CHINA III (1949-1976): China under Mao Zedong

A. Introduction of PRC
The Chinese Civil War produced the “People’s Republic of China” (PRC) under the
leadership of the CCP (Chinese Communist Party) and Mao Zedong. China then changed
from Kuomintang rule to a communist rule. Mao’s thought was known as Maoism, also
known as leftism.
I. Features of Maoism:
1. Use of mass movement
 Mao believed modernization had to be carried out by the people (i.e., peasants &
workers).
 The government carried out bottom-to-top programmes that mobilized the grass-root
people, e.g., like the Great Leap Forward and Cultural Revolution.
2. Promote “class struggle as key link” (以階級鬥爭為鋼)
 Mao thought that the capitalists, rightists and “anti-revolutionaries” were “class enemies”
that oppose communism. (rightists were people who supported capitalism. But later this
term was more or less used to describe anyone who was anti-Mao.)
 Violence was used to purge these people, like the Cultural Revolution.
3. Promoting economic self-sufficiency
 Mao thought it was dangerous to rely on foreign goods.
 International trade was limited.
 He changed China into a self-reliant economy, like through the Great Leap Forward.
4. Promoting high degree of public ownership:
 Eliminate private ownership by setting up the People’s Communes
5. Foreign policy: “leaning to one side”, to isolation, to normalization with US
 In 1949-1960, Mao only made friends with the USSR and the communist bloc. China
would only “lean to one side” (一邊倒政策). For example, the First Five Year Plan was
almost complete sponsored by the USSR.
 With the Sino-Soviet Split, China was isolated by both the US-led capitalist west, and the
USSR-led Eastern Europe (1960-1972).
 The isolation ended when China resumed diplomatic relations with the US during
Détente period.
6. Ultra-leftism
 Maoism turned extreme during the Cultural Revolution.
 It achieved the use of violence, constant struggle session, personal cult and
propaganda.

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II. Political structure

III. Political features

1. One-party rulership

 The CCP is the ONLY ruling power in China.

 ‘The party is above state, and state above the military’ (黨大於國、 國大於軍)
 Other parties were not allowed to compete with the CCP for leadership.
2. Collective rule
 All decisions were made by a group of people, not by an individual.
 However, during the Cultural Revolution, China was ruled by one-man dictatorship.

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IV. The Mass Movements
The following mass movements are to be studied briefly.
Land Reform 土地改革 (1950-52) Three-anti Campaign 三反 (1951)
Five-anti Campaign 五反 (1953) First Five Year Plan 第一個五年計劃
(1953-57)
Anti-Right Campaign 反右運動 (1957) Great Leap Forward (1958-60)
Readjustment period 經濟調整期 (1962-66) Cultural Revolution 文化大革命 (1966-76)

Land Reform (1950-52)

Mao launched struggles ( 批 鬥 ) against landlords and redistributed land to solve the
problem of uneven land distribution.
Achievement: Socially, it narrowed wealth gap.
Politically, the CCP gained more support from the peasants which helped
consolidate its rule.
Limitation: It promoted the use of violence since many landlords were beaten to
death.
The rule of law was damaged as the trial of landlords did not follow legal
procedures.
Three-anti Anti-waste, Anti-corruption, Anti-inefficiency
Campaign (1951)

Five-anti Campaign Anti-industrial sabotage, anti-tax evasion, anti-bribery, anti-fraud,

(1953) anti-theft of government property
Anti-Rightist Mao Zedong launched the Hundred Flowers Campaign (百花運動)
Campaign (1957) in 1956 which allowed non-Party people to voice criticisms of the
Party, i.e., ‘free airing of views’ (大鳴大放).
However, the criticisms exceeded Mao’s limit of tolerance because
they were directed against the entire system of CCP rule.
Mao changed the ‘free airing of views’ into ‘draw the snake out of
its hole’ (引蛇出洞). The Anti-Rightist Campaign ensued.

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B. First Five Year Plan 1953-57 (FFYP)
 The plan was a copy of Soviet economic model.
 It was heavily funded and directed by the USSR. Soviet experts were sent to advise;
Soviet machines were imported to China.
 It firstly aimed to develop heavy industry, then light industry and agriculture.
 It also aimed to collectivize productions in China.
 It was a major success.

Achievements
1. A solid foundation for industrialization was laid
Heavy industry  156 industrial construction projects were set up.
 New industries were developed, e.g., aircraft, car, electricity
generation, coal mining and machine building.
Light industry  Cotton & sugar industry were developed.
 In 1957, Industrial output increased 128.6% compared with that of 1952.
2. Improvement in rural area
 Agricultural production increased by 25 % between 1952 and 1957.
 Grain and cotton production surpassed the targets set in the FFYP.

Limitations
1. Neglect of agricultural development
 FFYP over-emphasized industrial development. The government only spent 7.6% of
the budget on agriculture, resulting in an imbalanced development between
agriculture & industry.
 Peasants farmed with backward methods with only 5% of the land ploughed by
tractors. Productivity was low and thus rural poverty remained.
2. Creating false optimism
 The set targets of FFYP were over-fulfilled and this gave rise to false optimism
among CCP leaders who expected rapid progress and instant success in the
upcoming economic development.
 Mao set impractically high industrial and agricultural production targets in the
Second Five Year Plan (Great Leap Forward), which led to serious economic
disasters.

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C. Three Red Banners (1958-60)
 Three Red Banners was the Second Five Year Plan.
 The three banners were “general line” (a slogan), Great Leap Forward and People’s
Commune.
 The Three Red Banners tried to speed-up economic production by setting impossibly high
targets, and used propaganda to make Chinese people believe that they could do it.
 It focused on steel and grain production, but the production methods were anti-scientific.
 It was an epic failure that hurt China seriously.

