The Multi-Revolutions of China The Social and Economic Upheavals of Maoist and Post-Maoist China By Jeff Sun & Dan Tran Engineering 297A: Ethics of Development in a Global Environment

Abstract

China today is a country on the verge of economic dominance and superiority in our world. With 2 decades worth of economic policies focused on free enterprise, free trade and developing a competitive advantage in manufacturing and production, China has positioned the 21st century to be China's century.

But how did Maoist China, a country built on sociopolitical revolution and Marxist ideology, develop into what is now post-Mao China, a China more capitalist than it had ever been in its history? The answer lies in Mao ZeDong's social and economic policies from the 1950s to the 1970s and their complex, far-reaching consequences.
From this historical explanation of why China's present-day economic policies came about, we bring the focus to what these economic policies actually were, and their role in China's rapid modernization and economic progress in the 1980s and 1990s. From there, we look at China today, and hypothesize China's place in the political and economic framework of our modern international society.




The Impetuses for Post-Mao Economic Policies

China’s leaders since 1949. Mao ZeDong (left), one of the most intriguing and volatile leaders of the 20^th century, would create a society based on his view of Marxist ideologies. His successor, Deng Xiaoping (middle), would quickly turn China’s focus to one of economic reform and progress. Deng’s economic vision of China has been further modernized and enhanced by his successor, Jiang Zemin (right). [http://news.bbc.co.uk/nol/shared/spl/hi/asia_pac/02/china_party_congress/china_ruling_party/problems_mount/img/300_pics/three_leaders_300.jpg]

The 21^st century will be China’s century.

Over the years, many have tried to argue against such a notion: “The United States is too powerful,” they say, “the United States has too much technology. The United States has too great of a military!”

But everyday, it becomes ever more clear that this premonition is quickly becoming a stark reality. The clothes we wear, the televisions we watch, the computers we use, the countless articles that we depend on for everyday life – so many are stamped with a little logo that represents a global changing of the guard: “Made in China.”

China’s economy today is growing faster than ever, driven by hard-hitting economic policies aimed at fostering free enterprise, global trade, and a competitive advantage in manufacturing and production that goes unmatched in our global economy. But how did today’s China come about? How did a rural, agricultural society built on ascetic ideals of communalism, simplicity and sociopolitical revolution develop into the world economic powerhouse that is China today? How did a people that had been programmed to follow Marxist philosophies suddenly discover the impetus to switch gears and embark on economic progress based almost purely on capitalistic ideals?

How did a country in our world’s economic backwaters just a few decades ago become what today is modern-day China, a country at the forefront of global economic dominance and supremacy?

The complex answers to these questions lie in a defining epoch of China’s social, cultural and economic history: the 30 years in which the Chinese people lived under Mao ZeDong, one of the most multifaceted and unpredictable leaders in world history. Mao’s continual call for asceticism in the name of Marxist egalitarianism would so deeply repress his peoples’ desires for material well-being and economic success that when they could have it once more, it would quickly become China’s obsession. His Cultural Revolution so thoroughly broke traditional bonds of family and friends, founded in millennium-old Confucian ideals of loyalty and trust, that the Chinese masses resentfully turned to an opposing value system that stressed materialism, personal wealth, and economic achievement. Mao’s policies and ideologies, and more importantly, the subsequent backlash against them upon his death, would effectively constitute the underlying forces that lie behind China’s modern-day economic policies and the rapid economic modernization and westernization they brought.

A Historical Perspective

For centuries, China stood as a rural state of landlords and peasants, built essentially on Confucian values: “the importance of families, the loyalty to the family, the ruling position of the patriarch” (Zeng quoted in Kuhn 260). In the 20^th century, Mao ZeDong would bring his Communist Revolution into this feudal environment. Advocating the revolutionary Marxist ideal of socioeconomic egalitarianism, Mao would quickly win the loyalty of millions of rural peasants, enabling him to build a massive peasant army of over 500,000 soldiers. Though they were greatly outmatched in weaponry, technology, numbers and funding, Mao’s peasant army fought with a passion and determination that was greatly lacking in their opponents, the forces of the Kuomintang, led by Chiang Kai-Shek. Over the course of several years, Mao would ultimately lead his followers to victory against a Kuomintang that was essentially fighting 3 wars: against Mao, against the Japanese Invasion, and against the Axis powers of World War II.

