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In many respects, the results of Deng's innovations have been remarkable. His goal is to raise the national per capita income to $800 by the year 2000, a formidable task. Already, China has not only met but exceeded its ambitious target of an annual 7% growth rate. The countryside has flourished in the six years since Deng's government introduced a "contract" system of incentives that allows China's 800 million peasants to sell all their surplus produce on the open market or to the state at premium prices and to establish small collective businesses. Crop production has shattered records every year, turning China into a net exporter of grain; the average peasant has more than doubled his cash income to $125 a year. Yet the lives of a quarter of the world's people cannot be changed easily, or overnight. China is not only the largest Third World nation but also one of the least developed. The fast pace of growth since the reforms went into effect has begun to tax the economy, * putting extraordinary pressure on the infrastructure: energy supplies, housing and transportation are stretched to the limit.
Moreover, despite a largely successful birth control scheme aimed at reducing the birthrate (now 17.5 per thousand), the population has topped the 1 billion mark. Equally important, as many as 230 million Chinese are still illiterate. While underemployment is estimated at 40% to 50%, skilled workers and experienced managers are in short supply. For all the emphasis on less central planning, only 3% of the economy (9.3 million small enterprises with 13 million employees and an annual turnover of $16 billion) is involved in private enterprise. Finally, the reforms have so far had only marginal impact in the cities, while their astonishing success in the countryside has started to level off. Chinese farmers are beginning to buckle down to the difficult transition from traditional methods to more sophisticated ones--from night soil, as it were, to nitrates. "They have achieved all the easy gains," says a Western agricultural expert. "Now comes the hard part."
Perhaps the most promising ingredients of Deng's second revolution are the small economic units, jointly owned by groups of citizens, that are known as collectives (see box). They are a far cry from the collectives of the Soviet Union, which on the whole have not been successful. Aided by low-interest government loans and subsidies, the Chinese collectives offer both the security of a state-run business and the potential profit of private enterprise. Their benefits have not been lost on the country. Thousands of new collectives are sprouting each month; this year two out of five graduates of city schools are expected to join such units.
Despite their generally small size, the collectives have reshaped the look of much of China. They produce badly needed consumer goods and step up competition. They have also put to work some of the estimated 100 million members of the rural work force who are either unemployed or underemployed. By allowing them now to stay in the villages and work in nonfarming jobs, the collectives have reduced the number of peasants streaming into the already overcrowded cities. "If we can keep the same proportion of urban and rural populations," wrote Sociology Professor Fei Xiaotong in a recent issue of the Beijing Review, "we will enjoy an enormous success. Anything else would be a catastrophe."