SOCIALIST PATH 5 A domestic producer-goods industry has been set up at a rapid rate, through control over the composition of the output of domestic producer-goods industries. As a result., China is now self-sufficient in capital goods to a degree unmatched in most underdeveloped countries., and can enjoy relatively high rates of investment and growth without being so independent on the need to earn foreign exchange in order to increase physical supplies of investment goods. In other words, it has gone a long way towards breaking the ^foreign exchange constraint' which hampers economic growth in so many ^Third World' countries. Human Motivation and National Independence At the lower stages of economic development in particular, increasing average real wages is central to the attempts to maintain work motivation. The Chinese government met with difficulties in regard to urban incomes in the 1960s in the attempt to even up the real income levels in town and country. Furthermore, it is clear that a greater proportion of increments to national income has been allocated to investment than consumption. Overall, however, consumption even in per capita terms does appear to have slowly expanded. Of great importance here has been relative equality with which the available consumer goods have been distributed, which has ensured maximal benefits, in terms of popular living standards, from a given volume of consumer goods. The Chinese government has been able to control earned income differentiation within industrial enterprises and agricultural collectives; it has ensured that basic items of consumption, such as grain, edible oil, fuel, cotton cloth and meat have been rationed; prices of basic items of consumption kept relatively low and stable, and consumer-goods industries produce mainly for meeting mass consumption needs. The importance of state control for real living standards at a given level of development is also reflected in what appears to be a relatively high proportion of GNP allocated to collective goods such as health, education and child care, available either free or at low prices. As for the foreign aspects of China's economic growth, the relationship between state planning and national ^independence' is quite clear. The Chinese government has, since soon after Liberation, held a monopoly of foreign economic transactions. Permitting no foreign investment, it has controlled the structure of imports in such a way as to most quickly achieve self-sufficiency in the production of producer goods. There is a stringent control of foreign indebtedness, the only long-term loans being from the Soviet Union in the 1950s, which were repaid by 1964. Short and medium-term credit arrangements are at the most of the value never exceeding a single year's export earnings. Offers of long-term loans in the 1970s from various sources have been considered with circumspection, but none so far accepted. An outstanding difference between China and the Soviet Union