Characteristics
1. Emphasis on willpower
 Mao convinced the mass that willpower was the most important factor in
production.
 ‘One day equals 20 years’(一天等於二十年)
 ‘How much productivity depends on how much guts one have’ (人有多大膽 地有多
大產),
 ‘Don’t worry about what can’t be done; just worry about what can’t be imagined’(沒
有做不到 只有想不到)
2. Emphasis on speed
 Impractical goal was set.
 Under the slogan of ‘surpass Britain and catch up with US’ (超英趕美) in 15 years,
many Chinese worked fiercely to increase industrial production.
3. Wind of exaggeration(浮誇風)
 As the government set the targets too high, peasants always exaggerated their
output to avoid punishment.
 Within a short time, the agricultural ‘satellites’ (農業衛星) reported in newspapers
became bigger and bigger.
4. Egalitarianism (平均主義)
 The People’s Communes was ‘large in size with a high degree of public ownership’.
(一大二公)
 Everybody was ‘eating from the same big pot’ (食大鑊飯) and wages were
distributed equally regardless of the effort.

The programmes of the Three Red Banners

1. General Line 總路線
This was a slogan.
‘Go all out, aim high & achieve greater, faster, better & more economical results in
building socialism’ (鼓足干勁，力爭上游，多快好省地建設社會主義).

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2. Great Leap Forward
 It was a dual programme aimed to boost steel and farm production. China must
“walk on two legs” (兩條腿走路) said by Zhou Enlai.
Steel production:
 ‘Take steel as the key link’ (以鋼為綱) as the guiding principle.
 It aimed to ‘overtake Britain and catch up with the US’ within 15 years. Impractically
high targets were set.
Year 1957 1958 1959 1962
Steel production (million) 5 10 60 80-90

 ‘Backyard Steel Campaign’ was launched. The Party called on the whole nation to
smelt iron & steel. Many farmers gave up farming to join the steel production, which
eventually led to drop of food production.
 Farmers were unskilled workers and they used unscientific methods were used to
make steel.
 Most steels were unusable, resulting in serious wastage.
Agricultural production:
 ‘Take grain as the key link’ (以糧為綱) as the guiding principle.
 To please Beijing (mostly Mao), local governments announced high targets for each
season. Then local farmers would exaggerate their output to avoid punishment.
 Some farmers faked to have super-harvest by putting many crops from all the fields
into one field. The Chinese government praised these super-productive fields as
‘satellites fields”(衛星田) and asked other farmers to follow suit.
 Local governments and farmers then exaggerated their output. There was a trend of
exaggeration in China called winds of exaggeration’(浮誇風).
Food production in fact declined because of poor weather in 1959, problematic food
collection and decreased number of farmers due to the steel campaign. A famine hit
China in 1960.

3. People’s Communes
 The People’s Communes aimed to collectivize the daily life of citizens.
 Mao combined 5000-10000 household into one commune.
 The commune provided EVERYTHING to its members, including food, medical care,
entertainment and jobs etc.
 Private ownership was abolished. All items in daily live was assigned by the
commune.
 Salary was paid no matter what. Therefore, many people did not go to work. Work
incentive was lost.

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Significance
1. Steel campaign failed
 The unscientific methods of steel making produced unusable steels. It created
wastage.
 In the last year of the Great Leap Forward (1962), steel production returned to the
level when the programme started in 1957.
2. Agricultural production declined
 Under government encouragement and propaganda, some farmers abandoned
forming and joined the steel making campaign. Food production thus declined.
 Farmers working in the People’s Communes lost working incentive as salary would
be paid regardless of performance. In Guangdong the monthly salary was $36, thus
the saying “you will receive $36 no matter if you work or not” 做又三十六，唔做又
三十六.
 Mao believed the GLF would produce more than enough food, and ordered residents
of the People’s Communes to eat as much as possible to create the image of
abundance and prosperity. It decreased the stockpile of food quickly.
 This led to a drastic fall in food production (13%) in 1958 and the famine.
3. The man-made famine (Three Hard Years 1960-62)
 GLF led to decline in food production (see above)
 Sino-Soviet Split in 1960 led to withdrawal of funds. Farming further declined.
 A famine broke out in 1960, killing at least 30 million. It was the worst famine in
modern history.
 The whole nation slid into economic hardship for 3 years (1960-62).
 This directly led to Mao’s retreat to the second line.
4. Sino-Soviet Split (1960)
 Mao and Khrushchev had a poor relations even before the GLF. As Khrushchev did
not follow Stalin’s line of communist ideology, Mao attacked Khrushchev as
“revisionist”(修正主義者).
 In 1959, Khrushchev criticized the Great Leap Forward as a total disaster publicly.
 Due to the personal feud between them, USSR and PRC split.
 PRC now regarded USSR as #1 enemy and the US #2. China was very isolated.

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 5. Mao’s “retreat to second lie” and the Cultural Revolution
 Mao was held responsible for the GLF and was forced to retreat to the second line
(退居二線).
 Liu Shaoqi (劉少奇) and Deng Xiaoping (鄧小平) replaced him to fix the national
economy during the Readjustment period (1962-1966).
 Mao was bitter and later launched the Cultural Revolution to remove Liu and Deng
from power and reclaim his command over the party.

Economic readjustment (1962-66)

After Mao retreated to the second line, Liu Shaoqi (劉少奇) & Deng Xiaoping (鄧小平)
launched ‘readjustment policies’ to fix the Chinese economy.
Agriculture  Reduced the size of large People’s Communes & closed communal
canteens.
 ‘3 Freedoms and 1 fixed quota’: Farmers were given production
freedoms. After meeting ‘one fixed quota’, they could sell the extra
crops in the market for profits. Production incentive thus increased.
Industry  Shifted focus from heavy industry to light industry

Result:
1. Putting economy back on track The Readjustment ended the economic chaos. The national
economy began to improve in 1962. The light industry output increased from 33.3% in 1960 to
46.5% in 1962. Financial deficits were eliminated and the government was able to record a surplus
of 830 million RMB.
2. Modernization in agriculture The total agricultural output increased by 6.2% compared to 1961.
Progress was made in the mechanization of agriculture: a 6-time increase in the use of tractors and
chemical fertilizers in rural China & a 70-time increase in the use of electricity in rural China.
3. Cultural Revolution Mao believed the policies and Liu and Deng were “revisionism”---they
departed from the “real” Marxism-Leninism and created their own thinking. Mao believed they
were the “Khrushchev of China” and were harming China, especially the “purify” of
communism. Mao must return to power to rectify the problem.

