. Beyond
this, we believe that the plan's strategy is seriously flawed in failing to
provide continuing technical support for rural areas. The level of
technology is often low; the plan is not effectively organizing trained
personnel into supportive extension services; and the poor quality of most
Spark training is not helping to alleviate shortages of skilled people.
Finally, Spark does not address other key needs of the rural sector, such
This memorandum was prepared by Office
of East Asian Analysis. Information avai a e as of November 1987 was used in its
preparation. Comments and queries are welcome and may be directed to the Chief,
Trade and Technology Branch, China Division, OEA,
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as chronic energy shortages, which require national strategies. Other
programs that provide technical suDDOrt to the rural sector may ultimately
Stumbling Rural Development
China's leaders are worried that problems in the rural sector, and the growing
inequities between the richest and poorest areas of the country, will hamper China's
modernization program. The growth in agricultural productivity is slowing--grain
production has leveled off since the 1984 record harvest, for example. The leadership
realizes that cultivated area cannot be expanded and that most of the increase in
production from rural labor reallocation has already occurred. Rural policy guidelines
are therefore reemphasizing the use of technology to boost development. In his work
report to the March 1987 National People's Congress, for example, party chief Zhao
Ziyang called for upgrading the scientific and technical level in agricultural production.
Problems in China's rural industries created another important impetus for
improving technical support for rural development. Rural enterprises proliferated under
reform policies that encouraged their development to absorb excess farm labor and
diversify the rural economy. Started by either individual peasant households or local
rural authorities, they include sideline poultry and fish breeding, food processing, light
industries, mining, and services. In 1985 alone, rural enterprise employment jumped
from 14 to 20 percent of the total rural labor force. In 1986 the total output value of
rural enterprises exceeded that of agricultural production for the first time.
Yet even supporters of rural enterprises admit that the sector is troubled because
of low technology and poor management, inefficient use of energy and materials, poor
safety and environmental standards, and low-quality products.' The Minister of
Agriculture told US officials earlier in 1987 that roughly 10 percent of these enterprises
are going bankrupt every year. In addition, some conservative leaders charge that rural
enterprises have led peasants to scorn vital--but less profitable--grain production, and
diverted scarce funds and materials from basic agriculture and from state sector
enterprises.
The Spark Plan
To address these problems in rural development, the State Science and
Technology Commission (SSTC) formulated the Spark Plan.2 The State Council and the
Central Party Commitee approved the plan in mid-1985, and Zhao Ziyang, Vice Premier
2 The plan draws its name from a Chinese proverb that "a single spark can start a
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Wan Li, and others have publicly endorsed it to better the lot of China's 800 million
peasants. According to SSTC Chairman Song Jian, the plan is intended to "inject
elements of a modern civilization, transform outdated modes of production and
lifestyles, drive off poverty, and build a new civilization."
The Spark Plan involves three avenues for "spreading the sparks" of S&T:
? Improving agricultural production by introducing measures such as intensive
farming, breeding techniques, and water conservancy projects.
? Developing equipment and technology for rural commodity production in town
and township enterprises, particularly in food processing, agricultural, machinery,
mining, and services industries.
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? Training peasants and rural workers. 25X1
Spark projects are to draw on local resources, reflect market needs and pollution
concerns, and consider export potential. According to Chinese officials, the program
concentrates on "what people eat, wear, live in, and use." Priority is given to methods
and equipment for:
? Farming on mountainous terrain.
? Exploration of resources in hilly areas.
? Raising livestock and breeding aquaculture.
? Cultivation of products ranging from mushrooms to oranges and rapeseed.
? Processing agricultural, forestry, animal husbandry, and specialized local products
into finished goods (brewing soy sauce, making soft drinks, producing leather and
silk goods).
? Preserving and storing products (including refrigeration and packaging).
? Production of construction materials.
? Small-scale mining.
Plans call for Spark activities to rely on technologies that can be easily applied,
are quick to produce results, and are inexpensive. Originally, Beijing focused on readily
available domestic technologies. When Zhao Ziyang endorsed the program in 1985, for
example, he said China's rural areas did not need advanced or imported technologies,
but should apply domestic research achievements. By late 1986, officials broadened the
program to include more international cooperation and foreign capital, equipment, and
technology.
