Economic Reforms, 1978-Present

Abstract

Between 1949 and 1976, under Mao Zedong’s 毛泽东 leadership, the Chinese Communist Party (CCP) implemented socialist economic policies. In the 1950s, the central planning of industry (with an emphasis on heavy industry) was introduced, modeled on the five-year plans of the Soviet Union, and agriculture was collectivized. Following the collapse of the Great Leap Forward and the political split with Moscow, China’s economic policies in the 1960s and 1970s vacillated between Mao’s ultraleftist tendencies and more conventional socialist policies advocated by such leaders as Liu Shao-ch’i 刘少奇 and Deng Xiaoping 邓小平. Mao attacked his opponents for taking the capitalist road and largely succeeded in suppressing their proposed policies until his death in 1976. After Mao’s death, advocacy of various reforms became more acceptable. One important early sign of the new atmosphere was the announcement in 1977 that entrance examinations for China’s universities (which had been attacked and closed down during the Cultural Revolution) would be reestablished. Deng Xiaoping returned to power, and at the Third Plenum (of the Eleventh Central Committee of the CCP) in December 1978 the famous four-character policy gaige kaifang (改革开放), a reform of the economic system and an opening up to the outside world, was promulgated. Beyond the strong signal that the reforms were intended to remedy some of Mao’s mistakes, it was not clear exactly what the slogan would entail in practice. Indeed, even in the early 21st century the specifics of the reforms are still the subject of substantial disagreements within the CCP leadership. However, there can be no doubt that the reforms since 1978 generally have succeeded in both the system reform aspect, marked by the decollectivization of agriculture and the dismantling of Soviet-style central planning in industry, and the opening-up aspect, leading to China’s entry into the World Trade Organization (WTO) in 2001. It is also beyond doubt that the reforms have resulted in rapid economic growth (by the official statistics, an average annual growth of real gross domestic product of 9.7 percent between 1980 and 2009). However, it is also true that in the early 21st century many Chinese people remain desperately poor, and the reforms continue to be incomplete and controversial.