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Evolution of China's politics and economy 1976-2005 (Deng's Era…

- - - - Top-down reform was being threatened by the wishes for democracy [which was inheritly grassroot]. Students and other intellectuals came forward willingly, in terms of protesting and other forms of expressing their dissatisfaction.
        
        e.g Zhao Ziyang & Hu Yaobang who supported student reforms during unrest from 1987 – 1989
        
        These students were youth who had not seen the time of Mao [or fully experience its setback], and therefore, saw slow but consistent liberalization as the policy trend of the CCP. This could have contributed to their misunderstanding of the extent the Party was willing to liberalize their policies
        [especially considering that the students that economic reforms would translate into political reforms (perhaps a view supported by the Open-door policy)].
        
        1989 Tiananmen Square massacre, using the PLA to crush student protestors
        
        Re-established CCP's authority, but had devastating effects on Deng's legacy.
        
        Sent police overseas to learn crowd control etc. to make Party able to ‘discipline the working population’ and ‘tame the masses’
        
        democratic reform would have (1) led to a weakening of the Party's control over China (2) Loss of the communist ideology (3) potential rise of the capitalist system, which would devastate the majority of Chinese living in poverty.
      - An autonomous government—one that neither represents a specific social class nor is captured by a specific social group—enables the central government to adopt highly inclusive economic policies that favour long-term economic growth of the whole society
        
        Decentralisation motivates local governments and officials to take the initiative to develop the local economy, while a meritocratic promotion system overcomes the negative effects of decentralisation, such as regionalism and corruption.
    - - e.g The 4 Cardinal Principles:
        
        Maintaining Socialism with Chinese characteristics [change in the characterization of socialism and Mao Zedong's Thought, in order to push his own agenda earlier]
        
        Ideology: Marxism, Leninism, Mao Zedong Thought (Modify to suit current standards)
        
        Rule of CCP should be continued
        
        Proletariat Dictatorship should be maintained
        
        China must stick to Socialism
    - - Did not have a clear structure on how to build the economy (Wanted to make the definition of the new formula of Socialism vague in the Post-Mao era) --> Encourage participation of youth to offer new perspectives
        
        However, Deng Xiaoping still remained paramount leader, and called the shots behind despite resigning from all positions in 1989 (after resigning from the Central Military Commission)
        
        However, this further encouraged factionalism (in a more obvious manner) [although said phenomenon was already present in Mao's time] in the Party, and the establishment of an elite bureaucracy and a totalist ideology (Party-led, substantial public ownership and achievement of a common prosperity) ~ Raviprasad Narayanan + Allan Todd
    - - Economic decentralisation gives local governments strong fiscal motivation to develop the local economy
        
        A meritocratic promotion system gives local officials strong positive incentives and counters the negative consequences of decentralisation
      - On May 1986, allowed political relaxation to encourage ideological flexibility and 'political reform'
        
        e.g There was initial tolerance for the democracy wall established from 1976 to 1980. The Democracy movement also were able to publish pamphlets and publish magazines like the Beijing Spring
      - Improved the education standards of Party cadres allowed to join the National People's Congress (60% of politburo had members with college qualifications during Deng's time)
    - - Deng Xiaoping's Philosophy: 'Hide your ambitions and disguise your claws"
        
        China focused on economic affairs, rather than international affairs
      - Relatively peaceful policy (e.g 1997 Hong Kong handover from UK to China) THIS WAS UNDER JIANG
      - Opening of China in the form of Special Economic Zones (SEZs)
      - Entered the World Trade Organization in 2001 [opening up to foreign intervention in the government control over the economy, all for the sake of economic development]
    - - Students were inspired by Party officials (e.g Hu Yaobang) who had fallen from grace to be an icon to them and inspire the Democracy Movement
      - Party officials (e.g Yao Ziyang) attempted to sympathise with student protestors, but were removed for resisting Deng's more neo-authoritarian beliefs (i.e Quelling the masses with crowd control)
      - Students were inspired by period of political relaxation (suggested by the presence of Democracy Walls, Salons and Deng's political relaxation in1986
  - - - A change in the way the economy ran: With the introduction of foreign companies, there was in increase in competitive and incentive to increase efficiency of production/output
      - Change from the perception of a hostile world to claiming the West/foreign powers were need to promote development. [pragmatic choices]
    - - enhance material incentives through policies to credit those who worked hard [pay based on work done, not extremely standardized]
      - taxes, interest rates, prices
      - Two-tier pricing system to ensure (1) continue the previous state-controlled price [to support the peasants] (2) change to create a more competitive market and incentive.
    - - 1978 Household Responsibility System --> Farmers could lease land from the government and use it to cultivate their own crops once they had given the minimum to the government
      - Farmers were richer
      - its success changed CCP leaders' receptivity to market economy
    - - Was pragmatic in shifting China towards a more capitalist-socialist balanced economy (i.e Economic Rationalisation) with 'authoritarian capitalism'
    - - Positive Consequences
        
        Wide divide in standards of living, For the SEZs, people tended to experience better standards of living since these areas tended to grow in economic growth & development
        
        Reinforced the credibility of reform over time. By undertaking reforms one step at a time, and starting with those most likely to deliver results, the government built up its reputation for delivering on reform.
        
