CIA: China’s Sixth Five‑Year Economic Plan, 1981‑85 – Central Intelligence Agency

China’s Sixth Five‑Year Economic Plan, 1981‑85 – Central Intelligence Agency assessment, June 1983 This is a declassified Central Intelligence Agency research paper on the People’s Republic of China’s Sixth Five‑Year Economic Plan, covering the period 1981 through 1985. The document was released to the public on the first of January, two thousand eight, and is hosted in the public archive at archive.org. The paper was made available through a Freedom of Information Act request, case number not disclosed, with declassification authority granted by the Director of Central Intelligence. It was originally prepared by the Office of East Asian Analysis and coordinated with the National Intelligence Council. The Chief of the Domestic Policy Branch, Office of East Asian Analysis, was listed as the point of contact for comments and queries. Key Judgments The approval last December of the Sixth Five‑Year Plan, covering 1981‑85, marked a milestone that the Chinese leadership had been working toward since the death of Chairman Mao in 1976. For Beijing, the restoration of an orderly planning process may be more significant than the plan itself. During the Cultural Revolution, from 1966 to 1976, China’s planning apparatus was dismantled, and plans reportedly consisted of little more than targets for a few important commodities. Now the planning bureaucracies have been reestablished and strengthened, and they have produced a plan that Beijing regards as only its second real five‑year plan—along with the First Five‑Year Plan of 1953‑57. Perhaps most important to the top leadership, policy discussions leading up to the plan have been relatively free of ideological cant and have explored a wider range of options. This plan emphasizes factors such as economic efficiency, productivity, and consumer needs, and virtually ignores socialist proprieties. In our judgment, Beijing’s policies have become more realistic, particularly in comparison with earlier years when more traditional Soviet‑style economic ideas or Maoist notions guided economic policies. The Sixth Plan is more comprehensive and methodologically sounder than recent plans, but it still falls far short of being fully comprehensive and internally consistent. The limited capabilities of Chinese planners, the scarcity and uneven quality of basic economic data, and the political and economic complexities of governing one billion people all prevent Beijing from doing much better at present. Because final decisions on many issues have yet to be made, and because of problems with the plan itself, we expect a number of revisions in the plan during 1983‑85. Indeed, the government has referred to the desirability of a “rolling plan,” to which adjustments would be made annually. The “five‑year plan” is really a three‑year plan, 1983‑85, given the late 1982 approval date. Relatively rapid growth in 1981‑82 has put Beijing in a position where many of the 1985 output targets can be met with ease. National income grew at an average rate of 5.2 percent in 1981‑82, so it need only grow 2.6 percent annually during 1983‑85 to meet the target for national income. Similarly, agriculture must grow at only 1.2 percent annually in 1983‑85 to meet the 1985 target, because growth in 1981‑82 averaged 8.3 percent. Industry, after growing by 5.9 percent yearly in 1981‑82, need only grow 2.7 percent annually for the next three years to meet the 1985 target. We anticipate that Beijing will have difficulties attaining other goals where the demands on management are greater. These include targets for energy conservation, lower costs, and higher productivity that are critical to Beijing’s attempts to reduce waste and make the economy more competitive internationally. One obstacle to plan fulfillment is the lack of adequate management systems, such as cost accounting and quality‑control procedures, that permit plant managers to monitor cost, quality, and productivity trends. To facilitate needed improvements, Beijing has set modest output targets to reduce the pressures of current production responsibilities on management. Another impediment is the shortage of managerial skills. China’s bureaucracies have trouble handling even simple tasks and can hardly be expected to deal expediently and effectively with complex problems such as energy conservation. Nor can management reforms be