Transcript Deng Xiaoping`s Economic Reform & Renaissance of China

Deng Xiaoping’s
Economic Reform
1978-1990s
Session 6
Table of Contents
I.
II.
III.
IV.
V.
VI.
Major Shift in Thinking
Economic Reform Step by Step
Open-Door Policy
Economic Miracle
China’s Foreign Policy
Discussion
I. Deng Xiaoping Resumed his Power and
Launched China’s Economic Reform in 1978
I-1. Major Shift in Thinking
Hua Guofeng became Mao’s successor in
1976.
“Whatever policy originated from Chairman
Mao, we must continue to support,” and
“Whatever directions were given to us from
Chairman Mao, we must continue to
follow.” 凡是毛泽东说的都是对的，凡是毛泽
东的指示我们必须坚决执行。
Continue
Deng remarked that “a liberation of
thoughts” was necessary and the
leadership must “seek truth from facts” Third Plenum of the Eleventh CCP Congress, Dec. 1978
Deng’s Pragmatism:
“It doesn’t matter whether its is a white cat or
a black cat, it is a good cat as long as it
catches mice”
 Cross the river by stepping over stones
(learning by doing)

I-2. Centrally-planned Economy
Transformed into Market Economy
“ Planning and market forces are not the essential
difference between socialism and capitalism. A
planned economy is not the definition of socialism,
because there is planning under capitalism; the market
economy happens under socialism, too. Planning and
market forces are both ways of controlling economic
activity
We mustn't fear to adopt the advanced management
methods applied in capitalist countries (...) The very
essence of socialism is the liberation and development
of the productive systems (...) Socialism and market
economy are not incompatible
II. Economic Reform Step by Step
II-1. Agricultural Reform
The household responsibility system
Of the population of 120, 67 peasants died
 A harvest larger than previous 5 years combined
 Per capita income: 22-400 yuan

Township & village enterprises
II-2. Breakthrough
Market-determined price
Breaking the “iron rice bowl”
70% of China’s GDP is in the private sector
(2010)
The economic reform and social
transformation led to the Tiananmen
Square Confrontation (occupation of the
Wall Street)
II-3. Reform in Education
Resumed the College Entrance
Examination in 1977, among 5.7 million
candidates, only 273,000 passed.
III. The Open-Door Policy
• 15 years effort to enter the WTO
• China’s tariffs dropped to 9.8%
from an average of 15.3% in five
years
• Welcome international trade &
foreign direct Investment
• Study abroad and welcome
foreign students to China
•
Three “ten thousands”
IV. China’s Economic Miracle
1. GDP has grown at an annual average
rate of 9.5% from 1978-2010
2. China becomes world’s second largest
economy in 2011
3. Largest exporter, second largest
importer, second largest trading nation in
the world in 2011
4. Foreign reserves: $3 trillion (Mar 2011;
ranked 1st).
The Economist
Apr 14th 2011
Another favoured sink for the world's riches is property. Perhaps
China should buy some exclusive Manhattan addresses. Hell, why
not buy all of Manhattan? The island's taxable real estate is worth
only $287 billion, according to the New York City government. The
properties of Washington, DC, are valued at a piffling $232 billion.
China is accustomed to being Washington's banker. Why not
become its landlord instead?
China could also allay its fears about energy, food and military
security. Three trillion dollars would buy about 88% of this year's
global oil supply. It would take only $1.87 trillion (at 2009 prices) to
buy all of the farmland (and farm buildings) in the continental United
States. And China could theoretically buy America's entire
Department of Defence, which has assets worth only $1.9 trillion,
according to its 2010 balance-sheet. Much of that figure is land,
buildings and investments; the guns, tanks and other military gear
are valued at only $413.7 billion.
China’s Progress in Technology
• China’s GPS
• Walk in the space
•
•
Canton-Wuhan high-speed train at speed
of 165 miles per hour; 4 hours from
Beijing to Shanghai (600 miles)
It now has the second largest R & D
budget
In 2007 China contributed more to global growth than
the United States, the first time another country had
done so since at least the 1930s.
Since 1978 400 million people have been lifted out of
poverty in China—about 75 percent of the world's
total poverty reduction over the last century.
Lawrence Summers has recently pointed out that
during the Industrial Revolution the average
European's living standards rose about 50 percent
over the course of his lifetime (then about 40 years).
In Asia, principally China, he calculates, the average
person's living standards are set to rise by 10,000
percent in one lifetime!
In two decades China has experienced the same
degree of industrialization, urbanization and social
transformation as Europe did in two centuries Newsweek, Issue 1, 2008
V. China’s Foreign Policy
Peaceful rise/development
To be a responsible great power
Created a peaceful world environment
Normalization with the US in 1979
 Normalization with the Soviet Union in
1989
 Visited Japan in 1978

Comparison between Mao’s Waroriented Mentality
& Deng’s Peace-oriented Mentality
Mao: China should make preparations
“for an early world war, a major war and nuclear war.”
If you are not with us, you are against us.
Deng: China’s foreign policy in the 1980s, and in fact in
1990s, even in the 21st century, can be summarized in
two sentences. China makes efforts to maintain world
peace and oppose hegemony. China always belongs to
the third world.”
If you are not against us, you are with us.
Deng Visited Japan in 1978
"China is striving to build itself into a modernized
socialist power. We need a peaceful international
environment and we are willing to develop friendly
and cooperative ties with all countries. Despite
different social systems in China and Japan, the two
countries should and can coexist in peace and
friendship."
Deng and Carter
Deng Xiaoping in the US
Deng and Mikhail Gorbachev
Discussion
• Is there any way to avoid the tragedy of
the Tiananmen Square Incident when
China experienced a radical social
transition from socialism to capitalism?
Could Deng find an alternative solution?
Conclusion
Deng’s Economic Reform:
Transferred the Crisis into an Opportunity
Missions impossible” Accomplished in China
• Mao lost Mandate of Heaven and led China into
a critical crisis in 1976.
• Reestablished the Mandate of Heaven through
replacement of Communist ideology with
pragmatism.
Continue
• Centrally-planned economy transformed into
market economy, with growth the fastest ever,
made China a second largest economy.
• New rising power has not resulted in a war,
territorial expansion, or a challenge to the
world order, relations between China & other
powers & neighbors better rather than worse.
Discussion
1. Why did Deng Xiaoping launch the
Economic Reform?
2. What are achievements of the Economic
Reform?
3. What kind of difficulties/challenges did
Deng have during the Economic Reform?
4. What were Deng's means to help him
reach his ends?
5. Why did Deng's Economic Reform
receive positive feedback from China and
the world?
6. What is difference between Mao and
Deng?