Chinese Politics in the Time of Deng Xiaoping

Based on Richard Baum, Burying Mao: Chinese Politics in the Age of Deng (Princeton University Press, 1996)

Westerners might be inclined to think that China’s government is much like Star Trek’s Borg: single-minded, antagonistic to individuality, intent on absorbing new territory at its margins and new technology wherever it finds it. The territorial and technological acquisitiveness is certainly real, and has been a source of conflict with China’s neighbours and trading partners. But the steadfastness of the Chinese government is often illusory. The political jousting so familiar to Westerners also occurs in China, but is hidden behind carefully worded communiqués.

The masking of political discord in China is a product of its one-party system. In a democracy, a government that loses the people’s trust will be removed from office at the next election. The party of the ousted government will not be happy, but it will rebuild itself and contest the next election. Noisy political dissent, both within parties and between them, is a normal part of the process. In a one-party system, on the other hand, a loss of trust leads to social unrest. Low levels of unrest are manageable, but extreme unrest can lead to the collapse of the entire system, as it did in Poland and the rest of the Eastern Bloc. Governments operating under one-party systems are acutely aware of this possibility. They suppress their internal disagreements in order to appear united, powerful, and resolute.

China’s leaders have had serious behind-the-scenes disputes over policy, but the range of policy options has been constrained by the country’s commitment to Maoist ideology. Indeed, disputes over policy have often morphed into disputes over ideology, and the careers of prominent leaders have been ended by charges of ideological impurity. Peng Dehuai is one example: he opposed Mao’s handling of the famine that occurred in the years around 1960, and was promptly purged from the party as a “right deviationist.” Other leaders have been cast aside, only to be “rehabilitated” later. Deng Xiaoping was twice purged and rehabilitated before becoming China’s paramount leader.

This post discusses China’s politics during the era in which Deng Xiaoping initiated reforms to the Chinese economy. But you can’t tell the players without a program, so let’s begin with a review of China’s governmental apparatus.

The Structure of Government

The Chinese Communist Party (CCP) is the only political party in China. It has more than 90 million members, and its influence touches every aspect of society: not just government, but also business, the military, the news media, academia, and the arts. Membership in the party is always an asset.

Representatives of the CCP meet every five years in a national congress, whose most important function is to elect a new central committee (CC). The number of candidates standing for election is not much greater than the number of vacancies, so this function is almost pro forma. The members of the central committee are the CCP’s most influential leaders. The central committee has no fixed size, but currently has about two hundred members. It was once led by a chairman — Mao Zedong, Hua Guofeng, and Hu Yaobang all held this position — but in 1982 the position of chairman was replaced with the position of general secretary, with Hu Yaobang being the first appointee. The new title was chosen to emphasize the collective nature of leadership: the general secretary was to be “first among equals.”

The central committee meets at least once a year in a plenum, but real power belongs to a still more select group. The politburo (from “political bureau”) of the CC has roughly 25 members, and the politburo standing committee (PSC) has only 5-9 members. Ideally, power belongs to the people, so the PSC should be answerable to the politburo and the politburo should be answerable to the CC. In practice, decisions come from the top: the PSC sets the agenda for the politburo and the CC.

The PSC sets the direction of policy, but its implementation is largely the responsibility of another structure in which, once again, power is concentrated at the top. The national people’s congress (NPC) meets annually to approve laws, budgets, and appointments. It is led by the president of China, although this position is largely ceremonial. A smaller NPC standing committee meets much more frequently. The standing committee has the power to interpret the laws, including the constitution.1 Its chairman is China’s most senior legislator.

The state council and the central military commission (CMC) are nominally under the control of the NPC, but are in practice controlled by the CC.

The state council is an executive body headed by the premier of China. The premier’s appointment is formally approved by the NPC, but he is selected by the PSC and becomes a member of that body if he is not one already. The premier is responsible for policy implementation. He is supported by a number of vice-premiers, ministers, and department heads. Although his initiatives are formally approved by the NPC standing committee, they are driven by the decisions of the PSC. (The boundary between the CCP and the government has always been fuzzy. Deng Xiaoping wanted a clearer delineation of their responsibilities; Xi Jinping believes the fuzziness is a feature, not a bug.)

The central military commission (CMC) controls the people’s liberation army (PLA), the people’s armed police, and militia groups. Nominally, there are two commissions, one answerable to the CCP and one answerable to the NPC. In practice, only one of these commissions matters: the CCP controls the military.2

The term “paramount leader” came into use during Deng Xiaoping’s time. He wanted to avoid the sort of one-man rule that Mao Zedong had established, and allowed others to occupy the highest positions in China’s political hierarchy. Nevertheless, he was the dominant figure in Chinese politics, and so its paramount leader. His successors have taken the opposite approach. Jiang Zemin, Hu Jintao, and Xi Jinping have all simultaneously held the positions of general secretary of the CCP, president of the NPC, and chairman of the CMC. They have been paramount leaders — but nobody had to be told that.

