Figure 11: Deng Xiaoping with US President Jimmy Carter
The generation of the Chinese that came of age in the 1960s was largely a lost generation without schools-that closed as a result of the Cultural Revolution-and without gainful employment due to the economic chaos that plagued the country. The stagnation and apathy that set in crippled the Chinese state. The challenges in restarting the Chinese economy included the lack of technological and managerial expertise, poor infrastructure, and a sagging agricultural economy.
In 1976, with Mao’s death and the arrest of the “Gang of Four”, that was comprised of Mao’s more direct followers, including his wife, the new Chinese leadership under Deng Xiaoping began moderate economic changes. Deng began by discrediting Maoist ideology and economic thought. Starting in the Hong Kong area, then spreading along the coast, before creeping very slowly inland, the Chinese state implemented strategies to enable it become a full member of the global financial and trading economy.
They began allowing a new Open Door policy for loans, trade, and tourists to come in with students and exports moving out. Students studied how modern economies worked, enrolled in universities abroad, and were expected to teach others upon their return. Farmers were allowed to sell surplus goods while the state retained ownership of the land. Factories were allowed to do essentially the same thing:after meeting state goals, they could sell their surplus production on the free market. However, privatization was initially slow, with the state only selling small amounts of their enterprises, and was confined to the special economic zones located in the southeast. As the black market was already flourishing, the scope of change was not as drastic. Foreign investment was encouraged even as foreign firms came to take advantage of the cheap labor force that the country offered. Light manufacturing flourished and quickly the zones of export possessed a skyrocketing GDP, especially in the southwest corner of the country.
Figure 12: GDP Growth in India and China
The same generation of students of the 1960s and 1970s began to demand important political changes; they were the agitators of the Cultural Revolution and recognized the limitations of the Chinese government. Initially encouraged by some party leaders, the demands became more and more brazen. In 1989 the government cracked down on student protests and large scale demands for political changes.
“Uphold the Four Basic Principles” by Deng Xiaoping, (Speech, March 30, 1979):
The [Party] Center believes that in realizing the four modernizations in China we must uphold the four basic principles in thought and politics. They are the fundamental premise for realizing the four modernizations. They are [as follows]: 1. We must uphold the socialist road. 2. We must uphold the dictatorship of the proletariat. 3. We must uphold the leadership of the Communist Party. 4. We must uphold Marxism‑Leninism and Mao Zedong Thought. The Center believes that we must reemphasize upholding the four basic principles today because some people (albeit an extreme minority) have attempted to shake those basic principles. … Recently, a tendency has developed for some people to create trouble in some parts of the country. … Some others also deliberately exaggerate and create a sensation by raising such slogans as “Oppose starvation” and “Demand human rights.” Under these slogans, they incite some people to demonstrate and scheme to get foreigners to propagandize their words and actions to the outside world. The so‑called China Human Rights Organization has even tacked up big character posters requesting the American president “to show solicitude” toward human rights in China. Can we permit these kinds of public demands for foreigners to interfere in China’s domestic affairs? A so‑called Thaw Society issued a proclamation openly opposing the dictatorship of the proletariat, saying that it divided people. Can we permit this kind of “freedom of speech,” which openly opposes constitutional principles?
Growth averaged 10% from 1992 into the early 2000s. It created a middle class of 400 million people and transformed the country into an industrial hub and the second largest economy in the world.Capitalism began flourishing and divide China into at least two very different countries with much of the inland and rural areas largely ignored in this capitalist transformation. The growth was also predicated on the continued exploitation of young Chinese workers migrating from the countryside with few rights. The environmental cost was also quite high.
China’s growth was matched, and in many areas followed, by the growth of other Asian countries, like Korea, Malaysia, Singapore, and Taiwan. While only a few countries remained isolated and marginalized to the global trade, only a select few, the Asian Tigers, became fully developed industrial nations. Other Asian countries, particularly in the Middle East, relied on oil exports to fuel their growth.
Vietnam also promoted more of a free market economy while, like China, keeping the communist party in power. The Vietnamese economy was the second-fastest growing economy in the world in the early 2000s. India also moved to the political right; but in a different manner. The far right Bharatiya Janata Party (BJP) won a major election in 1996, against the Indian National Congress, with a less secular agenda and more nationalist agenda.Its campaign slogan was: “India should be built by Indians”.
