CHINA AFTER MAO: The Deng Xiaoping Revolution 1979-97

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CHINA AFTER MAO: The Deng Xiaoping Revolution 1979-97

Deng’s Economic Reforms

DENG’S BASIC APPROACH TO ECONOMIC MATTERS

• Economic Realism

• Performance of Market or Performance of Socialism?

• Contact or Isolation from Capitalist World?

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DENG’S BASIC APPROACH TO THE ECONOMIC MATTERS

• Economic Realism Not Possible During Mao’s Reign

• Deng Discriminated Due to Economic Realism

• 1982: Deng’s Aims for China’s Economy Released

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DENG’S HANDS OFF POLICY

• Hand’s Off Policy Begins• Departure from Planned Economy Under Mao• Problem of State Owned Enterprises (SOEs) Tackled

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DENG’S HANDS OFF POLICY• Dogma Replaced by

Pragmatism

• The economy would become the key focus of Chinese government policy

• Return to Market Economy

• Stages of Economic Development

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Agricultural Reform

• Commune System Abandoned, Replaced by the xiang

• Production Quotas Remain

• Peasants Given Incentive to Produce More

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China’s Agricultural Record 1978-1989

Problems with Agricultural Reform

• Major Problem Caused by Reform: Property Rights

• Peasants Have Precedent to not trust State

• Property Questions Leave Efficiency in Doubt

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Industrial Reforms - Education

• Focus by mid-1980s Turns to Industry

• First Focus on Education• Expansion of Education

to Produce Technical Experts

• Thousands of Chinese Students Go Abroad

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Industrial Reforms - Special Economic Zones

• Educated Youth to Return to Develop SEZs• 4 SEZs Established in the country• SEZs were Chief Commerical Outlets and Key to

Opening Up Commerce

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Special Economic Zones - Deng’s Pragmatism

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Industrial Reform - Problems

• No More Guarantees For Workers and Businesses?

• SOEs would now need to become efficient

• Employees Paid Based on Efficiency and Output

Resistance from SOEs• SOEs Resistant to Changes• Loss of “Iron Rice Bowl”?• State Tried to Please

Workers, Reforms Carry Through

• Centralized Planning Would Have Been Impossible in China

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Results of Deng’s Economic Reforms

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• China On An Economic Boom Since Deng’s Reforms• Massive Growth…Fastest Growing Economy in the

World the Past 25 years• Growth at any Cost? Impact on prices? Environment?

Equity?

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China's Agricultural Record 1978-89

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1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989Year

Millions of Tons

Grain ProductionMeat Production

China's Imports and Exports Balance 1979-1989

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1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989Year

US$ Billions

ImportsExports

Deng’s Basic Aims

To stimulate China’s Domestic EconomyTo open Chinese trade to the outside world

MeansThe 4 Modernizations

Agriculture Industry DefenseEducation

MethodsAllowing market forces to operate

Subordinating theory to practical considerationsAllowing the development of individual enterprises

Encouraging joint venture of Chinese and foreign investment

ReformsLand

End of the Commune

IndustryTraining of studentsCreations of SEZs

Export DriveDrive for Efficiency/Productivity