Deng Xiaoping was the leader of China from 1978 (two years after Mao's death) until his death in February 1997. He was the last of the great revolutionary leaders of China and a Time Man of the Year twice (see below). The Person of the Year (formerly Man of the Year...name changed in 1999 in an effort to be more inclusive) is an annual issue (tradition started in 1927) of the prestigious US current affairs magazine Time that features and profiles a person, couple, group, idea, place, or machine that 'for better or for worse, ...has done the most to influence the events of the year.'
1978 1985
Interestingly...Mikhail Gorbachev was also Man of the Year twice! In 1987 and 1989 (where he was also considered Man of the Decade).
1987 1989
These are excellent examples that put into context the seismic changes that both leaders were trying to implement in their respectives countries...which in the end resulted in very different outcomes for both. As Alexis de Tocqueville wrote in his treatise on the French Revolution, 'The most perilous moment for a bad government is when it seeks to mend its ways. Only consummate statecraft can enable a king to save his throne when, after a long spell of oppressive rule, he sets to improving the lot of his subjects.'...chaos rides in on rising expectations.
A tough, abrasive, resilient, with many political comebacks (Deng was purged from the Communist Party three times: in 1933 as a mid-level party official; in 1966 during the Cultural Revolution; and in 1976 during a dispute with the Gang of Four, who called Deng a 'counterrevolutionary') Deng was 74 years old when he embarked on his Deng Xiaoping Theory whose social and economic philosophy is an attempt to merge a 'market economic model' with a 'socialist political system'. This became known as 'socialism with Chinese characteristics.'
In the Chinese spirit of balance between yin and yang, Deng's attempt was not only on a monumental scale, but also it was aimed at blending seemingly irreconcilable elements: state ownership and private property, central planning and competitive markets, political dictatorship and limited economic and cultural freedom. Indeed, it was almost, as it so often seems to skeptics in both the Western and Marxist worlds, an attempt to combine Communism and Capitalism.
One of Deng's most famous quotes, dating back to the years before the Cultural Revolution, states that 'it doesn't matter whether a cat is white or black, as long as it catches mice.' In other words, he did not worry too much about whether a policy was capitalist or socialist as long as it improved the economy.
In December 1978 at the Third Plenum of the 11th Central Committee, Deng Xiaoping announced the official launch of the Four Modernisations, formally marking the beginning of the reform era. These were in the fields of agriculture, industry, national defense, science & technology. The Four Modernisations were designed to make China a great economic power by the early 21st century.
These reforms were a reversal of the Maoist policy of economic self-reliance. China decided to accelerate the modernisation process by stepping up the volume of foreign trade, especially the purchase of machinery from Japan and the West. By participating in such export-led growth, China was able to step up the Four Modernisations by attaining certain foreign funds, market, advanced technologies and management experiences, thus accelerating its economic development. Deng attracted foreign companies to a series of Special Economic Zones, where foreign investment and market liberalisation were encouraged.
5. Agriculture...The Basis of Chinese Success Story
The animating spirit of Deng's reforms was the liberation of the productive energies of the individual, a daring concept not just for a Marxist but for a Chinese (the concept of individualism has a negative connotation in Chinese society). He began, appropriately, with agriculture, which had been collectivised by Mao to a degree extreme even for the Communist world. The land was worked by communes that grew what the state directed and turned over all food produced to the state for distribution. Pay was based on a system of 'work points' that bore little relation to production: a peasant would accumulate a certain number of work points for planting rice seedlings, for example, but he or she would fare no better if the eventual crop was large than if it was small.
Deng's reforms abolished the communes and replaced them with a contract system. Though the state continued to own all land, it leased plots, mostly to individual families. Rent is paid by delivery of a set quantity of rice, wheat or whatever to the state at a fixed price. But once that obligation is met, families can grow anything else they wish and sell it in free markets for whatever price they can get (though the state determined limits on how much some prices could fluctuate).
Most of the first leases were for two or three years, but they were extended, usually for 15 years and as long as 30 years on grazing land. In 1985 a law established that made leases inheriterable. Peasants owned their draft animals, and those who prosper could buy machinery; ownership of tractors and machinery exploded.
Though the state retained the power to cancel a peasant family's lease and award it to someone else, that power was rarely exercised, therefore farm families started to regard the good earth as theirs and using it about the way they would if they owned it outright. Farmers were allowed, indeed encouraged, to build privately owned houses on their state-owned land....agriculture today in China is completely privatised.
The results have been simply phenomenal...agricultural output increased by 8.2 percent a year, compared with 2.7% in the pre-reform period, despite a decrease in the area of land used. Food prices fell nearly 50%, while agricultural incomes rose.
A more fundamental transformation was the economy's growing adoption of cash crops instead of just growing rice and grain and increases in agricultural productivity allowed workers to be released for work in industry and services, while simultaneously increasing agricultural production. Trade in agriculture was also liberalised and China became an exporter of foodstuffs, a great contrast to its previous famines and shortages.
