Chunjuan Nancy Wei. International Journal on World Peace. Volume 36, Issue 2, June 2019.
What incentivizes a society and its leaders to modernize its economy? The Soviet Union and the People’s Republic of China represent twin communist party-ruled states. One collapsed while the other advances into an economic superpower. China stands as a “black swan” challenge to Western political science and political economy. Using Akmal Gafurov’s innovative A-E-M paradigm on socio-behavioral incentives and Gordon Anderson’s additional I-motive, this paper seeks to explain how incentives worked for the PRC in the last seven decades. It traces the evolution of China’s Government Productive Economic Structure and examines the interactions of the four motives—administrative, economic, moral, and survival—during the Mao Zedong, Deng Xiaoping and Xi Jinping eras. China’s successful reform has produced a system that is neither Soviet, nor Anglo-American, nor East Asian-developmental state. It has elements of all three.
Introduction
What incentivizes a society and its leaders to modernize its economy? The divergent political and economic systems of the Soviet Union and the People’s Republic of China (PRC) have captured my intellectual interest ever since I was a college student in China where I majored in English and minored in Russian. Since I became a professor at the University of Bridgeport a decade ago, I have had more opportunity to study and compare various economic systems in order to perceive their key differences. I want to thank Dr. Gordon Anderson for this unique opportunity to comment on Professor Gafurov’s innovative A-E-M paradigm on socio-behavioral incentives in relations to China’s rise.
In the following pages, I will delineate my observations on China’s winding paths from feudal to industrial economies; in doing so I will employ the lens of Gafurov’s A-E-M motives and Anderson’s additional I-motive. For clarity, I will start by relating these motives of production as appeared in Gafurov’s works. Administrative-coercive motive (A-motive) “mostly reflects interests of a society, a state, or an individual group” and it originates from “fear of punishment and the desire of rewards from authorities.” Economic motive (E-motive), on the other hand, largely “reflects legal material interest of an individual” and it “stems from aspiration to legal benefits of an economically independent man.” Moral-ethical motive (M-motive) “encourages compliance with the interests of humankind and nature protection,” and it “stems from kindness, justice, ethic, universal morality, and culture.” If one thought performing a certain action represents a positive good for mankind and for society, and he did it without being asked, he was responding to the M-motive. Working for God or for Communism can be one of those incentives. Finally, Instinctual motive (I-motive), or the survival instinct, is different from Gafurov’s social productive behavioral motives. It refers to “the basic biological economic motive that exists independent of socialization.” It may grow from primitive needs, such as human egotism and greed. Corruption is often motivated by both E-and I-motives.
Comparative Political Economy Theories
Comparativists frequently mention three competing alternatives in the study of global political economy: the liberal decentralized Anglo-Saxon and American paths; the statist French, German, and Japanese models; and the communist Russian and Chinese archetypes. The first group likely represents Dr. Gafurov’s PPES (private productive-economical structures) type, in that private sectors aiming to generate a profit dominate the socioeconomic landscape. The latter two are likely called the GPES (governmental productive-economic structures) model where the state or a political party runs the show. Of course, upon the end of WWII, both Germany and Japan were reformed by the United States. Liberal systems emerged, yet the state plays a large role in these countries. It is little known that during the last 150 years, China attempted all three. The Middle Kingdom sought to transform itself in order to reverse the century of shame and humiliation since the Opium Wars.
At the twilight of the Qing Dynasty (1644-1911), a time when China was being dismembered by great powers, the scholar Liang Qichao, a strong believer in constitutional monarchy, introduced democracy to China. He translated the term democracy into “the people as the master” (minzhu), convinced that such a system would unlock the western secret to wealth and power, thus saving China from the danger of national extinction. Later, the US-trained politician Sun Yat-sen advocated the Anglo-American political and economic system. The revolution swept Sun to the presidency of East Asia’s first western style regime in 1911, the Republic of China. Sun hoped, unfortunately in vain, that the new republic would evolve into a liberal democracy. His experiment rapidly degenerated into warlord rule, with dozens of factions competing for land, resources, and political power.
The May Fourth Movement of 1919, triggered by protests against the terms of the Versailles Peace Conference to transfer Chinese territory to Japan at the end of World War I, led to the establishment of the Chinese Communist Party (CCP) two years later. At its inception and throughout, the CCP was “more a product of nationalism than a product of ideology like Marxism and Communism.” The young Mao Zedong participated in the CCP’s founding, joining Sun’s Nationalist Party along with other communist members. They aimed to end imperialism and warlordism. After Sun’s untimely death in 1925, the Communists were purged by Sun’s successor Chiang Kai-shek who nominally unified China. From 1928 to 1936, Chiang attempted to employ the German-Japanese statist model for rapid industrialization. This process was interrupted first by the Japanese invasion and then by the ensuing Chinese civil war between Mao’s communists and Chiang’s nationalists. Mao used a combination of effective strategies—guerrilla warfare, land reform, and social revolution—to sufficiently expand his forces to drive the U.S.-backed nationalists to Taiwan.