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State-supported Spark projects, begun in late 1985, now number over 800, and
local governments are supporting over 3,200 more projects, for a total investment of 2.3
billion Yuan ($718 million). Officials expect the projects to increase annual output value
by over 10 billion yuan ($3.1 billion) and increase profits and taxes by 2.5 billion Yuan
($780,000) within 2 to 3 years.
Early Returns ...
Spark projects are already producing results, according to Chinese press reports.
We believe that many of these reports are exaggerated, such as the claim of an
enterprise in Guangdong Province of a 620-million-yuan profit on a 19-million-yuan
investment in a year. Nonetheless, we believe Spark projects are yielding benefits that
include:
? Greater variety and quantity of food. Improved seeds and livestock breeds, and
new cultivation techniques have improved the supply and variety of grains, meats,
and vegetables for both rural and urban consumption.
? More on-site processing. Production equipment and technology enabled a
duck-raising area in Guizhou Province, for example, to build plants for the
production of duck feed and processing of ducks and duck eggs.
? Growing exports. Spark projects have assisted in the production of export goods
such as handicrafts, fibers, mushrooms, and small farm machinery, contributing to
the growth in exports by rural industries from $2.6 billion in 1984 to over $9
billion in 1986.
? Increased income. According to press reports, to cite one example, courses in
bookkeeping, economic management, tree planting, fish breeding, knitting, and
tailoring raised the average income of 2.37 million farmers in Hebei Province by
almost 25 percent in 1986.
Evidence suggests several factors are slowing China's efforts to use Spark
projects as engines for growth in rural areas nationwide. Various localities have
reported problems both in funding and in choosing which projects to support.
According to Chinese officials, Spark Plan funding is based on a matching funds
principle, with the state, relevant local department, and village or enterprise each
providing a portion. According to recently released figures, over 80 percent of Spark
funding is provided by local governments, while the state provides another 15 percent in
loans and 5 percent in grants. The implementation of the plan and widening the
application of Spark technologies thus depend largely on local resources.
some provinces and local governments, however, are
unable or unwilling to contribute to Spark projects, which must compete with other local
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projects. Local enterprises and farmers often find it particularly difficult to
contribute--sometimes as a direct result of central government fiscal policies. In late
1985, for example, Beijing temporarily tightened credit to slow excessive rural enterprise
growth. Bank loans have once again become an important source of funds, but
evidence suggests many loans are arranged by local officials with little regard for
potential profitability. According to Chinese press reports, the president of the
Agricultural Bank of China recently told branch directors to again limit rural loans after a
rapid rise in rural credit.
Resistance from the local bureaucracy is also hampering the Spark Plan.
some farmers have found the program less helpful than
anticipated because local o icials assessed extra taxes on those profiting from Spark.
Other successful enterprises have been taken over by local officials, or even sabotaged
by jealous neighbors. We suspect the involvement of personnel from national,
provincial, and local organizations in Spark Plan activities also requires time-consuming
coordination of resources, including personnel and funding. Similarly, the announcement
earlier this year by the Ministry of Agriculture of a "bumper harvest" plan to apply
technology to rural areas--very similar to the Spark Plan--indicates that competition
among organizations for resources will increase (see inset).
Why Problems May Persist
We believe the Spark program underestimates the level of technology needed to
promote long-term growth, and the organization and personnel needed to spread
technology--shortcomings that will limit its benefits.
Low Level Technology. The inexpensive, readily available domestic technology
that Zhao Ziyang originally envisioned as the strength of the Spark program often offers
only limited economic benefits. Some "off the shelf" techniques that are not efficient or
practical are probably being employed simply because they are available. Introducing
better methods to rural areas that currently practice outmoded or ecologically harmful
cultivation techniques or teaching basics such as knitting to villagers will help. But, in
our view, such steps are only a beginning in stimulating rural growth. Spark Plan
officials and other organizations are working to introduce more effective domestic and
imported technologies, but many local Spark projects apparently still involve less useful
technologies.
