Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Directorate of Secret
Intelligence
China's Party Conference:
The Waning of the
Ancien Regime F-1
Secret
EA 85-10197
CR 85-16071
November 1985
COPY 3 01
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Directorate of
Intelligence
China's Party Conference:
The Waning of the
Ancien Regimen
Chief, China Division, OEA, on
This paper was prepared by the Domestic Policy
Branch, Office of East Asian Analysis, and the China
Branch, Office of Central Reference. Comments
and queries are welcome and may be directed to the
Secret
EA 85-10197
CR 85-16071
November 1985
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Summary
Information available
as of 20 October 1985
was used in this report.
China's Party Conference:
The Waning ofhe
Ancien Regime)
From 12 to 24 September, the Communist Party of China held an
unprecedented series of meetings that together constitute a major mile-
stone in Deng Xiaoping's decadelong struggle to restructure the party
leadership. In two plenary sessions of the Central Committee and an
extraordinary conference of party delegates, Deng managed to significant-
ly weaken the conservative party old guard, promote his allies to the top
party organizations, reduce the influence of China's senior military
officers, and win a new party endorsement of economic reform.
Specifically:
? One-quarter of the 210-member Central Committee, including 10 of the
27 members of the Politburo, resigned.
? Ninety-one younger leaders were named full or alternate members of the
Central Committee.
? Six new members joined the Politburo-five for the first time and one
promoted from alternate-and five were added to the Secretariat.
? The Central Committee approved guidelines for the 1986-90 Five-Year
Plan that strongly reaffirm the reformist course of economic policy.
We believe Deng accomplished most of his short-term objectives at the
meetings:
? The balance of forces in the Politburo and the Central Committee has
shifted to the reformers.
? The influence on decisionmaking of the party's old guard, and especially
its military contingent, has been significantly reduced.
? The leading reformers placed proteges on both the Politburo and
Secretariat. Hu Yaobang put three on each body and Zhao Ziyang one.
? Serious economic performance problems, and growing conservative criti-
cisms of reform policies, were not allowed to derail the economic
development program approved in 1984.
Despite these important gains, the meetings did not resolve all of Deng's
short-term political problems. His most forceful conservative critics,
namely Chen Yun and Peng Zhen, remain on the Politburo and will try to
restrain political and economic reform plans. Party conservatives maintain
a strong foothold in the propaganda apparatus and will continue to insist on
Secret
EA 85-10197
CR 85-16071
November 1985
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
justifying economic policies on strict ideological grounds. Moreover, it
appears that the reformers did not get all the top appointments we believe
they had sought. In particular, there has been no confirmation that the
September sessions endorsed Deng's succession plan, which calls for Hu
Yaobang to replace Deng as chairman of. the party's Military Commission
and Hu Qili to succeed Hu as General Secretary.
Over the long term, the leadership changes Deng put in place at the
September meetings will assume greater significance. In our view, the
meetings mark a major turning point in the generational transfer of power.
Although the old guard remains influential, little now bars the way to
consolidation by the successors on the Politburo and Secretariat. We also
believe the restructured party. leadership will be more energetic and
flexible than its predecessor, and better able to carry out its decisionmak-
ing functions.
Deng is changing the social and ideological base of the party. The
reconstituted Central Committee heralds the ascendancy of the polytechnic
institute graduates over the peasant activists, soldiers, and intellectuals of
the older generation. The new leaders are more sympathetic to Deng's
brand of "socialism with Chinese characteristics": free of 19th-century
dogma and able to absorb the technologies and ideas of capitalist countries,
while maintaining the party's dominance in all political matters.
The resounding vote of confidence in economic reform policies contained in
the five-year-plan guidelines means that Beijing will continue its trial-and-
error approach to economic development-reducing the role of central
planning, refining its use of macroeconomic levers to control the economy,
yet permitting greater individual initiative and free market activity. The
debate over the optimum development strategy will persist, and reform
policies must continue to show gains to stave off conservative critics, but we
believe the reformers have an extended mandate to make bold changes in
China's economy. The conservative tone of major leadership speeches at
the party conference indicates that more attention will be paid to the
ideological dimension of the reforms, perhaps at the cost of some confusion
within the economic bureaucracy and among foreign investors.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
The reduction in military influence achieved at the meetings puts control of
the armed forces more securely in civilian hands than has been the case in
decades. We believe Deng will seek to follow up these gains by making
more changes in the military hierarchy, bringing forward a younger, more
politically pliant high command better able to carry out effective military
modernization.
Finally, the September meetings set the stage for what will probably be
Deng's last effort to resolve the succession issue. We expect Deng to press
for his second-stage succession arrangements and make further prepara-
tions for his retirement. We believe he will try to carry the remaining
members of the old guard into retirement with him, probably before the
scheduled 13th Party Congress in 1987.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Deng's Goals
Longer Term Outcomes: Old Cleavages Reexamined 17
A. September 1985 Party Delegates Conference 21
Extracts From Major Speeches 29
The Reconstituted Leadership 39 ' 25X1
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Deng Xiaoping,
China's paramount leader
and the driving force
behind the September
party meetings.
Party General Secretary Hu Yaobang
(right) and his protege, Hu Qili, put the
organizational pieces in place for the
September sessions and benefited
themselves in the process.
(Photo was taken during an officia
tour of Australia. )
l
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
China's Party Conference:
The Waning of the
Ancien Regimen
From 12 to 24 September, the Communist Party of
China held an unprecedented series of meetings de-
voted to resolving longstanding personnel problems
and to laying down guidelines for the Seventh Five-
Year Plan (1986-90). Altogether, there were four
separate sessions:
? A Central Committee work conference, 12-16 Sep-
tember, at which the general agenda for the meet-
ings was probably presented and discussed in vari-
ous forums.
? The Fourth Plenary Session of the 12th Central
Committee on 16 September, which accepted 65
resignations from the Central Committee and ap-
proved a resolution to hold a national "Conference
of Party Delegates."
? The Conference of Delegates itself met from 18 to
23 September, approved the addition of 56 full and
35 alternate members to the Central Committee,
heard major speeches from the party's five top
leaders, and adopted a resolution on guidelines for
the coming five-year plan.
25X1 ? The Fifth Plenum of the revised Central Committee
convened on 24 September, elected a new Politburo
and Secretariat, and approved personnel changes in
other party bureaucracies. F_~
The meetings are a major milestone in Deng Xiao-
ping's decadelong struggle to restructure the party's
leadership and change its method of decisionmaking.
The September sessions must be viewed, however, not
only in light of Deng's reconfiguration of the balance
of political forces within the leadership, but also in
terms of their long-run implications for the continuity
and stability of the political and economic reforms
Deng has set in motion.nn
Since his return to power in 1977, Deng has had to
work with a Politburo not of his own choosing, and
one that did not fully support either his ambitions or
his policy preferences. Composed of a melange of
Maoist holdovers, aged soldier-politicians, old-line
economic planners and administrators, and provincial
bureaucrats who benefited from the Cultural Revolu-
tion, the Politburo essentially stood between Deng and
his larger goals of political and economic reform.
Even after he achieved a position of dominance in
1978, Deng constantly had to compromise, bargain,
cajole, and maneuver the party old guard to attain his
ends-a politically costly and time-consuming process
that Deng mastered but realized he had to change.
Since 1978, Deng has sought to ensure the continuity
of his political and economic reforms by securing
powerful positions for his chosen political heirs. Deng
has been motivated all along by the traditional goal of
Chinese statesmen, the search for national wealth and
power. In our view, Deng well understood his poten-
tially historic role and single-mindedly has forged his
ideas into policy. The most pressing, and politically
most volatile, issue was the personnel question: Deng
and his allies had to find the appropriate lever to pry
long-serving, undereducated, and ideologically rigid
officials away from their posts. To do this, the
.reformers required a corps of younger, better educat-
ed officials who could take over the hidebound bu-
reaucracy and bring it into line behind Deng's policy
initiatives.
Deng in effect has sought to change both the sources
of party legitimacy and the class basis of the party
along pragmatic lines. Under Mao, the party had
grown accustomed to justifying its leading place on
doctrinal grounds: it once was sufficient to argue that
the Chinese Communist Party, as the keeper of
ideological truths and backed by the coercive force of
the state, must be followed. Deng and his supporters
Secret
EA 85-10197
CR 85-16071
November 1985
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
The persistence of the old guard has been Deng's
most powerful obstacle. Although their influence
does not appear to have been exercised in a concerted
way-that is, they never discernibly acted in league
to block Deng-each prominent party conservative
has been associated with a particular target of the
reformers and presumably has provided support to
those who battled reform at lower levels: Chen Yun
and Li Xiannian with the Stalinist planning bureau-
cracy, Peng Zhen with the public security and legal
apparatus, Deng Liqun and Hu Qiaomu with the
propagandists and professional party workers, Ye
Jianying and other senior soldiers with old-line
commissars and commanders within the tradition-
steeped military. Seldom initiators of policy pro-
grams themselves, old-guard leaders seemed more
concerned to ensure that reforms never got to the
point of negating certain important "revolutionary"
concerns, such as party spirit, self-sacrifice, central
control, social order, or the party's leading role.
Old-guard support extends deep into China's bureau-
cracy, where personal interests have always played a
larger role. To a considerable extent, Deng created
the problem by rehabilitating hosts of local officials
deposed during the Cultural Revolution. Initially
part of Deng 's solution to the problem of Maoist
policies, they became part of the problem: once
rehabilitated, they felt entitled to "lifetime tenure, "
and resisted reformist calls to promote younger,
better educated leaders. They also refused to imple-
ment reform measures they could not understand or
feared would be quickly overturned if the political
line changed.
Within the state bureaucracy, Stalinist planners
found the new policies unpalatable. Motivated, in our
view, by fears for their job security, and limited by
ideology and narrow experience, they insisted that
Deng's policies courted economic disaster. Used to
administering a command economy and society and
to solving problems by slapping on additional con-
trols, they saw little virtue in the relaxation of
restraints and harped instead on how things could
fall apart without strict adherence to a comprehen-
sive blueprint that all could see and judge in advance.
Political and ideological cadres at all levels of the
party also saw their positions jeopardized by Deng 's
emphasis on technical competence, managerial abili-
ty, and pragmatism in decisionmaking. First in the
countryside, and later in the urban centers, 'political
workers" under the Deng-Hu regime found them-
selves with less and less to do and were continually
buffeted by reform, rectification, and the threat of
replacement. As reformers pronounced with increas-
ing frequency that government and economic admin-
istration should be freed from the interference of
party nonspecialists, political functionaries seized
upon episodes like the "spiritual pollution" drive of
1983 as opportunities to reassert their authority and
discredit the reforms.F___1
Finally, the middle and upper ranks of the Chinese
military have long been a concern of Deng and his
political allies. Although the senior soldier-
politicians have generally gone along with Deng's
policies, several have never been comfortable with Hu
Yaobang's outspokenness and his often strident advo-
cacy of reform. In our view, the list of the officers'
concerns was led by career anxieties-having come to
expect lifetime tenure in service, Deng placed them
under increasing pressure to retire in favor of younger
commanders and commissars.)