Mao proclaiming his People’s Republic of China in Beijing, 1949. [http://en.wikipedia.org/wiki/Mao_Zedong]

Instated as the Chairman of the People’s Republic of China in 1949, Mao would create an egalitarian society founded on Marxist economic ideals of agricultural collectivization and industrial nationalization, political ideals of continual revolution and individual activism, and social ideals of self-sacrifice and asceticism (Walder Lect.). But if one characteristic could describe great leaders such as Mao ZeDong, it would be their inability to be satisfied, their endless yearning for more – whether it be more land, more war, or in Mao’s case, more revolution. It was this precisely this never-ending call to social revolution that would quickly detach Mao’s vision of China from that of his people’s.

Upon his death, Mao’s Party selected Deng Xiaoping, a man whom Mao had banished from Beijing twice before his death, as China’s new leader. Deng, always a harsh critic of Mao’s economic policies or lack thereof, would immediately put China on his own path, one that he felt represented the pressing demands and modern attitudes of the Chinese people. This path consisted of aggressive policies focused on economic development and material progress at all costs (Cook 19). To this day, China is hardly Mao’s China – except for his massive portrait hanging in Beijing.

Mao’s Portrait, still hanging today in the center of Tianamen Square in Beijing, China’s capital. [http://www.kiku.com/electric_samurai/virtual_china/image/beijing_06.jpg]

Instead, it has become Deng’s China: a country devoted to economic modernization in the form of private enterprise and free trade, a country that sees economic dominance and superiority as its means for global recognition and power, a country that does not care, as Deng Xiaoping says, “if the cat is black or white as long as it catches mice.”
Maoist Institutional Asceticism

China’s economic reforms in the late 1970s and into the 1980s presented the Chinese people with the opportunity to be economically well-off and successful after 30 years of policies and ideologies embodying a system of institutionally forced asceticism. But we must ask: what was the impetus for the Chinese people and their leaders, especially Deng Xiaoping, to so drastically switch gears from Maoist economic policies? The answer, as we will see, is to be found in the shifting needs and demands of Chinese people themselves, at the heart of which is a pent-up lust for a taste of the material wealth and economic success that had been China’s forbidden fruit for a generation under Mao.

An idyllic Maoist life was one of poverty, of simplicity, of perfect egalitarianism: such was arguably Mao’s most ambitious and far-reaching socioeconomic ideal of his reign. Dr. Fang Wan, a researcher of cross-cultural psychology from China, attempts to see just how ascetic the everyday life of Chinese people truly was in his “A Tale of Two Cities.” In his assessment, Wan quotes a paragraph about the life of a new married couple in Maoist China, exemplifying just what life was like for the great majority of China’s citizens: ascetic, simple and poor.

“‘[They] held low expectations of life. They just lived in this small room when they got married. There was no sofa, no cabinet, no table and chairs, no new comforter at that time. They just pooled their stuff together and started their married life. The room is small, only 12 square meters…To them, a small room is big enough to live a life. Plain clothes are good enough to provide warmth. Simple food is tasty enough to ally their hunger’” (Rong quoted in Wan 301).

In 1950, Mao gave the Chinese peasants, for the first time in Chinese history, private and individual plots of land for them to sow and reap. But to the great dismay of these farmers, Mao would quickly turn away from what he saw as a system of petty capitalism. Instead, he chose to force his people into the incentive-loss, near-exploitative institution of agricultural collectivization. Introduced in 1952, Mao’s new system gave his people little, if any more, than they had had before the Communist Revolution (Walder Lect.). In fact, his people would work daily at a frenetic pace to meet monthly and yearly quotas: “the people, dressed in their blue Maoist uniforms, would work without sleep for 24, 48 and in some cases 72 hours straight, building with bare hands…” (Deng 14).

A scene from Mao’s Great Leap Forward campaign, in which his government imposed impossibly high quotas and unbearable workloads upon China’s peasants in an effort to compete with America and Great Britain. In the Great Leap Forward’s aftermath, 30 million farmers would die of starvation or disease. [http://www.tu-berlin.de/~alltag-china/pics/p_ih.jpg]

Many were “so hungry that they had difficulty sleeping…people became ill…elderly died” (Chan 25). All this was part of Mao’s grand economic plan: to funnel large amounts of grain from the countryside to fuel a growing industrial workforce. But such a plan essentially created a distressing situation in which the peasant masses, the fuel behind Mao’s revolution for over 20 years, were to work very hard yet live very poor.