Private enterprise began as a king of offshoot of the agricultural reforms. Mao's 'people's communes,' for all their faults, at least guaranteed everyone in the rural economy a job of sorts. Deng and his lieutenants feared that breaking up the communes would cause masses of jobless peasants to descend on the cities, where there might be no work for them either. So beginning in the late 1970s, individual farmers and village collectives were permitted to start sideline businesses and keep any profits.
The first enterprises were connected with farming: a group of peasants would set up a roadside market to sell their crops and perhaps buy a truck to haul their own produce as well as, for a fee, food grown by other peasants. But private entrepreneurs and village collectives very quickly expanded to all kinds of other businesses—inns, restaurants, stores, tailor shops, beauty parlors and light manufacturing like assembly of TV sets—often in competition with government-owned businesses.
Some entrepreneurs even opened services in major cities to recruit maids and other household help for busy urban families. Businessmen could hire workers privately, a practice that conventional Marxists regarded as inherently exploitative. Legally, no private entrepreneur was supposed to employ more than 15 hired hands, but local Communist Party officials often ignored that limit.
6.The Shift from Heavy Industry to Consumer Goods Industry
The pre-reform system, that operated under what Mao had copied from Stalin, was that ministries in Peking assigned all raw materials and dictated all investments, told every factory manager what and how much to produce and where to sell it and at what price, set wages and assigned jobs, took all profits and subsidised any losses. As late as 1984, one factory manager in Shanghai said, he had a discretionary fund of only US$33 that he could spend without getting permission.
Early on, Deng's government began revising this system too. In 1979, it halted a Stalin-style Five-Year Plan that emphasized heavy industry, like steel mills, and redirected much investment into consumer goods: refrigerators, washing machines, TV sets.
In the main move towards market allocation, local municipalities and provinces were allowed to invest in industries that they considered most profitable, which encouraged investment in light manufacturing. Thus, Deng's reforms shifted China's development strategy to an emphasis on light industry and export-led growth. Light industrial output was vital for a developing country coming from a low capital base. With the short gestation period, low capital requirements, and high foreign-exchange export earnings, revenues generated by light manufacturing were able to be reinvested in more technologically-advanced production and further capital expenditures and investments.
7. Final Thoughts on Difference with the Soviet Union.
Deng's program of reform termed Gaige Kaifang (meaning Reforms and Openness) preceded the most popular and well-known Perestroika and Glasnost introduced by Mikhail Gorbachev who was in reality 'borrowing' those terms from the Chinese.
On ascending to power in 1978, Deng ridiculed the Cultural Revolution slogan that held it was 'better to be poor under socialism than rich under capitalism.' The blunt, practical Deng offered instead: 'Poverty is not socialism.' Gorbachev observed and admired the changes that were taking place in China under Deng Xiaoping and they strongly influenced his own reform plans following his election as General Secretary of the Communist Party of the Soviet Union on the 13th of March 1985.
A nice and short synopsis (one to which I totally subscribe) on why China succeeded and the Soviet Union failed at implementing those critical reforms is given by Richard Evans, former British Ambassador to China and author of 'Deng Xiaoping and the Making of Modern China', he sees three secrets of success in China's drive to development that distinguish it from the failures of the former Soviet Union.
- China began by reforming agriculture rather than commerce or industry. This made food and raw materials for light industry plentiful and thereby created conditions conducive to change in the cities.
- China avoided hyperinflation and a rapid decline in living standards by removing price controls gradually, so that the consumer was not turned into an enemy of reform.
- Economic reforms preceded political reform, which improves the chances that a more open political order will survive once it does come about.
Another key issue, not mentioned by Evans but still of huge relevance, was the 'implementation type' of the reforms....i.e. the bottom-up approach of the Deng reforms vis-à-vis to the top-down approach of Gorbachev. Bottom-up reform cannot be resisted because it requires no negotiations, avoids confrontations, and it spreads like an unstoppable plague. Top-down reform can be killed easily by ridding the leadership of reformers or by high-level sabotage, however it was perceived 'easier', particularly in a totalitarian society, than securing support at grassroot level.
In China, there was a massive grassroots constituency which clearly understood the reform’s potential benefits. They acted quietly on their own, according to the Chinese saying, 'Do more but say less; do everything but say nothing.'
In a little over 30 years, Deng Xiaoping policies have allowed China to move from the peasant society it once was to an industrial superpower with a GDP second only to the United States. Since the beginning of Deng Xiaoping's reforms, China's GDP rose from some US $147.3 billion in 1978 (the size of the US economy in 1978 was US $2.3 trillion) when it was the 11th largest economy in the world to US $9.7 trillion in 2010 (with an annual average increase of 9.5 percent over that period) and 2nd largest economy in the world overtaking Japan this year, Yi Gang, China's chief currency regulator, mentioned the milestone during an interview with China Reform magazine, which was published on their website on the 31.07.10...see link below.
So China is now just behind the USA (the size of US economy in 2010 US $14.8 trillion)...and most analysts are now predicting that China's economy will be the world's #1 by 2020 or even earlier...
OK...China's path and results have been totally different to those of the Soviet Union...but will it still collapse? to be continued
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