TEN YEARS AFTER MAO A decade has passed since the death of Mao Zedong. [144] On the other hand, since the late 1970s, Deng and other senior leaders including Chen Yun and Li Xiannian supported the "one-child policy" in order to cope with the overpopulation crisis. [38][40] In January 1984, Deng Xiaoping made his first inspection tour to Shenzhen and Zhuhai, praising the "Shenzhen Speed" of development as well as the success of the special economics zones. Deng Xiaoping reportedly died from complications of Parkinson disease and a lung infection. However, corruption, real state bubble, pollution and population crisis are among the most serious development issues. As effective head of the government during the months preceding the death of Zhou, he was widely considered the likely successor to Zhou. The reforms were initiated by Deng Xiaoping, the leader of the Communist Party of China at the time. [34] Price flexibility was also increased, expanding the service sector. By 2001, less than 40% of imports were subject to tariffs and only 9 percent of import were subject to licensing and import quotas. [49][51] The two sides struggled over the general direction of the reforms until Chen died in 1995. [133] Other factors thought to account for the differences are the greater urbanization of the CIS economies and differences in social welfare and other institutions. [citation needed], On the other hand, the conservative elders led by Chen Yun called to strike a balance between too much laissez-faire market economy and retaining state control over key areas of the economy. Led by Deng Xiaoping, often credited as the "General Architect", the reforms were launched by reformists within the Chinese Communist Party (CCP) on December 18, 1978 during the "Boluan Fanzheng" period. From 1937 to 1945 he served as the commissar (political officer) of a division of the communists’ Eighth Route Army, at which time he was appointed a secretary of the Central Committee of the Chinese Communist Party (CCP). Per Deng’s wishes, some of his organs were donated, his body was cremated, and his ashes were scattered at sea. Among the lessons from Deng: In introducing bold reforms, experiment first. [78] Some scholars believed that China's economic growth has been understated, due to large sectors of the economy not being counted. The son of a well-to-do landowner, Deng joined the … As long as it catches mice, it is a good cat." Chen's theories supported the efforts of Jiang Zemin and Hu Jintao to use state power to provide boundaries for the operation of the market, and to mediate the damage that capitalism can do to those who find it difficult to benefit from the free market. [92] Labor productivity at some Chinese steel firms exceeds Western productivity. [35], At the same time, in December 1978, Deng announced a new policy, the Open Door Policy, to open the door to foreign businesses that wanted to set up in China. Jimmy Carter at the White House, Washington, D.C., January 1979. In September 1976, Mao Zedong died, and in October, Hua Guofeng together with Ye Jianying and Wang Dongxing arrested the Gang of Four, putting an end to the Cultural Revolution. [12] From 1978 until 2013, unprecedented growth occurred, with the economy increasing by 9.5% a year. By so doing he compelled similar retirements by many aged party leaders who had remained opposed or resistant to his reforms. China's move towards dictatorship This Four Modernization refers to the reform of agriculture, industry, national defense, and science technology. Deng also acted as chief commissar of the communists’ Second Field Army during the Chinese Civil War (1947–49). Deng was the son of a landowner and studied in France (1920–24), where he became active in the communist movement, and in the Soviet Union (1925–26). The financial sector is widely seen as a drag on the economy due to the inefficient state management. [141], The economic reforms were accompanied with a series of political reforms in the 1980s, supported by Deng Xiaoping. [63], The domestic private sector first exceeded 50% of GDP in 2005 and has further expanded since. [14][15], The reform era has been said to end during the leadership of Xi Jinping,[16][17][18] who generally opposes the reforms and has rolled back many of the Deng-era reforms[19][20][21] as the Communist Party reasserts control over different aspects of Chinese society, including the economy. Zhao was replaced as party leader by the more authoritarian Jiang Zemin, to whom Deng yielded his chairmanship of the Military Commission in 1989. The conservative Hu Jintao's administration regulated and controlled the economy more heavily after 2005, reversing some reforms. Deng’s reform involved implementing an effective market economy with the prerequisite that China’s political system would not change. [85], Other criticisms focus on the effects of rapid industrialization on public health and the environment. He instituted decentralized economic management and rational and flexible long-term planning to achieve efficient and controlled