My mother, a young woman who worked in Mao’s rural-education institution of the 1970s, can clearly recount these difficult circumstances:

“We loved Mao, everyone had to love Mao. And in his Little Red Book of Mao’s Quotations, which we read several times a day, he told us over and over again that we had to live in poverty and not strive for economic gain [and] economic progress because that was how he and his Communist [comrades] had lived before us. He told us we needed to give up our personal dreams, our personal desires for happiness…and instead be hungry, be poor so that China as a country could surpass Britain and America in power. I had always wanted to be a doctor, many of my friends wanted to be professors, scientists and government officials. But we gave up these dreams back then, because they were not Maoist. We were all supposed to be equal, so how could I want to be a doctor, while millions of farmers toiled everyday in the fields for nothing? Mao was almost a God to us back then, and anything and everything he said was done without question. In fact, we never even considered not doing what he asked of us” (Zhou Int. 1).

A Maoist propaganda poster calling for the Chinese people to read and study Mao’s Little Red Book of Mao’s Quotations on a daily basis. [www.wesleyan.edu/ dac/exhb/past/fifty3.html]

Ironically, it would be precisely this forced asceticism of the Chinese masses for almost three decades that would create a society that, upon Mao’s death, would demand and subsequently be exceptionally receptive to aggressive economic reforms allowing private property, free enterprise, and economic modernization and westernization.

In urban China, people were considerably richer. Many worked jobs in industrial facilities and government offices where the pay was above rural standards, and the majority of urban residents lived in decent housing structures with the full service of utilities. Still, self-sacrifice and “doing without” were a Maoist expectation of masses. Thus, once again, we have the fertile ground from which today’s capitalistic economic policies would rise from. My father, a young man living in Shanghai in the 1960s, recounts, “We didn’t have TVs, cars or bikes. All we ever received was our daily necessities. Anything extra traded for extraordinary premiums on the black market. I remember that bicycles were the one thing we wanted the most. If I had to say whether life was better or worse under Mao and before Mao, I would say without a doubt that [my family and I] had a great deal less in Mao’s time than we had before Mao” (Sun R. Int.). The people of urban China did not toil in the countryside day in and day out, but daily life was still described to be almost impossible languid and tedious:

“There was nothing to do, nothing to do all day, except work. If you didn’t have any work, you just loitered around the streets. Mao didn’t think we needed to have “fun”…and so there were no recreational places, especially not for the younger people. The pool halls, the bowling alleys, the bars and the nightclubs you see today? Nothing like that existed in Mao’s time, absolutely nothing! It was so, so boring and tedious, every single day” (Sun Int.).

An artist’s portrayal of Jiangsu, an urban industrial city in 1970s China. Notice the artist’s depiction of the city’s gloom and sense of desolation.

[http://kaladarshan.arts.ohio-state.edu/exhib/poster/PictPow4.html]
Zhao, a preeminent scholar of Chinese sociology who lived under Mao and survived the Cultural Revolution, supports this view in his “Meanings of Money Nurtured by Nature,” stating: “I did not enjoy [urban] life. In fact, I hated it. Not that I felt I suffered-I had not expected a much better life-but because everything was so predictable” (346).

In a country that just a few decades ago had consisted of self-sufficient farmers, enterprising businessmen, powerful landlords and important statesmen, China under Mao was a country of state-imposed poverty and forced asceticism. Mao created a situation in which his people lacked the bona fide socioeconomic competition and economic incentive that motivated the citizens of other modern countries. People had no reason to work harder and to be innovative. “The most happiness someone got in [China] was when someone got a parsed-out ticket saying they could get a radio or a bicycle,” as Rong Sun states in his interview. Without the true economic incentives available in a capitalistic state, Mao actually created a trifling competition for the small things that were frugally meted out by the state. Duan Sheng Sun, an official in the Shanghai government for 17 years describes how people participated in this competition as an “escape” from Maoist egalitarianism; as a way to have more than one’s neighbor, to feel ever so slightly a hint of economic and material success (Int.). Obviously the Chinese people, suppressed by a stifling egalitarianism, had subconsciously developed an intense, pent-up desire to have more, to do better, to be more successful than one’s neighbor. Such a yearning to attain a “better” life than one’s peers, or even just a “better” life in absolute terms, would lay a fertile groundwork from which capitalistic economic policies, allowing for private property, private and free enterprise and open competition, would quickly spring up and be almost universally accepted in the years to come.

Mao had effectively created a state in which both his rural and urban citizens were looking to escape from his oppressive asceticism and egalitarianism, a situation in which the great majority of Chinese citizens were quietly pleading for economic reforms that would allow material progress and individual success. As Duan Sheng Sun states,

“Those of us in the cities knew what the United States and Great Britain had. We wanted that…we wanted to be able to start our own companies, to become managers, to choose our own houses, to buy what we wanted. We wanted to buy our wives gifts, to buy our kids toys, to buy more than just what we needed to survive off of. So many of us learned to love Deng Xiaoping because we understood and appreciated his economic goals. He wanted to make real change to China, to bring to us what was making America and Great Britain so great and so powerful. We loved him for that” (Int.)

