Mao’s Legacy Revisited: Its Lasting

Impact on China and Post-Mao

Era Reform _1236 3..28

C. X. George Wei
University of Macau

Most observers hold a positive view of China’s reform since 1978 but are critical of the
policies of the era of Mao Zedong, ignoring the inseparable connections between the two.
This article argues that the post-Mao era reform represents both continuity and disconti-
nuity with the immediate past, and a complex mingling of Mao’s legacy with new initia-
tives. The origins of many reform policies, as well as their accomplishments, could be
traced back to the Mao era. They were often conditioned by, benefited from, or were built
upon the outcomes of Mao’s policies. These included the decisions to normalize China’s
relations with the United States and develop friendship with Third World countries,
efforts to decentralize economic power and industrialize China without urbanization, and
the move to defeat “capitalist roaders” but call Deng Xiaoping back to office. Overall, the
turn toward capitalism of China has proven Mao’s foresight, validated his concerns, and
may be evidence of the lasting utility of Maoism.

Key words: capitalism, Chinese development strategy, Cultural Revolution, Mao Zedong, post-Mao
reform

W hether inside or outside of China, most observers these days hold a posi-
tive view of the amazing pace of the economic development and unprec-
edented prosperity of China since 1978. This stands in striking contrast to the
usually critical view of Mao Zedong’s policies, particularly those during the
Cultural Revolution period (1966–1976) that is considered a dark and disastrous
time in contemporary Chinese history. While affirming the achievements since
the 1970s and condemning the setbacks during the Cultural Revolution, many
such observers do not look closely at the continuity of history, i.e., the inseparable
connections between the Mao era and the post-Mao era. It appears as though
their reading of history is discontinuous, with the assumption that the new era of
China post-1978 fundamentally and entirely departs from the old era under Mao.
But can it be possible for the policies of China under Deng Xiaoping, Jiang Zemin,
or Hu Jintao to have developed independently of those pursued by Mao Zedong?
Anyone who has a sense of history will find this unlikely and argue for the

Asian Politics & Policy—Volume 3, Number 1—Pages 3–27

© 2011 Policy Studies Organization. Published by Wiley Periodicals, Inc.
4 Asian Politics & Policy

existence of connections and continuities between the two eras. What, then, are
these connections and continuities, and what role did they play in contemporary
Chinese history?
There are many scholars, especially in the fields of economics and political
science, who have demonstrated great interest in analyzing the unique phenom-
enon of China’s reform since the 1970s. Among those who have conducted
thorough studies of the subject, some differences in perspective emerged as to
what factors ultimately led to China’s successful “market transition.” These schol-
ars could be divided into two groups: “the Experimentalist School” (E-School)
and “the Convergence School” (C-School).
The C-School asserts that China’s outstanding economic performance since
1978 can be attributed to the same factors that led to East and Southeast Asia’s
rapid economic development, namely economic freedom, internationalization,
and privatization, a convergence of the Chinese system under Mao with the
nonsocialist market economy. China under Deng and thereafter bravely gave up
agricultural collectivization and instead implemented a policy of privatization in
agriculture and certain industries. They argued that this kind of revolutionary
change had the effect of “shock therapy” and may have been the key to the
economic success in these places. Where such shock therapy was not adopted, the
Chinese government is said to have failed in its economic experiments with
noncapitalist institutions.
The E-School, however, claims that private ownership was not the decisive
element for the success of China’s economic reform, which instead came by way
of “groping the stones while crossing the river” and flexible and cautious gradu-
alism. Unlike the former socialist countries of East Europe that adopted rapid
and comprehensive reforms (“shock therapy” or “big bang”), China did not
immediately carry out privatization; neither did it relax government control over
prices and exchange rates nor stop providing enterprises and companies with
various state subsidies. It also allowed limited foreign investment at the outset.
Rather, the Chinese government carefully moved toward free economy and
privatization, only gradually albeit persistently experimenting with introducing
competition and the market mechanism in order to enhance the enthusiasm and
activity of laborers and managers. It was this approach that led to the rapid
development of China’s economy (Walder, 1995, pp. 964–965; Woo, 1999, pp.
116–120). Thus, while the C-School correctly pointed out that the iron rule of the
market is the key factor for the success of any modern economy, the E-School
rightly described the particular method that China adopted for successfully
transforming its planned economy into a market economy.
It seems, however, that both theories are based on the assumption that the
source of the success of China’s reform is ultimately a complete and absolute
departure from its past and a result of discontinuity of history, whether sudden
or gradual. What the two schools disagreed on was the way China was departing
from its past, not how far it diverged from it. This kind of view is ahistorical
because it totally ignores the continuity of history and oversimplifies the com-
plexity of history and change, especially in understanding the comprehensive
reasons for China’s successful reform. For instance, it seems not to have occurred
to most of these scholars that one of the foundations for China’s successful reform
is in fact the legacy of the Mao era and the Cultural Revolution.
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 5

Deng’s reform policy is a product of the conflicting, competing, and comple-

menting elements of new visions, government interventions, pressure from inter-
est groups, historical legacies, and a changing international environment. It was
influenced and conditioned by what happened during the Mao era and the
Cultural Revolution. It was under a particular set of historical circumstances and
conditions that Deng Xiaoping and his successors decided to pursue a gradualist
approach to reform. That said, this does not imply that the policies of the Mao era
and the Cultural Revolution were the precondition for the reform. Neither does
it deny the negative aspects and disastrous consequences of Mao’s policies and
the Cultural Revolution at all. Rather, this article intends to show the complex
nature and ironic aspects of China’s reform by analyzing important elements
that contributed to shaping the policies and therefore the success of China’s
reform—some of which were unintended consequences of policies of the Mao
era—that have been largely ignored by scholars in their analysis of China.

A Changed International Environment:

The Legacy of Mao’s Foreign Policy
It is well known that American President Richard Nixon’s visit to China in 1972
was the turning point of U.S.-China relations, paving the way for the normaliza-
tion and development of relations between the two countries. It is also well
known that it was Mao’s decision to play “ping-pong diplomacy” that eventually
led to Kissinger’s secret diplomatic approaches to China and Nixon’s visit to
Beijing. Without the absolute power and the grand political vision that Mao had
at that time, such a drastic decision, which shocked both the nation and the
world, could not have occurred in China. Just how significant were these events
to China’s reform after Mao’s death? The normalization and improvement of
U.S.-China relations in the 1970s was one of the key factors leading to China’s
successful reform because it led to a dramatic decline in U.S. enmity toward
China and created an international environment favorable to China’s reform,
enabling Deng Xiaoping to choose the best model and strategy for China’s
modernization.
To a certain extent, the challenges facing China’s communist reformers in the
20th century resembled those that the Self-Strengthening Movement (1860s) had
to deal with during the 19th century. Facing staggering problems that had accu-
mulated from the past, leaders of both reform eras had to figure out what kind of
path China should chart for its modernization. The political leaders and elites in
the 19th century made their choice under heavy pressure and imminent threat
from foreign powers that limited their strategy options for economic develop-
ment and modernization. In contrast, by the time Deng was to launch his reform,
Mao’s decisive foreign policy-making had set excellent conditions for change.
Western scholars have put forward many theories regarding the overall impact
of the West on China, such as “Impact-Response,” “Tradition-Modernity,” and
“Imperialism” (Cohen, 1984). Some scholars have extensively investigated both
positive and negative influences of the West on China’s economy and develop-
ment; yet their studies of the subject are mostly statistical research focusing on or
limited to the economy (Brandt, 1989, pp. 3–9, chap. 2, 7; Buck, 1968, p. 319;
Chang, 1969; Chen, 1933, 1939; Cohen, 1984; Dernberger, 1975; Elvin, 1973, chap.
6 Asian Politics & Policy