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The Spark Plan has quickly become the most visible program for
upgrading rural science and technology, but it is hardly alone. The Ministry of
Agriculture, Animal Husbandry and Fisheries has established over 500 county
centers in recent years to spread technology to rural areas, coordinate the work
of research units, and train rural cadres. Officials recently said such centers
would be established in 70 to 80 percent of counties by 1990, despite original
plans calling for one in every county by then--suggesting that progress has
probably been slower than expected. In addition, researchers working for the
Ministry and other organizations are developing new seeds and cultivation
techniques, using remote sensing to survey resources and plan water projects
and controlling irrigation and pesticide applications with computers.
Minister of Agriculture He Kang highlighted the need for more S&T in
early 1987 by outlining plans to improve the agricultural infrastructure, including
increasing state investment for technical assistance. Central Committee
Document Number Five on 1987 agricultural policy underscored this theme by
calling for an almost 40-percent increase in agricultural investment over 1986.
According to Chinese officials, the document calls for promoting agricultural
growth by popularizing agricultural technology, strengthening rural technical
strength, and developing industries that serve agriculture. In April 1987, officials
announced the "bumper harvest" scheme that, like the Spark Plan, calls for
applying technology to raise agricultural output and productivity in the animal
husbandry, fishery, farm machin r nd food preservation and processing
industries.
The announcement of the Spark Plan has prompted additional
complementary activities:
? The Chinese Society of Popular Sciences--which taught skills to 84 million
peasants during the past five years--plans to train 100 million more rural
youths by 1990.
? Rural technical service companies offer a range of services--providing
inputs (such as chickens), technical training, disease prevention and
marketing information, and, sometimes, buying and marketing products.
? Popular science societies and rural skill research groups have proliferated.
Households undertaking specialized production have formed over 2,000
associations with 50,000 members.
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We believe the "short, quick, cheap" philosophy is particularly inappropriate for
China's agricultural sector. Several trends have made this sector more dependent than
ever on continuing technical support:
? China relies heavily on specially developed, high-yield plant varieties, which need
constant research to maintain seed characteristics, technical support to adapt to
local environments, and significant amounts of chemical fertilizers and pesticides.
? Over 45 percent of China's cultivated areas are irrigated, but many of these
localities are fighting problems of poor drainage and salination.
? As use of small tractors and other agricultural machinery increases, China has a
greater need for mechanics to maintain the equipment, and agronomists to
Weak Diffusion Mechanisms. Technology--unlike a prairie fire--needs more than
a single spark if it is to spread and serve as a catalyst for development. The Spark Plan
calls for establishing demonstration projects, but fails to set up mechanisms for
disseminating information more widely and for providing ongoing technical support. At
the same time, the shift from collective to family farming has weakened the organization
of China's agricultural extension network, making it more difficult to spread technology
to those who need it. Previously, cadres introduced a new technique to 6 million
production teams. Now, agricultural extension workers must train and work with 200
million agricultural households. The Spark Plan sponsors many traveling S&T
delegations that may suggest improvements yielding initial gains in productivity or
output, but such short-term visits are often inadequate for introducing advanced
techniques, addressing complex problems, or providing followup support. Similarly,
Chinese postmortems of the poor results from technology imported to upgrade urban
industries have focused on the importance of support services for adapting and
maintaining equipment, but at least some Spark projects are neglecting the importance
of providing technical advice on the use and maintenance of equipment.
In some areas, specialized agricultural households or individual peasants have
organized informal networks to share technical information. A Spark project in Hubei,
for example, involved setting up rural economic development groups, led by either
competent rural people or urban scientists, that help members cooperate in the
assimilation of new farming or breeding techniques. Such popularization systems,
however, are only as good as the technical capabilities of the most educated member.
Many apparently lack the services of trained personnel, and may be unable to deal with
problems, or, in the worst case, may even distribute misinformation.