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Cultural Revolution (1966-76)
Causes
1. To correct communism in China socialism
 Mao regarded Li Shaoqi and Deng Xiaoping’s Readjustment policies (such as private
plot and free market) ‘led China back to the road of capitalism’. They were
“revisionist” and “Khrushchev of China”.
 To correct wrong ideology, Mao needed to install the correct kind of communism,
that is, Maoism.
 To begin, Mao must remove the source of revisionism. He accused Liu and Deng as
‘capitalist roaders’ (走資派), and ‘revisionists’ (修正主義者), and they must be
purged.
2. Incited by opportunists
 Power-hunger politicians saw Mao’s need to return to power and happily offer their
help in order to gain political power. Such people included Mao’s wife Jiang Qing (江
青) and her gang, known as “Gang of Four”. As well as Lin Biao (林彪), the PLA
(People’s Liberation Army) leader.
 They helped to find the wrongdoings of Mao’s enemies and attack them.
3. Consolidate Mao’s position in the government
 Mao’s authority (權威) was greatly undermined by the Great Leap Forward.
 He wanted to regain his reputation through promoting the cult of personality.
 Lin actively promoted Mao Zedong Thought (毛澤東思想) and issued ‘the little Red
Book’ (the Quotations from Chairman Mao 毛語錄).

Nature of Cultural Revolution

1. Ultra-leftist
It supports the use of class struggle and violence to achieve true socialism. (‘Great
disorder across the land leading to great order’)
2. Anti-rightist
To remove all rightists in China, such as Liu Shaoqi and Deng Xiaoping
3. Anti-traditional/feudal
 Chinese tradition, including Confucianism, Chinese arts, music and literacture, were
signs of Chinese feudalism. They hindered the full implementation of Chinese
communism.
 The revolution promoted ‘destroying four olds, creating four news’(破四舊、立四
新)1.
 Many cultural relics, historical sites, classics were destroyed.
4. Anti-imperialism/foreign
Western arts, literature, religion etc were destroyed as they were signs of imperialism.
5. Anti-intellectual/education
 Mao believed “studying is useless” and “the more you study, the more stupid you
become” (書越讀越蠢).
 The educated often shook other people’s faith in the pursuit of communism.
 Education was suspended and intellectuals such as professors, artists, writers were
purged.

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Four olds refers to old ideas, old culture, old customs, and old habits.

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Characteristics of Cultural Revolution
1. Use of young people
 Young people were recruited as ‘Red Guards’(紅衛兵).
 Under the pretext of ‘to rebel is justified’ (造反有理), they struggled against the
authority and destroyed cultural relics.
2. Use of violence
 The Red Guards struggled against the authority violently, e.g., beating and torturing.
 They also destroyed historical relics and cultural heritages.
3. Promotion of the personality cult of Mao
 The ‘Little Red Book’ was distributed to promote Mao Zedong thought. For example,
 ‘Chairman Mao is always right (毛主席永遠是對)
 ‘Chairman Mao, may you live for a thousand years!’ (毛主席萬歲)
 ‘Mao Zedong is the red sun rising in the East’ (東方紅).
Impacts of the Cultural Revolution

Political impact
1. Political chaos
 Mao-Jiang-Lin jointly purged Liu and Deng. This created much political instability.
 After the fall of Liu and Deng (Liu passed away in 1969), Mao and Lin fell into political
struggle, resulting in the mysterious death of Lin in Mongolia.
 Later in 1973, power struggle happened between Jiang Qing and Zhou Enlai.
 The Chinese government spent much energy and time in power struggle and little on
governance, causing instability.
2. Three Beliefs Crises (San Xin Weiji 三信危機)
 Mao mobilized the whole nation to blindly struggle against the ‘rightists’ and
‘capitalist roaders’. As a result, altogether 30 million people were purged, while half
a million lost their lives.
 But the CCP in the 1980s admitted the revolution was a mistake and the purging of
people were also a mistake.
 People’s trust towards the CCP thus collapsed. Many no longer trusted the
government. (Thus Deng needed to reform communism in order to continue the
ruling of CCP).
3. Reform and Opening up
 The wrong of the Cultural Revolution needed corrections. Deng’s Reform and
Opening Up was the correction of the revolution.
 CCP leaders learned that China’s modernization could never be achieved through
mass movements. Ultra-leftism, class struggle and personal cult were banned.
 Instead, Deng achieved modernization through economic modernization rather than
“class struggle”.

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Economic impact
4. Economic stagnation
 Class struggle rather than production was emphasized.
 As a result, industrial and agricultural production fell sharply and costed China 5
billion RMB of national income.
 China missed the global economic take-off in the 60s and 70s. For example: the
economic miracle of Japan and West Germany and the rise of Hong Kong, Taiwan,
South Korea & Singapore as the ‘Four Asian Little Dragons’.

