China’s economic rebirth in 1978 swept the country, profoundly changed whole world
Forty years ago this month in the Jingxi Hotel in Beijing’s Haidian district, one of the landmark events of the 20th century took place.
This was the location of the Third Plenum of the 11th Communist Party of China Central Committee, which was held from Dec 18 to 22, 1978, and the place at which top leader Deng Xiaoping launched reform and opening-up.
This initiative not only transformed China – from a largely agrarian and poor society to the second-largest economy in the world – but in so doing changed the whole world, shifting its center of gravity eastward.
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Top: Xishuangbanna Bridge was under construction over the Lancang River, in Jinghong, Yunnan province, in 1990s. Above: People launch Kongming lanterns for good luck and fortune near the Lancang River. Xinhua |
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A bird’s-eye view of Jinghong, Yunnan province, in the 1980s (top) and in 2018 (above). Xinhua |
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A visitor checks out the VR at an exhibition opened in Beijing to commemorate the 40th anniversary of China’s reform and opening-up. Zhang Yuwei / Xinhua |
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A girl plays the interactive screen at an exhibition opened in Beijing to commemorate the 40th anniversary of China’s reform and opening-up. Zhang Yuwei / Xinhua |
Martin Jacques, the British academic and author of When China Rules The World, believes 1978 was when the 21st century actually began, shaping the modern world we are beginning to experience today.
“Deng’s reforms not only transformed the whole of the Chinese economy, it transformed China’s vision of the world and the world itself. It is an absolutely revolutionary shift. It was a momentous event, absolutely incredible. In my view it did mark the beginning of the 21st century,” he says.
Reform and opening-up began with reform of the agricultural base of the economy.
The 1980s also saw the establishment of special economic zones in Shenzhen and other coastal areas, which became hives of industry and the platform for China to become the manufacturing workshop of the world.
The policy welcomed foreign investment from multinational companies around the world, which set up operations in China through joint ventures.
The economy has since grown at mostly double-digit rates from $306.2 billion (270.4 billion euros; ￡245 billion) in 1980 to $12.3 trillion in 2017, a 40-fold increase. In the process, some 800 million people were delivered from poverty.
Since the global financial crisis of 2008, China has contributed one-fourth of all global growth.
Kerry Brown, director of the Lau Institute at King’s College, London, says, however, that it would be wrong to see 1978 as a complete break from what came before.
He sees China’s development as more of a continuum, with the three decades after the founding of the People’s Republic of China in 1949 also important.
“The journey started in 1949. There was a modernization going on that was complicated. And it was all part of a learning experience. Without what happened before 1978, you wouldn’t have had the opportunities to do what happened afterwards,” he says.
The initiative has shaped many people’s lives. Jing Ulrich, managing director and Asia-Pacific vice-chairman at JPMorgan Chase and one of China’s most prominent businesswomen, was 11 years old when it was launched.
“I remember as a child witnessing the economic reforms that placed China on a path of extraordinary growth and prosperity,” she recalls.
“Every year I saw how the introduction of market principles allowed China to open up to foreign investment and gave people the opportunity to set up businesses and build something out of nothing. The transformation created much-needed jobs, drastically increased living standards and gave people the chance to build the lives they always wanted. It was the beginning of the Chinese dream.”
Ulrich, now 51, has been ranked by Fortune magazine among the top 50 most powerful businesswomen in the world, and was one of the first students at Harvard University to come from the Chinese mainland.
“While I was studying in America, people didn’t really know much about China. But over time, as the reforms continued to ripple throughout the market and brought global attention to the rising dragon, I knew it was my calling to interpret the China story for the world,” she says.
One of the contentious issues with reform and opening-up is whether it gets the attention and recognition in the West it deserves, if only by a single criterion: delivering so many people out of poverty.
Former UK prime minister Tony Blair, in an interview with China Daily earlier this year, was one to acknowledge this.
“It is a really significant event. If you were a Western student, you would study lots of things about the politics of the late 20th century. You would study the Soviet Union, the fall of the Berlin Wall and the end of apartheid,” Blair said at the time. “You wouldn’t probably study, in the same way, the opening up of China, and yet it signaled that China was going on a new path of engagement with the world with the opening up of its economy. The results have been staggering.”
Brown, although recognizing the significance of 1949, says the world we live in now derives from 1978.