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
veterans, this was utter heresy.
recognized that, in the aftermath of a long train of
policy debacles, the party's standing had plummeted,
and that, to avoid a situation comparable to that of
the Polish party, it must demonstrate, through exper-
tise, its ability to rule. The reformers proposed to turn
the country over to the experts and to disentangle
politics from routine administration. For many party
The policy views of Deng and his coterie of young
reformers were also deeply disturbing to the party's
old guard (see inset). To many, Deng's policies of
promoting material incentives, encouraging peasants
to seek profits and "get rich," loosening social con-
trols, and opening China to Western influences were
prescriptions for disaster and called into question the
party's commitment to socialism. As Deng steadily
progressed in implementing economic reform policies,
the tension between socialist values and pragmatic
economics came into sharper focus.F_~
The battle has been waged on an almost annual basis
during the Deng era, and in each case the old guard-
fighting against what its leaders perceived as the
waning of the Communist vision of the future-made
a stand and lost. Although the pragmatic politicians
generally won the issue-related battles, they were not
able to end the war, because the old guard maintained
its strong position in the leadership.
Thus, when Beijing announced at the Third Plenum in
October 1984 that an extraordinary conference of
party delegates would convene to "readjust" the
Central Committee, Politburo, and Secretariat, it was
widely recognized within the leadership that the
conference could well be "the last battle." That is
what made the stakes so high.
25X1 the leadup to the September sessions
was marked by intermittent tension and often heated
exchanges within the top party leadership. The Octo-
ber 1984 decision to hold an extraordinary conference
put the entire party on notice that Deng intended to
pack the top party organs with younger supporters
and would use the rejuvenated leadership to endorse
an effective follow-on to the radical reform prescrip-
tions of the October plenary session. A comprehensive
personnel overhaul in the provinces, economic prob-
lems, official corruption, and strains within the Polit-
buro added to the pressure of the impending confer-
ence. F I
Personnel Shakeups
To set the stage for the conference, the reformers
embarked upon a wave of leadership reorganization.
In midsummer 1984, personnel chief Qiao Shi an-
nounced that 40 percent of all managers and some 70
percent of party committee personnel in China's key
enterprises did not pass muster and would be replaced
by the end of 1985. In the spring of 1985, Hu
Yaobang told foreign reporters that Beijing would
complete by midsummer the replacement-begun in
1983-of approximately 70 percent of the top central
and provincial leaders. Between April and August, 23
new party and government chiefs were appointed in
16 provinces, fulfilling Hu's prediction. Hu had also
noted that 900,000 officials had retired through April
and that, by yearend, he expected some 1.1 million
more to do so. Finally, Hu publicly disclosed in April,
while on tour in New Zealand, that the Army planned
to reduce its ranks by some 1 million men by the end
of 1986.
Economic Woes
While pressing forward aggressively on personnel
questions, however, the reformers were facing mount-
ing economic difficulties. In his work report to the
March 1985 session of the National People's Congress
(NPC), Zhao Ziyang somberly conceded that prob-
lems in implementing the October party decision on
urban reform, although anticipated, had been surpris-
ingly severe. He acknowledged that inflation, rapidly
declining foreign exchange reserves, overextension of
rural credit, and excessive investment in capital con-
struction late last year required abrupt corrective
measures.n
Official Corruption
By connecting reports of increasing official corruption
to the expansion of economic reform, conservatives
further strengthened their critique of Deng's policies.
Although the reformers had initiated a crackdown on
economic criminals in October, too many enterprising
spirits saw opportunities for windfall profits. Begin-
ning in late 1984 and gradually escalating through the
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Succession has posed a perennial problem for China's
Communist leaders. Mao Zedong repeatedly at-
tempted to establish a stable line of political heirs,
only to reconsider and undo his work in every case
but one. When Mao died in 1976, the question of his
immediate successor was finally resolved when Hua
Guofeng, a darkhorse, added the post of party chair-
man to the premiership he assumed upon Zhou
Enlai's death. Hua, of course, was to fare little better
than Mao's earlier appointees and followed them into
political oblivion. F__-]
Sinking Hua, Raising Hu. By the time of the land-
mark Third Plenum of the 11th' Central Committee
in December 1978, Deng Xiaoping's succession plan
consisted of two parts: dislodging Hua and establish-
ing the leadership credentials of Hu Yaobang. The
careers of Deng and Hu have been closely entwined,
with Deng consistently exercising a careful steward-
ship over his protege's rise (Hu was named to the
Politburo at the Third Plenum). Deng 's progress
against Hua, and his parallel effort in favor of Hu,
can be seen in a series of steps taken between 1980
and 1982:
? February 1980: A plenary session of the Central
Committee named Hu General Secretary and rees-
tablished the party Secretariat, which took over
day-to-day party affairs from Hua and the
Politburo.
? September 1980: Zhao Ziyang replaced Hua as
premier at a plenary session of the National Peo-
ple's Congress, a move that, according to Western
media sources, had been secretly announced to
party members several months earlier.
? December 1980: Following a series of high-level
meetings, a specially convened party work confer-
ence endorsed Deng 's choice of Hu as party chair-
man and Deng himself as head of the party Mili-
tary Commission. Publicly, however, Hua
continued to hold both titles.
? June 1981: A plenum of the Central Committee
formally demoted Hua to last-ranking member of
the seven-man Politburo Standing Committee, and
designated Hu party chief and Deng chairman of
the Military Commission.
? September 1982: The 12th Party Congress demoted
Hua to mere member of the Central Committee, a
position he continues to occupy. The position of
party chairman was abolished in favor of party
general secretary, which Hu assumed. F__]
Enter the "Third Echelon. "In the spring of 1982,
Deng and his allies began a series of organizational
reforms within the party, government, and military
that represented the first concerted assault on the
founding gerontocracy that had monopolized the top
posts. Deng and Hu began to tout the goal of creating
a generation of younger, better educated, politically
reliable successors, which in 1983 they ultimately
labeled China's third echelon. (Thefrst echelon
consisted of older leaders like Deng who were no
longer physically capable of working long hours but
nevertheless remained the source of broad policy
guidelines. The second echelon-relatively younger,
more vigorous men like Hu and Zhao-were the
main executors of policy.) Bureaucratic reform was
pressed down through the provincial level in 1983,
and in 1984 the first stage of party rectification lent
added force to the organizational effort.
The turnover in ministerial- and provincial-level offi-
cials provided graphic evidence of progress in bureau-
cratic rejuvenation. Of 40 ministries and state com-
missions, 35 had new ministers by the end of 1983.
Another wave of changes was in place by 1985, and 15
ministries reshuffled in 1981-83 again received new,
generally younger and better educated leaders. Simi-
lar changes occurred in the party bureaucracy. In
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Secret
China's 29 provincial-level administrations, Deng and
company completed a virtual total turnover of party
secretaries, governors, and department chiefs by mid-
1985. The overwhelming majority of the new officials
were third-echelon leaders in their forties and fifties.
Progress in the military was slower in coming but
similarly sweeping when it arrived. A meeting of the
party Military Commission in May-June 1985 pub-
licly confirmed a million-man demobilization and
began the process of mustering out thousands of
superannuated or under qualified officers, merging 11
military regions into seven, and promoting a host of
third-echelon officers who for years had been denied
headroom by their elderly predecessors.F__-]
A New Succession Package. Since the December 1978
plenum, when Hu was named a member and Zhao
Ziyang an alternate member of the Politburo, Deng's
succession plans entailed passing party primacy to
Hu and state authority to Zhao. In the early 1980s,
Deng himself had often stated that he hoped to retire
by 1985. As China's third-echelon leadership rose in
prominence, however, we believe Deng recognized that
a Hu-Zhao leadership would itself be only transition-
al and that the logic of establishing a third echelon
had to be extended to the topmost leadership. Conse-
quently, when Hu Qili was brought into the Secretar-
iat at the 12th Party Congress in September 1982, he
was widely spoken of as Hu Yaobang's successor.
Similarly, when Li Peng and Tian Jiyun were made
vice premiers in June 1983, they automatically be-
came favorites to succeed Zhao as premier, with Li
conceded the inside track due to his superior party
credentials.
In the spring of 1985, rumors of a "third-echelon
succession" began circulating in Beijing and Hong
Deng would
pass the Military Commission to Hu Yaobang, who
in turn would be replaced as general secretary by Hu
Kong.
Qili. On the state side, Li Xiannian was reported
ready to retire as president in favor of Zhao, and Li
Peng would be promoted to premier.
Although the September sessions produced no public
declaration on the leadership plan, the shuffle was
probably discussed and perhaps ratified for imple-
mentation at a convenient future date. As reported,
the proposed plan advances reform goals in several
important ways:
? It puts in place a leadership group committed to
reform and young enough to be able to see plans
through, and does so while Deng is still healthy and
powerful enough to oversee its consolidation of
power.
? It lessens the likelihood of a messy power struggle
over succession to Hu Yaobang.
? It helps establish the principle of limited tenure in
office.
? It eases conservative concerns about Hu Yaobang,
who has been a lightning rod for antireform criti-
cism and who has often alienated members of his
own reform coalition by his impulsive actions.
? It advances important institutional changes
wrought by Deng, particularly civilian control of
the military.
? It furthers Deng 's efforts to clearly separate party
and government authority and prevent one individ-
ual from acquiring too much power. F__1
25X1
25X1
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
25X1
25X1
25X1
25X1
Why a Conference of Delegates?
The party constitution empowers party congresses,
held every five years, to name the Central Committee
and plenary sessions of the Central Committee to
elect the Politburo, Secretariat, and Military Com-
mission. Procedurally, there seemed no pressing need
to resort to the extraordinary formality of a national
"conference. " The plenary sessions alone could have
endorsed the Politburo and Secretariat changes and
accepted the resignations of Central Committee mem-
bers. As in the past, vacancies among the full mem-
bers of the Central Committee could have been filled
from the list of alternates.
