Reasons for success

I finished my last post with the last paragraph of the Wikipedia on the issue China economic reforms. Reasons for success might be considered many, but I would like to consider the most important reason of all; the right disposition of the Chinese government to achieve it, and this is to put on top of all priorities economic development. It might sound quite logical, but reality is that it is not such an easy task because political issues usually become priorities and disturb and break such an approach to the matter.

In this regard we have to turn our eyes to Chinese politics under Deng Xiaoping. Unless Mao Zedong´s time when China got involved in at least six wars and terrible disturbances inside, Deng Xiaoping policy was expressed, also in Western terms, as a policy of stability –if not directly called of peace.

Stability has been the key word all along the three generations of leaders since Deng Xiaoping in order to let the economy flourish. Even if they have kept a political issue under the consideration of indisputable; China sovereignty on Taiwan, they have played it in a pragmatic manner and, as they did with Hong Kong, the game goes about an always growing economic involvement and entanglement.

China domestic political doctrine has been firmly exposed as such; stability and stability to allow economic development. People’s rights and democracy have not been allowed to put into question, as they are not considered a priority, in order not to disturb economic development and, especially after the Tiananmen revolts, people in China has accepted the Chinese Communist government deal. Even some measures taken by the leadership, especially by the current one, against a too fast path of devolopment have to be read in attention to the country stability.

Especially interesting has been how China has put this policy into practice in the international arena. In contrast with the XX century when Western power allied to submit China, this time China has been able to play with the interests of them separately and when the US has tried to play hard with China, it has quickly understood that his economic involvement with China, as also his allies’ involvement with the communist country would bring any pressure on China to a failure and would result in economic losses, something the American system is not prepared to assume easily.

But the reality is that China has practiced a real pacifist policy and most of China researchers as Enrique Fanjul, myself or others in Spain and I guess in other countries, people who has really had a vital relationship with China, has noticed and transmitted this commitment of China with international peace.

The West has foreseen long ago the China rise and has tried to avoid it, therefore some other more neutral sources, many not personally involved with China, have tried to design a policy able to contain it. But China has been able to defuse any of those attempts putting in place pragmatism and that pacifist or pacific approach.  

Finally, the last reason for success pointed out by the Wikipedia, I did not copy in my previous post is:

“Herman Kahn explained the Reasons for success rise of Asian economic power saying the Confucian ethic was playing a "similar but more spectacular role in the modernization of East Asia than the Protestant ethic played in Europe".

Under my understanding he does not hit the point, but get quite close to it. But we will see it when we go back to this point from the Chinese point of view, as we go now to a new part in the blog titled Chinese Thinking.

Chinese economic reform 改革开放 - Deng´s followers

Despite Deng's death in 1997, reforms continued under his handpicked successors, Jiang Zemin and Zhu Rongji. In 1997 and 1998, large-scale privatization occurred, in which all state enterprises, except a few large monopolies, were liquidated and their assets sold to private investors. Between 2001 and 2004, the number of state-owned enterprises decreased by 48 percent. During the same period, Jiang and Zhu also reduced tariffs, trade barriers and regulations, reformed the banking system, dismantled much of the Mao-era social welfare system, forced the PLA to divest itself of military-run businesses, reduced inflation, and joined the World Trade Organization. These moves invoked discontent among some groups, especially laid off workers of state enterprises that had been privatized.

The domestic private sector first exceeded 50% of GDP in 2005 and has further expanded since. However, some state monopolies still remained, such as in petroleum and banking.

The Hu-Wen Administration has slowed the progress of the reforms. The government has adopted more egalitarian and populist policies; It increased subsidies and control over the health care sector^, halted privatization and adopted a loose monetary policy, which lead to the formation of a property bubble in which property prices tripled. The privileged state sector was the primary recipient of government investment, which under the new administration, promoted the rise of large "national champions" which could compete with large foreign corporations.

China´s economic performance since reform

China's economic growth since the reform has been very rapid, exceeding the East Asian Tigers. Economists estimate China's GDP growth from 1978 to 2005 at 9.5% a year. Since the beginning of Deng Xiaoping's reforms, China's GDP has risen tenfold. The increase in total factor productivity (TFP) was the most important factor, with productivity accounting for 40.1% of the GDP increase, compared with a decline of 13.2% for the period 1957 to 1978—the height of Maoist policies. Per capita incomes grew at 6.6% a year. Average wages rose sixfold between 1978 and 2005 while absolute poverty declined from 41% of the population to 5% from 1978 to 2001.Some scholars believed that China's economic growth has been understated, due to large sectors of the economy not being counted.