After the establishment of the PRC, Mao Zedong established Sovietstyle institutions also aiming at rapid socialist industrialization, but with mixed results. His model witnessed major success in some areas but also resulted in significant human toll and the squandering of investment resources. Upon reflection, a question emerges: What were the major incentives and motives for the people and their leaders?
Mao’s GPES and its Trade-Offs (19491978)
If a geopolitical approach is taken to understand actions of nations, then seven factors are believed to drive and condition leaders’ decisions: economics, politics/ideology, geography, history, technology, society and security. Together they help to explain why Mao and his successors chose their unique paths.
Chinese society during Mao’s era (1949-1976), as stated by Gafurov, was constructed around the A- and M-motives, with E-motives absent, for a reason. Seeing from Beijing in 1950, communist leaders designed their unique system, driven as much by ideology as by necessity. First, even after the founding of the PRC, its security was in no way assured. Internally, bandits and landlord militias roamed the countryside and remote mountainous areas where the communists had no bases or only weak presence, typically in the vast areas south of the Yangtze River. Tibet, which both the nationalists and the communists viewed as part of China, was also beyond Beijing’s reach. Across the Taiwan Strait, air raids by Chiang’s forces occurred with harrowing frequency. Hainan and other parts of the nation remained in the hands of the nationalists. Remnant KMT troops, still stationed in Burma, harassed PRC borders. Shanghai was blockaded; no Chinese ships could pass through the Taiwan Strait to reach other coastal Chinese cities. (This situation persisted until early 1970s). In addition, the West and their allies imposed a two-decade-long trade embargo. Nationalists (from Taiwan) repeatedly sent spies and trained guerrillas to coastal China, sometimes even kidnapping foreign ships trading with the Beijing regime.
Second, decades of foreign invasion, political strife, and civil war left China’s economy in shambles and regionally fragmented. In the cities, the old civil administration was shattered, while major infrastructures and transportation systems had been destroyed. While the peasants embraced the new government, it was a different matter for the traditional rural and urban elites. These businesspeople, landlords, and intellectuals were suspicious and hesitant. International trade also proved difficult. Technologically backward, China had little industrial capability. Mao’s rival Chiang had shipped the nation’s gold reserves to Taiwan. The national finance had collapsed, inflation skyrocketed.
Third, seemingly insuperable social problems lingered, including opium addiction, widespread poverty, and infectious diseases. Nationwide, 80 to 90 percent of citizens were illiterate; in rural areas, the illiteracy rate could reach 95 percent. The average life expectancy in 1949 was only 35 years. A 1950 report by the Minister of Public Health revealed that each year one of every four Chinese fell ill, and half of the deceased succumbed to preventable epidemic diseases. To carry out social reforms, Mao needed a healthy and better-educated workforce.
Administrative Structure and A-Motives
Nations in the midst of war or facing severe security and financial strains tend to adopt a top-down government-directed social structure. Yet, Mao’s three-decades of rural revolution produced a “villages surrounding the cities” approach to power. The Chinese GPES (Government Productive Economic Structure) thus operated with both top-down and bottom-up mechanisms. The system hoped to build a modern egalitarian society. The organizational principle was Leninist democratic centralism: Before a policy is made, open discussions and debate were allowed. Further, once a decision is made, all members are expected to accept and follow it. This centralism, however, was modified and complemented by Mao’s “mass line” leadership style. This called for authority to stay in close contact with the grass-roots, with their decisions reflecting interests of society. Working under this “quasi-democratic” system of command economy, the masses were not completely absent from major policy decisions; they responded to government-initiated campaigns (A-motives).
The government launched many political campaigns in the 1950s, with both positive and negative directives toward the masses. Videos and print media available from that era confirm that many poor people responded enthusiastically to these movements. Judging from the results, the populist land reform fundamentally changed rural governing structure; the landlords’ power was taken away while poor peasants were granted land and rights. The “suppression of counter-revolutionaries” smashed perceived enemies of the CCP. The Three-Anti and Five-Anti campaigns—the former targeting corruption, waste, and bureaucracy and the latter aiming at bribery, tax evasion, theft of state property, cheating on government contracts, and stealing economic information—punished both communist cadres and capitalists for perceived economic crimes. The “Great Leap Forward” took away peasants’ newly gained land to form collective farming while introducing labor-intensive industries. This resulted in famine and untold deaths by starvation; these results even stunned Mao who abandoned the program after only two years.
The Great Proletarian Cultural Revolution (1966-1976) existed as an ideological campaign and mass movement aimed at reviving revolutionary spirit. It had dual purposes: preventing China from following both the Soviet bureaucratic model of socialist development as well as the western “capitalist road.” Mao perceived his colleagues, including Deng Xiaoping, as traitors pursuing the capitalist system. Nevertheless, his Cultural Revolution led to massive social, economic and political upheaval and chilling violence. During the smashing of the “four olds,” Confucius, China’s greatest educator and thinker, was denounced. Millions of Chinese youth, including the nation’s future President Xi Jinping and Premier Li Keqiang, were sent down to the rural or remote areas to receive “reeducation” from the Chinese peasants. These expensive disasters were eventually remedied under new leadership.
