Economic Transformation of China: From Mao to Xi Era
Mutya Pratiwi
Writer
Microsoft Office 365
I wrote this essay for Third World Ideologies class —one of the courses I took when I was an exchange student in Malaysia. Students had about 1 month to write the topic they'd found intriguing and at the end of semester, each of us presented it in the class. Since I came from environment and health background, this was the first political science course I ever took. With that being said, I really enjoyed it and could manage to get an A- in this course.
Economy of China is notably always competitive and they dominate even in the mid of many developed countries which mostly support the free market. And the fact that the government leadership style is authoritarian for that huge of a country with the Left-Socialist Ideology they apply, it's interesting to know how they become superpower, at least economically.
Since Communist Party took over the most part of China, they claim themselves as a socialist particularly since Mao Zedong era —the first chairman of Chinese Communist Party (CCP) and the first leader of China after Chinese Civil War. Even until Xi Jinping era, they never stop calling themselves socialist despite their openness to foreign investment and open market which indicate they lean more towards capitalism.
The purpose of this essay is to identify the inclination of each era since the end of Cold War and Chinese Civil War whether ‘the pendulum’ leans towards Left Ideology or Right Ideology and how this long history has formed today’s economy of China. Hence, hopefully it can conclude how to categorise the economy of China nowadays particularly in Xi Jinping era that makes present day China economically superpower. This essay will argue that China in present day doesn’t fully apply Socialist Ideology even though Xi Jinping claimed he wants to bring back socialism into China’s core ideology.
Socialism and Capitalism Ideology
“By socialist society we shall designate an institutional pattern in which the control over means of production and over production itself is vested with a central authority —or, as we may say, in which, as a matter of principle, the economic affairs of society belong to the public and not to the private sphere.” (Schumpeter 2013: 167)
In a simple way, socialism can be explained as a socio-political and economic ideology where there’s no social class; all property is public-owned; and the market are supervised fully by the central authority/government/states. All policy related to economy and market are determined by the government such as commodities price and revenues share. Those kind of things are set by the central authority by means of equality and egalitarian manner.
The definition above is in line with the two biggest ideas on socialism that was stated by the two most famous socialist figures, Karl Marx and Vladimir Lenin. The difference is Marxism states that economy revolution towards socialism weighs on the role of proletariat or lower class. On the other side, Leninism argues that vanguard (one prominent figure or a group of people) leadership crucially holds an important role to initiate the revolution. These two opinions are often mixed together as Marxism-Leninism ideology which later became the foundation of Mao Zedong’s economy reforms in China (McLellan and Chambre 2021).
In contrast, capitalism stands for private ownership which automatically and inevitably forms social classes. All prices and revenues share are determined by free market mechanism with minimum or even no government intervention. As Gregory and Stuart (2013: 41) stated,
“Capitalism is characterized by private ownership of the factors of production. Decision making is decentralized and rests with the owners of the factors of production. Their decision making is coordinated by the market, which provides the necessary information. Material incentives are used to motivate participants.”
State Capitalism: The Ideology Standing Between Socialism and Capitalism
Neither socialism nor capitalism is a perfect economic system. Some countries, notably China and Russia, experienced a stagnant phase while carried on socialism system. As a consequence, they did a shift to an economic system called state capitalism as they kept resisting themselves not to be fully towards Right Ideology’s open market (Bremmer 2009). In this kind of system, state ownership or State-Owned Enterprises (SOEs) holds a prominent role in the market (Ngo and Tarko 2018).
State capitalism is considered more efficient since it is open to the market prices while the government still takes control by means of some policies (Ngo and Tarko 2018). In state capitalism system, states doesn’t only gain revenues from usual sources such as taxes, but also profit from the state enterprises (Bremmer 2009).
Involving in the open market while being supervised under central authority with some enacted regulations and policies could be considered as an alternative to compromise between socialism and capitalism strengths and weaknesses.
The First Time China Called Themselves Socialist (Cold War and Chinese Civil War Influence)
As we all know, Cold War began after the World War II where Germany Nazi was defeated and there was some kind of status quo that spurred the Battle of Two Superpowers: United States (and their allies) and Soviet Union (and the allies). It was the background of how Western Bloc and Eastern Bloc first formed. Western Bloc consists of the countries from the First World (led by the US) and bound under NATO. On the other side, Eastern Bloc (led by the USSR) consists of the Second World countries under the Warsaw Pact.
Beside those two blocs, there’s also Nonaligned Bloc consisting of the Third World countries which became the battlegrounds to win for either of the two former blocs in order to gain more powers and supports.
So where is China? Yes, they were considered as one of the Third World countries that became the ally of Eastern Bloc with their Leftist Ideology. How did it happen? And how did China grow and persist with Left Ideology for so long? It leads us to tracing back to the background where the Chinese Civil War in China first began.