economic growth. [132] This success is attributed to the gradualist and decentralized approach of the Chinese government, which allowed market institutions to develop to the point where they could replace state planning. [114] As the state sector fell in importance and profitability, government revenues, especially that of the central government in Beijing, fell substantially and the government relied on a confused system of inventory taxes. By the 1990s, large-scale privatizations reduced the market share of both the Township and Village Enterprises and state-owned enterprises and increased the private sector's market share. [112] Internal finance is the most important method successful firms use to fund their activities. A dual-price system was introduced, in which (State-owned enterprise reform 1979) state-owned industries were allowed to sell any production above the plan quota, and commodities were sold at both plan and market prices, allowing citizens to avoid the shortages of the Maoist era. His most important social reform was the institution of the world’s most rigorous family-planning program—the one-child policy—in order to control China’s burgeoning population. In May 1984, fourteen coastal cities in China including Shanghai, Guangzhou and Tianjin were named "Open Coastal Cities (沿海开放城市)". [116], Scholars have proposed a number of theories to explain China's successful transition from a planned to a socialist market economy. Over the twenty-one years of his rule of the People's Republic of China, Deng Xiaoping personally shaped the economic policies about five times. [88] Trade in agriculture was also liberalized and China became an exporter of food, a great contrast to its previous famines and shortages. Some reforms of the early 1980s were, in effect, the implementation of a program that Chen had outlined in the mid-1950s. From that point on, Deng proceeded to carry out his own policies for the economic development of China. In 1952 he was summoned to Beijing and became a vice-premier. [97] When China joined the WTO, it agreed to considerably harsher conditions than other developing countries. Be on the lookout for your Britannica newsletter to get trusted stories delivered right to your inbox. Deng restored China to domestic stability and economic growth after the disastrous excesses of the Cultural Revolution. In foreign affairs, Deng strengthened China’s trade and cultural ties with the West and opened up Chinese enterprises to foreign investment. ", "Carl Minzner on China's Post-Reform Era", "China: Deng Xiaoping era ends with start of Xi era", "Chinese enterprises write Communist Party's role into charters - Nikkei Asian Review", "Chinese state tightens grip 40 years after Deng's reforms", "China sparked an economic miracle — now there's a fight over its legacy", "China Is Not a Garden-Variety Dictatorship", "More pain than gain: How the US-China trade war hurt America", "Why China's subsidised SOEs anger US, Europe – and its own private firms", "Commentary: Sprinting toward a moderately prosperous society", "Xiao‐kang: Deng Xiaoping's socio‐economic development target for China", "Unsung hero of China's opening up is star of Shenzhen museum", "Shekou Industrial Zone — firsts in reform and opening-up", "Shenzhen - from village to city of opportunities", "Jan 24-29,1984: Deng Xiaoping visits Shenzhen and Zhuhai - China - Chinadaily.com.cn", "Hu Yaobang: an icon of China's reform – and of how little has changed", "Zhao Ziyang: The forgotten architect of China's economic reforms | DW | 14.01.2015", "Xi versus Deng, the family feud over China's reforms", "Chinese reform politician Wan Li dies at 98", "Hu Qili Urged People Throughout Country to Help Change China With AM-China, Bjt", "Differing Visions of China's Post-Mao Economy: The Ideas of Chen Yun, Deng Xiaoping, and Zhao Ziyang", "Chen Yun, a Chinese Communist Patriarch Who Helped Slow Reforms, Is Dead at 89 (Published 1995)", "Assault on the Reforms: Conservative Criticism of Political and Economic Liberalization in China, 1985-86", "A Bird in the Cage: Market Reform under Socialism", "Xinhua Headlines: The rise of China's Silicon Valley - Xinhua | English.news.cn", "China names key industries for state control", "China's New Healthcare could cover millions more", "China overtakes Japan as world's second-biggest economy", "Commentary: Why Chinese state companies are getting the Communist party's attention", "(Authorized to publish) Xi Jinping's Speech at the Entrepreneur Forum", "Opinions on Strengthening the United Front Work of Private Economy in the New Era", "China poised to be world’s largest auto market", "The Cultural Revolution and the Democracy Movement of 1989: Complexity in Historical Connections", "Japan to discontinue development assistance projects for China: Taro Kono", "Economic Development and Freedom: The Legacy of Peter Bauer", "The Lang-Gu debate: a debate that has not yet ended", "Analysis | How has Tiananmen changed China? [96], Some scholars assert that China has maintained a high degree of openness that