The only previous national party delegates conference
was held in 1955, and the parallels between 1955 and
1985 are instructive. The earlier session also dis-
cussed the five-year plan as well as sensitive person-
nel questions involving "adjustments" to the Central
Committee and Politburo-namely, the purge of the
"Gao Gang-Rao Shushi antiparty clique"-and fea-
tured then party Secretary General Deng Xiaoping in
a starring role (as Mao Zedong's spokesman in the
battle against Gao and Rao).n
In our view, Deng's advanced age and the desire of his
political heirs to consolidate the succession before his
death were the strongest motivations for convening a
spring of 1985, Beijing had to mount a campaign to
eradicate so-called unhealthy tendencies-the in-
volvement of officials in such activities as exploiting
their status for profit, purveying obscene videotapes
and magazines, and black-market-currency specula-
tion. Much of the criticism focused on the Special
Economic Zones, and the Shenzhen zone opposite
Hong Kong in particular, which not only had pro-
duced disappointing economic results after heavy
investment but had also become the locus of a wide
variety of corrupt practices.
Leaders Under Fire
The reform group, and especially Zhao and Vice
Premier Tian Jiyun, reportedly drew fire from party
conservatives for the economic setbacks.
called for Zhao's resignation.
special conference this year. Although Deng needed
only a Central Committee plenum to secure the
changes he needed on the Politburo and Secretariat,
he could not touch the Central Committee itself
without convening a party congress. The next party
congress was scheduledfor 1987, and Deng may have
reasoned he could not afford to wait that long to
work his desired personnel changes. Moreover, for
institutional reasons, Deng almost certainly wanted
to preserve the timetable and, for the first time in
party history, bring the congress in on schedule.
Article 12 of the party constitution permits the
convocation of special conferences "to discuss and
decide upon major problems that require timely
resolution." The overhaul of the Central Committee,
which would bring Deng 's succession arrangements
close to completion, certainly posed a "major prob-
lem."Furthermore, the lack of restrictions on who
may attend a special conference-as opposed to a
formal party congress, which must "elect" delegates
through specified procedures permitted the reform-
ist Secretariat to select some 300 "at large" dele-
gates, thereby guaranteeing Deng majority support at
the meeting.F__-]
We believe the combination of economic problems
and ensuing criticisms. shook the confidence of the
reform group.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0 ^
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Heated Exchanges
In this charged political atmosphere, the leadership
began convening preparatory meetings to finalize the
agenda of the September conference. From mid-July
to early August the top leaders retired to the resort
city of Beidaihe to caucus on readjusting the party's
upper echelon. Meetings on the five-year-plan guide-
lines were simultaneously under way at several loca-
tions throughout China.F--]
Despite the heightened tensions, the summer prepara-
tory sessions completed their work of choosing Cen-
tral Committee retirees and replacements, and Deng
brought the conference in on schedule. In his speech
to the conference, Hu Yaobang disclosed that he
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
The Seventh Five-Year-Plan proposal strongly reaf-
firms the leadership's commitment to comprehensive
economic reform, while calling for containment of
currently overextended capital investment, and urg-
ing an end to the thorny problems associated with
excessively high growth rates. According to the pro-
posal, the plan's three primary goals-in descending
order of importance-are to lay the groundwork for
comprehensive economic reform, continue the devel-
opment of China's woefully inadequate economic
infrastructure, and improve living standards. The
proposal does not provide a detailed- abstract of the
plan, but instead outlines a series of reform-oriented
economic policies to be implemented during the plan
period (1986-90). The Seventh Five-Year Plan itself
will be formally, approved next-spring by the National
People's Congress. n
By making economic reform its major goal, the
Seventh Five-Year-Plan proposal is an unprecedented
Chinese economic planning document. The proposal
urges the increasing adoption of economic levers and
the use of "guidance planning" (a new term used by
Chinese economic policy makers to denote an infor-
mal dialogue between government and producer, es-
tablishing flexible and probably nonbinding output
targets) to replace much of the traditional "manda-
tory "planning process. The document conveys the
distinct message that the Chinese leadership is now
prepared to apply the principles of economic reform
to virtually every sector of the economy. Specific
reforms underscored in the proposal include:
? Expanding enterprise decisionmaking powers and
relaxing the state's control over their economic
functions.
? Making greater use of such economic levers as
monetary and fiscal policy and strengthening the
nation's banking, auditing, and statistical systems.
? Completing price reform by 1990, the last year of
the plan period.
? Continuing China's "open policy" of expanding
foreign trade, promoting increased foreign invest-
ment in the special economic zones, and making
greater use of foreign borrowed funds.
? Creating a social safety net to minimize reform-
related personal hardship. F-]
China's reformist policy of opening to the outside
world will, according to the proposal, remain a key
policy objective. The proposal emphasizes that ex-
ports are to have priority over imports, targeting
exports to grow by 50 percent during the plan period
and imports by 40 percent. During the 1986-90
period,, Beijing will try to strike a delicate-and, thus
far elusive-balance between central control over and
decentralization of foreign trade decision making
authority. Economic levers such as pricing, exchange
rates, and customs duties, the proposal states, are to
be expanded; and, as management skills improve in
local enterprises, increasing power is to be delegated
gradually by Beijing to the localities.n
The few specific growth targets referred to in the
proposal are not ambitious. Overall economic growth
is planned to increase at a 7 -percent average annual
rate, with agricultural output growing by 6 percent
and industrial production by 7 percent. The planned
average annual growth rates for the six other indus-
trial commodities mentioned in the proposal range
from 2.5 to 6 percent. Judging from the strong
performance of the Chinese economy during the Sixth
Five-Year Plan (1981-85), Beijing will have little
difficulty meeting these new output targets. Similar-
ly, we believe that the proposal's call for raising per
capita personal consumption by an average yearly
rate of 4 to 5 percent is conservative.
25X1
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
himself had headed the blue-ribbon search commit-
tee' that compiled the lists of prospective Central
Committee members. The communique of the Fifth
Plenum noted that the Politburo Standing Committee
had proposed the new Politburo and Secretariat mem-
bers, with the implication that the selections repre-
sented specific preferences of each of the Standing
Committee members rather than a broader reflection
25X1 of party opinion. The nominations then went before
the Politburo and Secretariat for "repeated delibera-
tion."
With the results foreordained, the September meet-
ings convened to rubberstamp the leadership
decisions:
? On 12 September, delegates assembled in Beijing
for four days of preliminary caucuses, where pre-
sumably they received and discussed the results of
the Beidaihe conferences.
? The Central Committee that had been elected in
1982 met for the last time on 16 September in the
Fourth Plenum. According to the communique is-
sued after the one-day session, the Fourth Plenum:
- Agreed to convene the party conference of
delegates on 18 September.
Discussed and "adopted in principle" a party
proposal on the Seventh Five-Year Plan and
agreed to submit it to the impending conference
(see the inset on the plan proposal).
- Approved the resignations of 55 Central Com-
mittee members and 10 alternate members. Ten
Politburo members were included in this num-
ber
- Approved the resignations of 36 members of the
Central Advisory Commission and 31 members
of the Discipline Inspection Commission.
' Other members included Deng confidant Xi Zhongxun, moderate
reformer Bo Yibo, former personnel chief Song Renqiong, top
commissar Yu Qiuli, then personnel chief Qiao Shi, and Discipline
Inspection Commission permanent secretary Wang Heshou. The
Foreign Policy: Not on the September Agenda
Not surprisingly, given the heavy domestic political
content of the September meetings, foreign policy
questions received very little attention. Only Li
Xiannian spoke at any length on foreign policy, and
he invoked largely standard themes of opposition to
hegemonism, reunification with Taiwan, and opening
to the outside world. In our view, Chinese foreign
policy has been in a quiescent phase, not only because
the leadership was devoting more attention to inter-
nal politics, but also because Deng is relatively
content with the overall direction and achievements
of his foreign policy.
? From 18 to 23 September, nearly 1,000 delegates-
including the members and alternates of the Central
Committee, members of the Central Advisory and
Discipline Inspection Commissions, and more than
300 at-large delegates chosen by the Secretariat-
assembled for the National Conference of Party
Delegates. The conference:
- Heard speeches by all five members of the
Politburo Standing Committee: (in order of
their appearance) Hu, Zhao, Deng, Chen Yun,
and Li Xiannian (see appendix A for highlights).
- Adopted the party proposal on the five-year
plan.
- Elected 56 full members and 35 alternate mem-
bers to the Central Committee, 56 members to
the Central Advisory Commission, and 31
members to the Discipline Inspection
Commission.
? On 24 September, the reconstituted Central Com-
mittee met in plenary session as the Fifth Plenum of
the 12th Central Committee. The plenum:
- Made "partial readjustments" to the top party
bodies by naming six new members to the
Politburo (one of whom was promoted from
alternate membership), approving the resigna-
tions from the Secretariat of Xi Zhongxun, Gu
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
The Central Committee is not a "working body" in
any real sense. Party convention decrees that all
party decisions be issued in the name of the Central
Committee, and the party bureaucracy invariably is
termed the "organs under the Central Committee. "
When the committee actually convenes, usually once
a year, it formally constitutes China's highest deci-
sionmaking body. At all other times, however, the
power of the Central Committee devolves upon the
Politburo, which itself meets only upon the invitation
of the General Secretary, Hu Yaobang. When the
Politburo is out of session, its Standing Committee-
also convened by the General Secretary-makes the
decisions that are the basis of Chinese policy. Unless
the decisions of the Standing Committee are placed
before the Politburo for additional deliberation, the
committee's guidelines are transmitted directly to the
Secretariat-again, presided over by the General
Secretary for action.
If the Central Committee is not a true legislative
forum, why did the reformers press for its overhaul?
? Central Committee composition represents the bal-
ance of political forces at a given point and simulta-
neously serves as the pool from which party; state,
Mu, and Yao Yilin, and adding five new mem-
bers to the Secretariat (two were promoted from
alternate).
Approved the new Standing Committee and
vice chairmen of the Central Advisory Commis-
sion and the new officers of the Discipline
Inspection Commission. F-]
The Central Committee 2
The new appointments to the Central Committee
continue the trend toward younger, better educated
' The calculations below are based on a 210-member Central
Committee. We cannot identify organizational affiliations for four
alternate members, however, and therefore have based our calcula-
tions on the 129 known of the 133 total Central Committee
and military leaders will be drawn. When the
committee is overhauled, the party is sending a
powerful signal of political trends to lower levels.
? Central Committee actions are understood by party
members as the most authoritative expressions of
party consensus. Membership confers admission to
the party elite and, perhaps most important, grants
access to the party bureaucracy. With this access
comes the institutional prerogative to state one's
views during the preliminary stage of upper-level
policy deliberations. As the Central Committee has
become more broadly representative of the party's
upper echelon, it has provided the party leadership
with a better "sense of the party" and consequently
has become more important in policymaking.
? Although issues are never decided on the basis of a
Central Committee vote, such a procedure may
conceivably be used in the future. (Deng hinted in
1980 that he wanted to conduct party business on
precisely that basis.) Should a question ever be put
to a Central Committee test, the reformers must
reason that it is better to have the votes in hand.
technocrats that began at the 1982 party congress.