17, pp. 306, 312; Faure, 1989, pp. 1–10, 18–21, chap. 3, 6, 9; Hou, 1965, pp. 108, 129;
Huang, 1980, pp. 27–30, 33–34, 37–44, 1985, 1991, pp. 629–633; Li & Zhang, 1957;
Myers, 1970, pp. 207–210, 1991, pp. 604–627; Perkins, 1975; Riskin, 1975; Schultz,
1964; R. B. Wong, 1992, pp. 600–611; Wright, 1984, chap. 7, pp. 196–197). These
scholars ignored the impact of foreign invasions and the humiliation imposed by
foreign powers upon and suffered by the Chinese people on the mentality of
Chinese statesmen and therefore their strategic thinking about how to develop
China’s economy. On the other hand, quite a few scholars have looked at the role
of Chinese nationalism as ostensibly “unequalled by other doctrines” and the
emotional impact on the Chinese of their past humiliation or victimization by
Western powers (Lutz, 1971, p. 92; Tsu, 2005; Z. Wang, 2008, pp. 783–806; Wei &
Liu, 2001, 2002). The actions of individual statesmen or policy makers, as scholars
of historical and sociological institutionalism point out, though constrained by
the immediate institutional setting, may be determined by social and cultural
factors that are the products of history. Individual political or business leaders
and their concepts of “self-interest” and “utility” are embedded in and deter-
mined by cultural and organizational fields or sectors (Granovetter & Swedberg,
1992; Steinmo, Thelen, & Longstreth, 1991). To the Chinese statesmen of the 19th
and 20th centuries, the humiliating memory and consequences of the foreign
imperialist invasions of China, as well as their perceptions of existential threats,
provided the cultural atmosphere within which their individual actions, prefer-
ences, and calculations were framed.
For instance, the normal road to industrialization in the West was to d evelop
light and commercial industries first in order to accumulate enough capital and
technology for the later development of heavy industry. Unfortunately, such a
path for Chinese industrialization became almost impossible due to the external
environment since the Opium Wars. Chinese policy makers at the time were
forced to take the opposite approach: to prioritize development of heavy and
military industries over light and commercial industries. China’s frequent dip-
lomatic and military failures after the First Opium War posed a life-and-death
question in the views of Chinese scholars and policy makers: how much time
would China have to strengthen her capability to contend with foreign powers?
To them it seemed as though China was racing to arm and strengthen herself
against an impending foreign invasion. Priority had to be given to external
considerations instead of internal needs, to military development instead of the
production of consumer goods, to the speed of development instead of efficiency
and balance, and to the increase of power instead of the accumulation of wealth.
For these reasons, governmental involvement in the economy became necessary,
and the government was expected to engineer economic development as a whole
toward industrialization.
Thus, the Self-Strengthening Movement in the 1860s pursued a fundamentally
non-laissez-faire policy of Guandu shangban (enterprises managed by private
businessmen under the government’s supervision; G. Zhang, 1979). Chinese
scholars and policy makers then denounced laissez-faire and asked for govern-
mental intervention in business and even a protectionist tariff policy (J. Ma,
1968a, 11–31, 1968b, 173–192; T. Wang, 1982, pp. 19–29; Zheng, 2008a, 2008b,
2008c). During the Republican period, Sun Yat-sen, a central figure in the Chinese
republican revolution and the father of the Nationalist Party as well as a firm
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 7

believer in Western democratic systems, revealed a similar fear of foreign threat.

“The country ruled by the Manchurians,” he said, “is very weak and not inde-
pendent, always suppressed by foreign powers. She was invaded by Britain,
France, America, Japan and many other countries in the world” (Sun, 1926,
p. 297). Thus, China should “use the great power of the state” and “let the state
manage big industries, big businesses, big transportations” (Sun, 1926, pp. 301–
302). He believed that “the trend of modern economy” was to “replace free
competition with economic concentration”; China’s economy ought to be
planned and operated by a centralized authority—the State—in cooperation with
free individual economic activities (K. Zhou, 1965, pp. 43, 45–51).
For the same reason, Sun’s successor Chiang Kai-shek, the leader of the
Nationalist Party (Kuomintang [KMT]), chose the German and Japanese develop-
ment model, which prioritized the role of government in the economy and the
development of heavy industry, rather than the model of American economic
liberalism that upheld the role of the “invisible hand” in modernization. This was
despite pressure from the Americans. Even after World War II ended, Chiang
Kai-shek (1947) still claimed that “today it may be said that there is basically no
reason for laissez-faire economics” and that “we must adopt a planned economy”
(pp. 173, 279). China must, he explained, “be adapted to the requirements of
national defense” (Chiang, 1947, p. 171). Wong Wenhao, the minister of economic
affairs and chairman of the National Resources Commission, also warned that
“the mind of the powerful neighbor [Japan] would not stop running. It would
still aggressively intrude and seize China even during the peaceful period. It
would be still capable of finding success within its grasp and colonize our nation
by various economic forces” (W. Wong, 1989, p. 104). For that reason, Wong
asserted, China had to properly manage and control its defensive capabilities and
the major economic enterprises through governmental authorities “in order to
achieve the neatly planned effect” (W. Wong, 1989, p. 102). These statements
reflected the general mentality of the Chinese elite and ruling class of the time.
After 1949, the Communist Party, although a political rival of KMT, followed
suit and designed a similar strategy and pattern for development, this time due
to their fear that some other foreign power—the United States—might invade
and try to destroy the newly established People’s Republic. Interestingly, the
political animosity between Mao Zedong and Liu Shaoqi grew in part from their
different assessments of the external environment. Mao, believing that the Third
World War was pending, urged the Chinese Communist Party (CCP) to prepare
for a showdown between the socialist bloc and the capitalist bloc. As early as the
summer of 1945, Mao (1999) predicted that “the threat of war from the imperialist
bloc remains, and the possibility of Third World War remains” (p. 67). For a time
toward the end of World War II, Mao (1999) became quite optimistic that “the
new world war could be prevented if the Communist parties over the world
could continue to unite all possible forces for peace and democracy and let them
develop further” (p. 67). However, he soon resumed his pessimistic view, saying
that “the remaining fascist forces and the pro-fascist forces among the Allies
(such as Churchill, Hurley, and He Yingqin) . . . have already been organizing
and will continue in the future to organize the antirevolutionary movement for
anti-Soviet, anti-Communism and anti-Democracy, attempting to stir up the
Third World War. These reactionary forces are the main enemy at the present and
8 Asian Politics & Policy