Of course, what Duan Sheng Sun and his fellow citizens desired and loved so greatly were economic policies aimed at modernization, westernization and real progress and growth. Deng Xiaoping understood what was lacking in his country, and Deng implemented precisely these policies upon Mao’s death to the great delight of his people. Essentially, the Chinese people’s call to economic individuality and freedom, driven by a pent-up lust for all that they had done without for 30 years, would be the impetus behind the development and quick implementation of China’s modern-day economic policies, policies that have quickly allowed China to evolve into the dominant economic player that it is in today’s global marketplace.
The Cultural Revolution’s Destruction of Traditional Values

A poster advocating the ideals of the Cultural Revolution. It says, “This Time It is Essential that the Great Cultural Revolution of the Proletariat Immediately Move to Strengthen the Dictatorship of the Proletariat, Guard Against the Restoration of Capitalism, and Establish Socialism” [http://kaladarshan.arts.ohio-state.edu/exhib/poster/PictPow4.html]

Mao’s ideologies and the far-reaching socioeconomic policies born from them created a fertile foundation for the China of today. But there is one crucial event in Mao’s regime important enough to justify its own analysis, that made an equally, if not more important contribution to China’s post-Mao economic mindset and subsequent development. This event, often considered to be the culminating and defining event of Mao’s decades-long reign, was his Cultural Revolution of 1966-1968.

Mao in the 1960s was alarmed by what he saw as his country’s corruption and self-seeking among his party members, bias inherent in his social programs, neglect of the peasants who had brought the revolution and “ideological softness of China’s young people” (yuan xi). In this period, it became ever more clear to Mao that his party members, or cadres, were eating and living better than the vast majority of his people. An idealist at heart, Mao refused to acknowledge that corruption was inherent in the Marxist economic and political system. Furthermore, Mao saw that his own party’s focus had reverted away from his core supporters, his original revolutionaries: the peasants. The better part of his country’s social services and funding went to the cities, originally strongholds of Kuomintang resistance against Mao and his forces. Mao went so far as to believe that his most trusted comrades of many years, Liu Shaoqi and Deng Xiaoping, were “revisionists” and “capitalists” (Walder Lect.).

A propaganda poster advocating the ‘smashing’ of Liu Shaoqi’s and Deng Xiaoping’s ‘counterrevolutionary lines.’ [http://kaladarshan.arts.ohio-state.edu/exhib/poster/PictPow1.html]

And so Mao, never content in giving up revolution, put forth his Cultural Revolution, a class struggle against the “enemies” of socialism. But who were Mao’s enemies to be? As history tells, Mao made his enemies essentially anyone who had not shown a complete and unwavering support to his radical revolutionary line. In the next several years, Mao’s “cleansing” of his state would result in over one million deaths, 30 million imprisonments and countless million more torture sessions. Mao and his Red Guards had “completed” their Cultural Revolution, taking an immense toll on the psyche of the Chinese people.

In this chaotic period, China degenerated into “gang wars, joyrides, souvenir hunts and orgies of destruction,” and was on the verge of Civil War (Yuan xix). Churches were being burnt down throughout the country. Government offices were being raided and even attacked by their citizens. Houses of the more “well-to-do” were robbed and smashed to the ground. Mao had created an all-encompassing chaos in which people were forced to turn on their peers, their closest friends and even their own family in an effort to not be labeled anti-Mao themselves (Walder Lect). Mao would tear apart China’s traditional societal fabric, breaching a Confucian value system of loyalty to and trust in family and friends. Not surprisingly, this breach of China’s millennium-old, deep-seated values would go on to create a profound disillusionment with Mao and all that he stood for.

A scene from Mao’s Cultural Revolution. Top party officials are denounced in a day-long rally. [http://www.bordersstores.com/features/feature.jsp?file=redcolornewssoldier]

Yuan in his autobiography, Born Red, provides a vivid picture of the unchecked social chaos of the Cultural Revolution period. He relates to us the time he and his classmates were personally encouraged by Mao to accuse their teachers of “revisionism” and “anti-Mao thoughts,” though they were in no way guilty of such crimes (55). He goes on to say that within a year, workers were denouncing their peers, friends were accusing friends, and sons were even accusing their own fathers of imaginary crimes against the state. Yuan, in fact, recalls when he denounced his own father for being anti-Mao, thus permanently ruining his relationship with his father and his whole family:

