China's leaders are running into obstacles in their drive to make the country's urban economy more efficient and market-oriented.
In a speech made public recently, Hu Qili, a leading member of the Communist Party Politburo, said it will probably take "10 years or even longer" to transform China's old economic structure.
The most obvious problem is a foreign exchange shortage, which has resulted in a sharp reduction in purchases from abroad. It has also brought a cutback on loans and on investment in construction. With little money to spend, the Chinese have also restricted their contributions to joint ventures with foreign companies.
China's economy grew rapidly last year, straining its limited energy and transportation systems. Efforts to begin modifying the country's irrational price system contributed to the highest inflation in 30 years. As a result, the Chinese dramatically slowed economic growth and announced that there will be no major moves toward vital price restructuring this year.
Another important problem is resistance to the changes from lower- and mid-level bureaucrats and party cadres who fear a loss of power and from factory workers who have grown used to a system which, until recently, guaranteed incomes without demanding increased productivity.
Even some of the workers who are eating and dressing better as a result of the changes complain because they fear rising prices and because their gains have not met rising expectations.
The first phase of an overall restructuring of the Chinese economy was the largely successful rural changes put into effect several years ago. The second phase, announced in October 1984, was supposed to apply many of the same approaches to the cities and to urban factories. The idea was to loosen central government control over many factories and make them more responsible for their own profits and losses.
This has not proven easy, partly because younger, technically competent factory managers, who are supposed to be gaining more control, are encountering resistance from older, less educated party cadres and bureaucrats reluctant to share power.
In some cases cited by the official Chinese press, factory managers have succeeded in raising production only to be ousted from their posts by party officials.
A report reprinted in Thursday's China Daily said giving factory managers free rein is often "just a show" because of continued meddling by bureaucrats.
Despite all the obstacles, China's leaders seem to be determined to push ahead boldly in several areas. Premier Zhao Ziyang told U.S. Treasury Secretary James A. Baker III that China planned "another wave of reforms" within another year or two, according to an official who accompanied Baker on a recent visit here. The official said he had expected the Chinese to move more slowly than that.
Chinese economic analysts say that in management and labor, Zhao and his colleagues plan to announce within a few months changes that would allow factory managers, for the first time, to fire surplus laborers. According to one estimate, China's state-run factories are burdened by 15 million surplus laborers. In many factories, nearly half the workers can be seen doing little or no work.
Specialists are studying unemployment insurance plans that would provide for laid-off workers. If plans now under consideration are approved, private labor service companies would begin taking responsibility for finding jobs for unemployed workers. All these measures would mark a major departure from past practice.
The government is also working on a bankruptcy law that could act as a prod to the least efficient enterprises.
In the meantime, the going has been rough, and this has discouraged some supporters of the changes.
The official China News Agency said recently, "It is true that some reformists have fallen off their horses." Some proponents of change, the agency said, "lacked the willpower to persevere in the reforms."
It also said some persons who were used to the old system had "indulged in a bureaucratic style of work" and made "a big fuss over some minor problems, or even trumped up false charges against the reformists in order to drive the reformists into a corner."
Several weeks ago, Gui Shiyong, a vice president of the China Industrial Economics Society, summarized the limited progress made so far. "We have only won an initial battle . . . ," he said in an article published in the official People's Daily. "In order to attain our goal, it will be necessary to do much more work and to spend a relatively long time at it."
But that is not likely to stem the rising expectations that have developed from the inflated rhetoric of past government promises.
As Politburo member Hu acknowledged in his recent speech, "Some people are still not satisfied. Within the hearts of some people there is an indefinable anger."
Hu said part of the problem is that there is no ready-made model or experience for China to follow in implementing these economic changes. No one has a "complete plan," he said.