future. As long as these forces are not overcome, it is difficult to avoid the Third
World War” (Mao, 1996, p. 96). Mao (1957) repeated his warning to his comrades
in February 1957 that “now the people of all the countries are talking as if a Third
World War would break out. To this issue, we should have mental preparation
and analysis as well” (p. 3).
Liu Shaoqi, however, had a different view of international affairs of the time. In
a speech on August 28, 1949, he held that “as long as the Third World War does
not break out, the task of economic construction will remain. If the war does not
break out for twenty or even thirty years, our mission will be always the eco-
nomic construction and industrialization of China” (“Liu Shaoqi,” 2009). It
seemed to Liu that the Third World War was not imminent and that the current
international environment would allow China to pursue peaceful economic
development for about 20 to 30 years. This estimation led to an approach differ-
ent from that of Mao. Liu believed in material incentives, economic efficiency,
elite power, and the need to avoid social conflict, and the nature of such policies
were deemed capitalist at that time. In contrast, Mao tried to prioritize the
development of the military and heavy industries over that of light industry and
the need to improve people’s daily life. He launched the Great Leap Forward
Movement and the mass movement for steel production in 1957. Behind the
slogan of “Surpass Britain in fifteen years and the U.S. in fifty years” were the
communists’ vigilance and defensive strategy against a presumed imperialist
invasion.
Thus, although the external enemies or potential enemies of late Imperial
China, Nationalist China, and Mao’s China were very different, statesmen of the
various eras lived within a similar international environment and shared a
common fear and historical memory of foreign invasion. They all pursued the
single-minded goal of strengthening China’s defense capability; they neglected
internal economic realities and the need to find the best development strategy for
China. It was not until the 1970s that the communist fear of invasion by American
imperialists and Soviet revisionists was significantly reduced—after U.S.-China
relations were normalized, after the People’s Republic was recognized by the
United Nations, and particularly after the threat from the Soviet Union dissipated
when it collapsed in the late 1980s. As a consequence, the decline in external
threat perceptions led to an increase in Chinese leaders’ concerns about people’s
dissatisfaction with their quality of life and social problems at home. Only then
were Chinese political leaders able to design a development strategy free from
external pressure, allowing them to set forth a path for modernization focusing
first on light industry and commercial development, while gradually reducing
government intervention in the economy.
At the end of the Third Plenum of the Eleventh Central Committee of the
National CCP Congress in 1978, the Chinese leaders had reached the conclusion
that the Third World War was not imminent and that China should shift its
military focus from preparing for a world war and showdown with foreign
powers to maintaining the peace of the world and supporting national economic
development. With this new policy, the People’s Liberation Army made three
successive major cuts and reduced its total number by 1.7 million, respectively 1
million in 1986–1990, half a million (including 200,000 military officers) in 1997,
and 200,000 (80% of whom were military officers) in 2003–2006 (“Jianjun Bashi,”
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 9

2007; Teng, 2006). These large-scale demobilizations significantly reduced

China’s financial burden from military expenditures and enabled China to con-
centrate more financial resources on economic development. Had the hostile
international environment remained in the 1970s and 1980s, this kind of large-
scale demobilization would not have been possible, and Deng Xiaoping and his
associates might have had no way to shift the priority of China’s development
from military and heavy industries to light industry and agriculture. Thus, it was
Mao’s policy to normalize China’s relations with the United States that led to a
favorable international environment for China’s later reform and opening up.
Similarly, it was Mao’s strategy to unite the “Third World” for fighting a war
against the “First World” (i.e., the capitalist and revisionist countries) that laid the
foundation for developing the friendship between China and Third World coun-
tries. This worked unexpectedly well in helping China expand its trade with
Third World countries during the reform period. China’s entry into Africa started
with Mao’s attempt to transform the world according to his revolutionary vision
and the global tide of decolonization (Larkin, 1971; Yu, 1988, p. 850). Although
Mao’s theory on the “Third World” was not finalized and announced until the
spring of 1974, China’s friendly policy toward the Third World was initiated as
early as the 1950s. As George T. Yu (1988) stated, “The Bandung Conference of
1955 marked the beginning of Chinese appreciation of the role of the Third World
in combating adversaries and winning international recognition and support”
(p. 850). In 1963, Beijing signed six commercial agreements and three economic
and technical assistance agreements with six African states, involving a total loan
amount of $156.4 million from China, at the time accounting for 47.5% of China’s
entire loans to the Afro-Asian countries (Yu, 1965, p. 321). Chinese aid to Africa
suffered reductions during the Cultural Revolution as China turned inward, but
overall, Beijing provided African countries with total aid of $4.783 billion from
1956 to 1987, accounting for 62% of the entire value of China’s global overseas
assistance programs (Taylor, 1998, p. 449). The financing and construction of the
Tanzania-Zambia Railway became the symbol of China’s friendship with and
selfless aid to Africa.
Since the 1980s, Beijing endeavored to promote its relationship with the United
States and the West due to China’s need for economic development and financial
and technological assistance from them. Beijing largely ignored the Third World
countries, as they seemed to be less useful to China’s ambitious modernization
goals. However, Beijing still maintained aid to Africa, although this remained
stagnant and even decreased in some years. This policy, also inherited from the
Mao era, eventually paid off. It was these poor and undeveloped African coun-
tries that remained loyal to Beijing after the Tiananmen Incident in 1989 while the
West resumed hostility toward the Chinese communist state. High-ranking offi-
cials of Angola and Namibia expressed their firm support for the actions of the
Chinese army during the incident (Taylor, 1998, pp. 443–447). Some newspaper
commentators even pointed out that the events of June 1989 changed the attitude
of the People’s Republic of China toward the Third World from “one of benign
neglect to one of renewed emphasis” and that “in the past, China [had been]
. . . giving a cold-shoulder to the Third World countries and old friends. . . . it
seems that at a critical moment it was still those . . . old friends who gave China
the necessary sympathy and support. Therefore from now on China will put
10 Asian Politics & Policy

more effort in . . . developing relations with these old friends” (Taylor, 1998,
p. 447). Indeed, China began to put an emphasis on trade and economic affairs,
and this policy eventually dominated Sino-African interactions. The result was
that the Sino-African trade increased by 431% between 1989 and 1997 and from
$1.665 billion in 1990 to $5.030 billion in 1997 (Taylor, 1998, pp. 454–455). It is now
well known that Africa has become one of the key suppliers of strategic materials
for the development of the Chinese economy.

Industrialization Without Urbanization and Decentralization

With Centralism: The Legacy of Mao’s Domestic Policy
Another legacy of the Mao era that had a profound impact on post-Mao reform
is in urban development policy. Immediately after the CCP took over China in
1949, communist leaders were facing serious challenges in governing the country,
especially the cities. Mao and his comrades had effectively ruled the countryside
before and during World War II, but they had little experience in running modern
cities. One Western observer, for instance, had predicted that “the communists
will ruin Shanghai and Shanghai will ruin the communists” (Mann, 1986, p. 76).
On the contrary, however, Shanghai and other cities were not ruined but recov-
ered under communist rule. The CCP managed to simultaneously foster indus-
trialization and keep urban expansion under control, which is a process of
“industrialization without urbanization,” in contrast to the process of “overur-
banization” that characterizes the dysfunctional processes in many Third World
cities. Chinese cities avoided many urban ills and phenomenal demographic
growth that would lead to unemployment or underemployment; it became a
“shining counter-example to the world in the 1970s” (K. W. Chan, 1994, pp. 1–3;
Mann, 1986, pp. 72–81). Therefore, the Mao era left no serious urban ills for later
reformers to tackle but instead left a healthy and solid urban infrastructure for
new development with reform blueprints.
This strategy of “industrialization without urbanization” was implemented
along with the process of partial decentralization of economic power in the late
1950s. As James R. Townsend (1977) pointed out, “Local initiative and self-
reliance were favorite Maoist themes” (p. 1008). Mao (1977) clearly stated in his
“Ten Major Relationships” that

[we] could not follow the Soviet Union, taking everything into the hand of the
Central and restricting the locals to death with no flexibility at all. . . . We should
increase the local power a little bit given the sole Central leadership is consoli-
dated, giving the locals more independence and allowing them to do more
things. (pp. 275–277)