Reason for success

Scholars have proposed a number of theories to explain the success of China's economic reforms in its move from a planned economy to a socialist market economy despite unfavorable factors such as the troublesome legacies of socialism, considerable erosion of the work ethic, decades of anti-market propaganda, and the "lost generation" whose education disintegrated amid the disruption of the Cultural Revolution. One notable theory is that decentralization of state authority allowed local leaders to experiment with various ways to privatize the state sector and energize the economy. Although Deng was not the originator of many of the reforms, he gave approval to them. Another theory focuses on internal incentives within the Chinese government, in which officials presiding over areas of high economic growth were more likely to be promoted. Scholars have noted that local and provincial governments in China were "...hungry for investment" and competed to reduce regulations and barriers to investment to boost economic growth and the officials' own careers. A third explanation believes that the success of the reformists are attributable to Deng's cultivation of his own followers in the government.

Chinese economic reform 改革开放 - Deng´s reforms

The Chinese economic reform (改革开放; literally Reform and Opening) refers to the program of economic reforms called "Socialism with Chinese characteristics" in the People's Republic of China (PRC) that were started in December 1978 by reformists within the Communist Party of China (CPC) led by Deng Xiaoping.

First stage

The first stage, in the late 1970s and early 1980s, involved the decollectivization of agriculture; the Household-responsibility system, which divided the land of the People's communes into private plots. Farmers were able to keep the land's output after paying a share to the state. This move increased agricultural production, increased the living standards of hundreds of millions of farmers and stimulated rural industry.

Reforms were also implemented in urban industry to increase productivity. A dual price system was introduced, in which state-owned industries were allowed to sell any production above the plan quota, and commodities were sold at both plan and market prices, allowing citizens to avoid the shortages of the Maoist era. Private businesses were allowed to operate for the first time since the Communist takeover, and they gradually began to make up a greater percentage of industrial output. Price flexibility was also increased, expanding the service sector.

The opening up of the country to foreign investment. The country was opened to foreign investment. Deng created a series of special economic zones for foreign investment that were relatively free of the bureaucratic regulations and interventions that hampered economic growth. These regions became engines of growth for the national economy.

Second stage

Permission for entrepreneurs to start up businesses Controls on private businesses and government intervention continued to decrease, and there was small-scale privatization of state enterprises which had become unviable. A notable development was the decentralization of state control, leaving local provincial leaders to experiment with ways to increase economic growth and privatize the state sector. Township and village enterprises, firms nominally owned by local governments but effectively private, began to gain market share at the expense of the state sector.

Corruption and increased inflation increased discontent, contributing to the Tiananmen Square protests of 1989 and a conservative backlash after that event which ousted several key reformers and threatened to reverse many of Deng's reforms. However, Deng stood by his reforms and in 1992, he affirmed the need to continue reforms in his southern tour. He also reopened the Shanghai Stock Exchange closed by Mao 40 years earlier.

Although the economy grew quickly during this period, economic troubles in the inefficient state sector increased. Heavy losses had to be made up by state revenues and acted as a drain upon the economy.Inflation became problematic in 1985, 1988 and 1992 Privatizations began to accelerate after 1992, and the private sector surpassed the state sector in share of GDP for the first time in the mid-1990s. China's government slowly expanded recognition of the private economy, first as a "complement" to the state sector (1988) and then as an "important component" (1999) of the socialist market economy

The foundation of the People´s Republic of China, Mao´s era

                                         The People´s Republic of China was proclaimed in 1949

The new leaders gained popular support by curbing inflation, restoring the economy, and rebuilding many war-damaged industrial installations, set up various institutions to lead changes in rural areas, the military, and the bureaucracy, included legal protection of wome´s rights and the abolition of polygamy. Also adopted the horizontal left–right method of writing. Lands were confiscated by the government from the former landlords and subsequently redistributed to the lower-class peasants en launched.the Three-anti and Five Movements, as well as the beginning of the Anti-Rightist Movement, when property owners and businesspeople were labeled as "rightists" and purged resulting in the killing of about one million  However, people.experienced significant growth between 1949 to 1958.