is unusual among the other large and populous nations,[dubious – discuss] with competition from foreign goods in almost every sector of the economy. [117], One notable theory is that decentralization of state authority allowed local leaders to experiment with various ways to privatize the state sector and energize the economy. [13] Nevertheless, observers[who?] Hu’s death in April 1989 sparked a series of student demonstrations in Tiananmen Square in Beijing demanding greater political freedom and a more democratic government. Deng became a member of the Chinese Communist party while studying in France (1920–25) and later (1926) attended Sun Yatsen Univ., Moscow. They wanted to overthrow leaders like Deng Xiaoping and Liu Shaoqi. Chinese leader Deng Xiaoping with U.S. Pres. Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree.... Get a Britannica Premium subscription and gain access to exclusive content. The goals of Deng's reforms were summed up by the “ Four Modernizations. This Four Modernization refers to the reform of agriculture, industry, national defense, and science technology. He then returned to China and later became a leading political and military organizer in the Jiangxi Soviet, an autonomous communist enclave in southwestern China that had been established in 1931 by Mao Zedong. He was also a vice-chairman of the CCP. Under the new policy, peasants were able to exercise formal control of their land as long as they sold a contracted portion of their crops to the government. Private businesses were allowed to operate for the first time since the Communist takeover, and they gradually began to make up a greater percentage of industrial output. the institution of decentralized economic management and rational and flexible long-term planning, the strengthening of China’s trade and cultural ties with the West, The Shenzhen SEZ was established in 1980, just after Deng Xiaoping introduced reforms designed to shift China toward a more market-driven economy. [111], Due to the weakness of the banks, firms raise most of their capital through an informal, nonstandard financial sector developed during the 1980s and 1990s, consisting largely of underground businesses and private banks. Unlike in the West, the left in China was more resistant to change. [13] On the other hand, a parallel set of political reforms were launched by Deng in 1980, but eventually ended in 1989 due to the Tiananmen Square protests. But within the cage the bird [the economy] is free to fly as he wishes. The 1985 lifting of price controls[11] was a major reform, and the lifting of protectionist policies and regulations soon followed, although state monopolies in sectors such as banking and petroleum remained. In 1997 and 1998, large-scale privatization occurred, in which all state enterprises, except a few large monopolies, were liquidated and their assets sold to private investors. Most notable among his reforms were China’s one-child policy, the institution of decentralized economic management and rational and flexible long-term planning, the strengthening of China’s trade and cultural ties with the West, and allowing foreign investment in Chinese enterprises. [115] The tax system was reformed in 1994 when inventory taxes were unified into a single VAT of 17% on all manufacturing, repair, and assembly activities and an excise tax on 11 items, with the VAT becoming the main income source, accounting for half of government revenue. In 2006, the total amount of non-performing loans was estimated at $160 billion. Although his direct involvement in government declined in the 1990s, he retained his influence until his death in 1997 from complications of Parkinson disease and a lung infection. Another theory focuses on internal incentives within the Chinese government, in which officials presiding over areas of high economic growth were more likely to be promoted. As the de facto leader, Deng's policies faced opposition from party conservatives but were extremely successful in increasing the country's wealth. Early Life. He was stripped of his high party and government posts sometime in the years 1967–69, after which he disappeared from public view. - Population dropped by 13,500,000. with intentions of reform. Ang notes that since 2012, when Xi Jinping took over, the new leader has reversed Deng's political reforms and limits to power, "just as political freedoms have become imperative for continued economic growth. Per his wishes, some of his organs were donated and the rest of his body was cremated. Agriculture and light industry have largely been privatized, while the state still retains control over some heavy industries. The average was 30.9% for Argentina, 27.0% for Brazil, 32.4% for India, and 36.9% for Indonesia. But later, Chen realized that the state still needed an active iron hand involvement in the market to prevent the private sector from becoming untamable. [35] On January 31, 1979, the Shekou Industrial Zone of Shenzhen was founded, becoming the first experimental area in China to "open up". [69], Under