“‘Papa, you’ve always taught me to be honest. How can you play such tricks?...No wonder people call you a capitalist-roader!...You try to suppress revolution!...I won’t be a capitalist-roader’s son! I’m a revolutionary! I want to make revolution!’” (Yuan 247-248)

Duan Sheng sun also recounts this breakdown of loyalty and trust between friends and family in this turbulent time:

“In my office, we were told to find 3 Rightists for every 100 workers. But there were not 3 in 100, not even 1 in 100. We were all loyal to Mao! At first, no one knew what to do, and no one accused anyone. But then the party officials came back and told us that we had to accuse someone, or else we would all be charged with harboring anti-Mao workers! So as you would probably expect, people started accusing anyone who they had some personal grudge or jealousy against…their bosses, coworkers they didn’t get along with. My boss accused me, so I accused him. What else could I do? That was how it went on for months and months. Many people were sent away to hard labor in Western China or to prison. Soon, our office was almost like a graveyard. No one had faith in anyone else in the office, and no one wanted to speak to each other” (Sun D Int.).

Another scene from Mao’s Cultural Revolution. After a day-long hearing, the convicted anti-Mao “revisionists” are ordered to 2 years of hard labor in Western China. [http://www.bordersstores.com/features/feature.jsp?file=redcolornewssoldier]

The Chinese people that arose scathed from Mao’s Cultural Revolution were not the same. “They had become people with no shame” (Kuhn 107). People had lost sight of the ethical standards that their society had been built on for hundreds of years. There was no longer a national value system founded on ideals of family, loyalty and trust: Confucian ideals that were originally adapted into Mao’s ideologies in his call for mass unity and collective thought. Religion in its traditional forms had been torn apart and essentially labeled as anti-Mao in all of its forms and practices.

Mao had essentially demolished values that had exemplified the Chinese people for more than a millenium. Hence, the majority of Chinese were deeply disillusioned by Mao and his view of china, and even felt personally betrayed (Sun D Int., Sun R Int. and Zhou Int. 2). “Mao had told us to believe this and that for 30 years, then he made us turn on our own beliefs. We were very confused, very mad at him. He had deceived us,” as Rong Sun testifies.

Mao, for 30 years, had preached loyalty and devotion to family and friends, together with the collective asceticism and communal unity that we have afore mentioned. The Chinese masses, disillusioned by the treachery and disloyalty in Mao’s Cultural Revolution, would bitterly react to Mao’s breach of their values by developing new ethical standards in opposition to Mao’s. Duang Sheng Sun describes these new standards for us: “‘We wanted to betray everything we’d been taught by Mao…everything…equality, trust, comradeship…and we learned to believe in the opposite...materialism, material pleasure, having money, having what my neighbor didn’t have. If [Mao was] going to take away my friends, and make me fear my coworkers and acquaintances, what could I turn to for happiness other than the materialistic things that [Mao] hated so much?” (Int.)

Materialism, striving for material gain, money, increased pleasure, competition: such is a basic dictionary description of capitalism and a more “westernized” economy. It was what the Chinese people turned to in the wake of the Cultural Revolution’s chaos, and it would be what they received in the years to come following Mao’s impending death.

With the ethical standards and pseudo-religious values of generations in shambles, the people of China found a haven in materialism, in a “blind chase after money” (Yan quoted in Kuhn, 136). This unbridled materialism that formed in the post-Mao period, described to us ever so clearly by Massonnet in The New China: Money, Sex and Power, would be one of the key developments that would drive the people’s call for aggressive economic policies of a capitalist and western flavor. Unable to rediscover the contentment and pleasure in previous relationships of kin, friendship and comradeship, the Chinese people learned to live for material possessions, economic success, achievement in terms of the dollars in their bank accounts and the size of their houses – objects that necessitated a new economic system of new economic policies allowing for private property, private enterprise, western influences, western imports and all the materialistic ‘joys’ of capitalism.
Looking Forward

As China prepares itself for this century on the verge of being a full-fledged world power, scholars and economists around the world will address what they perceive to be its potential, its direction, its future.

Economists will unquestionably analyze trade deficits and surpluses to figure out China’s economic health in the years to come. They will push forward the wide discrepancy between rural vs. urban development in China in the last several years for a wide range of purposes and arguments. Bankers and investors will look at foreign investment numbers and the ups of downs of the Chinese markets to get a sense of market saturation, stability and of course, potential.

Politicians will examine China’s reaction to its new position at the forefront of global matters. They will attempt to predict whether China will be the aggressor or the victim in international affairs, especially concerning Taiwan and the United States. They will analyze every step China takes in the funding and development of their military and weaponry. Furthermore, they will try to discern how China’s people view their own leaders and other leaders of the world.