        China’s economic growth since 1978 has been nothing short of a miracle, lifting most people out of poverty and the country to the rank of higher-middle income. Its citizens have witnessed a quantum leap in their standard of living, and the nation’s wealth now rivals the greatest countries in the world.
        
        As it remained relatively impartial towards different sections of society, the party- led government was able to adopt economic policies that benefited the entire society without restraint.
      - Negative Consequences
        
        Older workers lost their iron rice bowl due to privatisation of firms, since young workers were granted more favourable labour contracts with higher pay
        
        High unemployment (20% from late 1988) and high inflation arose from economic growth, which could not cope with China's lack of infrastructure
        
        Social divide in the rise of distinct socio-economic groups [given the various groups of businesspeople, manual labour, and the rise of the middle class]. This also translated to a growing income disparity within the SEZ, and between the zone and the rest of China
        
        For example, there was growing discontent with the public three-tier healthcare system, compared to the healthcare services provided by the private sectors. Here, it can be inferred that the rich and the poor had different degrees of quality healthcare access, which would be a sign of disparity based on income (ongoing phenomenon)
        
        This was a long-term consequence that occurred with further development of Deng's policies by Huo and Jiang. However, it was mostly Deng who set the foundation of his policy.
        
        Shift away from Socialist principles --> China was increasingly dependent on fluctuations in international markets --> When China had to borrow from IMF and World Bank, had to abandon Socialist principles for neo-liberalism
        
        Food shortages and wide fluctuations in prices for crops --> Lower Standards of Living
        
        Corruption --> Establishment of princelings from party elites that got privileges (e.g Children of party officials got entry into universities, exempted from military service)
    - - When central planning was relaxed, competition among regions and their enterprises became possible, and economic oligarchy was avoided. Gradual reforms meant that the physical and human capital built under socialism did not become obsolete as a consequence of a transition shock.
    - - Medium-sized companies [from both rural and urban areas (TVE)] ended up becoming crucial to the economy given their relative autonomy and easier sizes to manage
        
        Narayanan: The energy of township and village enterprises accounted for much of the growth in the 1980’s and early 1990’
        
        1978: Collectively-owned - 94.8/423.7 [billion of yuan]
        WHILE in 1996: Collectively-owned - 3923.2/9959.5 [billion of yuan]
      - For instance, the state-owned land system has meant that local governments can rapidly improve a city’s infrastructure by way of land finance and SOEs can carry out national strategic goals.
    - - Mao used "shock therapy" + planning economy = There was no flexibility to adjust the production outcome of the industries to be in line with demands and what was needed.
      - Deng used gradual refroms + general policies that were flexible to changes needed = If something did not work, it could be abandoned as an experiment, rather than considered a policy failure
      - Deng: ‘Crossing the river by feeling the stones’ - this allowed for him to gain more trust in his policies if they proved to be successful, leading to a more cohesive government [politically crucial as Deng did not have Mao's cult and Foreign scare to establish his control and maintain a collective government]
      - Additionally, Mao enforced more of his policy without general consensus in an attempt to achieve two irreconcilable goals of development and a socialist/communist economy.
    - - The Cultural Revolution was very unpopular, and the party and the government had to distance themselves from the old regime and make changes to win the support of the people.
      - After years of experience in economic planning, government officials understood the shortcomings of the planned system and the need for change.
      - Successful economic development in other parts of Asia—including Taiwan, Hong Kong, Singapore and South Korea, known as the ‘Four Tigers’—demonstrated to Chinese government officials and the Chinese people that a market economy works better than a planned one. This lesson was reinforced by the different rates of economic development in North and South Korea, and among countries in Eastern and Western Europe.
      - The Chinese people were ready for, and ready to support, economic reform.
- - - - Jiang's coming to power and responses
        
        "Third Generation" of Chinese Politics
        
        Increasing Influence 1989 - Replaced Zhao as Party Secretary 1993 - Elected State Chairman of PRC
        
