Transcript Deng`s Economic Reform & Its Impact July 6 - Chinese

Deng’s Economic Reform
Session 6
Table of Contents
I. Deng’s Economic Reform
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Deng’s pragmatism replaced Mao’s ideology of
class struggle
Bottom-up marginal reform
Top-down state enterprises reform
II. Open-Door Policy
III. Economic Miracle
V. Discussion
I. Deng Xiaoping Resumed his Power and
Launched China’s Economic Reform in 1978
(Third Plenum, Eleventh Central Committee)
I-1. Pragmatism Replaced Mao’s
Ideology of Class Struggle
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
“凡是毛主席作出的决策，我们都必须拥护，凡是毛主席的指示，我们要始终不渝地
遵循”。"whatever decisions Chairman Mao made, and we must all embrace, where
Chairman Mao's instructions, we must consistently follow."
Economic Development is the core of the Party
work.” 发展是硬道理 （Development is the last
word.”)
“阶级斗争是个纲，纲举目张。”（“take class
“
struggle as the key link, when the lead rope is raised, the fish net opens
wide.）
Approaches to Goals
“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)
“评价一个国家的政治体制，政治结构
以及政策是否正确，关键看生产力是否
得到了持续的发展。” 1987年5月
Interest-Motivation Stimulation
Some areas and some people can get rich
first, lead and help other regions and
people, and gradually achieve common
prosperity.
Deng Xiaoping, October 23, 1985 meeting organized by the U.S. Time Inc
"To get rich is glorious” Deng’s economic reform
delivered this message indirectly.
Orville Schell in his 1984 book "To Get Rich Is Glorious: China in the '80s."
One fifth of humanity…… are now fully
unleashed in an epic pursuit of material
wealth.New York Times, January 2, 1994.
I-2. Bottom-up Marginal Reform
Four marginal “revolutions”
 Household
responsibilities in the
countryside in 1979
 Township
& Village Enterprises (TVE)
 Individual
economy (private economy)
 Special
Economic Zones
Agricultural Reform
The household responsibility system
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Of the population of 120, 67 peasants died
A harvest larger than previous 5 years combined
Per capita income: 22-400 yuan
Rise & Wheat yields increased to 50 % in 1987National famer spent 60
days on the crops per year, compared with 250
-300 days in commune. Agricultural production
increased 6.7% every year from 1979-1984
800 million peasants gained much more freedom.
Township & village
enterprises
Its output in the national GDP increased from 6% in
1978 to 26% and hired 130million people, about 23%
of the population in the countryside in 1988. Its expert
reached 25 %of the national expert in mid 1980s.
Urban Individual Economy
20 million jobless returned youth, 10% of
urban population
400,000 in Beijing, 8.6%. and 380,000 in
Tianjing, 11.7%.
1979 permission to start individual
enterprises in cities.
Wenzhou became cradle of private
economy

买茶叶蛋的超过做导弹的
From 4 cities in
1980expended to all
the costal cities in
1990
Shen
zheng
30,000
14
million
State Owned Enterprises (SOE) Reform
A top-down economic reform
Failure in 1989
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Parallel price system & corruption
Price reform
High Inflation 9.5% in Jan. to 38.6 % in Aug.
June 4 Incident
Ownership transfer to shareholding or
private companies
To invigorate large enterprises while relaxing
control over small ones (抓大放小）
2010: 42 Chinese enterprises in 500 Strong
III. The Open-Door Policy
• Normalization with Japan, US &
the Soviet Union
• 2001: China entered the WTO
•
China’s tariffs dropped to 9.8% from
an average of 15.3% in five years
• 2003, China surpassed the US
as the largest recipient of FDI
2012:$100 billion
• Study abroad and welcome
foreign students to China
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Three “ten thousands”
Comparison between Mao’s Cold War
Mentality
& Deng’s PostCold War 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 Xiaoping in the US
Deng and Carter
Deng and Mikhail Gorbachev
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. China’s development is a powerful
driving force behind the global economic
growth. In 19902002, China was placed
first, with a contribution as high as
27.1%.
4. Foreign reserves: $3 trillion (Mar 2011;
ranked 1st).
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
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.
Discussion
1. How did Deng Xiaoping convince Chinese people
to follow his new policy?
2 . What are the four marginal revolutions?
3. What factors led to China’s economic miracle?
4. What are different mentalities between Mao and
Deng in foreign policy?