The newly founded PRCh fought against the UN, leaded by the US, in the Korean Peninsula between 1949 and 1952 and entered Tibet in Oct 1950. In 1964 builded its first atomic bomb.

The Sino-Soviet Treaty of Mutual Friendship was signed in 1950 and the Soviet Union provided considerable economic aid and training to China during the 1950s.

In 1957 Mao launched the Hundred Flower Campaign intended to let a hundred school of thought to contend aimed at fighting bureaucracy, but many took it as an opportunity to critize the Communist Party, then Mao put in place the Anti Rightist Campaign purging many intellectuals and workers.

In 1958 Mao broke with the Soviet model and launched the Great Leap Forward aimed a rapidly raising industrial and agricultural production. The results were disastrous, famine caused between 20 and 40 million deaths. The loudest opponent of Mao, Defense Minister Peng Dehaua, leader of the People´s Liberation Army in the Korean war, was purged.

The disaster of the Great Leap Forward decreased Mao influence as national leader and President Liu Shaoqi, Party General Secretary Deng Xiaoping and Premier Zhou Enlai took over the direction of the party and adopted pragmatic economic policies. But Mao reacted launching the Great Proletarian Cultural Revolution to regain power against the "liberal bourgeoisie" and "capitalist roaders", created the Red Guards whose first targets were Deng Xiaoping and Liu Shaoqi, then they went on to rampage putting China in state of anarchy which actually lasted from 1966 to 1976.

Meanwhile, in 1971 Secretary of State of US, Kissinger led a secret delegation to Beijing to restore their relations. Previously China and SU relations had deteriarated at to the point of armed conflict at their Manchurian border.Nixon visited Beijing in 1972 causing confusion among socialist countries, "social imperialism" was now China´s main enemy.

Mao health was in sharp decline by 1973, however the Gang of Four leaded by his wife Jiang Qing tried to keep Mao´s radical stance. A turning point in the struggle between radical maoist and the pragmatic line leaded by Deng Xiaoping was Zhou Enlai death and his popular morning in Tiananmen converted in a demostration against the Gang.

Despite of Hua Guofeng was elected by Mao as his successor, Deng Xiaoping assumed the facto the leadership when Mao died in 1976.  

The Republic of China

The Republic of China begins in 1912 after in putting an end to over two thousand years of Imperial rule.

Since the republic's founding, it experienced many tribulations as it was dominated by numerous warlords and fragmented by foreign powers.

In 1928, the republic was nominally unified under the Kuomintang (KMT, the Chinese Nationalist Party) after the Northern Expedition, and was in the early stages of industrialization and modernization when it was caught in the conflicts between the Kuomintang government, the Communist Party of China which was converted into a nationalist party, remnant warlords, and Japan. Most nation-building efforts were stopped during the full-scale War of Resistance against Japan from 1937 to 1945, and later the widening gap between the Kuomintang and the Chinese Communist Party made a coalition government impossible, causing the resumption of the Chinese Civil War.

A series of political, economic, and military missteps led the Kuomintang to defeat and retreat to Taiwan in 1949, establishing an authoritarian one-party state that considered itself to be the sole legitimate ruler of all of China. However, since political liberalization began in the late 1970s, the Republic of China has transformed itself into a multiparty, representative democracy on Taiwan.

Chinese Dynasties: Qing Dynasty 清朝 (1644 to 1912)

The Qing Dynasty 清朝 (1644 to 1912) was founded by the Manchu clan Aisin Gioro in what is today northeast China (also known as Manchuria). It expanded into China proper and its surrounding territories until a complete pacification of China was accomplished around 1683 under the Kangxi Emperor.

In its early years, the Qing Dynasty witnessed a flourishing that was unprecedented by any other age. In order to mitigate class conflicts, the Qing pursued a policy of rewarding land cultivation coupled with a reduction or exemption from taxation. These policies promoted economic growth in the hinterland and on the frontiers of the country. During the reigns of Emperors Kangxi (1622-1723), Yongzheng (1723-1736) and Qianlong (1736-1796) saw the Qing at its heyday. By the mid-18th century economic development reached a new height. With this new prosperity power became more centralized, national strength increased, a well-maintained social order and a population that amounted to some 300 million by the end of the century. During the reign of Emperor Kangxi, Taiwan became part of the country and the Sino-Russian Treaty of Nerchinsk was signed determining the border between the two countries. During the reign of Emperor Qianlong, Xinjiang was incorporated into China after the Junggars and Uigurs were defeated. The early Qing emperors not only resolved the long conflict between nomads and peasants that had plagued China throughout history, but also took a series of measures to develop the economy, culture and transportation in the frontier areas. As a result, they consolidated national unification and laid the foundation for modern China's territorial boundaries.