Approximately 19 percent of the 343-member body is
made up of first-time members. According to Beijing,
the 64 new members and alternates average 50 years
of age, and three-quarters "have received higher
education"-meaning a college degree or training at a
technical school or military staff school (see appendix
C for a listing of the new Central Committee mem-
bers).
Deng and his allies continue to recognize the prov-
inces as a promising training ground for the new
generation of leaders. By our count, at least 30 of the
new appointees and 11 who were promoted- from
alternate to full membership work in China's 29
provincial-level jurisdictions. Provincial members (ex-
cluding regional military representatives) now com-
prise some 39 percent (132 members) of the total
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Central Committee, compared with the central party
and government's 34 percent (116 members). All 10 of
the provincial secretaries appointed this year who
were not already full members gained that status, as
did nine new provincial governors. Four more gover-
nors made the alternate rolls.
The significant decline in military representation on
the Central Committee is evidence of Deng's progress
in easing the soldiers out of important political posi-
tions. Although 13 officers were named to the com-
mittee-nine full and four alternate members-their
numbers are more than offset by 26 military retirees,
cutting the Army representation from 22 percent to
approximately 16 percent (56 members). Significant-
ly, of the 13 new members, 10 are commanders or
military technocrats and only three are political offi-
cers, a further boost to the prestige of professional
fighters, who in the past have often been outranked in
party standing by commissars within their units.
Political compromises are apparent in the composition
of the Central Committee. According to our analysis
of the 210 full members, some 41 are anomalous
holdovers-officials without functional responsibil-
ities who could have retired but did not. The greatest
number of these members, 18, are former provincial
officials. Nine are former ministers or demoted Polit-
buro members who hold honorary posts on the Na-
tional People's Congress Standing Committee. Six are
former regional military commanders. F--]
The "Leading Organs"
Politburo. We believe that the departure of 10 Polit-
buro members-eight of whom were in their seventies
or eighties-and the addition of six younger members
presages the return of that body to a more active
policymaking role. Deng had earlier attempted to
bypass opposition on the Politburo by making the
Secretariat increasingly responsible for policy formu-
lation, and in 1982 Deng may have sought to elimi-
nate the Politburo entirely from the party Constitu-
tion. Streamlined to 20 members plus two alternates,
the Politburo now seems a more credible deliberative
body.F__-]
Although the reorganized Politburo spans the entire
spectrum of Chinese politics, in our analysis, the
reform group now holds a slim but absolute majority
(see the table). Such Deng stalwarts as Wan Li, Xi
Zhongxun, and Fang Yi have been reinforced by the
leading lights of the younger generation. Because the
reformers face no cohesive, determined opposition
bloc on the Politburo but rather a loose collection of
conservatives, moderates, and swing votes, we judge
their plurality to be stronger than the bare numbers
indicate.
The ranks of conservative party elders have been
drastically thinned, but the most important players
stayed on. Chen Yun and Peng Zhen remain to voice
their reservations about the course of reform. We
expect the propaganda czar Hu Qiaomu also to
generally line up with the traditionalists, who proba-
bly secured. his retention on the Politburo. Deng may
also find some use for Hu-the party's leading theore-
tician-in preparing acceptable Marxist justifications
for his reforms.)
We believe other members of the old guard have more
or less thrown in their lot with Deng. The ailing Li
Xiannian has evidently overcome his earlier reserva-
tions, and since October 1984 has publicly supported
the reforms. Yang Shangkun and Xi Zhongxun have
long been considered loyal supporters of Deng, and
have vigorously pushed reform and restructuring poli-
cies. Army Chief of Staff Yang Dezhi owes his
current prominence to Deng and has seldom departed
from Deng's line, despite his age and conservative
background.F--]
Yu Qiuli, director of the Army's General Political
Department, presents a question mark. Yu was Minis-
ter in Charge of the State Planning Commission
under Hua Guofeng and has been regarded as a
lukewarm reformer. Yu was a compromise choice
when he took over the military post in late 1982, and
we believe that he does not see eye to eye with the
reformers on all issues. Yu has strongly supported
Deng's military professionalization program, however,
and has brought the Army's propaganda apparatus
into line behind Deng's policies. In the role of military
personnel director-part of his functions as chief
commissar-he has helped Deng promote younger
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
The remaining Politburo Standing Committee enters the confer-
ence hall at the Fourth Plenum. Although he did not make the
Standing ( onmmittee at the September cessions. Peng Zhen. second
front left, almost ce rtainh has been a de lacto member for several
rears. Peng ecac prominently grouped with the Dire Standing
( , mmittee ntemherc at most photo opportunities during the nteet-
int> Leli to right /hao /itang. Peng. Hu } aohang, Li .Aiannian,
leaders within the officer corps. Nonetheless, because
of his checkered background, we continue to consider
Yu a swing man on the Politburo. F--]
(running that body in Hu's absence), and,
We see the promotion of Vice Premier Yao Yilin from
alternate to full Politburo membership as a mixed
blessing for the reformers. Although Yao has actively
promoted China's economic reform program, he has
been an associate of both Chen Yuri and Li Xiannian
since the 1950s, when he worked in the finance and
commerce sectors. His recent public comments criti-
cal of the Shenzhen Special Economic Zone lend
further credence to our belief that he will serve as a
voice for moderation in reform.)
Deng seems to have yielded little ground in the
Politburo in exchange for the promotion of five lead-
ing members of China's "third echelon":
? Hu Qili is well known as Hu Yaobang's close
associate, the presiding member of the Secretariat
? Qiao Shi, another Hu protege from the Communist
Youth League, directed the party Organization
Department during the sweeping 1984-85 reorgani-
zation of the central and provincial party apparatus.
His rise to the Politburo is almost certainly in part a
reward for faithful services rendered. He was pro-
moted to full membership on the Secretariat as well.
? The elevation of Foreign Minister Wu Xueyian, a
third Hu crony, marks the first time since 1972 that
the foreign minister has been on the Politburo. In
our view, this reflects the increased attention ac-
corded China's foreign affairs and accords Wu the
same party standing as his Soviet counterpart.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Politburo
Deng Xiaoping Yang Dezhi Yu Qiuli
Hu Yaobang Ni Zhifu Li Peng a
Zhao Ziyang
Wan Li
Xi Zhongxun
Fang Yi
Tian Jiyun a
Qiao Shi a
Yang Shangkun
Wu Xueqian a
Hu Qili a
Qin Jiwei (alternate)
Secretariat
Hu Yaobang Yu Qiuli
Hu Qili Li Peng a
Wan Li Chen Pixian
Tian Jiyun a
Qiao Shi b
Hao Jianxiu b
Wang Zhaoguo a
a New member.
b Promoted from alternate member.
? Vice Premier Tian Jiyun was closely associated with
Zhao Ziyang during his time in Sichuan, when
Zhao was widely acclaimed for experimental eco-
nomic reforms that later were implemented nation-
wide. Tian was then Zhao's financial chief, and
Zhao brought him to Beijing to fill that same role.
Tian was named also to the Secretariat.
? The Soviet-trained Vice Premier, Li Peng, is widely
said to be in line to succeed Zhao as premier. We
consider Li something of a "wild card" on the
Politburo: he has broad
support among China's more orthodox leaders like
Chen Yun. Given little evidence of other concessions
that conservatives may have extracted from Deng,
we are inclined to view Li's rapid rise partly as an
acknowledgment of conservative interests. On some
issues, we expect Li to line up against reforms
Yao Yilin b Li Xiannian
Hu Qiaomu Chen Yun
Chen Muhua (alternate) Peng Zhen
entailing greater decentralization of economic control.
He, too, was named to the Secretariat (see appendix
A). F--]
Secretariat. The political balance on the 11-member
Secretariat is even more pronouncedly proreform.
According to the Communique of the Fifth Plenum,
which broke with recent party precedent by listing
Secretariat members in rank order,' the solid reform
core of Hu Yaobang, Hu Qili, and Wan Li are the
' The party customarily lists its top leadership, except for the
Politburo Standing Committee, in "alphabetical" order-that is, by
the number of strokes in each leader's surname. (The Standing
Committee's protocol order is: Hu, Deng, Zhao, Li Xiannian, and
Chen Yun.) Following the Fifth Plenum, the Politburo continued to
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
top-ranked members. They are followed by a hold-
over, Yu Qiuli, reformers Qiao Shi and Tian Jiyun, Li
Peng (the top seven are all concurrent Politburo
members), holdovers Chen Pixian and Deng Liqun,
and reformers Hao Jianxiu and Wang Zhaoguo.
there have been accounts
Hao Jianxiu, yet another Hu Yaobang protege and
the only woman on the Secretariat, was promoted
from alternate member. As a former model textile
worker and Minister of Textile Industries, she may
share some responsibility for China's light industrial
sector. Otherwise, she has been associated with issues
that the party generally regards as suitable for wom-
en, such as birth control and youth work. F_~
Wang Zhaoguo, at 44 the youngest member of the
Secretariat, currently heads the office responsible for
party documents and leadership protection. He joined
the Central Committee in 1982 after having been
"discovered" by Deng Xiaoping, whom Wang had
impressed in a briefing. Wang is also a former
Communist Youth League worker-he was CYL first
secretary for two years-with ties to both Hu Yao-
bang and Hu Qili. F---]
Like Hu Qiaomu on the Politburo, Deng Liqun is a
conservative whose reputation was sullied during the
spiritual pollution episode, and he has continued to
voice open criticism of the ideological inconsistency of
reform policies.
media reports predicted that Deng would be
forced off the Secretariat at the September sessions,
and the fact that he survives suggests to us that Chen
Yuri protected him. Nonetheless, Deng alone among
Secretariat members has no substantive bureaucratic
authority, having been removed in July as head of the
Propaganda Department. F__1
In our analysis, Chen Pixian plus two concurrent
Politburo members, Yu Qili and the newly appointed
Li Peng, straddle the fence between the reformers and
Deng Liqun. Chen has presided over the internal
security apparatus since 1982, but now apparently has
been supplanted by or shares that responsibility with
Qiao Shi, who in July was identified as secretary of
the party's Political and Legal Commission. Chen has
generally been a presumed supporter of Deng Xiao-
ping, reportedly from the 1930s. Recently, however,
demotion, perhaps by Peng Zhen.
that Chen had fallen out with Deng and was slated for
retirement. Although he remains on the Secretariat,
his relatively low ranking on that body in our view
indicates that he too was barely protected from
Deng's Achievements
In our view, Deng gained most of what he had set out
to accomplish. The September party meetings were
the most impressive display to date of Deng's political
facility and must also be considered a victory for the
organizers, Hu Yaobang and Hu Qili. Looking back,
we are struck by the persistent and methodical ap-
proach of the reformers, who since 1980 have built on
each incremental gain to win additional advantages:
first by creating a proreform Secretariat, then moving
through a series of central party and government
changes paving the way for provincial personnel
shifts, and finally moving back to the center to fill the
Central Committee with newly appointed national
and provincial officials. F__1
Reformist Consolidation. We believe the balance of
party power now rests with the reformers, and it
would be exceedingly difficult for a small group of
leaders to upset Deng's accomplishments. Under pre-
sent institutional arrangements, to reverse the refor-
mers' advantage the conservatives would have to
follow the path Deng laid out: take control of the
Standing Committee, put a new Politburo and Secre-
tariat into place, and dismantle both the policies and
the broad leadership net that has been built over the
past three years. Once Deng is gone, it is doubtful
whether there would be any old guard leader possess-
ing the prestige, political power, and personal stamina
to see those changes through.' F__-]
' The situation is not, as some may argue, analogous to the
circumstances following the Ninth Party Congress in 1969, the
highwater mark of the fleeting leftist/military dominance of China.