Social scientists, meanwhile, will focus on questions with far-reaching implications of how Western thought will affect the most populous nation in the world. They will attempt to understand just how Chinese culture will ultimately adapt to the countless pressures of modern society, of a modern economy, of an international global market.

In the complex and often tedious search for the answers to these important and ever so compelling questions, it is often easy to overlook the Chinese people themselves, along with a culture and history that is difficult to fully grasp and comprehend. But the right answers to these questions can only be found with a thorough analysis of the Chinese people and all that has shaped them in the past. For example, in this essay, it took a thorough understanding of China’s complicated economic and sociocultural history under Mao ZeDong to bring forth a distinctive and persuasive argument as to what were the underlying impetuses of China’s modern-day economic policies and rapid modernization today.

So in the many important studies and queries that will be conducted in China’s name in the years and decades ahead, the world must not forget the social, cultural and economic history of the Chinese people, and the complex circumstances through which they lived under one of the most multifaceted and unpredictable leaders in world history.

With the contributing factors to China’s modern-day economic policies and ensuing economic progress fully described and rationalized, the emphasis now turns to a thorough description of the economic policies instated following Mao’s death, and their significance in China’s modernization and growth, today and tomorrow.

The Aftermath of Mao’s Death and the Beginning of Economic Reforms in the 1980s

Deng Xiaoping, revolutionary elder in the Communist Party of China who served as the "de facto" ruler of the People's Republic of China from 1976 to 1997 [www.iisg.nl/~landsberger/dxp.html]

The death of Mao marked an epochal turning point in Chinese politics. The struggle for succession that ensued led to the emergence of Hua Guofend, Mao’s ‘anointed successor’, as party chairman and state premier. But Hua was soon challenged by surviving victims of the Cultural Revolution under the leadership of Deng Xiaoping, the deposed former vice-premier. Termed pragmatists, the new leaders question the value of the Cultural Revolution and of Mao’s policies of continuous class struggle and uninterrupted revolution. They doubt the efficacy of Mao’s economic adventurism, which during his twenty-seven year rule failed to life China from poverty and backwardness.

These pragmatists vow that the Cultural Revolution must never be allowed to recur. They advocate unity, stability, discipline, and greater domestic liberty and international cooperation. Most important, they have launched a program of modernization under a younger leadership and tried to stimulate enthusiasm for work through material incentives. Deng’s “Economics in command” has replaced Mao’s “Politics in Command.” The adoption of the principle, “From each according to this ability, to each according to this work,” reflects the new emphasis on expertise. Foreign-trained intellectuals, despised in the past, are now cherished as patriots (Ash and Kueh 21-22).

Deng and Mao Zedong repeatedly clashed when the Great Leap Forward (1957-1958) failed.

[www.iisg.nl/ ~landsberger/dxp.html]

The pragmatists gained power at the expense of Hua and the Maoists. Their crowning victory came in June 1981 when the Sixth Plenary Session of the Eleventh Central Committee officially affirmed socialist economic development as the central task of the party and government under the new collective leadership of party Chairman Hu Yaobang, Vice-chairman Deng Xiaoping, and Premier Zhao Ziyang. The Cultural Revolution was completely repudiated, and Mao was held chiefly responsibly for its excesses, while the party assessed itself a fair share of guilt for not having prevented his mistakes (Hsu 47-48).

Soon after his death there was wide agreement that there were fundamental defects with the over centralized economic system which China had adopted under Soviet influence. The following view is reasonably representative: “Such a structure put the national economy in a straightjacket, discouraging initiative in all quarters, causing serious waste of manpower, materials and capital, and greatly hampering the growth of the productive forces. For many years, this was a major cause of the slow pace of the growth of the Chinese economy and the improvement of the living standards of the Chinese people” (Hsu 64). China’s reforms in the 1980s have been likened to a person crossing a river who moves forward from stone to stone without a clear idea of where the next one is since it is hidden under the water ahead.
Two stages of reform

Overall the first decade of China’s economic reform since Mao’s death was outstandingly successful. However, by 1988 the reforms were far from complete and many problems had emerged. China’s economic reform can be divided into two stages, although there is no meat boundary between then. The first stage was characterized mainly by relatively simple institutional changes in which reform was widely welcomes by the producers who were directly affected. This, broadly speaking, applied to the agricultural reforms and the reform of the small-scale non-farm sector. In the second phase of reform attention switched to large and medium-sized state-run enterprises. These enterprises are much less flexible than agriculture and small non-farm enterprises, and their workers and managers form privileged elite for whom the reforms increase uncertainty (Harvie 36-37).

