Understanding the modern day China cannot be done without understanding the importance of Deng Xiaoping. Although Joe Studwell’s book: The China Dream contains great detail regarding the development of china as the world’s largest market, I would like to concentrate in what I thought was the most valuable part of the book; Deng Xiaoping, the reformer.
Mao Zedong, with his strict socialist rhetoric, brought China’s cultural and economic development to a stand still during his tenure. He closed the doors of China to the rest of the world and promoted an internally focused regime. When Mao died in 1978, Deng Xiaoping took the reins of power of the great Dragon. He was a short man in stature (5ft tall), but one who proved to be the greatest blessing of modern China. According to Joe Studwell, the greatest contribution of Deng wasn’t so much what he did for China, but rather what he did not do. Many consider Deng’s ruling period as the end of the war and the return to normality.
As many other communists, Deng grew up in a middle class family in the south of China. However, what differentiates Deng from Mao is that he was able to see the world. Deng was educated and worked in France between the ages of 16 and 19. Also, at the end the cultural revolution, he was sent to speak at the United Nations in Now York in 1974 were he saw the might of capitalist America. And in 1979 after the death of Mao and soon after the resumption of diplomatic relations with the US, he spent a full week in the US understanding life in a capitalist country.
In 1975 he mandated the development of a ten-year plan for economic development. This plan called for 120 large-scale investment projects and the larger ones were in the energy and petrochemical industries. The total investment of the plan was $12 billion dollars and China expected to pay for the plan with increased oil export. This plan was similar in many was to the Great Leap Forward because its purpose was to catapult China into a new level, but also because it was based on unrealistic assumptions. Fortunately for Deng and for China, Chen Yun, the head of the government’s Economic Leading Group, saw the deficiencies of the Ten-Year-Plan and suggested that instead of heavy industry investment, the plan should concentrate in incentives for agricultural production and light industry and services. Deng did not oppose.
The results were apparent in a very short time. China’s grain harvest grew from 305 million tons in 1978 to 407 million tons in 1984. Additionally, farmers started to plant other crops and raise animals that were prohibited previously such as rape, sesame, sugar can and fruit. The economic impact was even bigger. With higher income, farmers demanded more services such as electricity and increased the efficiency of their crops by adding technology fertilizer. As a result non-farm employment in the countryside increased from 30 million to 93 million, creating a very prosper economic cycle during the 80’s.
In non-rural areas positive results also were exhibited. In the area of Wenzhou a group of family clothing businesses persuaded officials to create a new form of enterprise, a ‘stock-holding cooperative’. This entity, although positioned as a socialist enterprise promoted by Mao was anything but. During Mao’s tenure, such thing would not have happened as family owned companies could not employ more than seven from one extended family. By the end of the 80’s there were more than 20,000 such cooperatives, and in 1990 Wenzhou’s GDP increased six fold from its level in 1978 to 7.8 Billion RMB. Also by 1990, communist China saw its first millionaires from the production of small electrical switches to ball pens, lighters, buttons, footwear, etc. These types of cooperatives became so efficient and well managed, that state owned enterprises could not compete with them.
Deng opened the doors to the world that were closed by Mao. One of the first steps in this endeavor was to devalue the currency which had caused in the past great losses in foreign trade. One dollar in 1980 was worth 2.9 RMB and by 1990 the value went up 5.9. Even though the RMB was still considered overvalued, the gradual devaluation helped China move from being the thirty second exporter in 1978 to being number 13 in 1990 increasing exports by 15% during the eighties.
Deng also created four experimental Special Economic Zones to foreign investors in 1980, three of which were located in the Guangdong province in the south of China closest to Hong Kong. These zones allowed Honk Kong entrepreneurs to open manufacturing facilities in mainland China, creating an explosion of foreign trade. Guangdong exports increased from $2.9 billion in 1985 to $50 billion in 1990, making China the biggest textile exporter in the world and employing over 3 million workers.
In 1991, he promoted to the post of Vice-premier Zhu Rongji, a former Shanghai mayor English speaking intellectual who was foreign trade friendly and was instrumental in the development of Pudong as a financial center. In addition, Deng promoted accelerated reform programs in the costal cities of Tianjin, Shanghai and Fujian where free trade zones were created and foreign investment was expanded. Finally, Shenzhen, a southern city known for its rice paddies, opened without government approval a stock exchange. Prior to Deng’s tenure, none of these actions could have been allowed.
In many ways Deng embraced many capitalist concepts and made them his own or in this case China’s. This was most evident during his own southern tour, during which he claimed Special Economic Zones were socialist and not capitalist. He also used this tour, which had originally been planned as a vacation, for media all over the world to hear his support not only for growth, but for the fastest possible growth, even at the expense of a little spiritual pollution.
The southern tour was the beginning of a larger reform campaign in which he wanted to renew the blood of China’s leadership and do away with the old school political dragons who had ruled since the times of Mao Zedong. In 1992 at the age of 88 he wrote a document entitled ‘The brilliant thesis of a socialist market economy.” This document was revolutionary for the communist party to the point of changing the Party charter to incorporate Deng’s new ideas. In 1993 China’s constitution was amended to integrate Deng’s theory of building socialism with Chinese characteristics.
That was the beginning of a great new period for China. Deng Xiaoping believed that China could not progress in isolation from the rest of the world. His vision opened the gates of the forbidden land; today we can see the results.