China is celebrating its 40th anniversary of ‘Reforms and Openness’. China has achieved remarkable growth and development in the last 40 years. Over the course of these years, China has been successful in bridging the gap created in the earlier (30) years since its inception. These two phases of China’s history are unique in nature. The era from 1949 to 1978 is generally known as the era of socialist economy, and the era since 1978 paved the way for Reforms and Openness. The most important question in this regard is what made China successful in achieving these landmark goals. The answer lies in Deng Xiaoping’s reforms. Deng is one of the most foresighted, shrewd, pragmatic and striking figures, not only of the 20th century but of times before. His statesmanship is even recognised by the great western great leaders, intellectuals, researchers and economists.
In order to understand Deng’s vision one would need to explore very meticulously, the history of China since 1949. From October 1949 to 1976 China underwent many experiments under the leadership of Mao Zedong. The civil war, Great Leap Forward and Cultural Revolution were important episodes aimed at materialising socialism. An estimated more than 30 million Chinese died due to the ambitious plans of Chairman Mao. At that time Deng was deeply and actively involved in domestic politics from the Long March to the Cultural Revolution. Initially he rose to power as Mayor of Chongqing but was neither satisfied with his portfolio nor with Mao’s policies. According to a prominent historian Mobo Gao, ‘Deng Xiaoping and many like him were not really Marxists, but basically revolutionary nationalists who wanted to see China standing on equal terms with the great global powers. They were primarily nationalists and they participated in the Communist revolution because that was the only viable route they could find towards Chinese nationalism’.
Deng is one of the most foresighted, shrewd, pragmatic and striking figures, not only of the 20th century but of times before. His statesmanship is even recognised by the great western great leaders, intellectuals, researchers and economists.
Thus, Deng wanted to deviate from Mao’s strategies but the Gang of Four (Jiang Qing [Mao Zedong’s last wife], Zhang Chunqiao, Yao Wenyuan, and Wang Hongwen) was the biggest hurdle in his way. After Mao’s demise Deng rose to power by outmanoeuvring the Gang of Four and others. The elimination of Gang of Four proved a great victory for Deng on the political front because it enabled him to materialise his vision of pragmatism rather than ideology as he used to say, ‘It does not matter whether cat is white or black if it catches the mice’.
Deng’s repudiation of Mao’s strategies and Socialist ideology compelled him to come up with a new slogan that could provide impetus to China’s economic growth. In 1978, after bringing political stability to the country, Deng visited Thailand, Malaysia and Singapore. During his visit he met with the Great Lee Kuan Yew and was impressed by Singapore’s development. In December 1978, the Third Plenum of the 11th Central Committee Congress of the Communist Party of China proved to be a turning point in China’s history as it marked China’s acquiescence to ‘Reforms and Openness’ which was pivotal in China’s economic miracle.
In the next few years he settled his foreign policy scores successfully. The US recognition of PRC instead of Taiwan and getting back Hong Kong and Macao from Britain and Portugal were other great achievements of Deng on the foreign policy front. Only in a few years he brought political stability to the country, got recognition from western powers, got rid of regional conflicts by getting back Hong Kong and Macao and provided the people and the country with clear direction. Undoubtedly, Deng remained unmatched and unparalleled among his contemporaries due to his incisive political acumen, foresightedness, calm demeaner and strategic calculated moves.
Channelizing political stability, foreign policy achievements, population strength and other elements of national power into economic growth was the most critical task for Deng and he was aware of counterproductive consequences of the transitional phase. Therefore, he introduced new economic reforms through four modernizations inclusive of agriculture, science and technology, industry and military. For this, he visited several countries in person, Multinational Corporations (MNCs), and tech giants like Coca Cola and Boeing also sent a huge number of Chinese to developed countries to learn and bring back technology to China where they were incorporated in the four aforementioned key sectors. Only in one decade, he had modernised four key sectors and created a manufacturing base with Special Economic Zones. When the technology and modernisation gap was minimized, he entered the World Trade Organisation (WTO) and encouraged its integration with other economies. During this transitional phase China transformed from an agricultural economy to a market economy due to technological advancements in manufacturing. This miraculous transformation of China is because of Deng’s vision.
Today China is considered to be the epitome of economic advancements in the 21st century and is rapidly marching towards the super power status. Over the last forty years China’s achievements are miraculous. Normally, a duration of forty years is an extremely short period in a nation’s life. Generally, great nations take forty years only in identifying and defining their direction. A very few of them become successful but most of them are met with failure.
The chequered history of USSR is a recent example in this regard. In 1960, The USSR was almost 42 years old but could not materialise its vision. In the 1970s, the GDP of Soviet Russia was four times larger than that of China but in the early 1990s, China surpassed Russia’s GDP. In 2010 China’s GDP rose to four times more than that of Russia. From 1978 to 2010, China increased its share of the global GDP more than sevenfold while the Russia’s share dropped approximately threefold. From 1978 to 2007, the average annual growth rate of China’s GDP was 10 per cent. China lifted more than 800 million of its people out of poverty. It’s per capita GDP jumped from $156 in 1978 to $8123 in 2018.
During this transitional phase China transformed from an agricultural economy to a market economy due to technological advancements in manufacturing.
It has become the world’s largest economy in terms of its purchasing power parity as well as the world’s largest manufacturer and exporter. It holds the largest foreign exchange reserves, is home to the second largest equity market and is the third largest domestic bond market in the world. It has become one of the more dominant players of Foreign Direct Investment (FDI). In the first half of 2012, it received $19.1 billion worth of FDI as compared to the US which received $17.4 billion worth of FDI. In 2013, the FDI flow into China was $24.1 billion, resulting in a 34.7 per cent market share of FDI into the Asia-Pacific region. By contrast, FDI flowing out of China in 2013 was $8.97 billion amounting to 10.7 per cent of the Asia-Pacific share. Its outbound FDI was only $1 billion in 2000 and elevated to $170 billion in 2016.
China has achieved the most rapid digitalisation of commercial activities in the entire history of the world. China’s share in global E-Commerce is 42 per cent. The Belt and Road Initiative (BRI) and internationalisation of Yuan are most significant ongoing projects. Now, China is conducting 10 per cent of its trade in Yuan. It has been predicted that by 2030, Artificial Intelligence (AI) will contribute $15.7 trillion to the global GDP. Out of $15.7 trillion, China alone will get $7 trillion which is 45 per cent of the total AI contribution to the global GDP. China has achieved these remarkable milestones only in four decades; milestones which took other nations centuries to achieve. Britain took more than two centuries while the US took one and half centuries to achieve this status.
Khaqan Chughtai has done M.Phil in International Relations from the National Defense University, Islamabad. His areas of expertise are Indo-Pacific region, Middle East, European Affairs, International Political economy, Foreign Policy of USA, China and Russia, Philosophy, Theories of IR and Artificial Intelligence. Currently, he is working as an Outreach Associate at the CSCR.