The Need for Agricultural Revitalization

Tentative reforms began in all sectors in the late 1970s, but in the early stages the pace of advance was much the fastest in agriculture. The leadership appreciated the fundamental importance of agriculture in a poor economy like that of China. Moreover, peasants responded enthusiastically to each step in the rural reform, feeling that they could only gain or buy it (Wang 98). In part also, the agricultural reforms were relatively simple. They began tentatively contracting land out to groups within the production team, but progressed rapidly by 1983 to full-scale contracting out of collective farmland to individual households. This was, in effect, the largest and most egalitarian land reform in history, since land was mainly divided among China’s 200 million rural households on a locally equal per person basis. “Decollectivation” did not apply to many types of large agricultural means of production or to some important collective activities. However, the rural labor process underwent a revolution. Peasants were now working for themselves, and could retain any surplus produce or income after meeting compulsory state quotas. A further potential stimulus to peasant incentives was provided by a sharp improvement in the intersectoral terms of trade for peasants in the late 1970s, although the improvement in the 1980s was much slower. The far-reaching changes in rural economic organization provided a breakthrough in people’s thinking about the Stalinist system of economic administration (Babkina 143-146).

The rural economic reforms allowed peasants such as these to profit to benefit from their hard labor.

[www.postcardman.net/ china_mission.html]
The enormous rise in agricultural labor productivity greatly increased the availability of rural surplus labor. The controls on the collective non-farm sector were relaxed in the early 1980s. Enterprises obtained greatly intersected entrepreneurial freedom, and with a short time collective non-farm enterprises operated in a competitive environment. The private sector was legally permitted and from early in the 1980s a relaxed official attitude was adopted towards private labor hiring. As early as 1983 private enterprises with several hundred employees existed. Indeed, in formerly less prosperous parts of China such as Wenzhou, the private enterprise became the dominant form of rural non-farm business organization by the mid-1080s. (Nolan and Dong 198). While the collective enterprise remained important in the more advanced areas, such as southern Jiangsu, a wide variety of new subcontracting arrangements was introduced. In the small-scale non-farm sector, as in agriculture, there was tremendous popular support for the increases operation of market forces, which people perceived could for some time only mean in increase in employment opportunities and family income (Nolan and Dong 201-203).
Opening Up to the World

A steady movements towards opening up to an international economy was apparent during the Post-Mao era. [www.iisg.nl/ ~landsberger/ff-su.html]

In some respects, the greatest single change in China’s political economy after Mao’s death was in the attitude towards the international economy. The shift towards an open policy away from Maoist isolationism took a big step forward with the 979 law on Chinese Foreign Joint Ventures (Liew 221). This was the first of numerous laws intended to encourage foreign investment.

A radical shift also occurred in the 1980s in China’s attitude towards to foreign trade, involving fundamental rethinking of its role in economic development. Instead of being regarded as a sphere for the exploitation of poor countries, China’s leadership shifted to an explicit recognition of the enormous contribution that international trade can make to economic advance. China has an abundance of certain natural resources, a large pool of low-wage surplus labor and many areas with strong commercial and manufacturing traditions (Moore 178). Moreover, some potential trade competitors from East Asia were moving into more sophisticated exports with higher value-added per worker as labor costs rose. China’s leaders were acutely aware that they had missed out on a great historic opportunity to expand exports rapid only in the 1960s and 1970s (Fukasakum, Wall, and Wu 99). Given the right set of policies there were considerably opportunities to expand export earnings, and hence the capacity to import, even in the more slowly growing world economy of the 1980s. A number of measures were taken to enliven the over-centralized administration of international trade so that more direct contacts could be established between domestic enterprises and international buyers and suppliers. Alongside some decentralization of the organization of foreign exchange earned for exports. The extent of the ‘airlock’ between the domestic and the world economy was much reduced compared with the Maoist period. Moreover, the increased role of market forced within the domestic economy meant that domestic enterprises were keener to take advantage of opportunities to profit from international trade (Moore 185).