Social impact
5. Decline in education
 Since Mao believed ‘studying is useless’, many schools were shut down and
intellectuals were labeled as ‘stinking old ninth’ (臭老九) and went through “labour
correction” in the “cowshed”. In 1966, the National Examination (高考)was banned.
 Young people, instead of going to school, were forced to join the “Down to the
Countryside Movement” (上山下鄉運動) to do manual work in rural China. They
lost their golden chance in education. For example, Xi Jinping’s education was cut
short during the revolution. He only studied university when he was 22.
 As a result, people born in the 50s and 60s did not receive proper education and was
called the ‘know-nothing generation’. Xi Jinping, for example, had to
 The lack of talent hindered modernization seriously.
6. Loss of talents
 Under the pressure of persecution, many talents committed suicide or escaped to
other places.
 For example, famous singer ‘Red Line Girl’ was purged and fled to Hong Kong.
 The famous Chinese writer Lao She (老舍) committed suicide.
 Without the contribution of talents, the progress of modernization was hampered.

7. Suppression of free thinking and creation

 Maoism was the only ideology allowed.
 Art creation was halted. Only the books by Mao Zedong were for sale.
 Other thinking such as democracy and western knowledge were banned. For
example:
 In art, only the ‘Eight Model Plays’ such as the White Haired Girl (白毛女) were
allowed, leading to the joke of ‘800 million people watching 8 model plays’.
8. Destruction of traditional culture
 Chinese tradition was seen as feudal and under the slogan of ‘Destroying four olds,
creating four news’ (破四舊、立四新), many traditional cultures were destroyed by
the Red Guards.
 Temples and graves related to famous Chinese figures like Yue Fei (岳飛) and Justice
Bao (包青天) were destroyed.
 Chinese books, paintings and calligraphy were burnt.
 This led to some irreversible cultural destruction of traditional Chinese culture.
9. Lawless China and decline in morals
 The revolution reduced China into a lawless state and a dysfunctional society.

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 Blind violence was encourage and no consequences were given. Red Guards carried
out random and senseless killings and torture in the name of “Mao”. For example,
cases of human-eating (cannibalism 人食人) was reported in Guangxi.
 Sons and daughters criticized their parents, students their teachers, and neighbor
against neighbor. For example, Bo Xilai openly criticized his father. Relations in
society felt apart.
 Once an exporter of civilization and culture, China went so low to become a lawless
and uncivilized country.

10. Modernization of rural China

 Mao sent thousands of city youths to the countryside under the ‘Down to the
Countryside Movement’ (上山下鄉運動).
 The peasants received basic education from them and this greatly increased the
literacy rate in rural areas.
 These young people also helped set up hospitals & small businesses in the poorest
regions of China which helped promote the development in rural areas.

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China under Deng Xiaoping: Reform and Opening-up 1978-2000

After the Cultural Revolution, Deng Xiaoping embraced a path of reforms. He called his
version of communism ‘Socialism with Chinese characteristics’.

Features of Socialism with Chinese characteristics

1. Emphasis on pragmatism: Deng believed that sticking to the original Marxist-Leninism
were not practical. CCP should modify communism to fit into the ‘realities of the nation’
(國情). He believed in ‘seeking truth from facts’ (實事求是), meaning to focus on the
realities rather than the ‘correctness’ of the ideology. Therefore, ultra-leftism was
dismissed & class struggle & mass movements were banned.

2. Result-oriented: Unlike Mao who was ideological-based, Deng attached high importance
to results. This was clearly illustrated in his ‘black cat white cat statement’. (‘It does not
matter whether a cat is black or white, so long as it catches mice.’)

3. Socialist market economy: China should adopt a mixed economy with features of both
planned & market economy. Under Various Ownership Systems(多種所有制), public
ownership (e.g., state-owned enterprises) & private ownership (civilian-run enterprises
& foreign enterprises) can co-exist.

4. Raising production incentives: The principle of ‘distribution to each according to his work’
is adopted & material incentives were used to replace ‘egalitarianism’ to improve
productivity.

5. Opened China to international trade: Coastal cities were open to attract foreign
investment and China was turned into a World’s factory.

6. To achieve Four Modernizations: Focus was placed on the building of industry,

agriculture, national defense, and science & technology instead of revolution.

7. Incremental approach to achieving modernization: China was still at an early stage of

socialism & progress must be made step by step. The economy should be developed in
3 stages.

1st The 1990 GNP shall double the 1980 GNP to solve the problem of food &
clothing.
2nd The 2000 GNP should double the 1990 GNP to become a moderately prosperous
society. (小康社會)
3rd The 2050 per capita GNP shall reach the level of moderately developed
countries.

8. To let part of China get rich first: In contrast with Mao, Deng believed that having the
whole nation to get wealthy would be an impossible task. Thus he implemented the
principle of ‘to let part of China to get rich first’. The rich part will lead the other regions
to common prosperity.

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Economic Reform
Agriculture
1. Household responsibility system( 家 庭 聯 產 承 包 責 任 制 ): The Chinese government
contracted a piece of land to a peasant household. After the peasant has fulfilled a
government quota, he can sell extra crops. The new system increased their incentive as
the more they work, the more they earned.
2. Dissolving People’s Communes: People’s Communes were gradually dissolved to give
peasants more flexibility in production. This was complementary to the implementation
of the responsibility system. All People’s Communes were abolished in 1984.
3. Township and village enterprise 鄉鎮企業 (TVE): To absorb the excessive productivity
and capitals in rural area, peasants were encouraged to set up their own enterprises.

Industry
Reform of state-owned enterprises:
1. Factory Director Responsibility System 廠長負責制: The Chinese government gave full
authority to factory directors to run their own business. They had to bear the profits and
losses and management decisions such as hiring and firing, promotion and factory
development. Incentive was increased as factory directors wanted to manage the factory
better to maximize their profits.
2. Industrial restructuring: The large state-owned enterprises underwent reorganization
and subsequently listed on the stock markets with the state owning 20-30% share. The
medium and small size SOEs were sold at low prices.
3. Price Reform: CCP adopted an incremental approach in carrying out price reform. As a
result, ‘double-track pricing system’ was introduced. A product had two different sets of
price: first, an official price and second, a market price in which the products could be
sold after the individual enterprises fulfilled the state’s plan. The market price would
fluctuate according to market demands.