Mao’s Successor

Mao Zedong died in September 1976, leaving behind a complex legacy. The establishment of a communist republic in China was an enormous feat, made possible by Mao’s steadfast idealism. But the flipside of idealism is a lack of realism, and Mao’s most ambitious programs were little short of catastrophic: the Great Leap Forward, the headlong collectivization of agriculture, the Cultural Revolution. A famine that occurred in the years around 1960 was first denied and then mishandled by the government; it resulted in the deaths of thirty million people. To the end of Mao’s life, the Chinese people lived in poverty.

Mao’s priorities were ideology and the broad outlines of policy. He left policy implementation to Zhou Enlai, who became premier in 1954 and held that post until his death in January 1976. It was Zhou who facilitated Deng Xiaoping’s first rehabilitation.

Towards the end of the famine, some Chinese officials had championed incentive-based policies to reinvigorate the agricultural sector. Deng was among them; so were Liu Shaoqi and Chen Yun. These policies were effective, but Mao believed that they were pushing China back towards the “capitalist road.” Deng and Li were purged; Chen was removed from government but not the party.

In the early seventies Zhou Enlai began to look for ways to end China’s economic stagnation, and recognized that Deng’s experience would be useful to him. He engineered Deng’s rehabilitation and appointed him first deputy premier. Deng was then well-positioned for further advancement, and protected by a powerful patron.

The policies promoted by Zhou and Deng antagonized Mao’s wife, Jiang Qing, and her far left supporters. They had instigated the worst excesses of the Cultural Revolution, and continued to advocate a rigid communist ideology. Zhou’s death was useful to them: it not only removed Zhou himself, but gave them a chance to strike against Deng. They petitioned Mao to oppose Deng’s promotion to premier on the grounds that he was a “right deviationist,” and proposed one of their number in his place. They were partially successful. Mao did oppose Deng’s promotion, but he was mistrustful of Qing and her supporters (soon to be known as the Gang of Four) and opposed their candidate as well. After difficult deliberations, the politburo chose Hua Guofeng, the sixth deputy premier, as China’s acting premier.

The Gang of Four then embarked on a propaganda campaign against both Deng and Zhou, which had an unexpected consequence. On Qingming (Ancestors Day) in April 1976, more than a million people visited Tiananmen Square, bringing floral tributes to Zhou and loudly protesting his treatment by the media. The Gang of Four was nothing if not opportunistic. It claimed that these demonstrations were counterrevolutionary, and accused Deng of fomenting him. Mao accepted their claims. The protestors were dispersed, Deng was purged again, and Hua Guofeng’s premiership was confirmed.

Mao died in September and was lavishly eulogized. A few weeks later, on Hua’s orders, the Gang of Four and its key supporters were arrested on charges of sedition. Hua Guofeng was China’s paramount leader, the winner in a high-stakes game of musical chairs.

Hua Guofeng and Deng Xiaoping

The Gang of Four’s arrest created pressure to reappraise the purges that the Gang had engineered, beginning with that of Deng. If the Qingming protests were not counterrevolutionary — if they were the spontaneous defence of an unjustly defamed national hero — Deng was not an instigator. The cases of numerous prominent officials purged during the Cultural Revolution were also raised. Hua initially opposed any reconsideration of the purges. He had participated in the decision to disperse the Qingming demonstrators, and feared that a reappraisal of the protests would damage his own reputation. As well, questions about the Gang of Four’s actions during the Cultural Revolution would inevitably lead to questions about Mao’s actions. Hua had presented himself as Mao’s natural successor, so any suggestion that Mao was fallible would impair his own authority. But the pressure to rehabilitate purged officials did not abate: one by one, they were brought back and installed in prominent positions. Deng himself was reinstated in April 1977. He was once again first deputy premier, as well as vice-chairman of the CCP and the CMC. He was appointed to the PSC in August 1978.

The terms of Deng’s reinstatement had been carefully negotiated with Hua, and to a certain degree, Deng was required to be conciliatory. However, Deng publicly broke with Hua on one ideological issue. Hua and his supporters adhered to the “two whatevers”:

We will resolutely uphold whatever policy decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave.

Deng, determined to end China’s economic stagnation, saw the “two whatevers” as a guarantee of failure. Deng instead argued that Mao had provided a framework for inquiry, not a fixed set of solutions. The solution should depend upon the facts, and new facts should lead to new solutions. This view was summarized by the mantra “seek truth from facts.” The choice between the “two whatevers” and “seek truth from facts” created a fault line within the CC.