Unlike the trends represented at the Ninth Party Congress, Deng's
changes have been gradual, not convulsive, and have been broadly
supported from within the party.F__1
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Secret
Ailing octogenarian Ye Jianying in a rare public
appearance with members of his family. Ye's
formal departure from the party leadership sym-
A Significantly Weakened Old Guard. The unprece-
dented retirement of a quarter of the Central Com-
mittee is a key event in Deng's effort to rejuvenate the
party leadership, an important precedent that reform-
ers can point to in encouraging others to step down.
The number of Politburo leaders who most consistent-
ly have resisted Deng in recent years is reduced, in
our view, to two-Chen Yun and Peng Zhen (even
party propagandist Hu Qiaomu, lately a critic of some
aspects of the reform program, is a longtime Deng
associate). Moreover, Deng succeeded in preventing
Peng Zhen from replacing Ye Jianying on the Stand-
ing Committee. F_~
Military Reform. The waning of the old guard is
symbolized by the departure of seven senior soldier-
politicians from the Politburo-including the ailing
octogenarians Ye Jianying, Nie Rongzhen, and Xu
Xiangqian, former chief commissar Wei Guoqing,
and former Shenyang Military Region Commander
Li Desheng. This and the substantial reduction of
military representatives on the Central Committee
fulfill Deng's intention to distance the military from
the the center of political power and lay a foundation
for a more professional military establishment. F
Party Rejuvenation. As a result of the massive retire-
ment, the reform triumvirate of Deng, Hu, and Zhao
has been able to cast the Central Committee in a
reformist image. The Central Committee's "class of
1985"-younger, better educated, and proreform-
symbolizes the changing official culture and the
movement within the party from a backward-looking
traditionalism toward a more pragmatic, technocratic
future. F-1
Proteges Promoted. The leading reformers placed
proteges on both the Politburo and the Secretariat.
Hu Yaobang put three on each body and Zhao
Ziyang one.F_~
Economic Reform. Despite the widely publicized eco-
nomic difficulties of the past year, the Central Com-
mittee endorsed a new five-year-plan proposal that
constitutes a ringing endorsement of the open-door
policy and expansion of market style reforms, while
yielding virtually nothing to Deng's critics.F__-]
What Deng Did Not Get
We believe that Deng's gains at the conference were
not won without cost. There are several areas where
Deng clearly was forced to compromise with more
conservative elements of the party. Generally, his
concessions leave his programs intact, but provide
ample opportunities for leaders with differing views to
continue to challenge the reforms on pragmatic and
ideological grounds.=
Remaining Critics. In our view, Deng intended nei-
ther to stifle nor to eliminate his opposition. As
though to balance his progress toward party rejuvena-
tion, the generational pecking order remains largely
intact within the Politburo and, most important,
within its Standing Committee, the dominance of
which was confirmed in September. Five octogenari-
ans continue to sit on the Politburo, and three on the
Standing Committee. Two of the conservative old
guard-Chen Yun and Peng Zhen-almost certainly
will fill the role of Deng's "revolutionary conscience,"
unable perhaps to reverse the present course of policy
but surely able to affect the manner in which the
reforms are presented and ultimately implemented.
Hong Kong media sources sug-
gested over the summer that many more reformers
would be named to the top party bodies than actually
25X1
25X1
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
were promoted. Younger leaders such as the new
heads of the Propaganda and Organizations Depart-
ments did not even attain alternate-member status on
the Secretariat. It also is a measure of continuing
conservative strength, as well as Deng's talent for
compromise, that such erstwhile critics of reform as
Hu Qiaomu and Deng Liqun held their seats.F_~
Succession. Although it is unclear whether Deng won
endorsement of his overall succession package at the
September meetings,
People's Congress.
Ithe sessions proba-
bly discussed the shuffle, and may have endorsed it as
a future measure.' The planned party shifts-Deng to
head only the Central Advisory Commission, Hu
Yaobang to move over to the Military Commission,
and Hu Qili to replace Hu as General Secretary-
may await a future plenary session or even the 1987
party congress for public announcement. The pro-
posed state shifts, which include the retirement of Li
Xiannian as President of the People's Republic, Zhao
Ziyang's assumption of the presidency, and Vice
Premier Li Peng's promotion to Premier, may occur,
as early as next spring's session of the National
25X1 Military Succession. Hu's accession to the Military
Commission chairmanship seems the linchpin of
25X1 Deng's overall succession package.
eng in-
tended to hand over the Military Commission chair-
manship to Hu Yaobang by the fall of 1985. Although
the September meetings would have been the most
convenient venue for the transfer, it did not take
place. Deng's apparent decision to wait for a better
time to further adjust the military leadership suggests
that he remains concerned over the senior officers'
loyalty to reform. He also may have calculated that
foisting Hu, still viewed by some senior soldiers as
' At least twice in the recent past, the party has done precisely that:
both cases involved Hua Guofeng. The decision to replace Hua as
premier in 1980 was disseminated in party channels months before
the event, and, in December of that year, a party work conference
endorsed Hua's demotion six months before Hu and Deng formally
assumed his party and military commission chairmanships.F_~
Chen Yun at the National Con-
ference of Party Delegates. Al-
though ailing, Chen will remain
"the conscience of the revolu-
tion" within the Politburo and
will seek to restrain the pace of
too inexperienced to assume the top military post-
upon the Army at this time would unnecessarily
alienate some senior soldiers. We believe that Deng
intends to take the final step in arranging his succes-
sion by transferring military authority, thereby assur-
ing that someone who shares his views is in charge of
the military when he dies.F__-]
Ideological Constraints. Deng's injunction to the
party conference to bone up on the Marxist classics as
a necessary antecedent to successful reform was
prompted, in our view, by a conservative backlash
against the recent tendency to disparage orthodox
Marxism. The reformist critique of Marxism reached
a high in a Renmin Ribao commentary of 7 December
1984, which declared that "Marxism cannot solve our
problems" (it was subsequently amended to read
". . . all our problems"). F
When in the past Deng has nodded to his putative
opposition by expressing conservative views-as in the
spiritual pollution episode-his views have been mis-
represented as criticism, and the reform program has
suffered setbacks. It seems likely that party conserva-
tives again will seize on Deng's orthodox themes to
justify their own agenda and may press for a crack-
down on "liberal" writers and artists or for a mini-
campaign to eliminate "bourgeois" economic prac-
tices. Although such swings tend to be short lived,
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
25X1
they create an atmosphere of intolerance for foreign
goods and ideas and slow reform momentum.=
Longer Term Outcomes:
Old Cleavages Reexamined
In our judgment, the September meetings did more
than advance the reform program and readjust the
topmost leadership. The outcomes reflected potential-
ly much larger changes in China that, if followed
through, may alter how problems are approached and
power is exercised. The ancien regime is giving way to
a new generation of leaders who have a different
concept of the roles of the party and military, and a
more innovative-albeit still highly bureaucratic-
approach to economic development. Deng has made a
strong start, but these differences will continue to
affect politics as long as the old guard retains some
influence.)
The Generation Gap
All of the party's aged officials have regularly and
routinely endorsed the policy of leadership rejuvena-
tion, but most have balked when confronted with the
prospect of actually retiring. In our view, however, the
September meetings mark a major turning point in
the generational transfer of power. Although not
denying the considerable remaining influence of the
party's old guard, little now bars the way to consolida-
tion by the successors on the Politburo and
Secretariat.
The new Central Committee establishes what in fact
is a shift in the social basis of the party leadership.
The early revolutionary leadership consisted mainly of
urban intellectuals and peasant revolutionaries who
remained in power through the first three decades of
Communist rule. The reconstituted Central Commit-
tee heralds the ascendancy of the polytechnic institute
graduates. Deng popularized the idea that policies
should be judged by practical results, not necessarily
by ideological soundness. By implication, he has asked
that the new leaders he has elevated be similarly
judged. In our view, the early results have been
favorable for the reformers, and there appears to be a
broad base of support for Deng's program and the
new leaders both within the party and among the
populace. F_~
Yet, no single event can patch over the substantial
breach between the new and old in China. The
passing political generation worked under difficult
circumstances to establish a set of institutions they
believed in, and many resent the message of reform-
that those institutions were seriously flawed. The
reformers must demonstrate that new institutions-
such as the retirement program, the separation of
party from government and economic work, and the
nationalization of the Army-can work and at the
same time retain distinctively Chinese Communist
characteristics.
In our view, Deng has co-opted a large body of
opinion by redefining what those Chinese characteris-
tics are-namely, an innovative socialism not
hemmed in by doctrinal concerns, able to tap the
technical superiorities of capitalist economies, but
maintaining the decisive authority of the party in all
political matters. Moreover, Deng gambled that mate-
rial well-being in retirement, plus a generous distribu-
tion of honorary posts, would satisfy most of the
oldtimers. Events suggest that he calculated correctly.
Reformers Versus Planners
Since the earliest stages of reform, China's economic
policy makers have been sharply divided into two
camps: those who championed the orthodox Stalinist
approach of tight central planning and macroeconom-
ic control by administrative command; and advocates
of decentralization, greater reliance on market forces
to determine production, and macroeconomic control
through such policy levers as taxation, interest rates,
and floating prices. The new leadership mix favors the
reformers, who heavily outnumber the oldline plan-
ners on both the Politburo and the Secretariat. In a
clear signal to advocates of central planning, the
planning minister was left off the Politburo, recon-
firming a decision in 1983 that for the first time left
the planning chief off the Chinese Politburo.'F
6 In 1983, Yao Yilin, then a Politburo alternate, was relieved as
Minister-in-Charge of the State Planning Commission and his
replacement was not promoted in party standing to the Politburo.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
We believe the debate will continue, but the odds
favor Deng and his allies: twice in the past year they
have secured authoritative Central Committee en-
dorsement of their reform agenda. Reformers will
continue to tout China's improved economic perfor-
mance, attributing it directly to policy changes like
the greater role permitted market forces and entrepre-
neurial energy, while simultaneously seeking to refine
macroeconomic levers to maintain control. Devotees
of more comprehensive planning remain in the top-
most leadership, however-in particular, Chen Yun
and Li Xiannian (neither of whom is closely involved
in the detailed workings of the economy) and Yao
Yilin, who probably is Chen's own chosen successor.