Commerce
1. Privatization of business: In 1985, Deng began to sell state-own business to businessmen
and allowed them to run jointly with the state. Companies like China Mobile and Sinopec
were owned jointly by the government and private sector. Also, Chinese were allowed
to set up private companies. Home applicants company Lenovo Group (1984) and
Wahaha Group (1987) became the listed corporations on the stock market.
2. Stock market: The Shenzhen Stock Exchange and Shanghai Stock Exchange were opened
in 1989 and 1990 respectively to enhance commercial activities.

Opening-up
Aim: to attract foreign investment and to set up Sino-foreign joint ventures
First phrase (1979-1990) —coastal China

 6 Special Economic Zones: Shenzhen, Zhuhai, Xiamen, Shantou Hainan, Pudong (SEZ
enjoyed economic privileges such as low business tax rate)
 5 Economic Open Zones: Pearl River Delta & Liaodong Peninsular
 14 Coastal cities: Shanghai, Tianjin, Dalian (For example, Dalian attracted many hi-
tech companies to set up offices there such as Intel and Canon because the
government built excellent infrastructure to cater the needs of hi-tech companies.)

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 Second phrase (1991-2000)—central China
The government began to open up inland cities for foreign investment. Yet, due to their
backward conditions, foreign companies were reluctant to invest there.
Third phrase (1997-2000)—western development
The government adopted the ‘China Western Development’ (西部大開發) policy in 1997
and focused on the development of energy industry. Plans were made in the 80s and 90s
to build the Qinghai-Tibet Railway and the West-East Gas Pipeline(西氣東輸). These
projects helped the economic development of the poorest region in China.
*Reform in social & political aspects and science & technology (see social and political
significance)

Impact of Reform and Opening up

Economic significance
1. Rapid economic growth
The Reform and Opening-up policy made China experience rapid economic growth. For
example, national income increased 10% annually.
China’s economy grew at an average annual rate of 9.8% during the period 1979-1997.
China’s GDP ranking jumped from 9th in 1970 to 5th in year 2000. (In 2008, China placed 2nd,
surpassing Japan).
 By 2000, China was undoubtedly an important economic power in the world.

2. Improving agricultural productivity

All People’s Communes were abolished in 1984. Under the household responsibility system,
peasants were given more production freedoms and were allowed to sell extra crops privately
for profits. This gave peasants more flexibility and incentive to produce.
Results: The per capita annual net income of peasants increased from $130 RMB in 1978
to $2200 RMB in 1999.

3. Rapid industrialization
 The opening up of 6 Special Economic Zones (e.g., Shenzhen, Zhuhai, Xiamen, Shantou
Hainan, Pudong), 5 Economic Open Zones (e.g., Pearl River Delta & Liaodong Peninsular)
and 14 Coastal cities (e.g., Shanghai, Tianjin) provided low business tax rate and
infrastructure to attract foreign investors. They brought in new technologies,
management system and capitals, which helped speed up industrialization.
 Factory director responsibility system, which gave factory directors full authority over
management and made them responsible for profits and losses. This increased their
incentives for industrial production.
 Increasing agricultural production caused by the household responsibility system
provided raw materials for industrial development.
 Township and village enterprises also helped industrialize rural areas by providing
villagers daily commodities. e.g. Midea ( 美的 electrical appliances company)
Results:
The share of the GDP of the secondary industry increased from less than RMB 1000 billion
in 1978 to over RMB $4000 billion in 2000 and China became the ‘world’s factory’, as many
products such as Nike shoes and Nokia phones were made in China.

15
4. Rapid commercialization
Privatization gave rise to many renowned national and international corporations:
From 1979, reforms were carried out in state-owned enterprises. The large state-owned
enterprises underwent reorganization and subsequently listed on the stock markets with the
state owning part of the share. e.g., China Mobile, Sinopec (中國石化).
Also, Chinese were allowed to set up private enterprises. As a result, the annual growth rate
of private enterprises was 20%. They became the engine of rapid economic growth in China.
e.g. Lenovo (聯想集團).
Shanghai and Shenzhen, with the opening of the stock markets in 1989 and 1990 respectively,
became the major financial hubs in the world.

5. Hyperinflation
To reduce the huge deficit due to the increasing expenditure during the Reform and Opening-
up, the government issued banknotes in large amounts and allowed floating commodity
prices progressively. Serious hyperinflation resulted. The inflation rate, which was only 6% in
1986, increased to 17-18% for 2 consecutive years after 1988. Hyperinflation led to shopping
rush, bank runs and falling living standards.

Social significance

1. Living standard improved (coastal cities only)

Under the principle of ‘to let part of China get rich first’, coastal cities such as Shanghai,
Shenzhen and Tianjin were opened to attract foreign investment and thus became affluent.
Before 1978, Chinese people chased after the ‘three old things’ (watch, sewing machine and
bicycle) but in the late 1990s, people pursued the ‘three new things’ (laptop, mobile phone
and digital computer). This showed that living standard improved dramatically.

2. Improved in education
Universal education was introduced and National Examination was resumed in 1977. Also,
the universities were greatly expanded in size and number. Therefore, educational level
enhanced.
To prepare talents for the Four Modernizations, the study of science and technology was
emphasized. Many new polytechnic institutes were set up, e.g. Shenzhen Polytechnic (深圳
職業技術學院) in 1993.

3. Widening wealth gap

Coastal cities, such as Shenzhen, Zhuhai, Shantou, Xiamen, which were opened for foreign
investment were the focus of economic development while the central & western regions
were neglected. Wealth gap was increasingly widened in the last two decades, e.g. the annual
income of many people was below US $200 in the western provinces, such as Gansu and
Shaaxi. Many people were living under the poverty line.