The reappraisal of history continued. By November 1978, Mao had been judged to have erred in three major events: the 1957 anti-rightist campaign, the initiation of the Cultural Revolution, and the repression of the Qingming protests. Acknowledgement of Mao’s mistakes made the “two whatevers” untenable. Coupled with this reappraisal was a growing discomfort over the ease with which the Gang of Four had been able to bend the system to their own ends. The system needed to change, and the “two whatevers” stood in the way of change. Both of these factors diminished Hua’s authority.

Hua was also weakened by a failed ten-year plan. Hua had hoped to accelerate China’s economic growth through the rapid development of heavy industry. His plan called for 120 new projects, including iron and steel foundries, coal mines, oil and natural gas development, power plants, railways, and harbours. These projects would require large imports of foreign capital goods, which Hua intended to finance through increased oil exports. But attempting to expand so many parts of the economy at once led to bottlenecks and work stoppages; and the oil industry failed to quickly expand, leading to huge budget deficits.

Hua’s support fell away; and at the same time, Deng’s support — in the media, in the military, and in the CCP — rose. Although Hua remained formally in charge of China’s government, Deng’s ideas were taking hold. The turning point came in December 1978, at the Third Plenum of the Eleventh Central Committee.

The Third Plenum adopted a number of important changes in the party’s political line and economic orientation. These included a shift from criticism of the Gang of Four to the pursuit of “socialist modern­ization” as the primary focus in party work; a decision to decentralize, rationalize, and reform economic administration and management through in­troduction of responsibility systems, performance-based rewards and punishments, and the “law of value”; abandonment of mass movements as a pre­ferred means of policy implementation; and a commitment to strengthen the institutions of collective leadership, socialist democracy, and the legal system.3

These policies were aligned with Deng’s priorities, but their adoption by the Central Committee wasn’t his work alone.

Apart from the key role played by Chen Yun in mobilizing veteran party cadres to oppose the “whateverists,” much of the credit for Deng Xiaoping’s triumph at the Third Plenum belonged to Hu Yaobang and his network of supporters inside the Communist Youth League and the Central Party School. It was they who spearheaded Deng’s “criterion of truth” campaign; they who led the drive to desanctify Mao and demystify “whateverism”; they who drafted the Third Plenum’s pathbreaking communiqué; and they who, along with such veteran party theorists as Liao Gailong, most ardently championed systemic structural reform.4

Both Chen and Hu were appointed to the politburo, and Chen was appointed to the PSC. Hu also became head of the central committee’s propaganda department, from which he could continue to mobilize grassroots opinion.

The Third Plenum was the starting gun for economic reform. Hua’s struggling ten-year plan was drastically curtailed, and more radical policies set in place. The early reforms included the creation of special export zones, the introduction of the household responsibility system, and the loosening of constraints on town and village enterprises. These reforms ended China’s reliance on food imports, and initiated a dramatic expansion of its manufacturing.

As the reforms proceeded, Deng consolidated his support. Chen Yun was appointed vice-premier in charge of economic planning. The household responsibility system had first been established in the provinces of Sichuan and Anhui, driven by two rehabilitated cadres, Zhao Ziyang and Wan Li. Both of them became vice-premiers in 1980. Hu Yaobang and Zhao Ziyang joined Deng and Chen on the PSC. Deng’s coalition had firm control of both the PSC and the state council by early 1980.

The Limits of Freedom

In the spring of 1978 — before the Third Plenum, and before Mao’s errors had been publicly acknowledged — China’s constitution was amended to include the “four freedoms,” these being the rights to speak out freely, to air views fully, to hold debates, and to write big-character posters. These rights were soon tested.

In November 1978, shortly after the Qingming protests were publicly acknowledged not to have been counterrevolutionary, big character posters began to appear in Beijing, on what came to be known as Democracy Wall. The first posters were critical of the “two whatevers” and of Mao’s lax handling of the Gang of Four. The posters drew people to the wall and to nearby Tiananmen Square. These people tended to be relatively young, and many of them were either unemployed or underemployed. Few of them were students or established intellectuals.

The next batch of posters struck at matters much more crucial to the government. They were critical of Maoist economic policy, and of the absence of democracy. One poster argued that the Chinese system of government was too much like the Russian system, under which “the state is strong and the people are poor.” Another called for the recognition of human rights: “The Chinese people do not want to repeat the tragic life of the Soviet people in the Gulag Archipelago.”5 Similar posters began to appear in other major cities. The crowds grew larger.

