Deng's Economic Policy

• Deng’s Economic Philosophy
• “It does not matter whether a cat is black or white, so long as it catches mice”
• Practicality and pragmatism over dogma¨
• Deng wanted to restore the market as the chief mechanism of the Chinese economy
• “socialism with Chinese characteristics” (though not much socialism was enacted)
• ¨Some of his specific economic goals included
• Invigorate domestic economy
• Open trade with the outside world
• Allow individual enterprise
• Encourage joint ventures with Chinese and foreign capita

Economic Reform 

• ¨1979: Hua’s Ten Year Plan was scrapped
  ¨Two periods of reforms
  ¤1979-84: Agriculture was the focus
  ¤1984 onwards: Industry and commerce
  ¨Means of reform: The Four Modernizations
  ¤Agriculture
  ¤Industry
  ¤Science and Technology
  ¤Military

Agriculture

¨80% of China’s population was based in the countryside, thus agriculture had to be the first to be reformed

¨Decollectivization: Communes were criticized and abolished and replaces with xiang, or villages

¤Not for ideological reasons, but because of the need for higher production levels to finance industrialization

¨The state lowered the amount of produce it appropriated and paid higher prices for it

¨Families leased plots of land and had a quota to fill, but could use the rest for private profit (1980)

¤Known as the Household Responsibility System

Successes

¨By 1984, 98% of farms were in the Responsibility System (some were forced)

¨Agricultural output grew by annual average of 9%

¨Some farmers motivated to start small scale enterprises-rural industries grow (Township and Village enterprises)

¨Per capita income doubled from 1978 to 1984

¨Living conditions improved, higher consumerism resulted

¨Rise in entrepreneurship caused cities to begin to thrive again

Less Successful results

¨Uncertainty about land ownership deterred peasants from doing much to develop their land with an eye towards long term growth

¨Unsustainable agricultural production rate

¤Large drop in 1985

¨Environmental problems-deforestation, flooding

¨Demise of commune-based social services

¨Wage laborers hired by successful farmers were often poor

¨Class divisions began to re-emerge

nSpecialized households vs. ordinary peasants

nCorruption among the Party cadres

nDeng’s pragmatic take: “some must get rich first”

Industry

¨Success in agriculture allowed the focus to switch to the industrial sector in the mid 1980s

¨Individual enterprises were encouraged

¨Heavy industry was the focus (coal, iron, oil, steel) although production of consumer goods also increased

¨Foreign trade and investment was also encouraged

¨Phases of Industrial Reform

¤1978-84

nImprove worker attitude

nIndustrial Responsibility System enacted

nSichuan Experiment

¤1984 onwards

nLoosened government control

nGave managers autonomy to improve production

nPrice controls on consumer goods lifted

·         Gang of four-

o    Jaing Quing is the major leader

o   Yao

§  Very Leftist

§  Very anti-Western

§  Pro-Cultural Revolution

·         Old Guard and Pragmatists

o   Represented by Deng Xiaoping

§  Rehabilitated from exile in 1973

§  Supported by Zhou Enlai & Veterans and Cadres

§  Helped rehabilitate the economy after

·         Believed small amounts of Capatalist reform and foreign aid could help China become a world power

·         Deng- Famous speech in 1974 @ the UN- tries to mend ties to

·         Hua Guofeng

o   Mao Choses him as his successor

o   Believes in a middle ground between the two radical factions

1976- The end of an Era

·         Zhou Enlai died early 1976

·         Deng Xiaoping loses protection, gives Zhou Enlai’s eulogy (may have been moderately anti-Mao)

·         Hua Geofeng is chosen by Mao to replace Zhou Enlai as Premier

·         Numerous arrests after the Qingming Festival pinned on Deng Xiaoping (victimized by the Gang of Four)

o   Mao exiles Deng from the party (he loses all his positions)

·         TangShan Earthquake- one of the largest Earthquakes ever, refuses all aid

o   Hua uses the event as propaganda, saying they did not need Western-aid and are self-sufficient

·         Mao Dies weeks After Earthquake

o   People upset, but not nearly as truly sad as when Zhou Enlai died

After Mao dies (still 1976)

·         Hua’s Campaign Slogan “With you in charge I am at ease”

o   Meant to emphasize Moa’s support of Hua

·         Gang of Four tries to seize power in a Coup quickly after Mao dies

o   They do not have the support of the PLA

·         Hua Geofeng uses his support of the PLA to arrest the Gang of Four

o   Lots of propaganda released to vilify the public’s view of theses long-term leaders

o   5-years later (after the public had been completely convinced that the Gang of four were bad) they are finally put on trail.

1977:

·         Deng has fled to the South and been rehabilitated

o   Hua brings Deng back (reinstates him in the Party)

·         Hua was the premier, the Chairman of the Party, and the Military Commissioner

·          Hua wants to continue all of Mao’s Policies and follow what he wanted

·         Deng wanted to bring in relations with the West,

·         differences with Hua and Deng became very evident

·         They both agreed that they needed to modernize

o   Four Modernizations

§  Agriculture

§  Industry

§  Scientifi                c and Technology

§  National Defense

·         Deng has some advantages over Hua

o   Political Savvy- was able to come back from exile twice

o   Experience

o   PLA and Red Guard Support

o   Support among Cultural Revolution

o   Organized

o   Support of Intellectuals, Veterans, and Old Party Members

·         1978- Deng took control of the military, begins appointing some of his younger supporters into the party so that his party support rises

·         1980- Hua realizes his defeat, resigns

Deng’s Rule

·         1978- Third Plenum

o   The Party decides to “rehabilitate” all those who had been wrongly condemned by the party (usually from the Cultural Revolution)

§  Gains a huge amount of support for this

o   The “Four Modernizations” become China’s official new rule

·         De- Maoization

§  1980 Central Comm. Declares that Mao was 70% correct, 30% wrong

·         All Members of the Gang of Four are convicted

o   Jaing says they stood their ground and did what they could- but she was “Mao’s bitch”