It is noteworthy that China has a very long history and was one of the first where civilization first emerged. It could happen due to the abundance of natural resources and also accessibility for the distribution of those resources on account of the geographical connectedness. Main area of China is a mainland with only two small islands. It also becomes an advantage and easiness that leads to a political unification and centralisation. Therefore, it’s reasonable why authoritarian survives in China.
“Once China was finally unified, in 221 B.C., no other independent state ever had a chance of arising and persisting for long in China. Although periods of disunity returned several times after 221 B.C., they always ended in reunification.” (Diamond 2017: 453)
Trace of authoritarian also can be seen when eventually Chinese Communist Party (CCP) won People’s Republic of China (PRC) over Kuomintang (KMT) on the Chinese Civil War. Chinese Civil War took place in 1927-1949 where there were two opposing forces in China that has been mentioned above: Chinese Communist Party (CCP) and Kuomintang (KMT) or also as known as Chinese Nationalist Party (CNP). CCP fought for the establishment of People’s Republic of China (PRC) and KMT for the Republic of China (ROC) establishment.
After the defeat of Japanese in the World War II, CCP gains control over China mainland to become PRC and KMT resided to Taiwan, the only remaining area of ROC. Since then, communist became the main power in China and became single-party state under the notable founding member of CCP, Mao Zedong. Being ruled by the communist party, China inevitably was one of the Third World countries who became a huge supporter of the Eastern Bloc with their Leftist/Socialist Ideology, allied with Soviet Union.
Mao Zedong Era (Great Leap Forward): Economic Movement towards Ideal Socialism
The first economy movement after the victory of CCP and the formation of PRC is called the Great Leap Forward. The initiator of this movement was the leader of PRC himself, Mao Zedong or as known as Chairman Mao, with socialism concept (Maoism) he brought which was derived from Marxism-Leninism concept.
The main concept of Great Leap Forward is to form Communist Society or peoples’ commune by the optimalisation of agriculture and industrialisation (pushing production); collectivisation of agriculture (no private-owned land and equal land-share); and monopoly by the government (Mirsky 2015).
However, some issues emerged during the implementation of this movement: inefficient distribution of food; poor agricultural techniques and technology; environmental impact on ecosystem; and sudden shift to iron and steel production that led to the greatest famine in China (Meng, et al. 2015; Ashton et al. 1984; and Bowman 2000).
Mao Zedong ideally wanted to apply pure socialism with himself as the revolution figure and also all people of China including peasantry or the so-called ‘lower class’ (worth noted that socialism doesn’t recognise social class). One of his legacy as a result of his economic reform was land reforms, where there’s land grant to the landless peasantry so as to bring equality for everyone (Schram 2021).
Deng Xiaoping-Jiang Zemin Era (Socialist Market Economy): Openness towards ‘The Outside World’
After Mao Zedong death, China was undertaken by Deng Xiaoping and then succeeded by Jiang Zemin. These two eras can be said as the era of economic reforms where China started to leave Mao Zedong’s principles and to be more open to ‘the outside world’.
There’s one of the most famous quote from Deng Xiaoping: “It doesn't matter whether a cat is black or white, as long as it catches mice.” This statement could be interpreted that it doesn’t matter what kind of system or ideology applied as long as the economy goes well.
It can be traced back that in this era private ownership was allowed alongside the existence of public ownership. However, the two types of ownership were still under party control. That’s why they claimed that the economy system in this era was far from capitalist ideology.
Nevertheless, the characteristics of Socialist Market Economy that was applied in this era comprised of some principles that are similar to capitalism such as decollectivising agriculture; open to foreign investment; corporatisation of the state sector; and privatisation of enterprises. With this system, the GDP (Gross Domestic Product) of China rose up 9.4% per year (People's Daily Online 2005). Even though Deng Xiaoping claimed he remained into socialism, some economists saw China economy was just another form of state capitalism or liberal socialism (Cui, 2012).
Xi Jinping Era (Socialist Market Economy with Chinese Characteristics): The Return to Socialism Root
The Socialist Market Economy basically lasts until Xi Jinping era. He calls it as Socialist Market Economy with Chinese Characteristics which actually had first been introduced by Deng Xiaoping. This statement below is a part of Xi Jinping thought emphasising that he doesn’t want China to fall apart like Soviet Union who in the mid of Cold War decided to build bridges between each other with Western Bloc. He aspires to bring back socialism into China’s core ideology.
“Why did the Soviet Union disintegrate? Why did the Communist Party of the Soviet Union fall from power? An important reason was that the struggle in the field of ideology was extremely intense, completely negating the history of the Soviet Union, negating the history of the Communist Party of the Soviet Union, negating Lenin, negating Stalin, creating historical nihilism and confused thinking.