The demonstrators were soon joined by “petitioners,” people who felt that they had been grievously treated during the Cultural Revolution and sought some form of redress from the government. It is estimated that one hundred thousand petitioners came to Beijing and Shanghai. Those who came to Beijing, having nowhere else to go, joined the masses in Tiananmen Square.

Deng initially supported the demonstrators’ right to free expression, but by February 1979, he found himself in a difficult situation. The CCP leadership was splitting. Reform-minded leaders continued to support the protestors. Hu Yaobang was one of them. So was Chen Yun, who believed the demonstrations arose because the “people don’t have enough to eat and are not adequately clothed.”6 But Deng had to maintain the confidence of the general leadership, and the older, more conservative leaders were becoming increasingly impatient with the protestors. Deng attempted to placate them by proposing the arrest of a few high-profile demonstrators, but the conservatives wanted more. At the end of March the municipal government of Beijing announced the impending suppression of the demonstrators, and proclaimed a set of restrictions on speech that would soon be known as the “four cardinal principles.”

All activities in opposition to socialism, in opposition to proletarian dictatorship, in opposition to leadership by the party, or in opposition to Marxism-Leninism-Mao Zedong Thought…are prohibited by law and will be prosecuted.7

Deng, speaking for the central committee, supported these restrictions. The demonstrations were slowly suppressed over the remainder of the year, and by January 1980, Deng had adopted a hard line on social unrest:

Noting that “our people have just gone through a de­cade of suffering [and] cannot afford further chaos,” Deng decried the in­crease in social disorder precipitated by “so-called democrats with ulterior motives.” Claiming that anarchists and extreme individualists in the Democ­racy Movement were flagrantly opposed to the socialist system and Commu­nist Party leadership, he accused them of colluding with foreign agents, in­cluding the Kuomintang secret service, to sow discord among the Chinese people. Arguing that freedom of speech, press, and assembly were never meant to be extended to such counterrevolutionary elements, Deng urged the constitutional abolition of the four big freedoms and promised greater reliance on the “weapon of law” in the campaign against troublemakers.8

The four freedoms were removed from the constitution in September 1980. The four cardinal principles were enforced immediately and written into the constitution in December 1982.

Some Westerners have believed that Deng was initiating a transition to free enterprise, and that democracy would surely follow. Neither belief was ever well-founded. Deng famously said that it did not matter whether the cat was black or white, so long as it caught mice, but he was always certain that the socialist cat was better than a capitalist dog.

Pressure for the Reform of Government

Deng’s coalition recognized the need to reform China’s governmental system. Power was too concentrated, with too many senior leaders holding multiple positions. There was no mechanism to ensure the smooth succession of leadership, and no ongoing mechanism for replacing aging leaders with younger and more energetic ones. There was no clear distinction between the responsibilities of the party and the responsibilities of the government. For Deng, this blurring of responsibilities was particularly concerning at the lower levels of government, where the party was most prone to interfere in people’s lives.

At the grass-roots level, we must make up our mind to change the situation in which party members dominate the masses, party branch secretaries dominate all other cadres, and party organizations dominate all other organizations. Our party committees should no longer take on and intervene in everything.9

Deng believed that if the CCP did not impose limits on its own authority, Chinese workers would be driven to establish trade unions to act as countervailing powers, exactly as Polish workers had.

Deng proposed a set of reforms (the Gengshen reforms) in 1980, but within a year the drive for political reform had been blunted by a worsening economy, increasing social dissent, and consternation over the events unfolding in Poland. The reforms that did occur “reopened regular channels for citizen complaints about bureaucrats, expanded elections of local cadres, revitalized the press for more effective propaganda, and instituted direct elections for the lowest levels of the people’s congress system.”10

These reforms might appear meager, but they were in aid of the traditional Chinese understanding of democratization, which is quite different from the Western one. Democracy meant not the direct election of officials, but open communication and active cooperation between the government and the people.

The critical assumption underlying this view of democracy is a unity of interests between all social groups and individuals and the state…In Deng Xiaoping’s era, the purported unifying force [was] the desire to modernize. This assumption of fundamental harmony is also what makes the Chinese conception of democracy compatible with dictatorship. Since the interests of state and people coincide, the government can serve the popular will with no checks on its power as long as it maintains good communications with the people. That is the function of democracy: to keep the government apprised of how well it is meeting popular needs and to keep the people informed about state policies.11

During the protests of 1978-9, only the most radical activists had advocated Western-style political institutions. The vast majority of the activists were not protesting against the government, but against the policies that had divided the government from the people. They supported the principles set out by the Third Plenum, believing that they would restore the “fundamental harmony” between people and government. They were, in short, Deng’s allies.

