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China After Deng Xiaoping: The Power Struggle in Beijing Since Tiananmen ReviewDeng Xiaoping 'retired' in 1989, after the Tiananmen Square (TS) 'massacre.' Opposition forces had never gone away while Deng was leading, and had already resurged prior to TS because of rising inflation. Deng tried to get things moving again from the sidelines, but became frustrated at his inability to do so. Thus, the motivation for his 1992 'Southern Tour' of the original SEZs - generating both considerable publicity for his cause and pressure on Beijing's leaders. Author Willy Lo-Lap Lam provides an excellent summary of the careful phraseology Deng used to counter his opponents and ensure that his economic reforms became permanent.Deng's original focus in 1978, and key to success, was to emphasize economics - 'Economic construction is the core of national work,' 'talk more about economics.' He repeatedly emphasized that only through economic growth and improvement in the standard of living could the CCO guarantee its monopoly on power, not through an emphasis on ideological purity as Mao and his supporters wanted to do. (China's populace had become disillusioned with the CCP after years of chaos and failures led by Mao's 'Great Leap Forward,' and the subsequent 'Cultural Revolution.' When Deng became leader he wanted to insure that this didn't boil over into another revolution.) Deng was further motivated by the Soviet collapse, seeing that its separation of the Communist Party from business and economics as a major contributor to its failure.
Within this focus on economics, Deng led a sub-focus on science and technology, 'the premier production force' for improving the economy. This also served to allow pushing class struggle (equality) and resistance to Westernization to secondary levels. At the time, market mechanisms were equated by many in China with capitalism, something bad. Central planning, on the other hand, was frequently accepted as synonymous with socialism. Deng instead made the point that planning and market mechanisms were simply the means to control and distribute resources - not a means to distinguish socialism from capitalism. Deng actually saw the two as mutually interdependent, clear indication of his pragmatic, non-ideological approach.
'We must not juxtapose the use of foreign capital against (the Maoist ideal) autarky' was another major Deng point. Unfortunately, that lesson didn't make it to North Korea, and their pursuit of self-sufficiency is a major source of their ailments. Continuing, we 'should not juxtapose the open-door policy with the principle of self-reliance and become over-cautious in the use of foreign capital.'
A statement aimed directly at his foot-dragging opponents - 'In the name of developing the economy in a sustained and stable (non-inflationary) manner, central planners are holding up reform in the pretext of being cautious.' Deng supported Taiwan tycoon Y. C. Wang's request for 'super-special' status if he made a $7 billion plastics manufacturing investment. Deng also supported giving top Hong Kong businessmen a say in the 1997 transfer of sovereignty from England to China.
Deng wisely made it clear that it was permissible to make mistakes in pursuit of reform - paraphrasing, 'those who weren't making mistakes weren't doing anything.' Deng wanted a return to 10% growth rates that would quadruple 2000 GDP from 1979 levels when reforms started. (Had fallen to 4% after TS.)
Author Lam points out that Deng was criticized by some for his 'one step forward, one-half step back' (too slow) approach. Reality, however, is that nobody had a map of how to conduct the reforms, and problems were encountered - inflation being the most prominent, and job-displacement another. Thus, Deng had to take political reality into account lest his opponents grow too strong and end the reforms.
In 1978 the state provided 3.6 billion yuan for grain and oil subsides alone; this rose to 40 billion yuan in 1990. In early 1991 prices were unfrozen for a number of products, and workers were given a less than 5% raise. Four rose 54%, vegetable oil 108%. Soviet and Eastern European experience, however, cautioned the Chinese to go slow and limit the products involved. In some experimental areas, eg. Hainan Island, grain subsidies were also eliminated - doubling prices.
After TS, some leaders want to return to collectivization of farming out of fear that it discouraged mechanization and collective work on eg. irrigation projects. Another worry - rural CCP cells were disintegrating. Still another - falling grain production because some farmers switched to higher value crops, some which were exported (eg. oranges). Returning to collectivization, however, stalled because of farmer resistance.
The Chinese government began foreclosing on hopeless failing SOEs in 1991, and giving greater autonomy to successful ones in experimental areas. New freedoms included hiring/firing, flexibility in use of profits, pricing for products not constrained by government-set pricing. Work stoppages were also ordered for factories producing unwanted goods piling up in warehouses. Managers were replaced at failing factories, worker pay cut, and mergers forced with more efficient operations. Government also stopped worrying about how much political education was taking place in the workplaces. Privatization, however, was not an option until later - this was a difficult step because it contradicted the socialist foundation of retaining ownership for the populace. The next year brought substantial reduction in the number of state planners, and they were limited to macro issues.
Bottom-Line: 'China After Deng Xiaoping' makes clear the complexity and long path required to transform China's economy.China After Deng Xiaoping: The Power Struggle in Beijing Since Tiananmen Overview
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