Chinese Economic Reform (4822 words) Essay Example For Students

Chinese Economic Reform (4822 words) Essay Chinese Economic ReformChinese Economic ReformTwo years after the death of Mao Zedong in 1976, it became apparent to many of Chinas leaders that economic reform was necessary. During his tenure as Chinas premier, Mao had encouraged social movements such as the Great Leap Forward and the Cultural Revolution, which had had as their base ideologies such as serving the people and maintaining the class struggle. By 1978 Chinese leaders were searching for a solution to serious economic problems produced by Hua Guofeng, the man who had succeeded Mao Zedong as Chinese Communist Party (CCP) leader after Maos death (Shirk 35). Hua had demonstrated a desire to continue the ideologically based movements of Mao. Unfortunately, these movements had left China in a state where agriculture was stagnant, industrial production was low, and the peoples living standards had not increased in twenty years (Nathan, Andrew J. Chinas Crisis pg. 200). This last area was particularly troubling. While the gross output value of industry and agriculture increased by 810 percent and national income grew by 420 percent between 1952 and 1980; average individual income increased by only 100 percent (Ma Hong quoted in Shirk, Susan L. The Political Logic of Economic Reform in China. Berkeley pg. 28). However, attempts at economic reform in China were introduced not only due to some kind of generosity on the part of the Chinese Communist Party to increase the populaces living standards. It had become clear to members of the CCP that economic reform would fulfill a political purpose as well since the party felt, properly it would seem that it had suffered a loss of support. As Susan L. Shirk describes the situation in The Political Logic of Economic Reform in China, restoring the CCPs prestige required improving economic performance and raising living standards. The traumatic experience of the Cultural Revolution had eroded popular trust in the moral and political virtue of the CCP. The partys leade rs decided to shift the base of party legitimacy from virtue to competence, and to do that they had to demonstrate that they could deliver the goods. This movement from virtue to competence seemed to mark a serious departure from orthodox Chinese political theory. Confucius himself had posited in the fifth century BCE that those individuals who best demonstrated what he referred to as moral force should lead the nation. Using this principle as a guide, China had for centuries attempted to choose at least its bureaucratic leaders by administering a test to determine their moral force. After the Communist takeover of the country, Mao continued this emphasis on moral force by demanding that Chinese citizens demonstrate what he referred to as correct consciousness. This correct consciousness could be exhibited, Mao believed, by the way people lived. Needless to say, that which constituted correct consciousness was often determined and assessed by Mao. Nevertheless, the ideal of moral fo rce was still a potent one in China even after the Communist takeover. It is noteworthy that Shirk feels that the Chinese Communist Party leaders saw economic reform as a way to regain their and their partys moral virtue even after Maos death. Thus, paradoxically, by demonstrating their expertise in a more practical area of competence, the leaders of the CCP felt they could demonstrate how they were serving the people. To be sure, the move toward economic reform came about as a result of a changed domestic and international environment, which altered the leaderships perception of the factors that affect Chinas national security and social stability (Xu, Zhiming. The Impact of Chinas Reform and Development on the Outside World. pg. 247). But Shirk feels that, in those pre-Tienenmen days, such a move came about also as a result of an attempt by CCP leaders to demonstrate, in a more practical and thus less obviously ideological manner than Mao had done, their moral force. This is not t o say that the idea of economic reform was embraced enthusiastically by all members of the leadership of the Chinese Communist Party in 1978. To a great extent, the issue of economic reform became politicized as the issue was used as a means by Deng Xiaoping to attain the leadership of the Chinese Communist Party. Maos successor, Hua Guofeng, had tried to prove himself a worthy successor to Mao by draping himself in the mantle of Maoist tradition. His approach to economic development was orthodox Maoism with an up-to-date, international twist (Shirk 35). This approach was tied heavily to the development of Chinas oil reserves. When, in 1978, estimates of the oil reserves were revised downward, commitments to import plants and expand heavy industry could not be sustained (Shirk 35). Deng took advantage of this economic crisis to discredit Hua and aim for leadership of the party. Reform policies became Dengs platform against Hua for post-Mao leadership (Shirk 36). Given this history of economic reform, it is evident that under the present system economic questions are necessarily political questions (Dorn, James A. Pricing and Property: The Chinese Puzzle. pg. 43). Once Deng and his faction had prevailed, it was necessary for some sort of economic reform to evolve. The initial form the new economy took was not a radical one. China was still a state in which the central government retained the dominant power in economic resource allocation and responsible local officials worked for the interest of the units under their control (Solinger, Dorothy J. Chinas Transition from Socialism: Statist Legacies and Market Reforms pg. 103). However, as time passed, some basic aspects of the old system were altered either by design or via the process of what might be called benign neglect. As Shirk points out, in rural areas, decollectivization was occurring: decision making power was being transferred from collective production units (communes, brigades, and teams) to the family (38); purchase prices for