The issue of government reform arose again a few years later, both in government and on the streets. The protests were different the second time around: the street activists were predominantly students and public intellectuals, and they were more open to radical change.

The first student protests occurred in the summer of 1985. The flashpoint was a visit by the Japanese prime minister, but the students had deeper causes for dissatisfaction. Urban areas were under stress: inflation was cutting into the standard of living, officials were corrupt, young people were insecure and alienated, the crime rate was rising. Many urban dwellers believed that on balance, the economic reforms were harming them rather than helping them. The students had their own particular concerns. Their living conditions were poor, and they often distrusted the university administrators who controlled their career prospects. The new round of protestors opposed both the government and the reform policies, making them a serious problem for Deng.

China’s intellectuals had initially been wary of violating the four cardinal principles, but by the summer of 1986, they had begun to contemplate deep reform. Yan Jiaqi, a senior member of the Chinese Academy of Social Sciences (CASS), suggested parliamentary government. Su Shaozhi, another senior member, proposed multiparty competition. Even more radical thinkers were being heard on the streets. The most prominent of them was the astrophysicist Fang Lizhi, who urged the students to demand Western-style democracy.

Democracy granted by leaders is not true democracy. What is the meaning of democracy? Democracy means that each human being has his own rights and that human beings, each exercising his own rights, form our society. Therefore, rights are in the hands of every citizen. They are not given by top leaders of the nation.

Democracy is not granted from the top down; it is won by individuals.

I am here to tell you that the socialist movement, from Marx and Lenin to Stalin and Mao Zedong, has been a failure. I think that complete Westernization is the only way to modernize.12

Somewhat surprisingly, the government’s initial reaction was simply to remind Fang of his duty to support party principles. Intellectuals had been reviled during the Cultural Revolution — “the more knowledge, the more reactionary” — but were now held to be a valuable resource. The students protestors also benefited from this respect: they were initially treated more leniently than the 1978-9 protestors had been. But the crackdown, when it finally came, was much more severe.

Deng remained committed to democratization in the traditional sense, but had difficulty rallying support for reform. Chen Yun now believed that the push for political reform was undermining the stability of the country, as did Li Xiannian and Peng Zhen.13 Hu Yaobang advocated extensive reform, but with the political center shifting to the right, he soon found himself alone on the left. In January 1987 he was removed from the position of general secretary and replaced with Zhao Ziyang.

Zhao supported moderate political reform. He argued that the main problems were still the ones that had been identified in 1980, and he outlined the necessary reforms. He also called on the party to recognize that society is not monolithic, that different segments have different concerns and different opinions, and that there must be a way for these interests to be conveyed to the government. However, he explicitly rejected multiparty democracy, declaring it to be unsuited to China’s current state. There would instead be “democratic supervision and consultation” — democracy in the traditional sense. But political reforms were again pushed to the sidelines by social unrest and the unravelling of the Eastern bloc.

Student protests became increasingly common in the early months of 1988. Then, on April 15, Hu Yaobang died of a heart attack. Tens of thousands of students gathered in Tiananmen Square to mourn him. Their leaders set out a series of demands, calling for a reappraisal of Hu Yaobang, as well as more freedom to speak and publish. The government remained silent, but the demonstrators did not back down. Their numbers reached 100,000 on April 22, and 150,000 on May 4.

Protestors in Tiananmen Square, May 1989
Protestors in Tiananmen Square, May 1989

Many of the leaders, including Deng, took a hard line against the demonstrators. Deng feared that the protests had been organized by agitators, and that a Polish style uprising might occur: “Events in Po­land prove that making concessions provides no solutions. The greater the concessions made by the government, the greater the opposition forces be­came.”14 Zhao was an outlier among the leaders. He made repeated attempts to reconcile the government and the students, but failed each time. When Deng suggested imposing martial law, Zhao objected but was overruled.

Martial law was imposed on May 20, and on May 21, about one million people demonstrated against it. The protests had initially been a student affair, but now they had broader backing.

As the first tense days under martial law passed with no sign of government response, the ranks of the demonstrators continued to swell. Now whole facto­ries and government work units openly displayed their solidarity with the students; banner-waving contingents representing Communist youth groups, government ministries, official media agencies, CASS research institutes, uni­versity departments, hotels, even public security agencies and law courts marched together in open support of what had become, by this time, an ex­tremely broad-based urban coalition.15

Opposition to martial law even extended to active and retired leaders of the PLA, who sent a letter to Deng stating that the PLA “belongs to the people” and should never spill their blood.