With Mao’s instruction, Beijing began to call for “walking on two legs” in 1956–
1957, defined as a policy fostering a dialectical relationship between centralism
and decentralization of economy (Løvbræk, 1976). Løvbræk (1976) found out that
the forces of centralism and decentralization of the economy in China were
contradictory but complementary to each other at the same time. Decentraliza-
tion does not mean that local units are “relatively free of interference from
bureaucrats from the state departments and planning commissions in
Peking.” Rather, “decentralization is only possible in China because of strong
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 11

centralism—both politically, administratively and economically” (Løvbræk, 1976,

pp. 218–219, 221).
The construction of the Xin’anjiang Hydro-Electric Power Plant and the devel-
opment of Anshan Iron and Steel Combine are two perfect examples showing the
dynamics of this dialectical relation. When simultaneously developing large and
national enterprises controlled by the central government and medium-to-small
local enterprises managed by the regional government, one sees a situation where
local agriculture supports the construction of the larger industrial projects with a
labor force, while smaller constructions of provincial and local enterprises
support the larger ones with skilled labor. In return, the constructed large enter-
prises can supply the local community with local experts capable of constructing
smaller plants (Løvbræk, 1976, pp. 218–219).
Likewise, Susan H. Whiting’s (2001) research on Wuxi County, which studied
links between city and countryside, and Songjiang County, which served as
Shanghai’s “distant” industry suburb, showed that during the Mao era,
commune and brigade industries in the two counties “received substantial state
support through budgetary grants, bank loans, and direct and indirect inclusion
in state plans” (p. 70). Audrey Donnithorne and Nicholas R. Lardy (1976) also
found evidence in China’s fiscal management that the decentralization of the
Chinese economy after 1957 considerably enhanced the ability of provincial and
local governments that were given a significantly larger role in distribution of
intermediate goods and in labor supply planning to “manage their own eco-
nomic affairs.” Decentralization introduced a degree of flexibility and local ini-
tiatives that were not previously evident when Beijing attempted to manage all
programs directly. Yet, while decentralizing day-to-day administrative control
of industrial enterprises to lower levels, Beijing retained “a highly centralized
system of controlling major resource allocation decisions” in order to eliminate or
alleviate interregional inequalities because it viewed control of the interregional
distribution of investment funds as “an essential precondition for the transfer of
administrative power to local governments” (Donnithorne & Lardy, 1976, p. 353).
The process of decentralizing economic power was associated with the con-
struction of the “Third Front.” In the 1960s, the Vietnam War was taking place
next to the Chinese border in the south, simultaneously with the Sino-Indian and
the Sino-Soviet military conflicts in the west and the northeast, making Chinese
leaders very nervous. To prepare for possible wars with foreign powers, China
carried out a movement in the 1960s and 1970s for construction of the Third Front
(sanxian) and the Small Third Front (xiao sanxian), relocating and dispersing
many factories from coastal cities to the rural hinterland. Although costly, Third
Front construction produced some important achievements that “would eventu-
ally have been required in any long term development strategy for China,”
including the creation of a railway grid linking previously isolated parts of China,
the exploitation of important ferrous and nonferrous mineral resources, and the
construction of some reasonably efficient manufacturing enterprises (Naughton,
1988, p. 375). The economic power that was decentralized during the Mao era
significantly weakened the central plan and control over national economy, dis-
persed the distribution of industrial materials and investments, promoted the
development of local and agricultural industries, and laid down a good founda-
tion for later reform led by Deng Xiaoping.
12 Asian Politics & Policy

The economic development of Shanghai benefited the most from the above
policies. In 1956–1958, the communist government discarded the Soviet model
that had made Shanghai a “socialist productive city” based on the centrally
planned economic system and gave Shanghai an alternative to the Soviet
industry-biased model that created rural-urban disparities. Restoring traditional
features of Chinese urbanization through close linkages between urban and rural
areas, Shanghai became one of the new city regions that promoted greater rural-
urban balance and agricultural growth, blending the “gray” and the “green”
within large metropolitan areas with a close coordination of supply and demand
for goods, services, and labor. This concept is derived from Maoist socialist
urbanism and attempts to develop middle-range cities and small towns with
decentralized industries so as to absorb mounting labor surpluses from the
countryside even while preventing massive concentrations of population in city
cores. Although the economic growth of Shanghai averaged 8.8% from 1953 to
1978, Shanghai as all other Chinese cities simultaneously achieved unusually
high levels of stability, equality, and security and low rates of poverty. This was
achieved through migration restrictions, full-employment policies, and the effort
to forge solidarity bonds within neighborhood and working units (K. W. Chan,
1994, pp. 3–4; R. C. K. Chan, 2006, p. 230; Fu, 2002, p. 112; Lewis, 1971, pp. 17, 26;
Mann, 1986, pp. 76–78; Yeung, 1996, p. 8).
In addition, the so-called “state tax” (actually a local tax) was being collected
mainly by local governments that then transferred the collected taxes to the
central government. The local tax revenue in mid-1970s was almost seven times
the amount of taxes directly collected by the central government. For example,
the tax revenue from Shanghai in 1981 amounted to 10 times its expenditure and
constituted 45% of the entire local taxes submitted to the central government
(Young, 2000, pp. 1095–1098). Under such a taxation system, local governments
virtually became local authorities of the planned economy. This is why the central
government under the Deng era was able to easily establish the system of tax
revenue contracts since 1981, to “eat at separate kitchens,” i.e., decentralizing
from central government to the local governments the power to sign tax contracts
with enterprises. This policy not only greatly increased the incentives of local
governments to promote the development of local enterprises from which they
could collect more taxes, but it also made local governments more active in
supporting the development of township and village enterprises to absorb the
surplus resources and labor from rural areas (Young, 2000).
During the course of China’s reform, local governments played a critical role in
the process of helping the central government gradually fade out of economic
control and guidance. They also promoted urbanization and China’s participa-
tion in globalization (Shen, 2007, pp. 303–316). The rise of the so-called “local state
corporatism” is an interesting phenomenon of China’s reform (L. J. C. Ma, 2005,
pp. 477–497). Steven M. Goldstein (1995) believes that reform for decentralization
helped develop a close relationship between government officials on all levels
and the local economy, making local officials a distinct group with shared eco-
nomic interests rather than just an “extension of central government.” Local
government officials became the great driving force for reform, as they were
more willingly responsible for the local economy and market development rather
than their administrative leaders (Goldstein, 1995, pp. 1126–1127).
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 13

This decentralization of administrative power in the economy, which was

achieved through centralism during the Mao era, was very helpful to Deng’s own
decentralization of economic power from 1984 to 1989. Deng’s policies included
the following: changing the state monopoly of procurement and marketing into
the “double track system” that combined contractual purchase with market
purchase, encouraging the development of township and village enterprises and
other nonagricultural businesses; cultivating the market for agricultural products;
turning the unitary public economy system into an economy based on state
ownership being the dominant system but coexisting with multiple ownerships;
allowing joint-stock business that separates ownership from management; sim-
plifying administrative processes, decentralizing fiscal power, separating admin-
istration from management, and “reform[ing] taxation through providing more
incentive” (ligaishui); gradually relaxing price control and establishing free
markets; implementing the system of contractual responsibility for management
and extending the system that assigns responsibility and power to factory direc-
tors rather than party representatives; reforming labor salary scales; carrying out
experiments in housing reform; and inviting bids for investment and setting up
the system of contractual responsibility for investment.
Moreover, although the populist approach to economic management and the
anti-urbanization policy during the Mao era led to the disastrous Great Leap
Forward, it also impeded a full transplantation of the Soviet planned economy
and welfare system into China. Before Deng launched his economic reforms in
1978, 75% of the Chinese population still lived in the rural areas and China was
still an agricultural society with weak industry (Walder, 1995, p. 971). The
Chinese government never thoroughly and strictly controlled the national
economy through a central plan, as was the case with the former Soviet Union. As
a result, the new reform policies after the Cultural Revolution succeeded in
establishing economic and trade markets beyond the weak planned market
without much difficulty. They also helped absorb a large amount of cheap labor
from the countryside into industries without much obstacle. This became the
necessary foundation for rapid economic development across the country, result-
ing in relatively easier and more effective reform and opening up policies that
were also less costly than those that took place in the post-Soviet Commonwealth
of Independent States and East European countries.
In comparison, the planned economic system of the Soviet Union was more
developed in a comprehensive sense. Therefore, when the post-Soviet govern-
ment moved to establish a market economy to replace the well-rooted planned
economic system, it encountered formidable opposition and enormous costs.
Due to the advanced level of its industrial economy, people working in collective
farms in the Soviet Union constituted only 6% and 5.3% of its entire national
employment in 1985 and 1991, respectively, whereas 93.1% and 86.1% of the labor
force was employed by state-owned enterprises, enjoying job security and stable
income, health insurance, retirement pensions, and living subsidies. It was much
more difficult to take away workers’ welfare to introduce them into the competi-
tive and brutal market system. In contrast, only 18.3% of employed people in
China in 1978 worked in state-owned enterprises where they could benefit from
the socialist economic welfare, whereas the members of the people’s communes
in the countryside who could enjoy little socialist welfare constituted 72% of the
14 Asian Politics & Policy

