69. Intelligence Assessment Prepared in the National Foreign Assessment Center, Central Intelligence Agency1

RP 77–10328

Policy Issues in the Post-Mao Leadership

Key Judgments

This study concludes that, despite an impressive record of achievement in restoring order and reviving the economy, differences over policy still divide the post-Mao leadership. These differences are mainly political (having to do with the distribution of power), but are also reflected in the new leadership’s discussion of economic, military, and, to a lesser extent, foreign policy problems.

With respect to political issues, it appears that individual and group conflicts have carried over from the bitter factional struggles of the Cultural Revolution era (now defined as encompassing the entire period from 1966 through the fall of the “gang of four” in October 1976). It is a working hypothesis of this paper that, as a result of these conflicts, the political agreement that led to the rehabilitation of Teng Hsiao-ping and the convening of the 11th Party Congress is beginning to break down. This agreement—[less than 1 line not declassified] by Teng Hsiao-ping to the Central Committee—appeared to call for a threefold commitment by Teng (1) to serve on his return in a subordinate capacity to Chairman Hua Kuo-feng, Mao’s chosen successor; (2) not to criticize the Cultural Revolution or its creator, Mao Tse-tung; and (3) most important of all, not to seek revenge against those in the new leadership who had both contributed to, and benefited from, his fall.

Despite the pledge to defer to Hua, Teng Hsiao-ping since his return has moved so rapidly to extend his power and influence by appointing associates to high posts and stamping his imprint on nearly every area of policy that, to most Western observers, he, rather than Hua, already appears to be the real head of government in China. Whatever the relationship between Hua and Teng, it seems clear that Teng’s share of power is still a contentious issue in the post-Mao leadership.

The second promise made by Teng Hsiao-ping as a condition for his rehabilitation—that he honor the Maoist legacy and not criticize the Cultural Revolution as an important part of that legacy—also appears [Page 275] to have been broken. Teng has openly criticized the Cultural Revolution on several occasions, most notably in his recent bitter comment that it will take China “20 to 30 years” to recover from the turmoil and disruption of the past decade.

Teng Hsiao-ping’s third pledge—not to try to settle accounts with those in the new leadership who had opposed him—may also be in the process of breaking down. The recent widespread rumors that three Politburo members (all of whom had opposed Teng) are under attack and will be demoted or purged suggest that Teng may in fact be engaged in settling scores with those who profited at his (and other veteran cadres’) expense during the Cultural Revolution. The end result may very well be a struggle for positions in the new government to be established by the now postponed National People’s Congress, with Teng Hsiao-ping and his adherents seeking to expand their power base and Hua Kuo-feng, along with other leaders who benefited from the Cultural Revolution, trying not to lose further ground.

With respect to economic issues, there are clearly differences within the post-Mao leadership over the allocation of scarce resources to achieve the four modernizations—the ambitious goal first enunciated by Chou En-lai three years ago of modernizing China’s agriculture, industry, national defense, and science and technology by the end of the century. Vice Chairman Li Hsien-nien recently told Western visitors that “debate” within the leadership over investment “priorities” often becomes “very heated and animated.” There are indications, moreover, that these differences may have delayed the making of hard decisions on resource allocation in China’s modernization program.

The issue of economic versus defense spending, or of the proper relationship between economic and military modernization, is one of the most difficult problems in resource allocation confronting the post-Mao leadership. Appearing more or less openly in the press, the current controversy over defense spending continues the series of guns-versus-butter debates that began in the mid-1950s, reappeared in the 1960s, and figured prominently in the leftist campaigns of the early and mid-1970s. In addition to this conflict between economic and military planners, another significant aspect of the current debate has been the apparent competition among China’s armed forces (especially the Navy and Air Force) for the limited funds available for military modernization.

The issue of incentives, the motivating of China’s work force, may well be the most critical long-term problem confronting the post-Mao leadership. With no general wage increase since the 1950s, there is a tremendous pent-up demand in China for higher pay and a higher standard of living. This revolution of rising expectations is taking place at a time, however, when the need to make up production and revenue [Page 276] losses and increase investment rules out significant improvement in the income of most of China’s work force.

With respect to foreign policy issues, it appears that the fall of the “gang of four” and the return of Teng Hsiao-ping will have a greater effect upon China’s relations with the West than with the Soviet Union. In relations with the Soviet Union, although Peking has reduced its confrontational posture and improved Sino-Soviet atmospherics, basic hostility remains, and the United States is still viewed as a partner in China’s anti-Soviet global strategy. In relations with the West, the new flexibility in foreign policy will probably be most noticeable in the areas of trade and technology transfer. There is some reason to believe, however, that internal differences may be slowing down the rate at which Teng would like to expand trade in order to acquire advanced technology from the West.

One may well ask what these indications of tension and of differences within the leadership, some of which are admittedly speculative and tenuous, signify. They suggest, first of all, that, in constructing a new model to explain the nature and character of the post-Mao leadership, Western analysts should recognize (1) that, although it would be manifestly wrong to cling to the factional model of the Cultural Revolution era, (2) it would be equally wrong to go to the opposite extreme and substitute a conflict-free consensual model in its place. Although no longer split along ideological lines, the post-Mao leadership does appear to be divided into loosely organized opinion groups expressing different views on different policy issues.

Do these differences pose a serious threat to the stability of the post-Mao leadership? A key variable determining the answer to this question is the health and continued influence of China’s aging military leader, Yeh Chien-ying, who, it appears, negotiated the agreement governing the return of Teng Hsiao-ping and since then has sought to balance the interests of the two groups within the leadership. But whatever the outcome (for example, an uneasy stalemate or perhaps the demotion or purge of one or two members of the Politburo), it seems safe to conclude that the degree of political instability will not approach the bitter and protracted factional struggle that characterized China’s leadership during the Cultural Revolution era.

Will these differences have a significant impact on the substance of China’s domestic and foreign policies? Although concerned primarily with the distribution of power, the current divisions within the leadership do appear to involve differences over policy. But since these policy issues are not being used as political weapons in an all-out struggle for power as they were during the Cultural Revolution, it appears that, at least for the foreseeable future, the differences will not affect the sub[Page 277]stance so much as the manner and pace with which the post-Mao leadership implements its domestic and foreign policies.

[Omitted here are the table of contents and the body of the assessment.]

  1. Source: Carter Library, National Security Affairs, Staff Material, Far East, Oksenberg Subject File, Box 28, Brzezinski 5/78 Trip to China: 2–12/77. Secret; [handling restriction not declassified].