major farm products were increased (39). In 1985, further reforms were introduced. For example, long-term sales contracts between farmers and the government were established. In addition, in an effort to allow the market to determine prices, city prices of fruit and vegetables, fish, meat, and eggs, were freed from government controls so they could respond to market demand (Shirk 39). Most importantly, a surge of private and collective industry and commerce in the countryside (Shirk 39) occurred. This allowed a great percentage of the populace to become involved in private enterprise and investment in family or group ventures. The conditions also allowed rural Chinese to leave the villages and become involved in industry in urban centers (Shirk 40). The economy grew so quickly that inflation occurred and the government had to reinstitute price controls. Chinas economy retains these characteristics of potential for growthand inflationto this day. Another important aspect of Chinese economic reform was the decision of China to join the world economy. Deng Xiaoping and his allies hoped to effect this 1979 resolution in two ways: by expanding foreign trade, and by encouraging foreign companies to invest in Chinese enterprises. This policydenoted the Open Policy (Shirk 47)was a drastic removal from the policies of Mao Zedong and, in fact, from centuries of Chinese political culture. The Open Policy, which designated limited areas in China as places with preferential conditions for foreign investment and bases for the development of exports (Nathan 99), was extremely successful in the areas where it was implemented (Shirk 47). However, it was looked upon by many Chinese as nothing less than an avenue to economic dependency (Nathan 50). Indeed, when the policy was first implemented, many Chinese seemed to fear that Dengs policies were drawing China back toward its former semi-colonial status as a market where the imperi alist countries dump their goods, a raw material base, a repair and assembly workshop, and an investment center. (Nathan 51). It is interesting to note the symptoms of a national character that would subscribe to the above sentiment. In an article written in 1981, just two years after the Open Policy was first proposed, Andrew J. Nathan noted the almost pathological resistance to foreign intervention in the Chinese economy: Some Chinese fear that reliance on imported technology will encourage a dependent psychology Many Chinese perceive joint ventures as a costly form of acquisition. Some people worry: Wont we be suffering losses by letting foreigners make profits in our country? (52). The Chinese were as vociferous about issues of sovereignty. Nathan maintained that the Mao-led revolution, which culminated in victory in 1949, had been fueled by an intense patriotism: once China had stood up, no infringement on its sovereignty, no matter how small, should be permitted (53). These feelings were manifested in denying foreign businessmen long-term, multiple entry visas, resisting increased foreign economic contacts and alteration of current ways of doing things, and disinclination to become involved in government-to-government loans and joint ventures lest Chinese become exploited in some way (Nathan 53-55). Given these hesitancies on the part of the Chinese society vis-a-vis foreign relations, it is impressive that Deng and his allies were able initially to create and implement the Open Policy since many members of the society at large were resistant to becoming involved in a policy so antithetical to the Chinese national character. However, once the successes of the Open Policy were apparent, resistance to the plan by the populace waned. Moreover, given the confluence of politics and economics in China, it seems apparent that some members of the CCP would also not be in favor of the plan. Nevertheless, the Open Policy was implemented and has become instrument al in the success of the burgeoning Chinese economy. Kevlar EssayIt is striking that Feng spoke of the benefits that the populace has received as a result of the economic reform now occurring in China. That is, his comments appeared to demonstrate the beneficence, or the moral force, of the Chinese Communist Party vis-a-vis economic reform. He noted that such reform involves the essence of socialism: to liberate and develop productive forces; to eradicate exploitation; to remove polarization; and to attain the goal of common prosperity (Official on Economic Reform. Beijing Review: pg. 12). Thus, CCP leaders still appear to see their roles as representatives of a moral force. CCP members and leaders wish economic reform not to be judged on just its practical merits, but also as an effect of the moral force of the leadership. Economic reform, then, becomes nothing less than a moral crusade and it is thus easy to see why, for example, China has staked its national prestige on becoming a founding member of the World Trade Organization ( Gargan, pg. 14). Will China succeeds in taking its place among the nations of the world market? Will the CCP succeed in retaining its political power given the drastic changes in the societal makeup of China that are occurring due to the changing economic realities? I would suggest that the chances are better for the former than for the latter. Once the Chinese attain more sophistication relative to international and national markets, institute a more manageable banking system, and make a good faith effort to insure acceptable human rights, the country may well become the richest economy in the world within the next 25 years (Gilder pg. 372). However, whether or not these conditions can occur without a weakening of the state-controlled system is problematic. The most impressive and far-reaching display of moral force by the CCP may well have to be a voluntary reduction of its power over the people. Paradoxically, by weakening itself politically, the party may demonstrate its true mo ral force by liberating, politically and economically, one billion Chinese citizens. 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