Where
to now? 40 years after the big economic experiment that changed China
·
Deng
Xiaoping’s push for ‘reform and opening up’ launched China’s rise from the
wreckage of the Cultural Revolution to the world’s second-biggest economy
·
To mark the
40th anniversary of the start of the process, the South China Morning Post
takes an in-depth look at the forces that shaped that transformation
When China embarked on
sweeping economic change 40 years ago, buttons and elastic bands were at the
forefront of the new era.
Vendor Zhang Huamei, who sold
the small items from a desk in an alley behind her home in the southeastern
city of Wenzhou, became the first entrepreneur in the country to be granted a
business licence as a sole proprietor.
Until then, Zhang and other
businesspeople like her had to be on the alert for authorities trying to stifle
the budding but “bourgeois” private sector emerging in the aftermath of the
Cultural Revolution.
“[Before I got a licence], we
had to flee and hide our stock when inspectors came [to clamp down on street
vendors],” she said.
“But in 1979, [local
officials] came to tell me that I could apply for a business licence, so I
did.”
In the four decades since, her
button and textile business has risen and fallen and risen again, following many
of the twists and turns in the path to “reform and opening up” taken by the
country as a whole.
That era began in late 1978
when the ruling Communist Party’s top decision-making body, the Central
Committee, met to end ideological turmoil, set aside class struggles and open
the door to experiments such as private ownership.
The push was driven by late
paramount leader Deng Xiaoping and was the start of a new pragmatic period in
which the results of economic policy would determine the value of the approach.
In the intervening years, the
party has continued to loosen state control in many economic and social
activities, legalising private ownership, allowing market competition and
opening up to foreign investment and trade.
The changes have transformed
China from one of the world’s poorest countries into the globe’s second-biggest
economy. Businesspeople have joined the party and China promotes free trade on
the international stage.
But the bottom line set by
Deng in 1979 remains in place: there can be no challenge to the party’s rule.
As China confronts new
challenges such as slowing economic growth and a trade war with the United
States, observers continue to question just how far the country can go along
the road to economic reform without political change.
In his trip to southern
Guangdong province last month, Chinese President Xi Jinping signalled that he
was willing to press on with the process set in motion 40 years ago. At the
same time, he is also unlikely to depart from the course he has taken since coming
to office – of centralising power and revigorating ideological campaigns.
The ‘Three Benefits’
When Deng started his push for
reform and opening up, his goals were to prevent a recurrence of the Cultural
Revolution and to salvage communist rule devastated by the decade of chaos and
Mao Zedong’s personality cult.
At 74, Deng was at the centre
of Chinese politics for a third time and the country was in ruins from the
decade of turmoil.
“Deng was personally purged
during the Cultural Revolution. Reform and opening up was his reflection on the
Cultural Revolution, it was also a collective reflection by Chinese [about how
to get out from the shadow of it],” Guangzhou-based historian Yuan Weishi said.
The new direction was set in
December 18-22, 1978, when the party’s Central Committee, chaired by Deng,
formally abolished the “Two Whatevers”, a principle that upheld whatever Mao
said was the truth, and replaced it with the principle of “Practice is the Sole
Criterion of Testing Truth”.
Liu Ji, former deputy director
of the Chinese Academy of Social Sciences and a top party theorist who advised
former president Jiang Zemin, said the new slogan meant that China did not have
to abide by everything Mao had said.
“We needed to experiment to
find out what was correct,” Liu said in an exclusive interview with the South
China Morning Post.
“Originally the most important
feature of socialism was state ownership, but Deng set aside the debate about
ownership. Another feature was the planned economy, but Deng dismissed these
two features of socialism. All he was talking about was to unleash the
productivity [of a country].
“Without Deng, the Communist
Party would have been over even before the end of the Soviet Union.”
In the following years, party
meetings and state media echoed the call to “liberalise mindsets”, unleashing a
wave of experiments, including the setting up of many special economic zones,
firstly in the coastal provinces of Guangdong and Fujian, and then in Shanghai
and the north.