In the realm of literature, during the reigns of Emperors Kangxi and Qianlong, several large works such as the Encyclopedia of Chinese Writings (Confucian classics, history, philosophy and belles-lettres), Kangxi Dictionary, and A Collection of Books Ancient and Modern, were compiled; which with other works made an important contribution to Chinese history and culture. Dream of the Red Chamber (红楼梦 - Hóng Lóu Mèng), composed by Cao Xueqin, is one of China's Four Great Classical Novels, a masterpiece of Chinese vernacular literature and is generally acknowledged to be the pinnacle of classical Chinese novels.

In spite of noticeable achievements, the Qing rulers were autocratic and despotic. The national economy was still based on agriculture. In the culture and practiced ideology, feudal ethics and rites continued to dominate society. Worse still, the Qing rulers persecuted many intellectuals, banning and destroying works that did not meet with their approval. The foreign policy of the Qing Empire was one of isolationism. The government was conservative and arrogant. It failed to join the industrial revolution that was spreading across the countries in the West. Sadly, these factors led to China falling more and more behind the developing world and the gap between it and Western nations inevitably widened.

After the mid-Qing period, the dynasty failed to adjust as new problems arose. Rampant corruption, a steady decentralization of power, warfare, rebellions, overpopulation and economic disasters plagued the once glorious empire. Rebellions sprouted like mushrooms after a rain, one of which, the uprising by the White Lotus Sect, that lasted for nine years, put an end to the golden age of the Qing. In 1840, the 20th year of the Daoguang reign, the Opium War, an armed invasion of China by foreign capitalists, broke out. The Qing government was forced to sign a series of unreasonable treaties, which demanded China to cede territories, pay indemnities and/or open trading ports. Eventually China became a semi-feudal and semi-colonized country.

At that time, the attitude of the Western powers towards China was strangely ambivalent. On the one hand, they did their best to undermine what they considered to be restrictive trading and governmental regulations. On the other hand, they did do their best to prop up the ailing Qing, the most notable example being the crushing of the Boxer Rebellion in 1900 by foreign troops. What the Western powers were interested in was the carving up of China for their own purposes, and that, paradoxically, required keeping China together.

Through its corrupt politics and conservatism, the Qing Dynasty rapidly declined. As its legitimacy waned almost daily, the Qing government imposed more taxes in order to pay both the expenses of war and the indemnities they had to bear. This action placed an unbearable burden on the people, especially the peasants. External aggression and domestic oppression sparked off a series of anti-feudal and anti-imperialist movements such as the Taiping Rebellion and the Nian Army Uprising. Under these circumstances, the Qing government was forced to introduce reforms, such as the Self-strengthening Movement and the Hundred-Day Reform, in effort to save and revitalize China. All measures that were doomed to fail. In the end the Revolution of 1911, led by Dr. Sun Yat-sen, enabled the Chinese people to overthrow the Qing imperialists who had ruled China for 268 years.

The Qing Dynasty which from 1644 had lasted 268, with a total of ten emperors when collapsed. With its demise feudalism, which had lasted for more than two thousand years, was brought to a close. The nation had entered a new era - Republic of China (1911 - 1949).

Chinese Dynasties: Ming dynasty - 明朝 (1368 - 1644)

The Ming Dynasty was the last dynasty in China ruled by ethnic Hans.

Ming rule saw the construction of a vast navy and a standing army of one million troops. Although private maritime trade and official tribute missions from China had taken place in previous dynasties, the tributary fleet under the Muslim eunuch admiral Zheng He in the 15th century far surpassed all others in size. There were enormous construction projects, including the restoration of the Grand Canal and the Great Wall and the establishment of the Forbidden City in Beijing during the first quarter of the 15th century. Estimates for the late-Ming population vary from 160 to 200 million.