Shortages of Skilled Personnel. China's acute shortage of researchers and
agrotechnicians exacerbates the difficulty of providing continuing technical support, and
limits the number of projects that involve direct contact between experts and the
recipients--usually the most useful type of training.
the nation has 450,700 agricultural technicians, Song Jian has said there are only
150,000 qualified technical personnel in rural areas. Moreover, the quality of agriculture
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personnel is suspect because the relaxation of controls on rural mobility in recent years
led to a "brain drain" of agricultural S&T workers as they left for more lucrative
industrial jobs . The overwhelming majority of the
remaining scientists are located in urban research areas; even agricultural scientists are
centered in urban institutions. According to Chinese statistics, rural areas average only
seven technicians for every 10,000 people, one technician for 1,200 acres of farmland,
one animal husbandry specialist for 7,000 head of livestock, and one technician for 160
village and township enterprises (see graphic).
The program's emphasis on training at first glance appears to be potentially the
most valuable aspect of the program, but it is unlikely that Spark will make much of a
contribution to China's critical need for trained people. Formal, full-time training
programs run by the Ministry of Agriculture, Animal Husbandry and Fisheries have
limited expansion capacity, and graduates are needed to staff the Ministry's own
facilities. To fill the need for more teachers and schools, local governments, popular
science societies, household associations, and even individuals have established courses,
but such training is short term and probably of fairly low quality. The numbers reinforce
this impression: SSTC officials say 1 million rural inhabitants received training in 1986
alone, 750,000 more than planned.
The Chinese press reports that 15 ministries and organizations have pledged to
deploy technical personnel in support of Spark activities, but we are skeptical of these
intentions. The Ministry of Astronautics, for example, announced plans to send 10,000
technicians to help in rural enterprises over the next three years. The Ministry will not
shortchange its own programs, however, which suggests that it will release fewer, and
the less qualified of its people. Students are also being sent to rural areas to provide
training and technical services; Chinese press reports claim vacationing university
students worked on 1,300 projects in Liaoning Province in 1986.
Limited Scope. Finally, the Spark Plan has failed to address larger problems
confronting rural areas. It focuses on giving enterprises or villages the tools to help
themselves, yet some of the most crucial needs of rural areas cannot be met
individually. Providing more energy and developing water management systems, for
example, will require external support--funding, material, and workers--and are regional,
not local, problems. Hebei Province reported building highways to rural areas and
providing other infrastructure development as part of its Spark program, but this is an
exception. Although the plan originally called for regional development activities, few
Prospects
Spark entails several risks for Beijing. Officials have called for widespread
involvement, and published press articles designed to stir up enthusiasm for the
program. Yet we believe such popularization measures may be stimulating low-level
activities that waste resources, duplicate ongoing activities, and generate little return on
investment. The appearance of press commentaries that specifically warn against "mass
run" activities such as the disastrous Great Leap Forward reinforces this impression.
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Technical Personnel in Agriculture
Few...
Industry
26.8%
Public Health,
Sports,
Social Welfare Agriculture
20.5% r- & Forestry
7.0%
Education, Culture, Other
Broadcasting 25.5%
20.2%
Total: 7.816 million S&T personnel, 1985
...and With Limited Training
Number of
Technical Personnel
Senior Level 800
Secondary Level 60,600
Below Secondary
Level
389,300
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Beijing, however, has only poor control over the choice of projects and training at the
local level, and lacks qualified personnel to supervise Spark projects. Similarly, the lack
of supervision over the plan at the local level and the exhortations to fund Spark
program activities could encourage local officials to use the plan as a cover to fund the
type of out-of-plan construction that Beijing wants to control.
The Spark Plan also may be raising expectations that will be difficult to meet
quickly. Even training most of the rural labor force of over 400 million in one or two
skills, as Spark promises, is an enormous task. Moreover, the Spark Plan may only
perpetuate the disparities in regional development. Although almost all provinces have
announced Spark projects, there apparently is very little activity in some of the interior
provinces.
Beijing's commitment to the state industrial sector means that rural industries
will suffer in the allocation of scarce resources. Also, officials will decide policies
relating to grain production and price controls, which will influence the extent to which
Spark projects can improve rural output and efficiency. Emphasis on the Spark program
may cause limited local S&T funds to be diverted to quick-return, low-level projects to
the detriment of other important research and development activities.