In the eastern province of
Anhui, the residents of Xiaogang village were among the first to cross the line
of collective ownership by dividing up the land owned by the commune and
allowing farmers to harvest the crops they grew. The move did not give the
farmers official ownership of the land but they could take personal ownership
of the yields.
In neighbouring Zhejiang
province, Zhang was being granted her pioneering business licence.
“It made a huge difference
because I could do business openly from then on,” she said.
Deng’s reform drive nearly
came off the rails in the aftermath of the 1989 Tiananmen Square crackdown and
the collapse of the Soviet Union, which brought conservative voices to the
political fore. The conservatives questioned the value of the new economic
direction, prompting Deng to head to Shanghai and Guangdong to spread his
message. It was on his 1992 trip to Guangdong that he declared that
“development is the hard truth” and all open debates about whether reform
policies were capitalist or socialist should stop.
Instead, support should go to
whatever reforms benefited productivity, the overall strength of the country
and living standard of the people, he said.
“The ‘Three Benefits’
principle broadened the definition of socialism. It was very important,” Liu
said.
“I think Deng had no dogma
about socialism, the only criteria is the … principle – whether it can make
China rich and strong.”
The approach culminated in
2001 with China’s admission to the World Trade Organisation (WTO) and its
formal integration into the international market economy.
By then Deng had died but
Jiang was at the national helm. Liu, said Jiang agreed to make concessions to
the WTO and change China’s economic regulations because he was convinced that
globalisation was an irreversible trend.
Jiang’s decision, Liu said,
was a continuation of what Deng had laid down.
“In terms of reforms, Jiang
actually didn’t create anything new. He basically followed Deng’s reform and
carried it through,” he said.
In 2002, the party adopted
Jiang’s “Theory of the Three Represents” as part of its charter, allowing
capitalists to join the organisation.
Today, China has the world’s
biggest cache of foreign reserves, it is the second-biggest economy after the
United States and its share of the world economy has grown from a mere 1.8 per
cent in 1978 to 18.72 per cent this year, according to the International
Monetary Fund.
Ezra Vogel, emeritus professor
of social sciences at Harvard University, said Deng’s approach unleashed much
of that change.
“The success of Deng’s reform
and opening policies – which brought a fundamental change in policies from the
previous 20 years of excessive leftism and allowed Chinese to learn recent
developments in science, technology, and management from the entire world –
provided the base for rapid economic growth that enabled China to achieve
unprecedented growth for four decades,” Vogel said.
Politics of change
While China has been willing
to embrace market reforms, the Communist Party has been reluctant to embark on
political change.
In the past four decades,
there have been intermittent attempts to better define the functions of the
party and the government, and introduce some election procedures and
transparency in the selection of party officials.
China has also allowed
elections at the village and county levels, but a crackdown on protests in the
Guangdong village of Wukan in 2016 over the jailing of a popular former village
chief showed that the party would maintain an iron grip at the grass-roots
level.
Western-style democracy has
never been on the agenda, and the ultimate goal of any kind of institutional
reform is to improve the ability of party rule.
But Vogel said one important
political reform by Deng was the establishment of a modern civil service.
“Deng undertook political
reforms of establishing regular term offices, introducing the exam system which
raised the qualifications of office holders and provided them added
understanding of the issues faced by the government,” he said.
“After 1978 the training of
officials in management and the introduction of information from abroad allowed
more room for expression of diverse opinion.”
Deng also tried to ensure
collective leadership in the top party echelon, to avoid a repeat of the
unchecked power Mao enjoyed. But these efforts were never successfully
institutionalised.
Alarmed by protests and
posters calling for democracy, Deng ordered a crackdown in 1979 and set a
boundary for China’s political and institutional reform: the “Four Cardinal
Principles”, which made it clear that the party would not allow anything to
challenge its rule.
The principles were a
straitjacket for political change. Even in the 1980s when Deng commissioned
former premier Zhao Ziyang to research ways to distinguish the role and
functions of the party and the government, the party was still to be the
dominant player.
Wu Guoguang, who was part of
Zhao’s team, said in previous reports that Deng only wanted to improve
administrative efficiency, but Zhao wanted to go further.