Problems in policy implementation will inevitably
occur, and traditional planners will seize on these
difficulties as fresh evidence to support their advocacy
of stricter controls over all economic activity. In our
view, they will be fighting a rearguard action-
attempting to slow the advance of reform without
great hope of turning the program back. F___]
The victories of the reformers in strategic planning
must nevertheless be translated into battlefield gains:
many of the reformers' policy proposals remain un-
tested, and the changes they have promoted in eco-
nomic institutions have yet to be consolidated. More-
over, as the tentative remarks of Deng and Zhao
demonstrated last spring, the reformers understand
the need for caution: they are certain of their analysis
of China's economic problems but are wary of the
magnitude of their prescribed changes and the eco-
nomic forces those changes may unleash. We believe
they must compromise on their boldest experiments-
such as the Special Economic Zones and wage and
price decontrol-not only to resolve the problems that
crop up, but also because they recognize that Chen
Yun and like-minded officials will step up the political
pressure if things go awry.F__-]
Civilians Versus Soldiers
The retirement of seven military representatives from
the Politburo is significant as a symbol of the continu-
ing clarification of political and military roles in
China. Deng long ago decided to institutionalize the
principle of restricted military participation in the
highest leadership councils, and the September meet-
ings are convincing evidence of his success. Civilian
control of the military appears more secure now than
at any other time. The only career soldiers remaining
on the Politburo are the Chief of Staff, Yang Dezhi,
and the Beijing Military Region Commander, Qin
Jiwei, who is only an alternate. Other Politburo
members who hold principally military jobs are Yang
Shangkun, the presiding vice chairman of the Mili-
tary Commission, and Yu Qiuli, chief of the General
Political Department, both of whom must be consid-
ered civilians in military uniform.
We believe that Deng may again seek to establish the
principle of a national, rather than a party, Army. In
1982 he unsuccessfully attempted to nationalize the
Army by creating a State Military Commission under
the NPC to supplement the party Military Commis-
sion. The state Commission was indeed established in
the 1982 Constitution, and its leadership named-
precisely the same leaders named to the party Mili-
tary Commission at the 12th Party Congress-but it
was never made operational. Evidently, the senior
soldier-politicians were unwilling to give up their
"glorious tradition" as the party's own army.)
Deng has now drastically cut Army representation on
the Politburo and erased it entirely from the Standing
Committee. Moreover, the retirement from the Cen-
tral Committee of the Minister of National Defense,
the Commander of the Navy, and the Director of the
General Logistics Department, plus many other pres-
tigious military figures may presage another attempt
to move the military out from under direct party
command. By subordinating the military to the gov-
ernment, Deng would be seeking to accomplish at
least two things: redefining the relationship of the
PLA to both the party and China, ending the special
claims the military has been able to make by virtue of
its historically close relationship with the party; and
taking an additional step toward military profession-
alism.)
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
? Although some senior soldier-politicians may still
oppose Hu Yaobang's assumption of the Military
Commission chairmanship, the reduction in military
representation in the top party bodies should ease
the way for Deng to pass that post to Hu.
? The resignation from the Central Committee of five
top Military Commission officers suggests that a
reorganization of the committee's leadership is like-
ly soon. Deng will certainly take that opportunity to
promote younger, better educated officers to the
Army's core leadership. Ultimately, this may help
25X1 clarify several aspects of China's defense policy-
from defensive deployments to acquisition of foreign
weapons-long muddled by the old soldiers' rever-
ence for outdated Maoist concepts. F___]
Finally, the reduction of military representation in the
top party organizations, in our view, implies at least
two additional developments that affect the party
Military Commission:
approved last year is still on track, but adjustments
will continue to be made to counter inflation, overin-
vestment in capital construction, revenue shortfalls,
corruption, and the foreign trade imbalance. More-
over, the leadership is likely to be more sensitive to the
need to provide ideological justification for its policies,
and will seek to ensure that all reforms are cloaked in
the appropriate socialist garb, even if this creates
confusion within China's trade bureaucracies and
among foreign investors. F_~
We believe Deng's achievements at the September
meetings are best viewed as a confirmation of trends
and policies he has initiated over the last 10 years,
rather than as an immediate portent of new directions
to be taken. The restructured leadership will be more
energetic, flexible, and pragmatic than its predeces-
sor, and in the long run it probably will be more
willing to consider bold departures from socialist
orthodoxy. Its actions will be tempered for some time,
however, by the continued presence of powerful con-
servative voices, specifically in the persons of Chen
Yun and Peng Zhen, and by the need to consolidate
and develop policies already undertaken.=
The economy ranks high on the agenda. We expect
the Chinese to continue their efforts to modernize the
economy through a combination of socialist adminis-
trative controls and free market demand management
techniques. Deng's depiction of economic reforms as
an "experiment" is apt, in that reformers have a set of
goals, but not a detailed or set plan on how to achieve
them. The five-year plan adopted at the meetings
indicates strongly that the urban reform program
Party rectification remains nominally high on the
political agenda, but received remarkably little atten-
tion during the party meetings. In fact, the extensive
discussion in the conference speeches of official cor-
ruption points to how ineffectual the rectification
process has been at the middle and lower levels of the
party. Deng alone among the meetings' main speakers
referred to rectification as an appropriate means to
deal with persistent problems in party work style, and
a forum of the party's rectification commission held at
the same time reflected his concerns. We expect that
the issue will be brought to the fore again, in a
concerted effort to cleanse the party of its wayward
elements.F----]
We expect Deng to continue to press for his second-
stage succession package, and sooner rather than
later. Hu Qili and Li Peng will play increasingly
prominent roles in the leadership, preparatory to
formally taking over leadership positions, perhaps
next year. Hu Yaobang played a somewhat subdued
role at the September meetings, but he is still a
crucial player in the transition to a younger leader-
ship. If he does indeed succeed Deng as chairman of
the Military Commission, one of two paths is open to
him: either to serve as an interim chairman, possibly
until the 13th Party Congress in 1987, and then to set
a solid precedent by retiring; or to set himself up on
the Military Commission as China's principal political
broker, in much the same fashion as Deng has done.
In fact, Hu's ultimate course may already have been
laid out for him in the bargaining that preceded the
conference of delegates.F_~
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
The most difficult transition still to be accomplished,
however, is Deng's own. Deng has so dominated the
Chinese political scene since 1978, and the reform
"vision" is so much his own, that it is difficult to judge
what the program will be like without him. Deng has
been indispensable to the successive victories that the
reform coalition has won. The irony now is that, if the
program is to survive his passing, he must truly retire,
allowing his chosen successors to establish their au-
thority independent of his. We believe that Deng
recognizes this, and fully intends to step down. He is
not likely to do so, however, unless he is joined by old-
guard stalwarts Chen Yun, Peng Zhen, and Li Xian-
nian, none of whom has yet indicated any interest in
retirement. In our judgment, it will take another
demonstration of Deng's unique political skills to
bring this off. Before the 13th Party Congress, sched-
uled for 1987, Deng will probably make one last
attempt to lead China's founding revolutionaries off
the political stageF__-]
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Appendix A
September 1985 Party Delegates Conference
Extracts From Major Speeches
Collective Leadership
Since the Third Plenum of the 11th Central Committee [1978], all major policy de-
cisions of the central leading organs have been made collectively, with the
revolutionaries of the older generation steering the course.
Work of the Delegates Conference
The Third Plenum of the Twelfth Central Committee [1984] considered that the
proposal concerning the Seventh Five-Year Plan had a vital bearing on the
national economy. It also considered that organizational matters-in particular
the election of additional members to the central leading bodies-must be taken
very seriously. For these reasons, the session decided that a national conference
should be convened.
The work of drafting the five-year-plan proposal was presided over by Comrade
Zhao Ziyang. To seek opinions on it, a meeting was held last July with some 200
participants. In line with the proposal to be adopted by the conference, the State
Council will work out the Seventh Five-Year Plan and submit it to the National
People's Congress next spring.
Regarding the organizational question, last May the Central Committee set up a
working group composed of Comrades Xi Zhongxun, Bo Yibo, Song Renqiong, Yu
Qiuli, Qiao Shi, Wang Heshou, and myself. The group drafted a resolution on
ways of further effecting the succession of new members in the leading central or-
gans. It also approved the requests of some veteran cadres to resign from the
central organs and prepared a list of candidates for election to those bodies.
Leadership Rejuvenation
During the last two or three years, many veteran comrades have asked to resign
from the central organs. It is in response to the needs of the party's cause that most
veterans have retired; it is also in response to the needs of the party's cause that a
few have remained. Our long struggles have produced a number of very
experienced veteran revolutionaries who enjoy high prestige both inside and
outside the party and both at home and abroad. It is the common desire of the en-
tire party membership and of the people of all our nationalities, and in their
fundamental interest, to keep these veteran revolutionaries in the top leadership of
the party.
In 1979 the Central Committee raised the question of promoting persons of ability
and political integrity and making the leadership younger. Since then, leading
bodies from top to bottom have undergone two major readjustments. Consequent-
ly, the readjustment for younger leadership is nearly completed.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Endorsement of Reforms
It has been almost seven years since the Third Plenary Session of the 11th Central
Committee. These seven years have been one of the best periods of economic and
political development since the founding of the People's Republic.
Zhao Ziyang Seventh Five-Year-Plan Proposal
The document was drawn up after a year of deliberation under the direction of the
Secretariat of the Central Committee and the State Council. It is not the Seventh
Five-Year Plan itself but a set of proposals for the plan. Instead of listing a whole
series of quotas, the proposal deals with only a few major ones that have immediate
bearing on the overall situation. Two of the distinct features are its emphasis on
development strategy and on principles and policies, which represent an important
new approach to planning. Once the proposal is adopted by the conference, the
State Council will use it as the basis for drafting the actual Seventh Five-Year
Plan.
Planned Growth Rates and Budget Deficits
The gross value of industrial and agricultural production is expected to increase at
an average annual rate of 7 percent and that of the GNP at an even higher rate. A
sustained 7- or 8- or even 10-percent growth rate over such a long time is rare in
the economic development of any country. A similar situation has occurred only in
a few countries and regions during the economic takeoff stage.