Nonetheless, we anticipate the Spark Plan will continue to produce small-scale
benefits for many localities, including improvements in output, per capita income, and
rural exports. Measures introduced by Beijing alleviate some of the shortcomings of the
program, and, to the extent they are implemented, the benefits will grow. For example,
China announced policies and financial incentives to lure intellectuals from urban areas
to the countryside. In addition, to improve the availability of funds and the types of
projects funded, Beijing is encouraging banks to provide money to projects prescreened
for profitability and export potential. Policies to experiment with shareholding in rural
enterprises and to seek foreign assistance should also help provide funds.
The call for foreign assistance and technology increases the opportunities for US
and other foreign firms to expand technology sales to rural industries. China has
expressed interest in equipment for food processing, storage, and transport. If rural
enterprises were to significantly increase exports of goods such as textiles, however,
tensions in Sino-US trade could intensity.
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Subject: Assessing China's "Spark Plan" for Rural Development
Distribution:
White House and National Security Council
1 - Dr. William Graham, Office of Science and Technology Policy,
Old Executive Office Building, Room 358
1 - Frances Li, Office of Science and Technology Policy, New Executive
Office Building, Room 5002
1 - Doug Paal, Senior Assistant for China, Taiwan, and Hong Kong, Room 302
1 - Robert Dean, Special Assistant for International Programs and Technology,
Old Executive Office Building, Room 348
Department of State
1 - Bob Suettinger, Director, INR/EAP, Room 8840
1 - Thomas Fingar, Chief, INR/EAP, Room 8840
1 - Hank Levine, EAP/CM, Room 4318
1 - Richard Williams, Director, EAP/CM, Room 4318
1 - Tony Arredondo, OES/SCT, Room 4330
1 - Bob Goldberg, Office of Chinese Affairs, Room 4318
1 - Rick Tropp, Special Assisstant to the Administrator of AID, Room 5879
1 - Jeff Bader, Deputy Director, EAP/CM, Room 4318
1 - John Danylyk, Chief INR/EC/CER, Room 8662
1 - Nick Lang, Deputy Director of Economic Affairs, EAP/CM, Room 4318
Department of Commerce
2 - Office of Intelligence Liaison for Myna Stoltz, Special Assistant to
Melvin Searls, Room 6854
1 - Office of Intelligence Liaison for Jeff Lee, Director, Office of PRC
and Hong Kong, Room 6854
Department of Agriculture
1 - Francis Tuan, IED/Asia Branch, 500 12th Street, SW, Washington, DC 20250,
Room 350
1 - Frederick Crook, IED/Asia Branch, 500 12th Street, SW,
Washington, DC 20250, Room 350
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Department of Defense
Central Intelligency Agency
1 - DDI, Room 7E44
1 - Senior Review Panel, Room 5G00
1 - PDB Staff, Room 7F30
1 - NIO/EA, Room 7E62
1 - NIO/ECON, Room 7E62
1 - C/PES, Room 7F24
1 - D/OEA, Room 4F18
2 - C/OEA/CH, Room 4G32
1 - C/OEA/CH/PA, Room 4G32
1 - C/OEA/CH/EA, Room 4G32
1 - C/OEA/CH/IS, Room 4G32
10 - C/OEA/CH/TT, Room 4G32
1 - OEA/Production Officer, Room 4G48
1 - C/OEA/NEA, Room 4G43
1 - C/OEA/NEA, Room 4F38
1 - FBIS/NEAAD/China Branch, Room 306, Key
1 - FBIS/AG/China Branch, RCC. Room 2S37G
1 - SOVA/NIG/DPD, Room 4E65
1 - SOVA/NIG/DPD, Room 4E65
1 - SOVA/NIG/EPD, Room 5E66
1 - C/DO/PPS, Room 3D01
1 - CPAS/ILS, Room 7G50
6 - CPAS/IMC/CB, Room 7G07
1 - NIO/S&T, Room 7B42
1 - OSWR/TTAC/TAG, Room 6C43
1 - OSWR/STD/SB, Room 5F43
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