Peking Announces Austerity Program to Reduce Consumption, Expand Exports

Premier Zhao Ziyang on Tuesday charted a more austere course for China over the next five years, announcing a policy of limiting consumer demand, curbing local spending projects and concentrating on the development of exports.

In his annual address to the National People’s Congress, Zhao said the Chinese government should make sure that the nation adopts “rational consumption patterns.”

He left no doubt that this means that China’s 1 billion people, who over the past two years have bought consumer goods in record amounts, should begin lowering their expectations for further material advancement.

“Our country has a vast population, but not enough arable land and grassland,” he said. “Consequently, for many years to come, the diet of our people cannot improve too quickly, and there can only be gradual increases in the consumption of meat, poultry and eggs.

“With respect to clothing, people should be encouraged to wear more garments made of cotton, synthetics and blends, while consumption of woolen fabrics and leather products can only be increased to a certain extent.”

Electric Power Inadequate

Furthermore, he said, although China should improve housing conditions, “residential building standards should not be too high and rooms should not be too large.” With a chronic shortage of electric power, he said, the nation should limit production and imports of electric heaters and air conditioners.

Zhao’s formal announcement of government policy was foreshadowed in recent months by a series of articles in the official Chinese press calling for controls on consumer spending.

The regime’s current attitude toward consumer spending is in marked contrast to the buoyant mood that prevailed in October, 1984, when the leadership launched its program of urban economic reforms. The Communist Party Central Committee said then: “The essential task of socialism is to develop the forces of production, create ever more social wealth and meet the people’s growing material and cultural needs. Socialism does not mean pauperism.”

Only last September, in discussing the economic plan with party officials, Zhao spoke approvingly of the demands for an improved standard of living. “From here on, the economy will gradually shift from meeting people’s basic needs to enhancing the quality of their lives,” he said.

Imports Restricted

But in the last half of 1985, China began restricting imports of consumer products such as cars and television sets after spending on these items produced a rapid decline in foreign exchange reserves. On Tuesday, Zhao conceded that a shortage of foreign exchange “will remain a prominent economic problem for a long time to come.”

He urged officials to “place the quality of export commodities before everything else” in an effort to begin selling products that can earn the cash China needs.

At the same time, he said, China should “change the mix of imports, emphasizing consumer software, advanced technology and key equipment, and strictly controlling the import of ordinary processing equipment and durable consumer goods.”

Still, the premier’s projections for China’s standard of living over the next five years were not entirely bleak.

The five-year plan outlined by Zhao sets the annual growth rate for the net income of China’s 800 million peasants at 7%, and for urban workers and cadres at 4%.

“There will be more consumer goods of greater variety and better design,” Zhao said, but only when China’s production and income levels increase.

To Curb Local Spending

Zhao made it plain that China will be even tougher in efforts to rein in the spending of local governments.

As China began its open-door policy and urban economic reforms, many cities and counties began vying with one another for development funds. “Many localities and departments continue to launch new projects at random,” Zhao said. He said that authorities in Peking will strictly control spending for new construction projects.

Meanwhile, Chinese leader Deng Xiaoping made his first public appearance in Peking in three months, to greet visiting Danish Prime Minister Poul Schlueter.

Deng, 81, the architect of China’s market-oriented reforms, had last been seen here on Dec. 14. He was shown on television once in early February, at a lunar new year’s celebration in his home province of Sichuan.

In January, diplomats in Peking were told that Deng was ill, and there have since been unconfirmed reports that he was under treatment for a kidney ailment.

On Tuesday, however, Deng scoffed at the reports of ill health and attributed his absence from Peking to an effort to let other Chinese leaders run the nation.

“In the past few years, I have deliberatedly tried to disengage myself from day-to-day affairs and let other comrades take more responsibility,” Deng said. “This shows that the existing policies of China do not hinge on myself alone.”