Reforming the Proletariat

Abstract

The year 1978 marked the beginning of a decisive transformation in the nature of China’s economy, from one characterised by central planning and the operation of collective institutions and state-owned enterprises, to a market economy dominated by various types of non-state firms. In 1978, the CCP and central government began to approve experiments in household contracting of agricultural production, establishment of special economic zones intended to encourage exports and the import of technology and capital, market exchanges, and private commerce. Initially, the country’s leaders argued that all these activities would remain under the aegis of the state’s planning organs, and state-owned enterprises would continue to predominate: the economy therefore remained socialist. In the mid-1980s, the radical changes wrought by reform were acknowledged by state spokespeople who began to refer to China’s socialist ‘commodity economy’. In the ‘commodity economy’, the party-state exercised control over markets which, in turn, helped to guide the activities of enterprises which enjoyed varying degrees of autonomy (Hannan, 1995; Survey of World Broadcasts (hereafter SWB), 13 February 1993). At the 14th Party Congress held in 1992, the economy was redefined as a ‘socialist market economy’ (Zhongguo gongchandang, 1993). Since then, the party-state has attempted to eliminate price controls and give full play to markets in production factors, products and services, guarantee the private ownership rights of investors, establish an independent commercial banking system, and liberalise trade (China News Digest, hereafter CND, 10 January 1994, 27 March 1995; Yabuki, 1995; Gao, 1996).