entire national employment (Woo, 1999, p. 121). In this context, one could clearly
see that the cost of and opposition to reform in China were much less, whereas
social support for reform was much broader and stronger than that in the former
Soviet Union.

The Role of the Capitalist Roaders:

The Legacy of Mao’s Cultural Revolution
During the Cultural Revolution, Liu Shaoqi, Deng Xiaoping, and other com-
munist leaders on the political right were labeled and accused by Mao and the
Red Guards as “capitalist roaders” because they tried to run the Chinese
economy by encouraging free markets and so-called capitalist ways. Their poli-
cies would have allowed the emergence of certain characteristics associated with
capitalist society, such as the rise of a privileged class and the widening gap
between rich and poor, which it was believed would eventually lead to the
demise of the socialist spirit. Both Liu and Deng were forced to step down from
office, and Liu was even miserably tortured to death during the Cultural Revo-
lution. Later, however, Mao called Deng to return to public life (in fact, twice at
different times) despite fierce opposition from the Gang of Four because he
needed Deng to assist Prime Minister Zhou Enlai in running the country at a time
when Zhou had taken seriously ill until he eventually passed away. It is unlikely
that Mao had not foreseen the possibility that Deng would seize power and
betray Maoism after his death; nevertheless, Mao still made that decision to
politically rehabilitate Deng Xiaoping. Regardless of Mao’s intentions, it was his
decision that gave Deng—then the number two target of the Cultural Revolution
and the biggest “capitalist roader” after Liu had died—the chance to rise in
prominence later and lead China toward a capitalist direction. This also paved the
way for a group of “capitalist roaders” to emerge within the Party as well as
outside of it.
China, at the end of the Cultural Revolution in 1978, was faced with a host of
economic problems and damaged politics. The disastrous consequences of the
Cultural Revolution, however, also had unexpected contributions to the success
of Deng’s reform. During this period, not only officials and members of the CCP
at all levels but also the common people of China were negatively affected, while
only a small group—the Gang of Four and their followers—were benefiting.
When Deng Xiaoping discontinued what Mao had been doing and changed the
course of history in 1978, he easily benefited the majority of the society and
gained support for reform from nearly all sectors in China.
Moreover, the failure of the Cultural Revolution meant the bankruptcy of
populism. The CCP officials learned a painful lesson from the huge and unprec-
edented crisis of the communist regime: that one cannot overemphasize political
struggle while ignoring economic construction. Thus, after the Cultural Revolu-
tion, the CCP reached a consensus at the Third Plenum of the Eleventh Central
Committee of the National CCP Congress to thoroughly get rid of endless class
struggle and political movements. The new regime was determined to take
China’s modernization and economic development as the sole mission and goal
for the whole party, nation, and people. The CCP’s steadfast determination to
develop China’s economy laid down a solid foundation for its indomitable and
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 15

persevering efforts in the last 30 years to reform China. Meanwhile, it is just

because of the powerful influence of Maoism that still remained at the wake of the
Cultural Revolution, Deng and his associates had to take an approach intending
to gradually change China’s long-existed economic and political systems in order
to avoid the attack from the left and political chaos and confusion among the
Party and the people.
The early policies of the Deng era, misleadingly labeled as “reform,” (a term
that has never been questioned and challenged) were simply repetitions of the
economic measures carried out before the Cultural Revolution, a restoration of
what had been Liu Shaoqi’s policy line for all of 17 years before the Cultural
Revolution. Politically, the term reform was used by Deng to disguise actions that
could otherwise be interpreted as betraying Mao and returning to the old line of
Liu. This “reform” carried out by Deng from 1978 to 1984 included the household
responsibility system for collective production, similar to the Liu Shaoqi policy of
“dividing fields to households,” which allowed independent management and
remuneration based on performance. Also undertaken was industrial reform
allowing factory directors and managers to have more independent managerial
power and incentives for improving productivity. This was similar to the
so-called Soviet revisionist policy pursued by Liu that put managerial power
over a factory in the hands of “experts” rather than “reds.” Deng’s reform also
involved managing the economy of the surrounding counties through a central
city in the economically more advanced areas, in order to promote local economic
development and common prosperity through urban-rural collaboration, which
resembled Mao’s policy of “industrialization without urbanization.” Deng also
established special economic zones initially in four cities. These policies, except
for the last one, all followed Liu’s “Line of Seventeen Years.” Thus, to a certain
extent, Deng’s reform was initially built up and developed from Liu’s policies
under the Mao era.
The real nature of Deng as a “capitalist roader” and of his reform was fully
revealed during his Southern China tour in January 1992. At that time, the
Chinese government was challenged by both internal and external crises in the
wake of the Tiananmen Incident and the downfall of the Berlin Wall in 1989–1990.
Conservatives within the Party began to assess the negative aspects of the reform
and attempted to pull China back onto the “socialist track.” In response, Deng
expressed his genuine opinion on what direction China should go. He asked
people to become more liberalized and to move forward. He said,

The reason that one did not dare to make big steps and adventures in reform and
opening lies after all in the fear that we would have too many capitalist stuff [sic]
and that we would take a capitalist road. The crucial point is the issue of naming
after “capitalism” or “socialism.” The standard for judgment actually should be
based on whether or not the policies are in favor of developing socialist produc-
tivity, strengthening the comprehensive national power of a socialist country and
enhancing the living standards of the people. (Deng, 1993, pp. 372–373)

