Blaming inefficiency and mistakes in economic management, China is backpedaling fast on many experiments to modernize and is cracking down on inflation and illegal profiteering.
The Communist Party newspaper People's Daily asked the masses this week to help officials watch for individual enterprises that have been raising prices illegally. Prices on some products have been allowed to fluctuate within fairly narrow limits.
Official inspections often turn up no evidence of illegal profiteering, the newpaper said, because many shops and factories discover in advance when they will be watched. In random visits to shops in Peking, however, a customer could find a seafood merchant who adds weight to fish by stuffing it with crushed ice before freezing. Some merchants are accused of pouring ordinary wine into bottles with more expensive labels.
For two weeks People's Daily has been running front-page editorials and articles saying that the concept of "putting profits in command" is not working.
The crackdown, the second in eight months, came a week after the newspaper announced that a major evaluation of China's three-year period of readjustment and reform has turned up a sobering appraisal of the gap between China's ambition and existing capabilities.
"The task of readjustment is not something that can be accomplished in three years. It will take much longer," the editorial said. "We must not hesitate to make a necessary and adequate retreat. We must resolutely overcome the wrong practice of setting high targets without taking our actual capability into account."
Under the new shift in policy, the country's control planners again are to take charge. The limited approach to free-market economics is to be scratched -- limiting the powers of individual enterprises to make their own decisions on prices, products, quotas and investments. The more widespread the free-market concept, the less China is prepared economically and technically to handle it, the newspaper said.
"With floods in the south and drought in the north, this year has been a disastrous one for agriculture," an editorial said last week.Grain production reportedly has dropped, oil and coal are running short, and the country's budget deficits are expected to reach $30 billion over a period of three years.
In December 1978, Chinese leaders shelved a 10-year economic plan that was intended to lay the government for the "four modernizations" -- in agriculture, industry, national defense and science-technology. Instead, they embarked on a three-year readjustment program that put a large part of economic planning in the hands of individual enterprises.
Economic relaxation allowed factory managers to give bonuses to their workers. This bonus system was touted as the key to boosting production. But now, the editorial said, the freedom to set prices on a local basis has played a major role in the gradual increase in prices and has "created an imbalance between purchasing power and available commodities."
The policy shift also affects foreign trade in the industrial sector, which is reaching the stage of near paralysis. Hundreds of projects have been canceled, the editorial said. Buying and building have been too ambitious, ill-conceived and uncoordinated, it added.
Cancelation of projects appears to have affected the Japanese the most. Officials from Tokyo were in Peking last week for a ministerial conference. In two weeks, three major Japanese projects were said to be halted.
The Chinese decided to postpone the second stage of work on a $5 billion steel mill near Shanghai, a project long considered to be crucial in Japanese-Chinese economic cooperation. Construction of a $180 million chemical plant in eastern Peking was halted after the Chinese had spent $13 million building the plant's foundation. Negotiations were postponed on a $22 million joint venture with Sanyo Electric to make refrigerator compressors.
Decisions made with inexperience and "partial blindness" have left a trail of capital construction projects that are inefficient, lacking raw materials and technology, and creating energy shortages, the editorial said. Some factories are operating at partial capacity and suffer deficits because of poor product quality and high production costs, it went on.