The ten-day visit of the CPI(M) Central Committee delegation to China was both intensive and extensive. After three days of intensive discussions with the leadership of the Chinese Communist Party in Beijing, the delegation went on a week long tour to interior China to study the actual living conditions of the people and how the problems arising out of the speedy developmental process are being tackled at the grassroots level. This itinerary was worked out at the request of the CPI(M) which had expressed the desire to visit interior China rather than more developed, fashionable and prosperous East Coast littered with huge cities like Shanghai and Guanzhou (Canton) which are easily comparable with Hong Kong. What we saw and experienced was that of a country and people seized with a singular passion to bring about an alround development based on speedy economic growth. This singularity of purpose and the determination was seen at all levels from the Polit Bureau down to the local committees. Given that this was happening in a country with 1.3 billion people that has been experiencing a phenomenal annual economic growth during the last two decades, such a massive human and material effort is bound to produce results that will have global implications.

The highlight of the visit was the discussions the delegation had with the CPI Political Bureau Standing Committee member and in-charge of Party Discipline, Comrade Wei Jianxing. While detailing the various aspects of the current situation in China, Comrade Wei Jianxing highlighted the China's desire to improve good neighbourly relations with India. This, he said, was in China's interest as its main priority was to develop its own economy and thus strengthen socialism, which required peace and absence of tension with any country. Despite the recent setback to the decade-long process of improvement of relations that began with the Indian Prime Minister's visit to China in late eighties, Comrade Wei Jianxing emphasised China's desire to overcome these problems and continue the process of improvement of relations. In response, our delegation conveyed to the Chinese leadership that the Indian people, given the centuries long association and interaction with the Chinese are equally, if not more, desirous of improving these relations. In fact, the mutual concern for good neighbourly relations was a constant feature in all the discussions down the line that we had during these ten days.

Considering that ours was the first political delegation visiting China after the BJP-led government assumed office in India and in the background of irresponsible acrimony unleashed by the BJP and its allies against China as a justification for Pokhran-II, such a universal desire for improving relations with India by the Chinese leadership and the people was, indeed, heartening. During the course of the discussions with various leaders, it became clear that over the past couple of years, China has overcome enormous difficulties, achieved new advances while maintaining political and social stability with a relatively high economic growth. China has achieved significant diplomatic victories as well and is bracing itself to re-unite Macau during the 50th anniversary of its socialist revolution in 1999.

Domestically, China had to overcome two very serious problems: the impact of the South East Asian financial crisis; and the severest of floods unprecedented in this century.

The impact of the financial crisis, they informed us, is not yet over. Over the past few years, foreign trade was growing at an annual rate of 16 per cent. Last year, this fell to 0.4 per cent. Anticipating such problems, China had targeted an 8 per cent growth in the GDP. Of this, 2 per cent was to come from foreign trade. The sharp drop in the latter growth rate was a severe setback.

The unprecedented floods, on the other hand, caused a damage that was worth more than 200 billion Yuan (Chinese currency, approximately 8 to a US dollar). Despite this, China achieved growth rate of 7.8 per cent during the year. And, the real per capita income grew by 4.3 per cent in rural and 5.8 per cent in urban areas. How did they manage this?

The main lever through which China faced these two formidable challenges was by a massive increase in State spending that stimulated internal domestic demand. During this year, more than 100 billion Yuan was spent by the public exchequer on building infrastructural facilities. It was this timely and effective State intervention that helped China not to go the way of the South East Asian countries which would have caused tremendous chaos in a country of China's size.

While China's decision not to make its currency convertible had helped to insulate itself from the financial crisis, it has refused to devalue its currency despite this being the obvious choice to bolster exports. And, thereby, improve the growth of foreign trade. They, instead, took a series of measures to encourage exports through a variety of subsidies. One of the main reasons for not devaluing its currency was that it would affect Hong Kong, which was already suffering the consequences of the financial crisis. Further, the devaluation would reduce the overall confidence and international standing. More importantly, it would increase China's foreign debt burden.

Incidentally, the few hours we spent in Hong Kong on our return journey confirmed the fact that mainland China had greatly helped Hong Kong from buckling under the financial crisis. Apart from not devolving the Yuan Mainland China had stepped up investments in Hong Kong boosting demand and employment. This has silenced even the worst critics of Hong Kong's unification with People's Republic of China. The bulk of Hong Kong's population appears more grateful to the mainland than even before.

It would be interesting to note that when we, in India, argue that in order to overcome industrial recession and at the same time generate employment, it is necessary for the government to undertake large public expenditures, we are told by the Indian liberalisers, that this will push up the fiscal deficit and, hence, would be counter-productive. Then why was this not true for China? Because, it is not true for India as well!