This passage is tantamount to advocacy of capitalism under the guise of social-

ism. By arguing that the term capitalism is not as important as the substantial
benefit derived from its policies, and that the aim of reform should be to improve
productivity, national power, and living standards, Deng was promoting capital-
16 Asian Politics & Policy

ist goals of efficiency and prosperity rather than the socialist goals of equality and
justice. Deng’s southern tour speech greatly encouraged reformers and stirred a
new tide of reform in China. It was only then that China’s economy was essen-
tially transformed into a market economy. As Barry Naughton (1993) pointed out,
the most important characteristic of China’s reform until then was “simply the
lack of an over-arching vision of the reform process or its goal. . . . It was not until
the end of 1992 that a Communist Party Congress even endorsed the goal of a
market economy” (p. 510).
The main differences between the reforms before and after 1992 are (1) the
“reform” in the 1970s was initiated from and by locals, society, and peasants, with
the later acquiescence from the central government, but the reform in 1992 was
started by a single CPP top leader, Deng Xiaoping; and (2) the aim and effect of
the reform before 1992 were to mobilize and enrich peasants and curtail the
intervention of the state in the economy, whereas the outcome of the reform after
1992 was to sacrifice the interests of peasants and workers for a more market-
oriented behavior that mostly benefited a newly emerged alliance of bureaucrats,
businesspeople, and intellectuals. If the main theory or policy of the CCP in the
1980s was to have a planned economy supplemented by market adjustment, it
eventually led to abandonment of the planned economy and establishment of a
market economy after 1992.
After 1992, in the name of establishing a modern enterprise system, a large
number of enterprises in China were transferred from state to private ownership.
The shift from a two-track to a one-track pricing system helped achieve the
marketization of commodity prices. The central government also launched fiscal
reforms in 1994 to bring tax collection back into the hands of the central govern-
ment, and it issued a series of policies to encourage foreign direct investment
(FDI). Both gave local governments more independence and power to look for
sources of revenue and the means to attract FDI. As a result, local governments
gained tax revenues by selling land at lower than market prices, while keeping
salaries of Chinese workers low in order to attract FDI. The virtual financial
economy and the new real estate economy emerged with great vitality and
became the driving force for development as well as profit seeking by the coali-
tion of bureaucrats, businesspeople, and intellectuals who formed the new class
of “capitalist roaders” within and without the Communist Party.
During the process of China’s market transition, authorities at both the central
and local levels played the significant and powerful role of macro-level actor.
While not necessarily considering the above phenomenon as the rise of a new
class of “capitalist roaders,” some scholars have pointed out that the achieve-
ments of China’s reform in fact resulted from the “co-evolution of politics and
markets,” namely the convergence of political development and marketization,
rather than being purely an outcome of the development of market mechanism.
Today’s managers of state-owned enterprises are actually agents of government
as well as managers of businesses. Their incomes came not only from their
functions as managers and directors of production but also from their relation-
ships with those in power. Likewise, the work of many professionals and experts
was closely associated not only with the market system but also government and
its regulations (X. Zhou, 2000, pp. 1190–1195). In his “Technocratic-Continuity
Hypothesis,” Ákos Róna-Tas concludes that the prereform cadres could continu-
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 17

ously maintain their social and economic position during the postsocialist period
by relying upon the management experience that they had gained under the
socialist system. He argues that their management experience in the past is
human capital that still has its market power under the new economic system.
Likewise, Jadwiga Staniszkis put forward a theory of Power Conversion and
points out that the political power, political capital, and human networks and
relations could be converted into all kinds of economic advantages in the con-
struction of market economy (Cao & Nee, 2000, pp. 1175–1189). Andrew G.
Walder (1995) says that the success of a transitional economy must alter incen-
tives not merely for individuals and firms but also for government agencies and
officials because when the latter act as “capitalist roaders” as in China, their
behavior can bring about enormous economic outcomes (p. 978). Moreover,
many Chinese intellectuals adopted an attitude of collaborating or complying
with the State, having lost interest in politics after the Tiananmen Incident.
Disillusioned with the political reality and future of China, many of them jumped
into “the ocean of business” and sought personal gain through the market or
through association with political power. They joined the forces of marketization
with cadres and businesspeople and became yet another category of “capitalist
roaders.”
Among the new class of “capitalist roaders,” the biggest group is the Princeling
Gang (taizidang), the children of the top Communist leaders who founded the
People’s Republic of China under Mao’s leadership. The Princeling Gang
emerged during and after the Cultural Revolution. Due to the disastrous impact
of the Cultural Revolution on their parents and family and the failure of Maoism,
many members of the Princeling Gang became very disappointed with Mao and
the CCP and altered their outlook on life. They accepted Deng’s capitalist
approach and turned themselves into either reformers in government or follow-
ers and supporters of reform. Many of them, such as Xi Jinping and Bo Xilai,
managed to ascend to power and adopted the capitalist way of managing the
economy. They became the new “capitalist roaders” within the Party. On the
other hand, many others departed from official and political careers and opted
instead to develop careers in business. They became “capitalist roaders” with
financial power operating outside the Party and the political system. The two
groups of the Princeling Gang within and without the Party often echoed and
collaborated politically and economically with each other and formed a very
influential capitalist class. They were later joined by more and more children of
the new generations of the communist leaders, such as Jiang Zemin and Zhu
Rongji.
According to a report on social and economic conditions issued by the
Research Office of the State Council of China, the Research Office of the Central
Communist Party School, and the Chinese Academy of Social Sciences in 2006,
90% of China’s billionaires are the children of high-ranking officials, totaling
about 2,900 people who owned more than RMB 20,000 billion in assets. In the five
major economic fields—such as finance, foreign trade, land development, con-
struction of major projects, and stock security and management—primary posi-
tions are generally occupied by the children of high-ranking officials. The wealth
of these billionaires was mainly generated, legally or illegally, through means of
power connections based on family background; such means included gaining
18 Asian Politics & Policy

kickbacks from foreign investments they introduced into China; import and
purchase of complete sets of equipment from overseas and resale at the domestic
market at prices 60%–300% higher than the international market; earnings from
exports of domestic resources and products under their control; reaping stagger-
ing profits without any capital investment through land development, resale of
land, and bank loans; profiting from smuggling and tax evasion; incomes from
loans without payment of mortgage or pocketing of funds from financial institu-
tions; making large profits from exclusive contracts for the construction of huge
projects; illegally transferring public funds capital into individual accounts; and
manipulation of the stock market by using false financial information through
connections with financial institutions as well as media (Sina Jinrong Licai, 2006).
The report also pointed out that many interest groups outside China often tried
to influence the policy-making processes of the Chinese government for profit,
through their connections with the privileged children of high-ranking officials
(Sina Jinrong Licai, 2006). Such groups frequently exercised enormous influence
on the policy-making or law-making by relevant government organs through
bribing the children and relatives of high-ranking officials working in these
institutions. Some would directly hire the top officials or employees of these
important government institutions as consultants with generous pay. With a
lasting monopoly in finance, energy, communications, transportation, and infra-
structure, the children of high-ranking officials could reportedly find ready
spokespersons in political, academic, and media circles, thereby influencing or
manipulating public discourse and opinion in their favor. Thus, China’s reform
and opening up are essentially an economic and social transformation toward
capitalism and a victory of capitalism in China, represented by the Princeling
Gang.
In February 2000, after consolidating his power, Jiang Zemin presented his
theory of the “Three Represents,” clearly stating that the CCP should represent
the advanced productive forces of society. The most vital and advanced produc-
tive force that had emerged then was, of course, that of the free market; thus, the
so-called “advanced productive force of society” is capitalism. The CCP formally
included the theory of the “Three Represents” in the Party Constitution in 2002,
and then in the Constitution of the People’s Republic of China in 2004. Private
businesspeople began to be allowed to join the Party. As a result, although the
CCP has not overtly laid down its socialist flag, it had in fact become a party for
both the capitalist class and the common people, at least for the time being, and
socialism has been turned instead into a long-term goal of the Party.