“In terms of global leadership nothing comes close to it in terms of its impact on one-fifth of humanity. This was a truly great event, and so many issues we are dealing with now such as the shape of the global economy and the rivalry between the US and China, all date back to that year.”
Jacques also believes there is insufficient acknowledgement of 1978 in the West.
“You see barely anything in the Western media. That tells you virtually everything you need to know about the inability to comprehend one of the greatest trends in the world.,” he says.
For Ulrich at JP Morgan Chase, the impact of reform and opening-up will continue to shape the world with China’s ability to invest in other nations through such things as the Belt and Road Initiative, which was proposed by President Xi Jinping in 2013.
“China’s economic reforms have paved the way for the nation to create some of the world’s leading companies in e-commerce, artificial intelligence, genetic engineering, financial services and biotechnology,” she says.
“With China already achieving its goal of shifting from an export-oriented economy to a consumption-driven one, the leaders of the nation are now on a journey to build and invest in its neighbors through the trillion-dollar Belt and Road Initiative.”
State direction has played a significant role in the success of the China economy from the setting up the SEZs in the 1980s to current initiatives, such as establishing Free Trade Zones.
Rana Mitter, director of the University of Oxford China Centre, says the reform measures developed a momentum of their own in the 1980s.
“You had the decollectivization of the countryside. With the setting up of Special Economic Zones, Guangdong takes off like a rocket,” he says.
Deng’s Southern Tour in 1992, when he visited the Shenzhen SEZ and famously said “to get rich is glorious”, was also another important stepping stone, Mitter says. “This is when you have the real beginning of the Made in China export-oriented economy.”
William Kirby, TM Chang Professor of China Studies at Harvard, says part of the dynamism of the reform was the return of family businesses, particularly after 1990.
“They had been the dynamo of the China economy up to the 1920s – also in other East Asian economies,” he says.
Ulrich believes one of the most important ingredients in its success has been the way China has managed to rapidly integrate itself into the global economy.
“China’s unprecedented economic growth over the last 40 years is a testament to the importance of an economy embracing global business and international markets,” she says. “Over the last half-century, China has transitioned from a closed agriculture-based economy to one that is vibrant and deeply connected across virtually every sector in the world.”
Mitter, author of China’s War With Japan, 1937-45: The Struggle for Survival, says that part of the of the success of the initiative was its timing.
“It coincided with the end of the Cold War, and the US was then buying a lot of stuff – although this was largely debt-fueled – and China was producing it. It created what the historian Niall Ferguson called Chinamerica, referring to the two economies becoming complementary.”
Kirby, also author of Can China Lead? Reaching the Limits of Power and Growth, says the initiative has not been without its problems, particularly widening the inequality between the rich coastal regions and the poorer inland ones.
“The reform led to the extraordinary development of the south and east but some other less developed regions got left behind,” he says.
He believes this has particularly affected the farming community, which has not benefited the same way as the urban population.
“It is the farmers that have not enjoyed these benefits. If you look at France, the UK, Germany and the US, the farmers have not been impoverished. For China to be an enduring rich country it needs to have a prosperous agricultural sector as well.”
As the anniversary is observed, China, which became a member of the World Trade Organization in 2001, is continuing to open up its economy.
“People are looking to see what role China will play as a key actor on the international stage in the next phase of its development. That question remains to be resolved and the way that China addresses it will do a great deal to decide what China’s reputation, reach and power is,” adds Mitter at Oxford.
Ulrich also believes further opening up will also be important to China’s future success.
“There is still room for China to accelerate market liberalization. In addition, China can also further open its financial system to foreign competition, encourage foreign direct investment and continue to lead in global trade. These reforms will take time, but we do see China making meaningful progress on every front,” she says.
As people look back to 1978, Brown, who is also the author of China’s World: What Does China Want?, says it’s important to remember Deng’s leadership and reflect on it.
“Through his reforms China has emerged as a country that once again is a force in the world. It is innovating and creating its own technologies,” he says. “It is becoming what the US was in the 20th Century but with Chinese characteristics.”
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Two visitors take a selfie in front of a wall of tape recordings at an exhibition opened in Beijing to commemorate the 40th anniversary of China’s reform and opening-up. Zhang Yuwei / Xinhua |
(China Daily European Weekly 12/14/2018 page1)