A small deficit does not matter much and should not be taken as the primary indi-
cator of how the country is faring financially and economically.
Tasks of the Plan
There are three main tasks in the period of the Seventh Five-Year Plan: 1) to cre-
ate a sound economic and social environment for the smooth progress of structural
reform; 2) to speed up the construction of key projects; and 3) to continue to
improve the people's living standards. The first task is most important.
The plan can be divided into two stages. In the first two years, the emphasis will be
on controlling social demand to solve the problems of overly rapid growth rates, ex-
cessive investment in fixed assets, and sharp increases in consumption funds.
However, the main drawback is that people may not pay much attention to this ef-
fort, and these problems may even run out of control. Reform should focus on im-
proving macroeconomic control while stabilizing the economy. We must continue
price reform and develop better economic levers, such as interest rates, tax rates,
and exchange rates. In the last three years, price reform will be completed, tax and
banking reforms will be established, and investment in construction will be
increased in accordance with the circumstances.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Role of Market Forces in Regulating the Economy
In reforming the economic structure, we must do the following things: 1) further
invigorate enterprises, especially state-owned large and medium-sized ones; 2)
further expand the planned socialist commodity market and gradually improve the
marketing system; 3) gradually relax the state's direct control over the economic
operation of enterprises in favor of indirect controls, such as economic, legal,
and-if necessary-administrative measures.
The task confronting us is that while improving microeconomic operations and
mechanisms we must.exercise more effective indirect control over macroeconomic
operations. In other words, we must give a greater regulating role to economic
levers and improve economic legislation and supervision.
Only when we make a success of indirect macroeconomic control can we
coordinate it with the reforms that are under way, and only then can the conditions
be created for greater flexibility with regard to enterprises. The extent to which we
relax direct microeconomic controls and the measures we take for that purpose
must be suited to the state's ability to exercise more effective indirect control and
must be coordinated with such control.
Dealing With Anticipated Problems
During this period, a host of problems will arise in the process of creating a
favorable environment for reforms. There are two keys to solving these problems:
first, to enhance the economic efficiency of enterprises and to make them better
able to earn more foreign exchange through exports. Technological transformation
should be conducted; however, it is even more urgent to raise operational and
management skills.
The second key is to earn more foreign exchange to strike a balance of payments.
As a developing country, China will suffer shortages of foreign exchange for a long
time. We must work out a development strategy and systematic foreign trade
policies. We should make full use of the special economic zones, open cities and re-
gions along the coast, develop an export network, and we should earn more foreign
exchange through tourism and labor export.
Building Socialist Civilization
We must build the "two civilizations" simultaneously, steadfastly adhering to the
four principles, opposing corruption by bourgeois liberalism, capitalism, and other
decadent ideologies. We must improve the socialist legal system and our political
and ideological work so that our "spiritual civilization" complements and expedites
our material civilization.
Deng Xiaoping Progress of Reforms
The period since the Third Plenary Session of the 11th Central Committee [1978]
has been a crucial one. For many years we suffered badly from one major error: we
still took class struggle as the key link. Since the Third Plenum, we have
accomplished two things: we have set wrong things right, and we have launched
comprehensive reforms. The current good situation would not have come about if
we had not corrected the erroneous "left" mistakes and shifted the focus of our
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
work to developing the economy. At the same time, if we had not adhered to the
four principles [upholding the socialist road, the people's democratic dictatorship,
the leadership of the Communist Party, and Marxism-Leninism and Mao Zedong
Thought], we would have gone from correcting "left" mistakes to "correcting"
socialism and Marxism-Leninism.
In the reform, we have consistently followed two fundamental principles. One is
the predominance of the socialist public sector of the economy; the other is
common prosperity. The use of foreign investment funds in a planned way and the
promotion of a degree of individual economy are serving the development of the so-
cialist economy. We still have to work out specific rules and regulations by trial
and error.
The Seventh Five-Year Plan
It is projected that, during the period of the plan, the annual growth rate will be
7 percent, a figure on which the Standing Committee of the Political Bureau has
unanimously agreed, and which may be exceeded in practice. If the growth rate
were too high, that would create many problems. We must control the scale of in-
vestment in fixed assets and see that capital construction is not overextended.
Socialist Civilization and Party Work Style
Although much work has been done to build a socialist society that is both
culturally and materially advanced, we must admit that so far the results are not
very satisfactory, mainly because it has not had the serious attention of the entire
party membership. We exert ourselves for socialism not only because socialism
provides conditions for faster development of the forces of production than
capitalism, but also because only socialism can eliminate the greediness, corrup-
tion, and injustice that are inherent in capitalism. In recent years, some evil things
that had long been extinct after liberation have come to life again. Material
progress will suffer delays and setbacks unless we promote cultural and ideological
progress as well. Today, some comrades no longer have a clear understanding of
this truth.
At present, we must first concentrate on bringing about a fundamental improve-
ment in party conduct and in general social conduct. In consolidating the party, we
must succeed in four tasks: achieving unity in thinking, improving party conduct,
strengthening discipline, and purifying the party organization. We should greatly
strengthen and never weaken ideological and political work as well, and support
the work of cadres in this field. Ideological, cultural, educational, and public
health departments should take social benefit as the sole criterion for their
activities and so must the enterprises affiliated with them. In our propaganda
work, we must firmly oppose bourgeois liberalism and publicity that favors taking
the capitalist road. It goes without saying, however, that we should adhere to the
policy of "letting 100 flowers bloom." With regard to erroneous ideological
tendencies, we should adopt a policy of persuasion and education, and refrain from
political movements and "mass criticism."
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Promotion of Young Cadres and the Need for Theoretical Study
The succession of new cadres to old and their cooperation have been going on fairly
well over the past few years. I once said that younger age and professional
knowledge alone are not enough. To these must be added a fine work style. I hope
you will serve the people wholeheartedly. We often say that the succession of new
cadres to old provides the organizational guarantee for the continuity of our
party's policies. It means the continuity of the domestic and foreign policies of
independence, democracy, legality, opening to the outside world, and invigorating
the domestic economy, which we will by no means change.
Now I would like to propose a new requirement-the study of Marxist theory, a
requirement not only for new cadres but for old ones as well. Some comrades may
say: What immediate use is there to studying Marxist theory? Comrades, this is a
misconception. Marxist theory is not a dogma, but a guide to action. We must find
time in our busy schedules to study Marxist theory. Only thus can our party keep
to the socialist road and build socialism with Chinese characteristics until the
realization of our ultimate goal-Communism.
Statement of Support
I support the proposal of the Central Committee for furthering the succession of
new members to old in the leading central organs, its proposal for the formulation
of the Seventh Five-Year Plan, and the speeches delivered by members of the
Standing Committee of the Political Bureau.
Promotion of Younger Leaders
Promoting young and middle-aged people to leading posts by the tens of thousands
to reinforce the leading bodies at all levels is an important task that our party has
stressed repeatedly over the past few years. This system will ensure that there will
be an orderly succession of cadres in the Communist Party from generation to
generation.
Problems With Agriculture, Rural Enterprises
We must continue to pay attention to grain production. Thanks to the contracted
responsibility system, agricultural production has increased. The media have for
some time exaggerated the number of "10,000-yuan households." Actually, there
are not that many. Our media's reports are divorced from reality.
Some peasants are no longer interested in growing grain. They are not even
interested in raising pigs and vegetables, because in their opinion there can be "no
prosperity without engaging in industry." Town and township enterprises should
be developed. The thing is that the call of "no prosperity without engaging in
industry" is heard much louder than that of "no economic stablility without
agricultural development." Feeding and clothing 1 billion people constitutes one of
China's major political and economic challenges, for "grain shortages will lead to
social disorder."
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
The Nature of China's Economy and the Role of Planning
The socialist economy must be developed proportionately and in a planned way.
We are Communists. Our goal is to build socialism. The general orientation for re-
structuring the urban economy is correct, but we are experimenting with concrete
measures for its implementation. We must look carefully before taking each step.
The planned economy's primacy and the subordinate role of market regulation are
still necessary. Planning consists of both mandatory planning and guidance
planning. Both involve the planned use of economic regulators. Guidance planning
is not the same as market regulation. Market regulation involves no planning,
blindly allowing supply and demand to determine production. Planning is the
essence of macroeconomic control. Only by doing a good job of macroeconomic
control can we stimulate the microeconomy and make it dynamic but not chaotic.
Proper Economic Growth Rates
The proposal of the Seventh Five-Year Plan sets annual industrial and agricultural
growth rates at 7 and 6 percent respectively. These are respectable. And although
they may be surpassed during this period, there is no reason to set them higher.
Comrade Deng Xiaoping once mentioned China's excessive industrial and agricul-
tural growth rates, saying, "It sounds good, but contains disturbing elements." I
agree with this. As the saying puts it, "More haste, less speed."
Party Conduct, Ideological Work, and Corruption
Improving party conduct remains a major task of the entire party. Leading cadres
at all levels, particularly senior ones, should set good examples. There's no such
thing as retirement when it comes to setting good examples. I hope that the party's
senior leaders will set a good example in educating their children, who absolutely
must not use their parents' positions in pursuing personal power and interests and
becoming privileged.
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 speculation 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 attributed 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.
Adherence to democratic centralism is a principle prescribed by the party
Constitution. All decisions on important issues must be made by the collective
after complete discussion to avoid mistakes and unnecessary detours and to
achieve better results.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Li Xiannian Economic Tasks
The essential task for the historical stage of socialism is to develop the productive
forces and ensure the planned and balanced growth of the national economy. Since
this year's economic growth rate has been excessively high, it will not be easy to re-
duce it to normal next year. Our comrades must-keep in mind our party's fine tra-
dition of seeking truth from facts and maintaining close ties with the people, and
check the tendency found in some areas to make false reports that mislead the
leaders. We should actively expand trade with foreign countries and use the
foreign exchange thus earned to import necessary and useful advanced technology,
equipment, and materials to further socialist modernization in a realistic manner.
Ideological and Political Work
Ideological and political work must be intensified during economic construction
and structural reform. Regions and units that have overlooked ideological and
political work in recent years should strengthen it immediately and seriously. We
must step up education in ideals, social conduct, discipline, and law, and combat
the corruption of capitalist and feudal. ideologies, bourgeois liberalism, egotism,
and putting money above all else.
The Opening to the Outside and Foreign Policy
We cannot modernize behind a closed door. The basic tasks of construction and re-
forms at home determine that we will follow an independent, peaceful, and open
foreign policy. It is in the interests of all people to oppose the arms race, preserve
world peace, and expand international exchanges in all areas. We must make
further efforts to unify the mainland and Taiwan by peaceful means.