The stand-off between the government and the protestors continued for two more weeks before the government decided to use troops to disperse the demonstrators. Two factors are likely to be have strongly influenced this decision:

One was the rapid rise of a militant, autonomous workers’ movement that proclaimed its solidarity with the students, thereby bringing ever closer to reality Deng Xiao­ping’s recurrent Polish nightmare; the other was the progressive defection of substantial numbers of party, government, and army leaders to the side of the students, lending critical weight and legitimacy to the antiregime fervor that was sweeping through China’s major urban centers.16

The crackdown began on the evening of June 3. The troops were ordered to clear Tiananmen Square and to disperse demonstrators wherever they gathered. The troops fired on the demonstrators. The number of people killed is uncertain, but most estimates lie between 700 and 2700. Thousands more were injured.

Zhao Ziyang’s effort to prevent this catastrophe proved to be personally costly. The conservative faction claimed that his interventions had split the party, and forced his removal from all government posts. His replacement as general secretary was a compromise candidate, Jiang Zemin.

The Politics of Economic Reform

Very substantial economic reforms were implemented in the late 1970s and early 1980s. There were two major changes in the countryside. The first change was that plots of arable land were allocated to individual families. Each family was required to deliver a specified amount of produce to the collective that owned the land, but retained everything that it produced above this amount for its own consumption or for sale on free markets. The farmers faced few restrictions over how they used their land or allocated their own time. This arrangement was known as the “household responsibility system,” and by the end of 1982, more than 90% of China’s farmers operated under it. The system eliminated many of the incentive problems that plagued the collectives. The productivity of the collectives had been stagnant for decades, but China’s grain output rose by a third between 1978 and 1984. Even as the farmers were producing more grain, they were sharply reducing the amount of time that they spent in their grain fields. The amount of labour used to cultivate a hectare of rice fell by almost a quarter between 1978 and 1985, and the amount used to cultivate a hectare of wheat fell by over half.17 They used the time released from grain production to raise subsidiary crops or livestock, to work in paid employment, or to engage in private business. Rural per capita incomes doubled between 1979 and 1984. The second change was the expansion of the town and village enterprises (TVEs). The TVEs were small firms, each operating under the auspices of a collective. Their original purpose was to produce simple agricultural inputs in order to make the collectives locally self-sufficient. As rural incomes rose, the rural populace began to demand basic consumer goods (such as bicycles and electric fans) that were underprovided by the state-owned enterprises (SOEs), and the TVEs expanded their product lines to satisfy this demand. They required little capital, and employed the labour released from agriculture. At least initially, they were immensely profitable. They expanded rapidly, producing an increasingly broad range of goods and sometimes acting as subcontractors for urban SOEs. The value-added produced by TVEs was less than 6% of GDP in 1978, but reached 26% of GDP in 1996, even though GDP itself was explosively growing.18

China in the early 1980s: 1000 men + 1000 shovels = 1 pipeline
China in the early 1980s: 1000 men + 1000 shovels = 1 pipeline

Equally radical changes occurred in the provinces of Guangdong and Fujian. Four special economic zones (SEZs) were set up there to encourage foreign firms to shift manufacturing to China. This possibility was especially valuable to firms from Taiwan and Hong Kong, whose economic expansions had created local shortages of labour. Much of the work done in the SEZs, especially in the beginning, was assembly work. The firms were allowed to import components and export finished goods without paying duties. The benefit to them was access to cheap labour. The benefit to China was employment that supported a rising standard of living, access to new technology, and exposure to international standards of manufacturing. The first SEZs were so successful that fourteen more SEZs were set up in 1984.

China as a whole also benefited from the loosening of restrictions on private enterprise. Between 1983 and 1985, the number of registered private enterprises and getihu (individual households engaged in private trade) rose from 5.9 million to 11.7 million.19 They were initially concentrated in rural areas, but slowly became more prominent in the cities. All of these changes involved winners without losers. The sticking point was the moribund SOEs, where reform was impossible without lay-offs and firm closures.

Also in the early 1980s, China’s crime rate was rising and official corruption was becoming more common. There were elements within China’s leadership that believed that these things were brought about by the economic reforms.

Since the policy of opening up to the outside, encroachments by bourgeois ideology from abroad [and] infiltration by hostile foreign influences [have] directly or indirectly fostered criminal activity in society.20

China, they said, was suffering from “spiritual pollution,” a loss of socialist values caused by creeping Western liberalism. Spiritual pollution had to be stopped, even if the cost was the halting of economic reform. This belief

…struck a raw nerve in many parts of the country, particularly in rural areas where economic reform had (at best) brought only mixed results. In some rural districts, village officials, resentful of the new-found prosperity of peasant-entrepreneurs, had taken advantage of the antipollution drive to restrict the legitimate market activities of peasants and to impose a variety of discriminatory taxes and fees on newly affluent “specialized house­holds.” In China’s less developed interior provinces, opposition to Deng Xiaoping’s open policy, which gave preferential treatment to coastal prov­inces and special economic zones, also began to crystallize in this period. Throughout the country, those localities, groups, and individuals most highly disadvantaged by reform, or simply afflicted with envy of others more suc­cessful than themselves…took advantage of the antipollution campaign to decry the high costs and adverse side effects of economic reform.21

Deng’s faction was concerned about crime and corruption, but fought back against the ever broadening hunt for spiritual pollution — sunglasses and filtered cigarettes were not to be interpreted as signs of moral decay.

