At the time of Mao’s death in 1976, who would have predicted that China stood on the eve of a most remarkable period of economic growth that would entirely transform the face and fortunes of the country? Virtually nobody. It was as unpredictable and unpredicted as another enormously significant event — 1989 and the collapse of European Communism. China had been torn apart by the Cultural Revolution, in which the cadre that had largely steered the party through the 1950s and early 1960s had been vilified and banished by a ‘popular’ coup d’état staged at Mao’s behest, involving the mobilization of tens of millions of young people in the Red Guard. The movement was opposed to privilege — whether by virtue of family history or Party position — and super-egalitarian in its philosophy: a very Chinese phenomenon with echoes of the Taiping Uprising in the mid nineteenth century. By the time of Mao’s death, the Cultural Revolution had subsided and stood largely discredited, but the country’s future direction remained deeply uncertain. The vacuum created by Mao’s death was soon filled by the return of those same old leaders who had been persecuted during the Cultural Revolution, with Deng Xiaoping at the helm. They were confronted by the economic ravages and political dislocation that were the legacy of the Cultural Revolution, but free at last to pursue their instincts and inclinations, unimpeded by the wild extremes and excesses of Mao, albeit in a situation where the party faced a severe crisis of legitimacy.
There was one favourable omen. By the end of the seventies China ’s relatively modest growth rate constituted something of an exception in East Asia. Many countries in the region were on the economic move: Japan was booming; South Korea, Taiwan, Singapore and Hong Kong had already experienced take-off; Malaysia, Thailand and others were in its early stages. The Chinese diaspora — centred on Hong Kong and Taiwan, but also in Singapore and Malaysia — were key players in this economic transformation. There were, in other words, examples around China ’s borders of the possibilities that now beckoned. The country’s East Asian hinterland was being transformed by a region-wide economic revolution based on catch-up. Of course China faced unique problems, in particular its vastness and diversity, together with the legacy of civil war, turmoil and occupation. In addition it had been isolated, a condition partly self-imposed and partly a result of an American embargo (involving a total ban on all transactions with China until 1971), plus the withdrawal of all Soviet aid and personnel in 1959. The challenges facing the new Chinese leadership, therefore, were far more formidable than those that had confronted Taiwan or South Korea, especially as these had enjoyed considerable American patronage and munificence during the Cold War.
The process of reform began in 1978 with the creation of a handful of special economic zones along the south-eastern seaboard, including Guangdong province, in which the rural communes were dismantled and the peasants were given control of the land on long-term leases and encouraged to market their own produce. It was based on a step-by-step, piecemeal and experimental approach. If a reform worked it was extended to new areas; if it failed then it was abandoned. Such down-to-earth pragmatism stood in sharp contrast to the grand ideological flourishes that informed the Cultural Revolution era and the Maoist period more generally. As Deng put it, in the time-honoured tradition of pithy and popular quotes by Chinese leaders from Confucius onwards: ‘Seek truth from the facts’; ‘Truth is to be found in practice’; and ‘Cross the river by feeling for the stones’. The new economic approach involved a new kind of mindset and way of thinking in the Party and government, which necessitated a massive change of personnel, starting at the top and working rapidly downwards. In 1978 Deng declared: ‘To make revolution and build socialism we need large numbers of path-breakers who dare to think, explore new ways and generate new ideas.’ [422] The People’s Daily later commented that political reform was:
a gigantic social systems engineering project, which involves straightening out the relationships between the Party and the government, power and judicial organs, mass organizations, enterprises and institutions, and between central, local and grassroots organizations; it concerns hundreds of millions of people. This is an arduous and protracted task. [423]
The reform project has usually been seen in narrowly economic terms, as if it had few political implications. In fact Deng’s project involved not just an economic revolution, but also a largely unrecognized political revolution, which entailed a complete overhaul of the state, both in its modus operandi and its personnel, with the universalist, ideological model of the Maoist era being replaced by something closer to the developmental model of the East Asian tigers. An essential element in this transformation was the decentralization of the state, which was seen as a precondition for the reform of the economic system and economic growth. Decision-making, including the granting of de facto property rights and fiscal power, was decentralized to different levels of local government. [424] As a consequence the central government budget, as a share of GDP, shrank considerably. [425]
Almost from the outset, economic growth rates were transformed from the 4–5 per cent of the Mao period to an annual growth rate of 9.5 per cent between 1978 and 1992. [426] The momentum of reform, however, was seriously disrupted in 1989, little more than a decade after it began, by a massive student demonstration in Tiananmen Square that was brutally suppressed by the army. With the Party leadership seriously divided, it seemed likely that the reform process would be derailed, perhaps indefinitely. In the event, there was only a short hiatus before, in the grand style of Chinese emperors, and to coincide with the Chinese New Year in 1992, Deng made a ‘Southern Expedition’ to the coastal heartland of China’s economic revolution, during which he made a statement in Shenzhen — a brand-new city neighbouring Hong Kong — that not only reaffirmed the central importance of the market reforms but made a clarion call for the process to be intensified and accelerated, suggesting, in a famous passage, that there was nothing wrong in allowing the rich to get richer (and then eventually paying higher taxes to help the poor). [427] Until this point the reform process had largely been concentrated in the south, but now it began to move to the interior provinces and, most crucially of all, to Shanghai and the Yangzi Delta, China ’s former economic powerhouse. There was a further wave of foreign investment, largely from the Chinese diaspora based in Hong Kong and Taiwan (which to this day remains the largest single source of foreign inward investment), while Chinese exports, mainly to the United States, increased rapidly. An economic fever began to grip the country, encouraged by Deng’s call to embrace the market economy and fuelled by the annual double-digit growth rate. Nothing more graphically symbolized the ‘new frontier’ economic spirit than the tens of millions of rural migrants, China ’s reserve army of labour, who left their farms and villages in search of the work and glitz of the city. [428] The Red Guards were now but a distant memory. There was barely a Mao suit in sight.
[422] John Gittings,
[423]
[424] Zheng Yongnian,
[425] Zheng Yongnian,
[426] Zheng Yongnian,
[427] Wang Zhengyi, ‘Conceptualising Economic Security and Governance: China Confronts Globalisation’,