On the contrary, despite such huge public expenditure, both the retail and consumer prices grew at a lower rate in China than the previous year. The Chinese explained that the problem is not in building up a domestic debt. The question is on how such funds are spent? If these are spent productively and not wastefully, then it need not give rise to inflation. They claimed that the ratio of deficit plus the total value of outstanding national bonds (domestic borrowing) to the GDP is still below the internationally accepted alarm level and, hence, sustainable. This has been so because, unlike India, over the years China pursued a balanced fiscal policy.

As regards its foreign debt, a question with which we are often confronted in India, Chinese have explained that in no single year has the outstanding foreign debt been more than the foreign exchange reserves. This, they claimed, is the key to ensure that the country does not get indebted. Further, in any uncertain international political situation, if the pressure mounts by the donor countries to return the loans, China can do so by using its foreign exchange reserves. Unlike India, it can use these reserves because it does not need them to finance imports as it always, over the last two decades, has a balance of trade surplus. Meaning that its export earnings are more than sufficient to finance its import requirements.

We were most impressed to learn how China tackled the unprecedented floods. Apart from a direct economic loss of over 200 billion-Yuan, many mines and industrial enterprises had to be closed down. But, due to a massive mobilisation programme under the leadership of the CPC and the People's Liberation Army, they succeeded in battling the floods and minimising losses. Despite such a major calamity, harvest was generally good. Amazingly the grain output did not fall, they estimate a growth rate of around 4 per cent.

In fact, a very high priority has been accorded to agricultural development with an emphasis for urgent modernisation. Unless this is done, they apprehend dangers to the livelihood of the people and social stability. The task of feeding such a huge population with a cultivated area less than that in India, which is also vulnerable more to droughts than floods is, indeed, stupendous.

With regard to industry, a major problem China is facing is that of its public enterprises. Public enterprises continue to be the overwhelmingly predominated part of Chinese industry. And, we were assured that this will be maintained. However, in the process of restructuring of these enterprises, the problem being faced is that of workers being laid off. Around five to six million workers are laid off every year. But at the same time, six to seven million new jobs are created every year. But due to population growth and additions to the labour force every year, they informed us, that around five million workers remain to be re-employed. This, they anticipate to solve in the next couple of years.

The laid off worker is protected by the State by receiving a minimum amount of money required to sustain normal life. This amount varies from place to place with the local authorities determining the level, according to the cost of living, housing availability etc. Hence, it is not, as is the case in India, when retrenched workers find themselves on the streets.

We are often confronted in India by our businessmen as to how we support China when it implements a `hire and fire' policy regarding labour when we oppose the introduction of the same in India. We found out that in China, whenever a person is employed, the employer is obliged by law to take an insurance policy against the employees' prospect of unemployment. The employer pays the premium. If he chooses to fire the worker, then the worker receives the insurance amount as compensation. Will the Indian businessmen be prepared to accept such a condition to protect the worker and will the present Indian State pay the worker to sustain his life?

Another problem being faced by China is the regional economic imbalance between the prosperous East Coast and the rest of China. They explained to us that conscious efforts were being made to overcome this through greater financial allocations for major projects in these areas and to create better climate for the introduction of private capital. The developed areas are to assist the backward areas through economic linkages, i.e., by encouraging the establishment of auxiliary units in the backward areas. Through this process, people deprived of developmental benefits, they are confident, will receive them at the earliest.

Another major problem that China is facing is the growing disparities in the income levels between its people. Their famous dictum that in the process of getting rich some will get rich faster is there for all to see. But through conscious State intervention, they are seeking to provide benefits to those at the lower end. Apart from such disparities, a major problem that continues to surface is the growth of illegal activities such as corruption etc. The CPC has adopted a vigorous policy to encourage people to grow rich through honest means and cracking down on illegal activities. A widespread campaign is on this score and some deterrent action has also been taken, like against the former Mayor of Beijing who was found corrupt.

In March, this year, the National People's Congress, the highest State authority met to review the activities of the last year. The Chinese leaders informing us of the results, emphasised that Comrade Deng Xioping's theory means working from practical conditions. In the past, they had committed, according to them, the mistake of trying to overtake the concrete conditions. China is not yet a developed country, it is still backward. Therefore, their decision to develop the productive forces through the socialist market economy and demonstrate the superiority of socialism through growth of economic productivity. In the process of such a review, they came to the conclusion on the need to amend the Constitution to allow the development of other forms of property like private property, collective or co-operative property while public ownership will be dominant.

This, they said, was necessary to stimulate initiative of private or other forms of ownership and to allow them to co-exist with public ownership. In answer to the obvious question that whether this would permit the growth of a capitalist class, they answered that under the leadership of the CPC with its commitment to maintain and strengthen socialism in China, they are confident that they can preserve China's socialist character and not allow such forms of property to dominate.