In his memoir, published in
Hong Kong after his death, Zhao said he had no intention to institute
Western-style democracy, but he wanted to increase transparency in the party
and the government, introduce elections within the party, and have more room
for public expression and the participation of other political forces.
“When economic reforms got
deeper, the resistance from the conservative forces in the party got bigger.
Without political reforms, it is difficult for economic reforms to drill
deeper,” Zhao wrote.
Those efforts were aborted
after the Tiananmen crackdown and political reforms were never again open for
discussion.
“The 1989 Tiananmen
[crackdown] was a watershed … After Tiananmen, there was no political reform at
all,” said Wu, now a political-science professor in the University of Victoria
in Canada.
But a pro-government scholar
disagreed, citing elections at the village and county levels, changes to the
household responsibility system that occurred in places like Xiaogang, and even
market reforms that allowed private enterprises as evidence of political
change.
“Many people said China only
conducted economic reforms and there was no political reform, it was wrong. The
Chinese economy and politics are inter-related and interact. Political and
economic reforms cannot be separated,” said Li Junru, former deputy head of the
Central Party School and a party theorist during Xi’s administration and that
of his predecessor Hu Jintao.
“Without ironing out the
relationship between the government and the enterprises, how can you build a
market economy?”
40 years on
Forty years on and China is
six years into Xi’s administration. Just like Deng, Xi has had to confront a
party at the crossroads, with the upper ranks riddled with corruption and
membership seen as a vehicle for advancement rather than a reflection of
belief.
Xi has responded to these
challenges by adopting a strongman approach – sending thousands of corrupt
officials to jail, reshuffling party and government officials to root out
factions, purging businesspeople who helped political elites channel money
overseas, and tightening control over the media, arts, and education.
In March, Xi also made
sweeping changes by merging and restructuring party and government bodies, such
as putting the State Administration for Religious Affairs and the Overseas
Chinese Affairs Office under the party’s United Front Work Department. Instead
of separating the government from the party, Xi has pushed for the party to
oversee every aspect of the country.
“[Xi’s top aide] Wang Huning
believes in new authoritarianism. What China needs is [to establish] systems,
but authoritarianism is always music to the ears of politicians,” a former senior
government official said.
Xi’s strongman style has
helped him to crush opposition voices, but the approach raises the risk of
mistakes that China can ill afford.
“The most important tool to
make cadres work now is using self-criticism sessions, but who would be sincere
in such sessions?” a researcher specialising in party organisation said,
referring to meetings where cadres must admit their failings.
Xi has repeatedly pledged to
deepen reforms but just how far he will and can go remains unclear,
particularly as China grapples with slowing growth, a trade war with the United
States, and pessimism in the private sector.
Observers were looking for
signs late last month when Xi made his own high-profile trip to Guangdong amid
rising concerns in the business world that the party was favouring state
industry at the expense of the private sector. By visiting private companies in
the area, Xi signalled that the party would continue its support for the
private sector and that economic reforms and opening up would continue.
The party has also held a
number of high-level meetings to indicate its support for entrepreneurs. On
November 1, the president underlined the message to a group of businesspeople,
including Robin Li of Baidu and Pony Ma of Tencent.
“Some have argued that the
private economy has completed its mission and will fade out … Some have wrongly
argued that setting up party cells and labour unions in private businesses is
intended to control private enterprises … All these statements are completely
wrong and do not conform to the party’s policies,” Xi said.
Vogel said the reform and
opening up drive started by Deng would continue under Xi, although the current
president might adopt a different methodology.
“Many of the reforms
introduced by Deng still continue, but Xi has tightened the controls over the
government and society and extended the micro-management while Deng
concentrated only on the major issues and left more room to specialists below
him,” Vogel said.
But Vogel said it was
impossible for the party to maintain a tight political control forever.
“With over a million students
studying overseas and tens of millions of tourist visits abroad each year, it
is impossible to have tight political control over the thinking of Chinese
citizens,” he said.
“Just as tight controls were
loosened after 1976, so it is possible that controls over expression of
different views will again be loosened at some point. Chinese citizens are too
thoroughly intertwined with events around the world for Chinese leaders to be
able to enforce long-lasting tight control over thinking.”
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