We must not…indiscriminately turn into spiritual pollution everything that one has not seen before, does not care for, or is unaccustomed to, as some comrades have done.22

Deng’s faction did not want economic reforms to stall. The creation of fourteen new SEZs in 1984 occurred despite the opposition of Chen Yun and other conservatives. The TVEs began their dramatic expansion in the same year.

China in the early 1980s: fashionista
China in the early 1980s: fashionista

The primacy of economic reform was reasserted by Zhao Ziyang (now general secretary, Hu Yaobang having been dismissed) in a speech at the party’s national congress in the fall of 1987. As Baum explains,

Economic development was the central task of the present era, to be pursued by grasping simultaneously two basic points: adherence to the four cardinal principles and persistence in the policy of re­form and opening up to the outside world. What made this somewhat stylized formulation noteworthy was its explicit subordination of the four cardinal principles to the strategic requirements of economic development. “Whatever is conducive to the growth [of the productive forces],” said Zhao, “is in keep­ing with the fundamental interests of the people and is therefore needed by socialism and allowed to exist.” Conversely, Zhao continued, “whatever is detrimental to this growth goes against scientific socialism and is therefore not allowed to exist.23

Zhao stated that “because our socialism has emerged from the womb of a semi-colonial, semi-feudal society, with the productive forces lagging far behind those of the de­veloped capitalist countries, we are destined to go through a very long primary stage.” In this stage, said Zhao, China must use whatever means are available to catch up with the advanced capitalist countries. It would be “naive and Utopian,” he argued, to believe that China could skip over this primary stage and proceed directly to mature socialism; indeed, such a Utopian belief com­prised “the major cognitive root of Leftist mistakes.24

The intention to increase reliance on the market was indicated by a new slogan, “The state regulates the market; the market guides the enterprise.”

Zhao’s main goal was the rationalization of the SOEs. They had to be made more responsive to market incentives. They had to be allowed to shed unproductive labour, and if they were still not profitable, they had to be closed down. Zhao made some progress on this agenda, but he was working in opposition to his successor as premier, Li Peng. Li was a conservative who wanted stability. His main goals were greater grain production, and the development of basic industry and infrastructure. Li allied himself with Chen Yun. Chen, a one-time reformer turned conservative, could not envision an economy in which planning did not play a dominant role. He likened the economy to a bird in a cage. The cage was state planning: it must give the bird a little room to fly about, but not too much! Their concerns were not altogether groundless. There was growing evidence of inflation, profiteering, and speculation. Some people — including, all too often, the children of cadres — experienced large gains in their living standards, but a very large segment of society found that their living standards were falling. The unemployment rate was rising, begging was observed on city streets for the first time since the revolution, serious crime became more common.

The battle for control of economic policy slowly shifted in Li’s favour, and in September 1988, Zhao publicly acknowledged that economic policy was under the control of the premier and the state council. Zhao would be removed from office in June of the following year.

Chen and Deng openly clashed in early 1990. Chen blamed Hu and Zhao for allowing corruption to take hold within the party: they had been too lenient, too forgiving of “bourgeois liberalism.” The party corruption led to social unrest, the unrest to student protests, the protests to the Tiananmen Square massacre — so all of these things were the responsibility of Hu and Zhao and, by extension, of Deng as their handler.

They clashed over economic reform in the fall of 1990.

Premier Li strongly endorsed Chen Yun’s views on the importance of continued central planning and slow, bal­anced growth. More significant, he directly contradicted Deng Xiaoping’s in­junction to treat further economic reform and opening up as China’s highest priorities. “Reform and opening up should not be taken as the guiding princi­ple,” said Li; “instead, sustained, steady, and coordinated development should be taken as the guiding principle.25

Jiang Zemin, the new general secretary, publicly supported Li’s position. Deng held his ground, arguing for even faster economic reform. The collapsing Eastern Bloc concerned him, and he believed that only higher living standards would end social unrest and prevent the collapse of China’s communist regime.