        Jiang had a middle-course approach for compromise between left and right
        
        Jiang's supporters promoted - More centrist line than Zhu's
        
        Jiang's "Three Represents" - Portrayed as politically significant like Mao Zedong Thought and Deng Xiaoping Theory
        
        Ideological alteration of the Party
        
        'Protecting the interests of workers and peasants' to 'overwhelming majority of the people'
        
        Change in the ideology with the change in times. From the previously peasant-focused ideology spearheaded by Mao, the changing times with a larger number of urban workers during the mass industrialisation of China. This led Jiang to shift focus from the previous ideology to be more representative
        
        Policy reform to admit new members of the Party
        
        In a bid to improve the Chinese economy, senior staff from the business community were admitted to the Party - Compared to previous membership being limited to workers, peasants, & military
        
        Contrast to Huo Guofeng's "Three Whatevers" - Representative of Mao's ideology as a legacy
        
        Despite China being an authoritarian regime, Jiang attempts to rule by consensus - Gain support of general population without having to give away power from the state
        
        Post-USSR Collapse Debates
        
        "Peaceful evolution" into capitalism hotly debated - How the Chinese government would adapt to keep their communist government
        
        Jiang's reflective approach
        
        Felt that debates were more focused on political reform and not enough for economic - Failure of USSR seemed due to economic failures, not political
        
        In China, reforms were slowed due to the change of world stage and considering how to avoid failure like the USSR
      - Jiang's political plans
        
        Planned Political Transition
        
        Adoption of 10th 5 Year Plan - Jiang, Zhu Rongji and Li Peng would retire
    - - The main task of Jiang's team was to revive confidence in China's reform programme, which had been badly shaken by the 1989 protests and the following suppression.
        
        In particular, there were concerns that foreign direct investment - vital to China's reform programme - might fall. However, spearheaded by Japan, foreign businesses quickly resumed their interest taking a share of China's growing economy.
        
        From the 1990s, China became increasingly popular with foreign MNCs - this was a result of China possessing, in addition to a growing domestic market, a seemingly unlimited supply of cheap labour, disciplined by official trade unions and state repression.
        
        This combined with large investments by China's SOEs, and the creation of new private industrial enterprises, led to a massive expansion of China's industrial development. The result was that, after a decline from 1978 to 1991 (because of the initial efforts of introducing 'free' market mechanisms, which resulted in teh closure of many factories and consequent unemployment), Chinese industry's share in GDP massively increased.
        
        Fewsmith - although CCP created ideal conditions under which 'the TVE sector grew dramatically', their prudent economic management allowed SOE sector to 'not fade away' but 'to dominate important sectors, particularly heavy industry'. These two factors created most ideal conditions, culminating in incremental industrial growth, dispelling any criticism of industrial decline under Deng.
  - - - "Three Represents" - building a party that will serve the interests of the people and govern for the people. Attempt to 'rule by consensus'.
        
        Limitations: incredibly vague with no targets made to hit.
        Extremely idealistic and lacked ways for efficient execution - just policy promises made to abide by the wishes of the Chinese. Continuing on Deng's path by not setting hard targets.
      - People-centered
      - "Scientific development concept" - comprehensive, sustainable and coordinated planning
        
        urban and rural development, regional development, economic and social development, environment, domestic development and international trade
        
        led to a change in social structure - growing of a middle class
      - Party Building
        
        Party work mechanism
        
        Institutionalization - prohibition on party and government officials from holding concurrent posts in enterprises
        
        Success: Discipline inspection sections came under high level of control, increasing efficiency
        
        Failure: No clear division of power and lacked a cleare outline on duties
        
        Regularization
        
        Standardization
        
        Rule by party
        
        Writing party policy into state law
        
        invoke party discipline to control state bureaucracy
        
        Party leadership
        
        Reform cadre/personnel system
        
        open selection and competition for posts
        
        democratic recommendation and assessment
    - - Lifestyle improvement: aimed to improve socio-economic equality domestically through the scientific outlook on development one of the guiding socio-economic principles of the CCP) + authorities also cracked down on social disturbances, ethnic minority protests, and dissident figures
      - reintroduced state control in some sectors of the economy EXAMPLES?
      - Managed to achieve 10 years of rapid growth.
      - Rising wages, and a stronger yuan, also took a toll on export competitiveness.
      - Healthcare reforms:In 2002, the party set a goal of turning China into a middle-income country with a “well off” population by 2020. Also designated more than 300 counties in 2004 (about 10% of the total) where a new “co-operative medical system” was to be tried (SARS crisis)