The Lasting Impact of Mao: A Harmonious Society

With “Capitalist Roaders”?
The Cultural Revolution was a huge stain in Mao Zedong’s revolutionary
career. Nevertheless, regardless of his real intentions in launching the Cultural
Revolution, he accurately foresaw the serious problem that having a privileged
class within the CCP would cause. Unfortunately, Mao failed to find an effective
way to deal with the conflicting interests between the ruling class and the ruled
through a cultural revolution. This chaotic situation of the period ironically not
only failed to make Mao’s successors understand and continue his mission, but
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 19

also caused them to fear mass democracy and the mass movement. “No more
Cultural Revolution and class struggle” became the new call; it was the best
excuse for the CCP to avoid sharing power with the ruled and to avoid launching
any social movement for justice or against corruption. In the short term,
however, this was not necessarily a bad thing for reform because an authoritarian
government could be much more effective and efficient in implementing reform
than a democratic one. A case in point is that a simple speech made by Deng
Xiaoping during his Southern China tour could determine the course of reform
and turn the tide against the antireform groups.
Yet serious social injustice, corruption, crimes, and inequality were brought
about by the emergence of new “capitalist roaders.” It is believed that as long as
China’s gross domestic product grows at an annual rate of 8–9%, which means
the standard of living of the common people continues to improve, such prob-
lems may not lead the society to the brink of rebellion or disorder. However, how
long could this growth rate last? Will the positive contributions of the new
capitalists eventually be offset by their negative impact on society? Can the
negative elements of the new capitalist forces be constrained and curbed?
Fortunately, history here has a predestined course, again associated with the
choices made during the Mao era. First, the socialist ideology that ruled China for
a long time has helped inculcate the concepts of social justice and equality into
the minds of the Chinese people. The political culture inherited from the Mao
era and now deeply rooted in society is a huge barrier as well as a strong social
foundation against the negative forces of greed that now overtly challenge social
justice and equality. Secondly, the power structure that resulted from the Cultural
Revolution laid down a power base within the Party against the Princeling Gang.
Without the Cultural Revolution and therefore the rise of Hu Jintao and his
associates, the elements needed to balance the Princeling Gang and the “capitalist
roaders” might never have developed.
Deng was a pragmatist rather than an ideologue. His classic phrase “groping
the stones to cross the river” and the statement “it doesn’t matter if the cat is black
or white, as long as it catches mice” indicate that in his eyes, the main challenge
China faced after the Cultural Revolution was to cross the river, i.e., to develop
the economy. Where to go after crossing the river, what new problems China
would face arising from economic development, and what would become of the
Chinese society as a result of the reform were matters that Deng did not think
about or elaborate on. Nevertheless, Deng made a good choice in naming Hu
Jintao as the number one leader of the fourth generation of the central Party
officials, reflecting the influence of the Cultural Revolution on him and his
thinking.
Hu Jintao was born into a humble family in 1942. With no strong family and
political background, he rose as a result of hard work, political acumen, talent
in navigating factional conflict, balanced political view (Ewing, 2003, pp. 17–18),
and personality, but also as a result of the political struggle during the Cultural
Revolution. Had the Cultural Revolution not happened, it would have been
impossible for an official like Hu to sit on the upper echelons of the communist
leadership because the Princeling Gang would have monopolized the third- and
fourth-generation leadership of the CCP. The Cultural Revolution, however,
disrupted the normal power transition among the CCP and changed the way of
20 Asian Politics & Policy

political succession and political structure of the Party. First, the early deaths of
Liu Shaoqi, Lin Biao, and many other senior CCP leaders caused a succession
crisis in the CCP and accelerated the succession process. Mao’s firm grip of
power and his trust of neither the Gang of Four nor the Zhou Enlai faction
prolonged the power transfer process, which led to the aging of the CCP lead-
ership. By the end of the Cultural Revolution, many high-ranking officials of the
first and second generations had either passed away or were too old to continue
to play an energetic role in the government or the Party. Therefore, the doors of
promotion were opened to the younger cadres and the third and fourth genera-
tions of the CCP. Second, it was during the Cultural Revolution that, thanks to the
philosophy of Maoism and populism, the Party set up the precedence to rapidly
promote officials with an ordinary family background to high positions within
government and the Party.
Third, given the great failures of the Cultural Revolution in neglecting the
economy and overemphasizing class struggle, the CCP reached a consensus that
the new direction of the Party should be modernization and economic develop-
ment rather than political movements. For modernization, the country needed
younger and better-educated cadres to assume the leadership at all levels. The
Party’s decision to make the communist leadership more “revolutionary, rejuve-
nated, knowledgeable and specialized” entailed that Deng and his colleagues
accelerate the process of power transition from the first and second generations
to the third and fourth generations, promoting many officials like Hu Jintao with
college degrees and expertise to important government and party positions.
Fourth, due to the Cultural Revolution, the fates of many who could have been
part of the Princeling Gang were altered, as many children of veteran cadres
totally missed their opportunity for political advancement because of the political
mistakes of their parents. Others lost faith in socialism and turned to business. As
a result, the pool of Princeling Gang members as the qualified successors to
political power at the provincial and state levels was significantly diminished.
This yielded the rise of Hu Jintao, Wen Jiabao, and others who did not have such
privileged family backgrounds. Finally, to offset the bad public image of the Party
caused by corruption of many members of the Princeling Gang, Party leaders saw
the necessity of changing the mix of Party membership and balancing its political
power and structure. They decided to promote many outstanding officials from
ordinary families to the Central Committee and government, including Hu, Wen,
and others. Thus, Hu rapidly rose within the Party, and his ascent to the top
position in turn led to the rise of other young officials with similar backgrounds,
namely the Communist Youth Faction.
Indeed, the Hu-led Communist Youth Faction among the communist high-
ranking officials may better represent the interests of ordinary people and serve
as a balance to the Princeling Gang as well as the emergent capitalist class
(though some children of this faction could conceivably also become corrupted
and join the the Princeling Gang after their parents become more powerful).
Many new policies of the Hu-Wen administration during 2004–2009 were set up
to deal with the problems resulting from capitalist development. For instance, the
new Labor Law is clearly designed to advance the interests of the common people
and has come to illustrate the nature of the reform in the new phase. The
fundamental spirit and philosophy of the Hu-Wen administration, manifested in
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 21

their slogans, such as “human-centered mindset,” “construction of a harmonious

society,” and the concept of “scientific development,” as well as their concrete
policies (including comprehensive adjustment through collaboration, sustainable
development, taking all factors into consideration for making overall plans, opti-
mizing economic structure, constructing a civil environment, curtailing of
housing prices, enlarging the opportunity for employment, improving the
system of redistribution of incomes, creating social security for both urban and
rural citizens, establishing basic health and sanitary systems, passing a contract
law for labor, and developing new socialist villages), all demonstrated their effort
to protect the interest of the common people, reduce the gap between the rich
and the poor, and promote social justice and equality. Hu-Wen’s fight against
corrupt high-ranking communist officials, such as former Shanghai Party chief
Chen Liangyu, the decision to rotate provincial and municipal officials from one
location to another, and the move to reform ministries also aimed at limiting and
weakening the power of the “capitalist roaders” within the Party. Recently, much
has been said about establishing a system whereby each official declares his
personal property as a means to prevent and discover corruption among officials.
Interestingly, the recent campaign launched by Bo Xilai, a member of the Prince-
ling Gang and the new mayor of Chongqing, to arrest and punish corrupt
high-ranking officials allied with the “black society” (organized crime), has been
hailed but viewed as a political show.
Moreover, one of the most important policies of the Hu-Wen administration is
political decentralization and separation, which has led to a balance of power
among agencies of government, rather than between the government and society
(Goldstein, 1995, p. 1126). There was also an abortive effort some years ago, led by
Hu’s trusted Vice Premier Li Keqiang, to decrease the number of the ministries of
the central government and thereby reduce the power of the old bureaucrats.
Most recently, election law reform was being discussed during the Third Plenary
of the Eleventh Congress held in the spring of 2010 and is expected to be put in
effect soon. The new election law will significantly increase the number of rep-
resentatives from the rural areas in Congress and curtail the relative influence of
other interest groups. Thus, the fundamental tone of the Hu-Wen reform agenda
appears to painstakingly address social problems and to remove political barriers
by changing the internal power structure of the government.
However, the pace of China’s economic development and the extent of social
and economic problems resulting from that development far surpass the deter-
mination and effort toward political reform that the Hu-Wen administration has
so far demonstrated. As Elizabeth J. Perry and Mark Selden (2000) summarized,
despite the sweeping legal reforms initiated by the State and the significant
changes brought about by these efforts, “an apparent disjuncture remains
between the free-wheeling economic expansion, on the one hand, and the still
highly circumscribed political climate, on the other” (pp. 6–7). Currently, it seems
that the Chinese leaders are facing a dilemma in regard to how to deal with the
new “capitalist roaders” and political reform. On the one hand, they knew that
political reform would be critical to China’s future as China had been facing more
and more serious social and economic challenges, almost forming a bottleneck to
China’s sustainable development and stability. By the late 1990s, protests in
China demanding compensation for stock swindles, the elimination of corrup-
22 Asian Politics & Policy