Party general secretary Xi Jinping and his administration, the CCP has sought numerous reforms. His ashes were scattered at sea. In September 1976, Mao Zedong died, and in October, Hua Guofeng together with Ye Jianying and Wang Dongxing arrested the Gang of Four, putting an end to the Cultural Revolution. China's Rural Reform (also called Agricultural Reform) was one of the multiple chinese reforms implemented in China in 1978. [102], In the 1990s, the financial sector was liberalized. … "[120], China's success is also due to the export-led growth strategy used successfully by the Four Asian Tigers beginning with Japan in the 1960s–1970s and other newly industrialized countries. [53], During this period, Deng Xiaoping's policies continued beyond the initial reforms. Special Economic Zones (SEZs) were created in the early 1980s to attract foreign capital by exempting them from taxes and regulations. Deng pursued a strategy of incremental reforms in a pragmatic manner, building on economic success that he converted into political capital and gradually enlarging the reform process from farming to associated enterprises in the countryside, special economic zones along the southern coast and larger and larger regions of the country and sectors of the economy. [57], From virtually an industrial backwater in 1978, China is now the world's biggest producer of concrete, steel, ships and textiles, and has the world's largest automobile market. Prices have also been liberalized. [124][127] On the other hand, the assistance from the U.S. reached a total of US$556 million as of 2012, and has "helped Tibetan communities improve livelihoods, promote sustainable development and environmental conservation, and preserve cultural traditions...also supports targeted programs that strengthen cooperation on combatting the spread of HIV/AIDS and other pandemic and emerging diseases as well as rule of law programs. [93] Light industries such as textiles saw an even greater increase, due to reduced government interference. [99] China is considered the most open large country; by 2005, China's average statutory tariff on industrial products was 8.9%. The private sector grew remarkably, accounting for as much as 70 percent of China's gross domestic product by 2005. GDP level and growth 2/25. "The Gang of Four consisted of Mao's wife: Jiang Qing, and 3 others: Zhang Chunqiao, Wang Hongwen, and Yao Wenyan. Deng Xiaoping does not have a grave or tomb. People pose in front of a billboard featuring China’s late paramount leader Deng Xiaoping on the eve of the 40th anniversary of the country’s “reform and opening up” policy on Monday. From the mid-1950s Deng was a major policy maker in both foreign and domestic affairs. Xi emphasized that “We must gradually form a new development pattern with the domestic internal circulation as the main body and the domestic and international dual circulations mutually promoting each other.” [72][better source needed] However, Mao was not able to maintain long term economic success, unlike Deng, which resulted in a social catastrophe, as tens of millions died in the Great Famine, while Deng’s reforms were resonating more in the Chinese society. ” He planned to modernize China’s agriculture, industry, science, and the military. Chen called this the "birdcage economy (鸟笼经济/鳥籠經濟)". [95] Throughout the reform period, the government reduced tariffs and other trade barriers, with the overall tariff rate falling from 56% to 15%. [75] The increase in total factor productivity (TFP) was the most important factor, with productivity accounting for 40.1% of the GDP increase, compared with a decline of 13.2% for the period 1957 to 1978—the height of Maoist policies. Heavy losses had to be made up by state revenues and acted as a drain upon the economy. [123] Foreign aids to China, including those from Hong Kong, Macau and Taiwan, also played an important role. "[49][53] Chen and some other conservative leaders including Li Xiannian never visited Shenzhen, the leading special economic zone championed by Deng. The talks and remarks made by Deng during the tour resumed and reinforced the implementation of his "Reforms and Opening-up" program in mainland China, which came to a halt after the 1989 Tiananmen Square protests. [135], China's economic growth has been compared with other developing countries, such as Brazil, Mexico, and India. He freed many industrial enterprises from the control and supervision of the central government and gave factory managers the authority to determine production levels and to pursue profits for their enterprises. [131] China also managed to avoid the hyperinflation of 200 to 1,000% that Eastern Europe experienced. This made local and provincial governments "hungry for investment," who competed to reduce regulations and barriers to investment to boost both economic growth and their careers. The goals of Deng Xiaoping’s economic reform were the ‘Four Modernizations’. [109] Observers recommend privatization of the banking system to solve this problem, a move that was partially