16
4. Three Rural issues: agriculture, rural and peasants (農民真苦、農村真窮、農業真危
險)
Peasants They suffered from poverty because of the low farming income. Also, their
rights were not protected and there was a wide income gap between urban
and rural areas.
Rural areas As farming did not create much wealth, rural villages suffered from poverty,
underdevelopment with inadequate infrastructure and depopulation. Only
children and the elderly remained in village, making village unproductive.
Agriculture The farming industry was relatively less competitive. It was small scale and
the degree of mechanization was low. It could not produce high-end farm
products.

5. Issue of migrant workers

Due to the Huji System(戶籍制度), migrant workers became second class citizens because
they were deprived of social welfare ( e.g. medical services and education) and fair job
opportunities after they left their home province. They always needed to work overtime in a
poor working environment. Their living standard remained low and they became a major
force of discontent in the society.

6. Unemployment
State-owned enterprise (SOEs) became less competitive under the socialist market economy.
Without sufficient capitals and effective management, some SOEs continued to suffer losses
and even went bankrupted. Millions of workers became unemployed and lost the retirement
welfares.

7. One-child policy
Facing the problem of population explosion, Deng Xiaoping implemented the One-child Policy
in 1979. Each family could only give birth to one child; extra birth would result in heavy fine.
The policy was successful in slowing down population growth (annual growth was 1.04%
annually) but it created other social problems such as imbalance sex ratio (more males than
females) and female infanticide in rural China.

17
Political significance

1. Political stability
Unlike Mao who was ideological-based, Deng was pragmatic. He modified communism to fit
into the ‘realities of the nation’(國情) and emphasized ‘seeking truth from facts’(實事求是),
meaning to focus on the realities rather than the correctness of the ideology. Therefore, ultra-
leftism was dismissed & class struggle was banned. 3 million party members, including Liu
Shaoqi were rectified. As a result, China could achieve political stability, which was the
prerequisite for economic development.

2. Rising hard power:

China developed advanced aerospace technology & national defence. For example, China
became the 3rd nation after USSR and US to launch satellites & built 10 rockets (e.g. the Long
March Rockets) in this period. China even sent its first spacecraft to space in 1999 (Shenzhou
One). Also, China’s military power also grew to rank third, after the US and Russia in the world.
Therefore, China was regarded as the world power at the end of the 20th century.

3. Some progress in democratization:

After 1978, the Chinese government allowed election in the village level where villagers were
allowed to vote for their village chief. The government even encouraged university graduates
to take part in the election. Also, China enjoyed a relatively free period in 1986 called ‘Holiday
of Speech’ in which certain degree of speech and press freedom was allowed. Chinese people
were seen openly criticizing the government & discussing political reform.

4. A liberal economy in an autocratic state:

Despite China’s economy became freer but political system remained autocratic as the CCP
insisted on one-party dictatorship. Freedom of speech, press and assembly were not allowed.
Even though China enjoyed a relatively free period in 1986 called ‘Holiday of Speech’, such
relaxation was completely destroyed by the June Fourth Incident of 1989. Deng believed that
stability was overwhelmingly important (穏定壓倒一切) and thus cracked down on the
students’ democratic movement violently through the PLA (People’s Liberation Army). Since
then, voices calling for democratization and anti-corruption were muted.

5. Serious corruption
Many officials abused their power to spend public money on personal pleasure or speculation,
to sell the government’s raw materials for own profits and to interfere in the operation of
enterprises. The state suffered a great loss. Besides, corruption caused widespread discontent
among the public. The famous example includes the case of Chen Xitong (陳希同) who was
the mayor of Beijing and was arrested in charge of corruption of 2 billion USD.

18
Impact of Reform and Opening-up on China’s relations with other Asian countries

Under the Reform and Opening-up, China strived to create a peaceful environment for
modernization. It established friendly & co-operative relations with neighboring countries
on the basis of the Five Principles of Peaceful Co-existence. Besides, economy and trade
were the cornerstones of its foreign policy. China co-operated with Asian countries to
develop economy, trade, science and technology.

Normalizing diplomatic relations

During the Reform and Opening-up, Deng Xiaoping resolved the problem of diplomatic
isolation created by Mao (due to ideological differences) by establishing normal diplomatic
relations with other Asian countries.
In 1972, China and Japan signed the Sino-Japanese Joint Declaration to normalize their
diplomatic relations. In 1978, the two countries further signed the Sino-Japanese Treaty of
Peace & Friendship.
Sino-Soviet relations returned to normal after Gorbachev’s visit to China in May 1989. China
was one of the earliest countries that recognized the government of the Russian Federation
in 1991 after the dissolution of the USSR. China also established diplomatic relations with
South Korea in 1992.
Setting aside territorial disputes
The PRC had been involved in armed conflicts with its neighboring countries over territorial
disputes. Deng Xiaoping suggested setting aside the territorial disputes to improve China’s
diplomatic relations. For example:
When China and Japan normalized their relations, both parties agreed to shelve the issue
of the Diaoyu Islands and seek solutions through future negotiations.
In 1993, the Sino-Indian border disputes were put aside by both governments.

Maintaining regional peace

China maintained peace and stability in Asia with great efforts to create a favorable
environment for economic development. For example:
China adjusted its ‘leaning to one side’ policy towards North Korea, its communist ally.
During the 2 nuclear crises in the Korean Peninsula in the early 1990s, China prompted
North Korea & South Korea to resolve the nuclear crises through negotiation on an equal
basis. In 2000, China held the first meeting of the two Korean leaders to resolve their
differences via dialogue and co-operation.
Enhancing economic and technological co-operation
During the Reform and Opening-up, China wanted to attract investments and introduce
technologies from the developed countries, especially Japan, to facilitate its economic
development. As for its neighboring countries, China was a big market for their products.
Between 1978 and 1988, the Sino-Japanese trade continued to grow. The Japanese
government also provided huge sums of economic aid and loans to China.
In the late 1980s, the Sino-ASEAN trade increased at an annual average rate of 20%.
In 2000, the Sino-Russian co-operative agreement was signed, in which Russia promised to
increase its sale of weapons to China, and to help China develop new armaments and train
astronauts. As a result, China’s modernization in national defence & technology was
enhanced.