The rebuilding of China's agricultural base and strengthening of communication routes through the militarized courier system had the unintended effect of creating a vast agricultural surplus that could be sold at burgeoning markets located along courier routes. Rural culture and commerce became influenced by urban trends. The upper echelons of society embodied in the scholarly gentry class were also affected by this new consumption-based culture. In a departure from tradition, merchant families began to produce examination candidates to become scholar-officials and adopted cultural traits and practices typical of the gentry. Parallel to this trend involving social class and commercial consumption were changes in social and political philosophy, bureaucracy and governmental institutions, and even arts and literature.

By the 16th century the Ming economy was stimulated by trade with the Portuguese, the Spanish, and the Dutch. China became involved in a new global trade of goods, plants, animals, and food crops known as the Columbian Exchange. Trade with European powers and the Japanese brought in massive amounts of silver, which then replaced copper and paper banknotes as the common medium of exchange in China.

During the last decades of the Ming the flow of silver into China was greatly diminished, thereby undermining state revenues and indeed the entire Ming economy. This damage to the economy was compounded by the effects on agriculture of the incipient Little Ice Age, natural calamities, crop failure, and sudden epidemics. The ensuing breakdown of authority and people's livelihoods allowed rebel leaders such as Li Zicheng to challenge Ming authority. Seizing the opportunity, the Manchus crossed the Great Wall after the Ming border general Wu Sangui opened them the gates at Shanhai Pass.

Culture

As in earlier dynasties, the Ming Dynasty saw a flourishing in the arts, whether it was painting, poetry, music, literature, or dramatic theater. Carved designs in lacquerwares and designs glazed onto porcelain wares displayed intricate scenes similar in complexity to those in painting. The major production centers for porcelain items in the Ming Dynasty were Jingdezhen in Jiangxi province and Dehua in Fujian province.

There was a great amount of literary achievement in the Ming Dynasty. The Jin Ping Mei, published in 1610, is considered by some to be the fifth great novel of pre-modern China, in reference to the Four Great Classical Novels. Two of these novels, the Water Margin and Journey to the West were products of the Ming Dynasty. To complement the work of novels, the theater scripts of playwrights were equally imaginative. One of the most famous plays in Chinese history, The Peony Pavilion, was written by the Ming playwright Tang Xianzu.

The dominant religious beliefs during the Ming dynasty were the traditional mixtures of ancestor worship, Daoism and Buddhism. The Chinese believed in a host of deities in what may be termed Chinese folk religion. The late Ming period saw the first arrival of Jesuit missionaries from Europe such as Matteo Ricci and Nicolas Trigault. There were also other denominations including the Dominicans and Franciscans.

Wang Yangming's Confucianism.

Leading a new strand of Confucian teaching and philosophy was the scholar-official Wang Yangming (1472–1529), whose critics said that his teachings were contaminated by Chan Buddhism. Wang Yangming (1472–1529).
In analyzing Zhu Xi's(1130–1200, under the Song dynasty, founder of Neo-Confucianism) concept of "the extension of knowledge" (i.e. gaining understanding through careful and rational investigation of things and events; Chinese: 理學, or 格物致知), Wang realized that universal principles were concepts espoused in the minds of all. Breaking from the mold, Wang said that anyone, no matter what socioeconomic status or background, could become as wise as the ancient sages Confucius and Mencius, and that the writings of the latter two were not the source of truth, but merely guides that could have flaws if carefully examined. In Wang's mind, a peasant who had many experiences and drew natural truths from these was more wise than an official who had carefully studied the Classics but had not experienced the real world in order to observe what was true.

To curb his political influence he was often sent out to deal with military affairs and rebellions far away from the capital. Yet his ideas penetrated mainstream Chinese thought, and spurred new interest in Daoism and Buddhism. Furthermore, people began to question the validity of the social hierarchy and the idea that the scholar was above the farmer. Wang Yangming's disciple and salt-mine worker Wang Gen gave lectures to commoners about pursuing education to improve their lives, while his follower He Xinyin 何心隱 challenged the elevation and emphasis of the family in Chinese society. His contemporary Li Zhi 李贄 (1527–1602) even taught that women were the intellectual equals of men and should be given a better education; both Li and He eventually died in prison, jailed on charges of spreading "dangerous ideas".