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T00590R000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Next 8 Page(s) In Document Denied
Iq
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Appendix C
The Reconstituted Leadership
Standing Committee (in rank order)
Hu Yaobang, General Secretary
Deng Xiaoping
Zhao Ziyang
Li Xiannian
Chen Yun
Members (in alphabetical order)
Fang Yi
Hu Qiaomu
Hu Qili
Li Peng
Ni Zhifu
Peng Zhen
Qiao Shi
Tian Jiyun
Wan Li
Wu Xueqian
Xi Zhongxun
Yang Dezhi
Yang Shangkun
Yao Yilin
Yu Qiuli
Secretariat (in rank order)
Hu Yaobang, General Secretary
Hu Qili
Wan Li
Yu Qiuli
Qiao Shi
Tian Jiyun
Li Peng
Chen Pixian
Deng Liqun
Hao Jianxiu
Wang Zhaoguo
Alternate members (in alphabetical order)
Chen Muhua
Qin Jiwei
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
An Pingsheng
Ba Sang
Bai Jinian a
Bu He
Chen Bin
Chen Fuhan
Chen Guangyi a
Chen Huiguang
Chen Lei
Chen Muhua (f)
Chen Pixian
Chen Puru
Chen Renhong
Chen Xitong
Chen Yun
Chi Biqing
Chi Haotian a
Cui Naifu
Cui Yueli
Dai Suli
Deng Jiaxian
Deng Liqun
Deng Xiaoping
Ding Guangen a
Fang Yi
Fu Kuiqing
Fu Quanyou a
Gao Di a
Gao Yangwen
Gu Mu
Gu Xiulian (f)
Guan Guangfu
Guo Liwen (f)
Han Peixin
Hao Jianxiu (1)
He Dongchang
He Jingzhi
He Jinheng
He Kang
He Zhukang b
Hou Jie a
Hu Hong
Hu Jintao b
a Indicates new member.
b Indicates promotion from alternate.
c Indicates new alternate member.
Hu Ping b
Hu Qiaomu
Hu Qili
Hu Sheng
Hu Yaobang
Hua Guofeng
Huang Huang a
Huang Zhizhen
Ismail Amat
Jia Chunwang a
Jiang Minkuan b
Jiang Xinxiong b
Jiang Yonghui
Jiang Zemin
Jiao Linyi
Kang Shien
Lang Dazhong
Li Chang'an b
Li Dongye
Li Guixian a
Li Jijun b
Li Jiulong a
Li Li'an
Li Ligong
Li Menghua
Li Ming b
Li Peng
Li Ruihuan
Li Senmao
Li Tieying b
Li Xiannian
Li Ximing
Li Xipu
Li Xu'e
Li Xuezhi
Li Yaowen
Li Ziqi
Liang Buting
Liao Hui a
Lin Liyun (f)
Lin Ruo
Liu Jingsong a
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Liu Lin
Liu Zhengwei
Liu Zhenhua
Lu Peijian
Luo Qingchang
Ma Xingyuan
Mao Zhiyong
Mo Wenxiang
Mu Qing
Ni Zhifu
Peng Chong
Peng Zhen
Pu Chaozhu a
Qian Liren a
Qian Qichen b
Qian Yongchang
Qian Zhengying (f)
Qiang Xiaochu
Qiao Shi
Qiao Xiaoguang
Qin Chuan
Qin Jiwei
Qin Zhongda
Rao Xingli
Redi
Ruan Chongwu a
Rui Xingwen a
Seypidin
Shen Tu
Shen Yinluo
Song Jian b
Song Ping
Su Gang
Su Yiran
Sun Weiben b
Tang Ke
Tian Jiyun
Tomur Dawamat
Wan Da
Wan Haifeng
Wan Li
Wan Shaofen (f) a
Wang Bingqian
Wang Chaowen
a Indicates new member.
b Indicates promotion from alternate.
c Indicates new alternate member.
Wang Chenghan
Wang Chonglun
Wang Fang
Wang Guangyu
Wang Guangzhong
Wang Hai a
Wang Hanbin
Wang Kewen
Wang Meng
Wang Meng b
Wang Quanguo
Wang Renzhi b
Wang Renzhong
Wang Senhao a
Wang Tao a
Wang Zhaoguo
Wei Jianxing b
Wei Jinshan b
Wu Jinghua
Wu Quanqing
Wu Shaozu a
Wu Weiran b
Wu Wenying (f) b
Wu Xueqian
Xi Zhongxun
Xiang Nan
Xiang Shouzhi
Xie Feng
Xie Xide (f)
Xing Chongzhi b
Xing Yanzi (f)
Xiong Qingquan b
Xu Huizi a
Xu Shaofu
Xue Ju
Yan Dongsheng
Yang Bo
Yang Chengwu
Yang Dezhi
Yang Dezhong
Yang Di
Yang Jingren
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Yang Rudai
Yang Shangkun
Yang Taifeng
Yang Xizong b
Yang Zhengwu b
Yao Guang
Yao Yi1in
Ye Fei
Ye Xuanping b
Yin Fatang
Yin Kesheng a
Yin Yuan
You Taizhong
Yu Hongen
Yu Mingtao
Yu Qiuli
Zhang Guoying (fj a
Zhang Jingfu
Zhang Shou
Zhang Shuguang
Zhang Zaiwang
Zhang Ze
Zhao Haifeng
Zhao Nanqi
Zhao Xianshun a
Zhao Xingyuan
Zhao Zhijian
Zhao Ziyang
Zheng Tuobin
Zhou Guangzhao b
Zhou Hui
Zhou Jiannan
Zhou Keyu a
Zhou Shizhong
Zhu Guangya
Zhu Houze b
Zhu Xun b
Zhu Yunqian
Zou Jiahua b
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Central Committee Alternate Members
Ai Zhisheng c
An Zhiwen
Batubagen
Chen Mingyi (f) c
Chen Suzhi
Chen Ying
Chen Zuolin
Dan Zeng c
Ding Fengying (f)
Ding Henggao c
Ding Tingmo c
Dong Jichang
Dong Zhanlin
Fang Weizhong
Gaisang Doje
Gao Dezhan
Gao Zhanxiang
Gong Benyan
Han Ruijie
Han Xu
He Guangyuan
He Guoqiang c
Hei Boli
Huang Demao
Huang Ganying (f)
Huang Shu
Janabil
Jiang Hongquan
Jiang Xiesheng
Jin Baosheng
Jin Jian c
Keyum Bawudun c
Li Bing
Li Changchun c
Li Deshu c
Li Feng
Li Gang
Li Huifen
Li Ruishan
Li Shoushan
Li Shuzheng (f)
Liang Chenye
Liang Dongcai
a Indicates new member.
b Indicates promotion from alternate.
c Indicates new alternate member.
Lin Jianqing
Lin Yincai
Liu Guiqian
Liu Guoguang
Liu Guofan c
Liu Haiqing
Liu Hongru
Liu Ronghuic
Liu Shusheng
Liu Weiming
Liu Yi
Liu Youfa
Liu Yujie (f)
Liu Yunshan c
Lu Gongxun
Lu Liangshu
Lu Maozeng
Lu Yongxiang
Luo Gan
Luo Shangcai
Ma Hong
Ma Ming
Ma Sizhong
Ma Zhongchen
Nian Dexiang
Nie Kuiju
Pan Rongwen
Peng Shilu
Qi Yuanjing c
Qiao Xueting
Qiao Zonghuai c
Quan Shuren c
Ren Rong
Song Defu c
Song Hanliang c
Sun Jiazheng c
Sun Tongchuan
Sun Wensheng c
Tang Zhongwen
Tian Shixing
Wang Fuzhi
Wang Jialiu (f)
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Wang Jiangong
Wang Linhe
Wang Qun
Wang Xuezhen
Wang Yuefeng
Wang Yuzhao c
Wang Zongchun
Wei Mingyi
Wu Bangguo c
Wu Guanzheng c
Wu Lengxi
Wu Xiangbi
Wu Zuqian
Xie Fei
Xing Zhikang
Xu Qin
Xu Shiqun c
Xu Xin
Yan Zheng
Yang Guoliang c
Yang Haibo
Yang Yongliang
Yang Zhong
Yangling Doje
Yin Changmin
Yin Jun
Yu Hongli
Yu Zhenwu
Yuan Fanglie
Yuan Jun
a Indicates new member.
b Indicates promotion from alternate.
c Indicates new alternate member.
Yuan Weimin c
Zhang Boxiang
Zhang Gensheng
Zhang Jianmin
Zhang Lichang c
Zhang Wannian
Zhang Wanxin
Zhang Xiang
Zhang Xintai
Zhang Xudeng
Zhang Zhongxian c
Zhao Di c
Zhao Dongwen
Zhao Zongnai
Zheng Guangdi (f)
Zheng Hua c
Zhou Aqing
Zou Jingmeng
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Resignations
Resigned From Politburo
Deng Yingchao (f)
Li Desheng
Nie Rongzhen
Song Renqiong
Ulanhu
Wang Zhen
Wei Guoqing
Xu Xiangqian
Ye Jianying
Zhang Tingfa
Resigned From Secretariat
Gu Mu
Xi Zhongxun
Yao Yi1in
Members Retired From Central Committee
Bai Dongcai
Chen Guodong
Chen Weida
Deng Yingchao (f)
Han Xianchu
Hong Xuezhi
Hu Lijiao
Huang Hua
Huang Xinting
Jiang Nanxiang
Kang Keqing (f)
Li Desheng
Li Qiming
Li Rui
Liang Biye
Liang Lingguang
Liao Hansheng
Lin Hujia
Liu Fuzhi
Liu Huaqing
Liu Zhen
Liu Zhijian
Lu Dadong
Ma Wenrui
Nie Rongzhen
Qin Yingji
Ren Zhongyi
Song Renqiong
Sun Daguang
Tan Qilong
Tan Shanhe
Tan Youlin
Tie Ying
Ulanhu
Wang Enmao
Wang Heshou
Wang Zhen
Wei Guoqing
Xiao Han
Xiao Quanfu
Xie Zhenhua
Xu Jiatun
Xu Xiangqian
Yang Yichen
Ye Jianying
Yuan Baohua
Zhang Aiping
Zhang Tingfa
Zhang Zhen
Zhang Zhixiu
Zhao Cangbi
Zhao Shouyi
Zheng Sansheng
Zhou Zijian
Zhu Muzhi
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Alternate Members Retired From Central Committee
Gao Houliang
Li Huamin
Liu Minghui
Qian Xuesen
Sun Guozhi
Wang Dongxing
Wang Jinshan
Wang Liusheng
Wang Qian
Yu Sang
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0
Secret
Secret
Sanitized Copy Approved for Release 2010/03/01 : CIA-RDP86T0059OR000300560002-0