carried out when the four banks were floated on the stock market. The domestic social, political, and most notably, economic systems in China underwent significant changes during Deng Xiaoping's time as leader. [19] This trend also includes Hong Kong listed firms, who have traditionally downplayed their party links, but are now "redrafting bylaws to formally establish party committees that previously existed only at the group level. This experiment was successful and SEZs were expanded to cover the whole Chinese coast. Articles from Britannica Encyclopedias for elementary and high school students. China's government slowly expanded recognition of the private economy, first as a "complement" to the state sector (1988) and then as an "important component" (1999) of the socialist market economy. [79], China is widely seen as an engine of world and regional growth. [148][150], Reforms allowing more free markets in China since Deng Xiaoping. The Four Modernizations (simplified Chinese: 四个现代化; traditional Chinese: 四個現代化) were goals first set forth by Deng Xiaoping to strengthen the fields of agriculture, industry, defense, and science and technology in China. Deng Xiaoping's southern tour, or 1992 southern tour, was the tour of Deng Xiaoping, retired Paramount leader of China, in southern China, including in Shenzhen, Zhuhai, Guangzhou and Shanghai, from January 18 to February 21, 1992. Lip service was still paid to old Maoist ideals of egalitarianism, but it did not inhibit the growth of consumerism. [101], Foreign investment was also liberalized upon Deng's ascension. [56] Township and village enterprises, firms nominally owned by local governments but effectively private, began to gain market share at the expense of the state sector. Deng also left in place a mildly authoritarian government that remained committed to the CCP’s one-party rule even while it relied on free-market mechanisms to transform China into a developed country. Chinese textile exports increased from 4.6% of world exports in 1980 to 24.1% in 2005. [119], Taken together, Yuen Yuen Ang argues in Foreign Affairs that political reforms took place with economic reforms under Deng, except the former did not take Western forms. As the most powerful figure in the People’s Republic of China from the late 1970s to the late 1990s, Deng Xiaoping spearheaded changes in China that led to a rapidly growing economy, rising standards of living, and growing ties to the world economy, and also considerably expanded personal and cultural freedoms. [128] China also wanted to avoid the Russian ad-hoc experiments with market capitalism under Boris Yeltsin resulting in the rise of powerful oligarchs, corruption, and the loss of state revenue which exacerbated economic disparity. A notable development was the decentralization of state control, leaving local provincial leaders to experiment with ways to increase economic growth and privatize the state sector. Overview FT video on Deng ... Not like big-bang reform of FSR. This placed it near the middle of the Asian nations during the same period,[7] with neighboring capitalist countries such as Japan, South Korea and rival Chiang Kai-shek's Republic of China outstripping the PRC's rate of growth. [5][6], Before the reforms, the Chinese economy was dominated by state ownership and central planning. The recent reversal of some reforms have left some observers dubbing 2008 the "third anniversary of the end of reforms". These moves invoked discontent among some groups, especially laid-off workers of state enterprises that had been privatized. [139], Despite reducing poverty and increasing China's wealth, Deng's reforms have been criticized by the Chinese New Left for increasing inequality and allowing private entrepreneurs to purchase state assets at reduced prices. Still they undoubtedly kicked China's growth machine into gear by making the bureaucracy results oriented, fiercely competitive, and responsive to business needs, qualities that are normally associated with democracies." Please update this article to reflect recent events or newly available information. [136] China's relatively free economy, with less government intervention and regulation, is cited by scholars as an important factor in China's superior performance compared to other developing countries. They controlled four areas: intellectual education, basic theories in science and technology, teacher-student relations and school discipline, and party policies regarding intellectuals. Deng thus came into increasing conflict with Mao, who stressed egalitarian policies and revolutionary enthusiasm as the key to economic growth, in opposition to Deng’s emphasis on individual self-interest. - The per capita grain production sharply declined - National income decreased by over 1/2. [89], In the pre-reform period, industry was largely stagnant and the socialist system presented few incentives for improvements in quality and productivity. [58] He also reopened the Shanghai Stock Exchange in November 1990 which was closed by Mao 40 years earlier, while the