Curb Spending Binge, Premier Urges Chinese

In the frankest acknowledgment to date of China’s economic difficulties, Premier Zhao Ziyang told the nation Wednesday that its demand for consumer goods has increased far too rapidly for the country’s relatively low level of development.

Opening the annual session of the National People’s Congress, China’s parliament, Zhao set a gloomy tone of austerity and economic retrenchment, asserting that Chinese individuals and institutions must rein in their spending. The excessive demand, he said, has helped bring about inflation, a budget deficit and a drop in foreign exchange reserves.

The premier was particularly scathing in his denunciation of what he termed “institutional consumption” by China’s socialist enterprises, which have won a modicum of autonomy as the nation has gradually decentralized its economy.

“Many government offices, enterprises, institutions and public bodies squander public funds to a serious extent, pursuing ostentatiousness and extravagance, vying with each other in luxury, giving lavish dinners and gifts, issuing excessive bonuses in kind and indiscriminately seeking modernization in all construction projects,” Zhao said in China’s version of a state of the union address.

Sitting directly behind the premier as he spoke in Beijing’s massive Great Hall of the People was former Communist Party General Secretary Hu Yaobang, who lost his job in a high-level leadership shake-up last January. He has since been criticized for allegedly encouraging or tolerating the trend toward a higher level of consumption in China.

Hu, 71, had not been seen in public since late December. When he entered the auditorium, he was greeted by a scattering of applause. Yu Qiuli, one of the conservative People’s Liberation Army leaders who reportedly favored Hu’s ouster, stood up and shook his hand.

The political changes of the past three months were evident in the speech by Zhao, who was named the Communist Party’s acting general secretary in January.

Premier Praises Army

This year, the premier took special care to praise the army, saying it has made new contributions to “the maintenance of domestic stability and unity” in China.

He also repeatedly stressed the importance of Marxist ideology, even in academic and literary settings.

“We must apply the Marxist viewpoints in scientifically analyzing and appraising the philosophical and social science theories of the Western bourgeoisie and its trends of thought on literature and art,” he said. Zhao also appeared to leave the door open for more intellectuals or others within the party to be fired from their jobs for espousing “bourgeois liberalization”--the Chinese phrase for Western-style democracy and capitalism.

“Even when a few individuals who stubbornly cling to bourgeois liberalization are dismissed from their leading posts, they should be assigned suitable jobs so as to turn to good account their professional skills,” he said.

Three leading Chinese intellectuals--physicist Fang Lizhi and writers Liu Binyan and Wang Ruowang--were expelled from the Communist Party last January.

Nevertheless, Zhao’s speech contained long passages urging the nation to avoid going to political excesses.

He said non-Marxist academic views are not themselves to be considered bourgeois liberalization. And he specifically warned against a wave of denunciations or obligatory self-criticisms, such as were commonplace during China’s Cultural Revolution of the 1960s and 1970s.

To Press Economic Reform

The premier made clear in his address that he still intends to press forward with the country’s economic reform program, of which he is a principal architect. In particular, Zhao indicated that he does not intend to abandon the effort to free up state-controlled prices and to move toward a market economy, even if this brings about a certain degree of inflation.

“The people should deepen their understanding of the necessity of price reform and become better able to adapt themselves to price changes. . . ,” he asserted. “It is unrealistic to have only wage increases, but no changes in commodity prices.”

The thrust of Zhao’s speech was to warn the nation that it is spending too much money on the wrong things and in the wrong ways.

“Quite a number of the projects under construction belong to ordinary processing industries, and many others are non-productive projects which should not have been undertaken in view of the current national strength, such as office buildings, auditoriums and hotels of extra-high standards,” he said.

By contrast, he continued, the nation finds itself without enough money to invest in energy, transportation and telecommunications projects.

Limousines Outside

While Zhao spoke, several dozen recently purchased black limousines, many of them Mercedes-Benzes, sat parked side by side in the interior courtyard of the Great Hall of the People, providing evidence of China’s spending habits. Some of the cars bore army tags while others had civilian plates.

“We must point out that a noteworthy problem exists in our country’s present economic life--that is, the affordable consumer demand has increased too fast, with the desire for consumer goods becoming ever greater and the standards sought ever higher,” Zhao said.

He warned that if the trend toward high consumption continues, it will “make continued economic growth difficult. More seriously, it may serve to corrupt social morality, in that some people will be given to pleasure-seeking at the expense of their pioneering spirit.”

The premier said that the State Council, China’s version of a presidential cabinet, has ordered all government agencies to cut administrative, managerial and operating expenses by 10% from the amounts they spent a year ago.

Zhao provided no specific figures on China’s budget shortfall, which he attributed in part to the sharp decline in oil prices.

But this morning, Finance Minister Wang Bingqian told the National People’s Congress that China’s deficit in 1986 was 7.1 billion yuan ($1.9 billion).

In 1985, by contrast, China had a surplus of $760 million. The amount of the 1986 deficit is still far below that of 1979, when the nation had a record deficit of $4.6 billion.

Chinese leaders have acknowledged that over the past couple of years, the nation’s state-owned enterprises have been competing with one another to hand out salary increases, bonuses, food, clothing and other benefits to their workers.

Official figures published here last week show that the wages paid in the first two months of this year had increased by 16% from the same period a year ago--an amount far above the reported inflation rate of about 6%. Furthermore, the amount paid in bonuses increased by 36% over the same period.