Reforming Industrial Enterprises

State-owned enterprises like this industrial facility during the late 1970s and early 1980s was still in need of industrial reforms. [http://exhibits.slpl.org/lpe/data/lpe240029608.asp?thread=240029535]

In the late 1970s over 800 per cent of the value of industrial output was still produced in state enterprises, so that improving their effectiveness was of central importance to the long-term success of the reform (Nolan and Dong 32). However, their reform proved more difficult to accomplish than that of the collective and private sectors. Nevertheless, considerable changes did occur in the first decade of the post-Mao reforms. The overall objective of the reforms was to increase enterprise autonomy, raising the efficiency of enterprises through new incentives to compete in the marketplace. The attempts to do this can be divided into two phases with the turning point being the ‘Decision of the Central Committee on Reform of the Economic Structure’ in 1984 (Noland and Dong 40). The main method with which it was hoped to increase the vitality of enterprises was increased rights to retain profits, which spread rapidly to most state enterprises in the early 1980s. However, this did little to increase enterprise incentives. Given the still fundamentally unreformed nature of the Chinese industrial price system, profits were a poor indicator of enterprise performance, and profit retention became the subject of protracted bargaining between the enterprise and its superior planning authorities. Rather than work to cut costs to raise profits the system placed a premium on cultivating connections to obtain through bargaining a better contracted profit retention share. Beginning in 1983, an attempt was made to circumvent these difficulties by substituting a series of taxes for profit sharing. However, because enterprise and sectors faced unequal market conditions, particularly in the form of prices that were more or less divorced from enterprises’ costs of production, the crucial tax was the ‘adjustment tax’ which itself became the subject of protracted bargaining (Hsu 123-124).

By the mid-1980s it was obvious that attempts to reform industrial enterprises would be unsuccessful under the existing price system, and in October 1984 the Central Committee announced that price reform was ‘the key to reform of the entire economic structure’. A considerable reduction in state price control occurred in 1985. However, overnight elimination of price control in a system where prices bore little relationship to supply and demand would have produced chaos. Accordingly, the decision was taken to introduce a ‘dual track’ system, with part of the enterprise output sold at state fixed prices and part a either free-market. By 1987, the production sold at state fixed prices had fallen to around 50 per cent and 65 per cent respectively (Nolan and Dong 67-71).

Main achievements of economic reforms

The sharp alteration in China’s economic institutions greatly increased competition, shifted resource allocation and considerably increased labor intensity of much of the workforce. Although still far form a free-market economy the role of the market in China by the late 1980s had vastly increased compared with pre-1976. this change was reflected in an accelerated growth rate and a much altered growth pattern in the first decade of reform. Owing to the relatively large number of people entering the reproductive age groups from the mid-1980s to the mid 1990s (an ‘echo-effect’ from the post-Great Leap baby boom) and the many difficulties, both short- and long—term, associated with trying to implement too harsh a population control policy in the early 1980s, China’s natural growth rate of population was rising in the late 1980s, but was still much below the long-term trend rate of the Maoist period (Nolan and Dong 88-89).

At least as important as the overall acceleration in the growth rate was the striking change in the balance of growth. Agricultural growth exploded in the early 1980s as the rural reforms unfolded. In the early 1980s the average annual growth rate of agricultural output was close to 10 percent, an extraordinary high future for a country as large as China with limited possibilities to export farm produce. Even over the whole decade the growth rate net of net agriculture output was almost three times the long-term growth of the Maoist period (table 1.1).

During the reform decade the gross value of light industrial output accelerated to a real annual average growth rate of over 14 per cent, while that of heavy industry declined to around 10 per cent (Table 1.1). A number of factors contributed to this. On the demand side urban and rural purchasing power grew rapidly, and the income elasticity of demand for light industrial output was mostly higher for light industry’s products than for the direct consumption of food. On the supply side, the production of light industrial inputs (e.g. cotton, leather and timber) from agriculture grew rapidly, and much capacity shifted form heavy to light industrial production. Moreover, the overall productivity of capital almost certainly increased (Table 1.2) so that less output was required of the capital goods industries to produce a unit of final product.

Enormous changes occurred in China’s international trade after Mao’s death. Following a long period of slow export growth and a steadily falling share of world trade, China’s export performance improved markedly in the 1980s. In volume terms, China’s export growth rose from 6 per cent annum in 1968-80 to 12 per cent in 1980-6, despite the fact that this was a period of great difficulties in world trade. China’s share of world trade rose from 0.8 per cent in 1978 to 1.7 per cent in 1987, and the ratio of its exports to GNP rose from just 5 percent in 1978 to 13 percent in 1987 (Fukasakum, Wall, and Wu 276), a turnaround which both assisted domestic growth and was a reflection of improved domestic supply conditions.

	Average annual growth rate (%)
	1953-78	1978-87
Total social product	7.4	10.8
Gross value of agricultural output	2.9	6.5
Gross value of industrial output	10.6	11.9
Heavy Industry	13.0	10.0
Light Industry	8.7	14.1
National income (net material product)	5.7	9.0
Agriculture	1.9	6.0
Industry	10.5	10.4
Construction	5.9	12.8
Transport	6.3	9.5
Commerce	3.2	9.9
Population	2.2	1.3