19
In 1991, China joined the Asia-Pacific Economic Cooperation (APEC) to promote free trade
in the Asia-Pacific region and strengthen the economic co-operation among the member
states.
Promoting civil exchanges
The civil exchange in the fields of sports, art and culture between China and other Asian
countries became more frequent.
The number of Japanese and Korean students studying in China continued to rise.
Since the 1980s, China has signed up hundreds of cultural exchange programmes with its
neighbouring countries in Asia every year.

20
 CHINA IV: REFORM AND OPENING-UP AND SINO-JAP RELATIONS: 1978-2000

After the Cultural Revolution, Deng Xiaoping embraced a path of reforms. He called his
version of communism ‘Socialism with Chinese characteristics’.

Features of Socialism with Chinese characteristics

1. Emphasis on pragmatism: Deng believed that sticking to the original Marxist-Leninism
were not practical. CPC should modify communism to fit into the ‘realities of the nation’
(國情). He believed in ‘seeking truth from facts’ (實事求是), meaning to focus on the
realities rather than the ‘correctness’ of the ideology. Therefore, ultra-leftism was
dismissed & class struggle & mass movements were banned.
2. Result-oriented: Unlike Mao who was ideological-based, Deng attached high
importance to results. This was clearly illustrated in his ‘colour cat theory’. (‘It does not
matter whether a cat is black or white, so long as it catches mice.’)
3. Socialist market economy: China should adopt a mixed economy with features of both
planned & market economy. Under Various Ownership Systems(多種所有制), public
ownership (e.g., state-owned enterprises) & private ownership (civilian-run enterprises
& foreign enterprises) can co-exist.
4. To achieve Four Modernizations: Focus was placed on the building of industry,
agriculture, national defense, and science & technology instead of revolution.
5. Incremental approach to achieving modernization: China was still at an early stage of
socialism & progress must be made step by step. The economy should be developed in
3 stages.
1st The 1990 GNP shall double the 1980 GNP to solve the problem of food &
clothing.
2 nd The 2000 GNP should double the 1990 GNP to become a moderately
prosperous society. (小康社會)
3 rd The 2050 per capita GNP shall reach the level of moderately developed
countries.

6. To let part of China get rich first: In contrast with Mao, Deng believed that having the
whole nation to get wealthy would be an impossible task. Thus he implemented the
principle of ‘to let part of China to get rich first’. The rich part will lead the other regions
to common prosperity.

Economic Reform

Agriculture
1. Dissolving People’s Communes and implementing household responsibility system(家
庭聯產承包責任制)
People’s Communes were gradually dissolved to give way for the implementation of the
responsibility system. All People’s Communes were abolished in 1984.
The household resposbility system allowed peasants to sell extra crops after they fulfilled
a government quota. The new system increased their production incentive, which people
had little of that under People’s Communes.

21
Industry
Reform of state-owned enterprises:
1. Factory Director Responsibility System 廠長負責制: The Chinese government gave full
authority to factory directors to run their own business. They had to bear the profits and
losses and management decisions such as hiring and firing, promotion and factory
development. Incentive was increased as factory directors wanted to manage the
factory better to maximize their profits.

Commerce
1. Privatization of business: In 1985, Deng began to sell state-own business to
businessmen and allowed them to run jointly with the state. Companies like China
Mobile and Sinopec were owned jointly by the government and private sector. Also,
Chinese were allowed to set up private companies. Home applicants company Lenovo
Group (1984) and Wahaha Group (1987) became the listed corporations on the stock
market.
2. Stock market: The Shenzhen Stock Exchange and Shanghai Stock Exchange were
opened in 1989 and 1990 respectively to enhance commercial activities.
3. Township and village enterprise 鄉鎮企業 (TVE): To absorb the excessive productivity
and capitals in rural area, peasants were encouraged to set up their own enterprises. For
example, Midea Group (美的集團).

Opening-up
Aim: to attract foreign investment to boost economic development. But the CPC was cautious
of “foreign forces” and only selected a few spots in China for experiment.
First phrase (1979-1990) —coastal China

 6 Special Economic Zones: Shenzhen, Zhuhai, Xiamen, Shantou Hainan, Pudong (SEZ
enjoyed economic privileges such as low business tax rate)
 5 Economic Open Zones: including Pearl River Delta & Liaodong Peninsular
 14 Coastal cities: Shanghai, Tianjin, Dalian (For example, Dalian attracted many hi-
tech companies to set up offices there such as Intel and Canon because the
government built excellent infrastructure to cater the needs of hi-tech companies.)
Second phrase (1991-2000)—central China
The government began to open up inland cities for foreign investment. Yet, due to their
backward conditions, foreign companies were reluctant to invest there.
Third phrase (1997-2000)—western development
The government adopted the ‘China Western Development’ (西部大開發) policy in 1997
and focused on the development of energy industry. Plans were made in the 80s and 90s
to build the Qinghai-Tibet Railway and the West-East Gas Pipeline(西氣東輸). These
projects helped the economic development of the poorest region in China.
*Reform in social & political aspects and science & technology (see social and political
significance)

Economic significance
1. Rapid economic growth
The Reform and Opening-up policy made China experience rapid economic growth. For
example,

22
 National income increased 10% annually.
 China’s economy grew at an average annual rate of 9.8% during the period 1979-1997.
 China’s GDP ranking jumped from 9th in 1970 to 5th in year 2000. (In 2008, China placed
2nd, surpassing Japan).
 By 2000, China was undoubtedly an important economic power in the world.

