The international situation and economic problems

March 3, 1990

How are we to view the changes in the international situation? Has the old world pattern come to an end and a new one taken shape? There are various opinions on this question both at home and abroad. It seems to me that many of the views we have formed about international issues are still valid. Actually, the old pattern is changing but has not come to an end, and the new one is yet to take shape. As for the two great issues of peace and development, the first has not yet been resolved, and the second is even more pressing than before.

The situation in which the United States and the Soviet Union dominated all international affairs is changing. Nevertheless, in future when the world becomes three-polar, four-polar or five-polar, the Soviet Union, no matter how weakened it may be and even if some of its republics withdraw from it, will still be one pole. In the so-called multi-polar world, China too will be a pole. We should not belittle our own importance: one way or another, China will be counted as a pole.

Our foreign policies remain the same: first, opposing hegemonism and power politics and safeguarding world peace; and second, working to establish a new international political order and a new international economic order. These two policies should be emphasized repeatedly. Specifically, we should maintain our contacts with all other countries and increase our contacts with both the Soviet Union and the United States. Whatever changes take place in the Soviet Union, we should steadily expand relations with it, including political relations, on the basis of the Five Principles of Peaceful Coexistence and refrain from arguing over ideological differences.

We should continue to observe the international situation. True, there are some questions that we do not fully understand right now, but that doesn't mean the whole picture is black. We should not think that the situation has deteriorated seriously or that we are in a very unfavourable position. Things are not so bad as they seem. In this world there are plenty of complicated contradictions, and some deep-seated ones have just come to light. There are contradictions that we can use, conditions that are favourable to us, opportunities that we can take advantage of -- the problem is to seize them at the right moment.

Considering the overall situation, no matter what changes may take place over the next ten years, we should do solid work to develop the economy without delay. If we can quadruple the GNP in this decade, we shall have achieved an extraordinary success.

We should pay particular attention to the question of the drop in the economic growth rate. I am worried about this. If our economy grows at the rate of only four or five per cent a year, it will be all right for a couple of years. But if that rate continues for a long time, it will represent a decline compared with the growth in the rest of the world, especially in the East Asian and Southeast Asian countries and regions. Some countries have problems basically because they have failed to push their economy forward. In those countries people don't have enough food and clothing, their wage increases are wiped out by inflation, their living standards keep dropping and for a long time they have had to tighten their belts. If our economy continues to grow at a slow rate, it will be hard to raise living standards. Why do the people support us? Because over the last ten years our economy has been developing and developing visibly. If the economy stagnated for five years or developed at only a slow rate -- for example, at four or five per cent, or even two or three per cent a year -- what effects would be produced? This is not only an economic problem but also a political one. When we work to improve the economic environment and rectify the economic order, we should therefore try to quickly attain an appropriate growth rate.

What rate is appropriate? An appropriate rate is one that will enable us to redouble the GNP in this decade. To calculate the target GNP for the year 2000, we have to use constant, unexaggerated 1980 prices as the base and take into consideration the anticipated population growth. That will tell us how much the economy has to grow every year. Is this method of calculation correct and reliable? We must calculate honestly whether we can quadruple the GNP with an annual growth rate of six per cent. After all, the actual increase in GNP will be reflected in the standard of living. The people can tell very well what their standard of living is. We leaders can never calculate it so well as they do; their judgement is most accurate.

What I mean is that the political stability we have already achieved is not enough to rely on. And although we have to strengthen ideological and political work and stress the need for hard struggle, we cannot depend on those measures alone. The crucial factor is economic growth, which will be reflected in a gradual rise in living standards. Only when people have felt the tangible benefits that come with stability and with the current systems and policies will there be true stability. No matter how the international situation changes, so long as we can ensure appropriate economic growth, we shall stand firm as Mount Tai.

If we are to ensure such growth, we cannot confine ourselves to handling immediate routine affairs. We must analyse problems from an overall, strategic point of view and work out concrete measures. We should seize every opportunity and make timely policy decisions. We should do some research to determine which localities have the most favourable conditions and promise the best economic returns. For example, it is of prime importance to develop Shanghai; that city is a trump card. By developing Shanghai we shall be taking a short cut.

From a long-term point of view, the reform and development of agriculture in socialist China will proceed in two leaps. The first leap was to abolish the people's communes and institute the responsibility system, the main form of which is the household contract that links remuneration to output. This system marks a great step forward and should remain unchanged for a long time to come. The second leap will be to introduce large-scale operations and to expand the collective economy, so as to facilitate scientific farming and socialized production. This will be another great step forward. Of course, it will be a long process. The township and village enterprises play an important role in the rural economy and need to be expanded and improved. But at the same time we must always pay close attention to agriculture. It is easy for the countryside to become prosperous, but it is also easy for it to become poor. If farming is neglected, the rural economy will collapse.

In short, it is still a big question whether we can prevent the economy from going downhill and quadruple the GNP by the end of this century. I am afraid that for at least the next ten years this question will keep us awake at night. If China wants to withstand the pressure of hegemonism and power politics and to uphold the socialist system, it is crucial for us to achieve rapid economic growth and to carry out our development strategy.

(Excerpt from a talk with leading members of the Central Committee. )

(From Selected Works of Deng Xiaoping, Volume III <1982-1992>)