Party organs at all levels had lost their functions, the military was no longer under Party leadership. In the end, the Communist Party of the Soviet Union, a great party, was scattered, the Soviet Union, a great socialist country, disintegrated. This is a cautionary tale!“ (Tiffert 2019)
However, he’s also not wiling to erase any of his predecessors struggles. In short, he wants to unify Mao Zedong and Deng Xiaoping-Jiang Zemin thoughts as the identity of China (Chinese Characteristics). It indicates that Xi Jinping’s China is still open to international cooperation.
One of the famous initiative by Xi Jinping in the early of his leadership was called One Belt One Road Initiative (OBOR). It aims to construct unified market by enhancing international investment with focus on the area of Silk Road such as infrastructure investment, education, construction materials, automobile, and iron and steel. By 2013, around 70 countries and international organisations have made investments in this initiative (Belt and Road Forum 2019 and Belt and Road in Big Data 2016).
Furthermore, China has recorded some milestones in how they have remained involved in organisation and trade relation. In 1971, China became permanent members of the United Nations Security Council. Then, in 2001 China became a member of the World Trade Organisation (WTO). So far, China has become a trading partner of 124 countries including US and also ASEAN and Europe as the largest trading partners (Desjardins 2016).
Conclusion
Ever since Deng Xiaoping economic reforms, China has been more open to making market relations internationally. Even though in certain period of the reformation China was considered as more of capitalist, they denied that concept as the economy and market were still under the control of central authority. In Xi Jinping era, China tries to re-strengthen their socialism root without abandoning what has been done by Xi Jinping’s predecessors, which he called as Socialism Market with Chinese Characteristics. However, China’s openness to international organisations and trade relations up until now undeniably couldn’t be considered as pure socialism nor capitalism and inclines more to a concept called state capitalism. This ‘mixed concept’ leads China becomes China nowadays and that’s what makes China economically superpower.
References
Ashton, B., et al. (1984). Famine in China, 1958-61. Population and Development Review, 10(4): 613–645. doi:10.2307/1973284
Belt and Road in Big Data 2016. (2016). General Office of Leading Group of Advancing the Building of the Belt and Road Initiative. Beijing: the Commercial Press.
Belt and Road Initiative Forum 2019. (2019). Overview. https://web.archive.org/web/20190917091133/http://www.beltandroadforum2019.com/conference-profile/overview/
Bowman, J. S. (2000). Columbia Chronologies of Asian History and Culture. New York: Columbia University Press. ISBN 978-0-231-50004-3.
Bremmer, I. (2009). State Capitalism Comes of Age: The End of the Free Market? Foreign Affairs, 88 (3): 40–55.
Cui, Zhiyuan. (2012). Making Sense of the Chinese 'Socialist Market Economy': A Note. Modern China, 38 (6): 665–676. doi:10.1177/0097700412459700.
Desjardins, Jeff. (27 April 2016). Four Maps Showing China's Rising Dominance in Trade. https://www.visualcapitalist.com/four-maps-showing-chinas-rising-dominance-trade/
Diamond, J. (2017). Guns, Germs, and Steel: The Fates of Human Societies. New York: WW Norton & Co Inc, pp. 453.
Gregory, P. and Stuart, R. (2013). The Global Economy and its Economic Systems. South-Western College Pub, pp. 41. ISBN 978-1-285-05535-0.
McLellan, D. T. and Chambre, H. (2021, December 14). Marxism. Encyclopedia Britannica. https://www.britannica.com/topic/Marxism
Meng, X., et al. (2015). The Institutional Causes of China's Great Famine, 1959–1961. Review of Economic Studies, 82 (4): 1568–1611. doi:10.1093/restud/rdv016.
Mirsky, J. (2009). The China We Don't Know. New York Review of Books, 56(3).
Ngo, C and Tarko, V. (2018). Economic development in a rent-seeking society: socialism, state capitalism and crony capitalism in Vietnam, Canadian Journal of Development Studies / Revue canadienne d'études du développement, 39(4), 481-499, DOI: 10.1080/02255189.2018.1467831.
People's Daily Online. (2005). China has socialist market economy in place. http://en.people.cn/200507/13/eng20050713_195876.html
Schram, S. R. (2021, December 22). Mao Zedong Chinese leader. Encyclopedia Britannica. https://www.britannica.com/biography/Mao-Zedong
Schumpeter, J. A. (2013). Capitalism, socialism and democracy. Oxfordshire: Routledge, pp. 167.
Tiffert, G. (2019). 30 Years After Tiananmen: Memory in the Era of Xi Jinping. Journal of Democracy, 30(2), 38-49.
2022