In the following months, Chen extended his attacks. He publicly criticized Boris Yeltsin, and warned that Chinese socialism could be brought down by a “bourgeois liberal” leader. He also criticized the SEZs, arguing that they did not contribute to China’s modernization but that they did dilute socialist values. A group of party veterans, contemporaries of both Chen and Deng, backed Chen. Deng now recognized that he was losing control of the party. He took action:

Deng Xiaoping marshalled his remaining physical energies and made a dramatic gesture de­signed to recapture the policy initiative on behalf of his reform program. Lay­ing down the gauntlet, Deng challenged Chen Yun to accompany him on an inspection tour of China’s southern SEZs, to see for himself the fruits of a dozen years of economic reform and opening up. Though he now experienced noticeable difficulty walking and talking, and though he lacked sufficient strength to play bridge for more than an hour at a time during his customary twice-weekly card game, China’s paramount leader threw caution to the wind. Heading south in the middle of winter, Deng launched his last major political campaign.26

Deng’s famous “Southern tour” showcased the successes of the SEZs. In his speeches, Deng rejected the left’s claims that the SEZs represented creeping capitalism, instead arguing that their obvious success demonstrated the need for widespread economic reform. He denied the claim that free markets are innately capitalist: “Plans and markets are simply economic stepping stones…to universal prosperity and richness.”27 Some people were getting rich now, but the rest would catch up later.

Deng’s gambit was a success. In early 1992 the politburo SC endorsed Deng’s position — “reform and opening” remained official policy. Jiang and Li were caught offside, but quickly pivoted to promoting the position that they had so recently opposed. The most fervent advocate of economic reform, though, was another hand-picked Deng protégé, Zhu Rongji.

Deng Xiaoping and Chen Yun, aged and in poor health, withdrew from politics. For them, the Long March was finally over.

Jiang Zemin became the paramount leader, and with Li Peng as his premier, continued the task of economic reform. Zhu Rongji worked tirelessly to build new legal and regulatory foundations for the Chinese economy. By the time that he replaced Li Peng as premier in 1998, the hard work of reform had been done.

  1. In the West, the interpretation of the law and the final adjudication of cases are the responsibility of the supreme court. In China, these duties are split: the NPC standing committee interprets the law while the supreme court decides specific cases.
  2. Its control is not absolute. China’s military leaders have often had their own opinions about the direction that the country should take, and at times it has been difficult for the political leaders to keep them onside.
  3. Baum, Burying Mao: Chinese Politics in the Age of Deng, pp. 63-4.
  4. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 65.
  5. Both quotes from Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 73.
  6. Quoted by Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 78.
  7. Quoted by Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 79.
  8. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 89.
  9. From a 1986 speech by Deng. Quoted by Kjeld Brødsgaard, “Economic and Political Reform in Post-Mao China,” Copenhagen Papers in East and Southeast Asian Studies (1987), p. 42.
  10. Daniel Kelliher, “The Political Consequences of China’s Reforms,” Comparative Politics (1986), p. 488.
  11. Daniel Kelliher, “The Political Consequences of China’s Reforms,” Comparative Politics (1986), p. 489.
  12. Fang Lizhi, quoted by Baum, Burying Mao: Chinese Politics in the Age of Deng, pp. 200-1. It should be noted that the conception of rights advocated by Fang is not the traditional Chinese conception. Kelliher says this of the 1978-9 protests: “Most democracy activists assumed the Chinese tradition that people do not have innate rights, but only rights granted by the state (which are not rights at all by western standards). The purpose of these rights is “not to protect the individual against the state, but to enable the individual to function more effectively to strengthen the state” (p. 125). To most democracy activists the alternative of millions of citizens pressing their own individual rights against the state “meant chaos and national weakness” (p. 105).” (Daniel Kelliher, “The Political Consequences of China’s Reforms,” p. 489; included quotes are from Andrew Nathan’s Chinese Democracy)
  13. At this time, Li was China’s president and Peng was the chairman of the NPC standing committee.
  14. Deng, as quoted by Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 250.
  15. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 260.
  16. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 275.
  17. Barry Naughton, The Chinese Economy: Adaptation and Growth (MIT Press, 2018), p. 269. The farmers could produce more output in less time because they worked harder when they did work (there was no personal benefit to hard work under the collective system) and because they employed more inputs such as chemical fertilizers and small tractors.
  18. Barry Naughton, The Chinese Economy: Adaptation and Growth, p. 310. As private enterprise became more acceptable in China, many of the TVEs were bought out, often by their managers, and converted to private firms.
  19. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 173.
  20. From a communist party publication, quoted in Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 156.
  21. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 164.
  22. Politburo member Yu Qiuli, quoted in Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 162.
  23. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 218.
  24. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 219.
  25. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 320.
  26. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 340.
  27. Baum, Burying Mao: Chinese Politics in the Age of Deng, p. 342.