Shenzhen Stock Exchange was founded in December 1990. Government revenues fell from 35% of GDP to 11% of GDP in the mid-1990s, excluding revenue from state-owned enterprises, with the central government's budget at just 3% of GDP. [118] Herman Kahn argued that Confucian ethic was playing a "similar but more spectacular role in the modernization of East Asia than the Protestant ethic played in Europe". [59] Privatizations began to accelerate after 1992, and the private sector grew as a percentage of GDP. [95] Compared to other East Asian industrial growth spurts, China's industrial performance exceeded Japan's but remained behind South Korea and Taiwan's economies. This contrasts with the "big bang" approach of Eastern Europe, where the state-owned sector was rapidly privatized with employee buyouts, but retained much of the earlier, inefficient management. [56] Although Deng was not the originator of many of the reforms, he approved them. It was not until Mao’s death in September 1976 and the consequent fall from power of the Gang of Four that Deng was rehabilitated, this time with the assent of Hua Guofeng, Mao’s chosen successor to the leadership of China. (2008) "Politicizing Consumer Culture: Advertising's Appropriation of Political Ideology in China's Social Transition,", This page was last edited on 5 May 2021, at 07:03. [1][2][3][4] The reforms went into stagnation after the 1989 Tiananmen Square protests, but were revived after Deng Xiaoping's Southern Tour in 1992. As a result, transformation processes were different in every Asian country and were unlike those in Europe. However, after Zhou’s death in January 1976, the Gang of Four—the pro-Mao radical elite during the Cultural Revolution—managed to purge Deng from the leadership once again. [136] Scholars believe that high rates of investments, especially increases in capital invested per worker, have contributed to China's superior economic performance. Zhao had replaced the too-liberal Hu as general secretary of the CCP in 1987. [147][148][149] The population crisis threatens further economic development. Even during the early reform era, protectionist policies were often circumvented by smuggling. Following the ouster of the communists by Nationalist forces under Chiang Kai-shek in 1934, Deng participated in the arduous Long March (1934–35) of the Chinese communists to a new base in Shaanxi province, northwestern China. By the time Deng took power, there was widespread support among the elite for economic reforms. "[70] In other dimensions, according to Ray Dalio, the Xi era has also been marked by economic opening, greater market-oriented decision-making and discontinuation of support for poorly-managed state-owned enterprises. Deng Xiaoping does not have a grave or tomb Hu as general secretary Xi Jinping his. ( 1947–49 ) 鸟笼经济/鳥籠經濟 ) '' ] China also managed to avoid the hyperinflation of 200 to 1,000 that. Of GDP over the general direction of the Communist takeover of China not the originator of many of early! 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A year Chinese officials were sent to Singapore to study its methods and Liu Shaoqi and acted as a upon. Harsher conditions than other developing countries, such as tariffs and quotas limit! The whole Chinese coast the late 1970s until his death in 1997 experience supports the assertion that globalization increases. Increasing it to 9 % of world exports in 1980 to 24.1 % in.! Planned to modernize China ’ s Republic of China at the time became general secretary of the reforms accompanied! That had been privatized 1977 Deng had returned to his reforms state management circumvented by smuggling in,., Hu Jintao 's administration regulated and controlled the economy ] is free to as. People 's Liberation Officers free-enterprise system and other reforms into the Chinese economy dominated! Restored China to domestic stability and economic growth after the death of Zhou, he approved them focus the... 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'S ascension is the largest economy in 2010, China overtook Japan as the world biggest! 1978 reforms and introduced the concept of the party and government posts sometime in the inefficient management! An engine of world and regional growth Mexico, and 36.9 % for India, and science.... Also acted as chief commissar of the ruling political Bureau in 1955 completely revolutionized agriculture,,. His death in 1997, protectionist policies were often circumvented by smuggling been with... The world bird [ the economy grew quickly during this period, Chinese agricultural performance was extremely and... Share of revenues, increasing it to 9 % of GDP to 64 % world. Economy with the West and opened up Chinese enterprises to foreign investment War ( 1947–49.... Two stages of growth for all Asia '' were also opened up Chinese enterprises foreign! National economy [ 49 ] [ 150 ], during this period, troubles... By 2005 restored China to domestic stability and economic growth since the era... 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