2. Improving agricultural productivity

All People’s Communes were abolished in 1984. Under the household responsibility system,
peasants were given more production freedoms and were allowed to sell extra crops
privately for profits. This gave peasants more flexibility and incentive to produce.
Results: The per capita annual net income of peasants increased from $130 RMB in 1978
to $2200 RMB in 1999.

3. Rapid industrialization
The share of the GDP of the secondary industry increased from less than RMB 1000 billion in
1978 to over RMB $4000 billion in 2000 and China became the ‘world’s factory’, as many
products such as Nike shoes and Nokia phones were made in China.
4. Rapid commercialization
Privatization gave rise to many renowned national and international corporations:
 From 1979, reforms were carried out in state-owned enterprises. The large state-owned
enterprises underwent reorganization and subsequently listed on the stock markets
with the state owning part of the share. e.g., China Mobile, Sinopec (中國石化).
 Also, Chinese were allowed to set up private enterprises. As a result, the annual growth
rate of private enterprises was 20%. They became the engine of rapid economic growth
in China. e.g. Lenovo (聯想集團).
 Shanghai and Shenzhen, with the opening of the stock markets in 1989 and 1990
respectively, became the major financial hubs in the world.

5. Hyperinflation
To reduce the huge deficit due to the increasing expenditure during the Reform and Opening-
up, the government issued banknotes in large amounts and allowed floating commodity
prices progressively. Serious hyperinflation resulted. The inflation rate, which was only 6% in
1986, increased to 17-18% for 2 consecutive years after 1988. Hyperinflation led to shopping
rush, bank runs and falling living standards.

Social policies and significance

1. Living standard improved (coastal cities only)
Under the principle of ‘to let part of China get rich first’, coastal cities such as Shanghai,
Shenzhen and Tianjin were opened to attract foreign investment and thus became affluent.
Before 1978, Chinese people chased after the ‘three old things’ (watch, sewing machine and
bicycle) but in the late 1990s, people pursued the ‘three new things’ (laptop, mobile phone
and digital computer). This showed that living standard improved dramatically.

2. Widening wealth gap

Coastal cities, such as Shenzhen, Zhuhai, Shantou, Xiamen, which were opened for foreign
investment were the focus of economic development while the central & western regions
were neglected. Wealth gap was increasingly widened in the last two decades, e.g. the annual

23
income of many people was below US $200 in the western provinces, such as Gansu and
Shaaxi. Many people were living under the poverty line.

3. Three Rural issues: agriculture, rural and peasants (農民真苦、農村真窮、農業真危

險)
Peasants They suffered from poverty because of the low farming income. Also, their
rights were not protected and there was a wide income gap between urban
and rural areas.
Rural areas As farming did not create much wealth, rural villages suffered from poverty,
underdevelopment with inadequate infrastructure and depopulation. Only
children and the elderly remained in village, making village unproductive.
Agriculture The farming industry was relatively less competitive. It was small scale and
the degree of mechanization was low. It could not produce high-end farm
products.

4. One-child policy
Facing the problem of population explosion, Deng Xiaoping implemented the One-child Policy
in 1979. Each family could only give birth to one child; extra birth would result in heavy fine.
The policy was successful in slowing down population growth (annual growth was 1.04%
annually) but it created other social problems such as imbalance sex ratio (more males than
females) and female infanticide in rural China.

24
Science and education
1. Improvement in education
 Universal education was introduced and National Examination was resumed in 1977.
Also, the universities were greatly expanded in size and number. Therefore, educational
level enhanced.
 To prepare talents for the Four Modernizations, the study of science and technology was
emphasized. Many new polytechnic institutes were set up, e.g. Shenzhen Polytechnic
(深圳職業技術學院) in 1993.
2. China as a rising space power
Due to the goal of “Four modernizations” and expansion in education, China developed
advanced aerospace technology and national defence in the 1990s. China build the Long
March Rockets in this period and ts first spacecraft to space in 1999 (Shenzhou One).

Political policies and significance

1. Political stability
Deng dismissed ultra-leftism and banned personal cult and class struggle. There were still
power struggles on the top level of the party but it was nothing like that during the Cultural
Revolution. Deng insisted that there should be no one-man rule (like Mao) but collective rule.
He never assumed the highest position of China (like President of China or Chairman of CPC)
to serve as an example that no one should hold all power in one hand.
Also, there was the works on vindication (vindicate wronged cases 平反冤假錯案). Many
officials that were wrongly charged and punished in Cultural Revolution were vindicated,
including Lui Shaoqi. This had stabilized the government.

2. Some progress in democratization in 1980s

After 1978, the Chinese government allowed election in the village level where villagers were
allowed to vote for their village chief. The government even encouraged university graduates
to take part in the election. Also, China enjoyed a relatively free period in 1986 called ‘Holiday
of Speech’ in which certain degree of speech and press freedom was allowed. Chinese people
were seen openly criticizing the government & discussing political reform.

3. Serious corruption
Many officials abused their power to spend public money on personal pleasure or
speculation, to sell the government’s raw materials for own profits and to interfere in the
operation of enterprises. The state suffered a great loss. Besides, corruption caused
widespread discontent among the public. The famous example includes the case of Chen
Xitong (陳希同) who was the mayor of Beijing and was arrested in charge of corruption of 2
billion USD.

Diplomatic policy and Significance

1. A cooperative diplomacy
Deng advocated a “low-profile” diplomacy and aimed at avoiding international conflicts. Deng
wanted China to have a good relationship with the rest of the world for stable economic
relationships.
◼ Ending the Sino-Soviet Split by inviting Gorbachev to Beijing in 1989 (a month before June
Four). Sino-Soviet relations normalized.

25
◼ Further improving Sino-Japanese relations by allowing Japanese investment into the
various “open zones”. Deng also avoided territorial disputes like the Diayou Island by not
discussing it.

2. International isolation
The June Fourth Incident triggered a US-EU isolation, e.g., they banned the selling of arms to
the PRC (still in effect today). The image of China was also damaged.

26