tion, abandonment of enterprise privatization, payment of stipends for laid-off

workers, et cetera, were becoming more commonplace throughout China. The
social discontent over rising unemployment; enterprises failing to pay or provid-
ing too little wages, pensions, or severance pay; the growing gap between the rich
and the poor; families displaced by urban projects and commercial development
without adequate compensation; et cetera, were being attributed to the greed of
the new “capitalist roaders.” Many believe these problems can be solved only
when the current political system, which has served as a breeding ground for
social injustice and which has protected the interest of the new “capitalist
roaders,” is reformed.
On the other hand, Chinese leaders have become more cautious and do not
dare to make any mistake in political reform that could result in losing control
of the society at the expense of China’s stability and social order. As John P.
Burns analyzed, CCP’s organizational structure, policy-making mechanism and
process, and ruling method have remained unchanged since 1949. Therefore, a
fundamental transformation of this entrenched political system, if not carefully
planned and smoothly and effectively carried out, could be a disaster to the
Party as well as the society. Basically, although the current CCP leaders have
departed from Mao’s ideology and the Party’s old method of using mass mobi-
lization and ideological campaigns to achieve its goals, and instead have tried
to deal with social problems and political opposition through introducing laws
and rational bureaucratic regulation, they have not made any significant move
toward democracy or any major political reform. The Party still “relied on a
mix of remunerative and coercive incentives on the one hand and patriotism on
the other” and “continues to repress all attempts to organize challenges to its
authority” (Burns, 1999, pp. 580–583). In 1998, the Chinese court sentenced
Wang You Cai, Xu Wenli, and Qin Yongmin, organizers of a fledging political
opposition, the China Democratic Party, to long prison terms, punished labor
activists, such as Zhang Shanguang, and banned books discussing “the need
for and prospect of political reform” (Burns, 1999, p. 583). The author of this
article was also told by a few Chinese scholars that “the Party’s control of
media, publications and public speeches, though quite skillful and civilized, is
the strictest now than ever before.”1
In late August 2010, Premier Wen visited Shenzhen and urged its local leaders
to take the initiative again to push for political reform. This is a mixed message,
which could be interpreted as either that the Hu-Wen regime is still attempting to
launch political reform or that this attempt has been facing serious opposition,
quite possibly from the “capitalist roaders.” On September 7, 2010, Hu Jintao
also visited Shenzhen and gave a speech at the celebration of the 30th anniversary
of the establishment of Shenzhen Special Economic Zone, during which he
announced that the central government would support Shenzhen to take bold
steps toward “democratic election, democratic policymaking, democratic admin-
istration and democratic supervision” (Dai, 2010). This is a very encouraging
statement. However, Hu did not mention “political reform” or designate Shen-
zhen as a “Special Political Zone.” Thus, it is most likely that the Hu-Wen
administration will continue Deng’s approach of “crossing the river by feeling
the stones” and adopt the Mao-era policy of “walking on two legs” to implement
democratization and centralism at the same time.
 Mao’s Legacy Revisited: Its Lasting Impact on China and Post-Mao Era Reform 23

Indeed, the fundamental transformation of the political system of China is a

great challenge to any of its leaders. Interestingly, the basic challenge that the
Hu-Wen administration is facing today is exactly what Mao foresaw and encoun-
tered during the Cultural Revolution: how could the CCP leaders skillfully and
appropriately tackle the problem of “capitalist roaders,” a major threat to democ-
ratization more from within the Party than from without? In handling this
problem, the legacies and political philosophy of the Mao era can still be felt today
and will still be felt for years to come, probably as long as China is not democra-
tized. Mao did overthrow “capitalist roaders” within the Party by mobilizing the
Red Guards during the Cultural Revolution, but that led China to social chaos and
economic disaster. The successors of Mao have managed to lead China toward
economic prosperity and modernization, but that gave way to the rise of “capitalist
roaders.” Wu Bangguo, Chairman of the Standing Committee of the National
People’s Congress, commented on the Cultural Revolution on March 9, 2010, that
“we should remember the lesson of the Cultural Revolution” (Q. Zhang, 2010). The
fact that a high-ranking communist official made a public comment on the
Cultural Revolution at a televised Congress meeting is a rare phenomenon, as this
topic had been taboo in China for a long period. What, then, does this indicate? Was
Wu trying to emphasize the danger of lack of law and order, or the problems
caused by “capitalist roaders” within the Party, as it was during the Cultural
Revolution? We do not know for sure at this moment, but certainly we can see that
the memory of the Cultural Revolution is still deeply engraved in the minds of the
top Communist Party leaders, who realize that “capitalist roaders” within the
Party can be their allies but could be their downfall as well.
In conclusion, China’s reform during the post-Mao era was not a complete
departure or an absolute separation from the institutions and policies of the Mao
era; it is both the continuity and discontinuity with the immediate past and a
complex mingling of past legacies with new policy directions. There are many
gray areas connecting the two. While many policies of the Mao era and the
Cultural Revolution were discontinued by the Deng regime in 1978, the origins
of many political and economic developments during the Deng, Jiang, and Hu
reform era could be traced back to the Mao era; they were conditioned by,
benefited from, or were built upon the legacy and outcomes of Mao’s policies. It
was Mao’s decision to normalize China’s relations with the United States that
created a favorable international environment under which Deng was able, for
the first time in modern Chinese history, to choose the best path for China’s
modernization without much fear of external powers. Mao’s foreign policy
toward the Third World also laid down a solid foundation for the development of
trade and economic relations between China and countries of the Third World
today. Moreover, Mao’s domestic economic policies guided China away from the
Soviet pattern of heavily centralized planned economy toward decentralized
economic power, which helped China avoid many problems associated with
urbanization and the planned economy. These in turn transformed the political
and economic forces at local levels into the most vital engines of reform and
economic development in China. Besides this, while the disastrous consequences
of the Cultural Revolution greatly reduced the objections to Deng’s and the
CCP’s determination to focus on the economy, restoring Deng to office was
basically Mao’s decision, allowing this disgraced “capitalist roader” to regain
24 Asian Politics & Policy

political and economic power and become the prime mover of China’s reform. It
was also the Cultural Revolution that led to a balance of power between the
now-declining Princeling Gang and the rising Communist Youth Faction within
the Communist Party, which will now determine the direction and fate of China’s
reform. Finally, the rise of a capitalist class in the course of China’s reform proves
that rather than being a label invented for some political purpose during the
Cultural Revolution, the “capitalist roader” is a political, economic, and social
reality that can yet become a major obstacle to China’s democratization and
which the CCP leaders must be prepared to deal with. Mao Zedong’s vision, his
foresight and his concerns about socialism in China have been affirmed, evidence
that the utility and influence of Maoism will continue to last.

Note
1
In consideration of the personal safety and possible effects on the careers of these scholars, they
will remain anonymous in this article.

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