M-Motives
Importantly, these campaigns also had roots in moral motives and voluntarism, a belief that human willpower, such as faith, commitment and perseverance, can overcome objective obstacles in one’s way of achieving a policy goal. This revolutionary romanticism—with a focus on morals and faith—distinguishes Maoism from traditional Marxists who emphasize materialism (economic determinism) or who deal with objective conditions. The oft-cited illustration of this case was Mao’s use of a Chinese fable. It told of a seemingly foolish old man whose perseverance eventually led to the removal of two mountains. Mao reinterpreted the two mountains to be imperialism and feudalism, calling the Chinese people to “work unceasingly” with the CCP to clear them away.
Maoism identified the peasants (compared to the proletariats in the Soviet Union) as a leading force in advancing the Chinese revolution. His “mass line” called for CCP cadres to guard against “sugar-coated bullets” in the form of elitism, prestige, and privileges that power brings; and to “preserve the style of plain living and hard struggle” in order to continue to win the support of the masses. His most important populist call for the authority was to “serve the people.” Today Mao’s calligraphy of the characters remains etched in the entrance wall of the Zhongnanhai, the compound where Chinese leaders reside.
Encouraged by communist ideals for a fairer society and equal opportunity regarding culture and learning, the government designed effective tools to combine, for example, literacy campaigns with values education and public policy. In one of his three-in-one Combat Illiteracy Campaign posters, the son tells the father, “Daddy, this is how you write this character.”
This poster reverses the Confucian family hierarchy that it was the father’s duty to teach the son how to do any and all things. Children of the New China may be better educated than parents; accordingly, not only are they supposed to teach grownups how to read and write, but there is no shame in doing so. The characters on the ground read “mutual help and cooperation.” This not only conveys the idea of family equality, but it helps propagate the rural policy that encourages peasants to form agricultural cooperation organizations, a political goal during the Great Leap. Hundreds of millions of men and women participated in these rural literacy campaigns, and in doing so they became more capable citizens.
The PRC, much like during its earlier imperial era, constructed moral standards for people to emulate in all walks of life; this contrasted with Western nations that tend to incentivize desired behaviors via material rewards. The first 30 years of the PRC witnessed various heroes and heroines valorized for their loyalty, selflessness, and devoted service. Representing distinct sectors of society, these included Jiao Yulu (for communist party cadres to follow), Huang Jiguang and Qiu Shaoyun (soldiers), Lei Feng (CCP members), Bai Qiu’en (a Canadian named Norman Bethune, for doctors), and Wang Jinxi (for industrial workers). Across the nation, cadres, educators, barefoot doctors, scientists, and workers were all encouraged to learn from these luminaries both in their daily lives and work. In sum, the society responded to both M-motives to serve others and A-motives to be promoted or from being punished.
Less Important or Non-Existent: E-Motives and I-Motives
Gafurov states, “E-motive stems from aspiration to legal benefits of an economically independent man.” Since the Chinese economy was largely state- or collectively-owned, people were organized into work units which tied work, welfare, and social networks all together. There existed few “independent” agents or entities. As a result, there were fewer opportunities for individuals to make a profit. Under the prevalent ideology, profit was considered exploitation and was punished. People were paid very little and encouraged to take pleasure in poverty so that the state could accumulate capital for industrialization in the absence of foreign sources.
The Three-Anti movement (anti-corruption, anti-waste, and anti-bureaucracy) further punished I-motives for both bureaucrats and cadres who had the power and opportunity to serve individual interests. Added to political deterrence was the means of production. Collective farming, organized in the communes, rewarded farmers with work points and year-end grain distribution; that is, in a village where everybody knew everybody else, the labor inputs on which rewards were distributed were transparent. Further, most people were poor, international trade was nearly non-existent, and few opportunities existed for embezzling public funds. Finally, corruption, once caught, was punished severely, an additional layer of deterrence.
Results
Mao’s major accomplishment was in national security and an independent foreign policy. During the 110 years prior to the PRC, China represented the great powers’ playground; to wit, foreign navies controlled Chinese coasts and waterways to set up “concessions” and semi-colonies. Three times over that “century of humiliation” Chinese capital cities were looted, burned, or occupied, along with widespread massacres. As such, “Chinese nationalism,” as articulated by Minxin Pei, “was actually partly a creation of Western imperialism.” Mao reversed China’s fate by fighting US-led United Nations’ troops to a stalemate in Korea; this successful resistance to the West (and later the Soviet Union) added to national pride and international prestige. As the only nation threatened by “nuclear blackmail” from both superpowers, Mao doggedly pushed for China’s nuclear capacity. The PRC successfully detonated atomic (1964) and hydrogen bombs (1967), soon thereafter launching its first artificial satellite (1970). The year 1971 found China assuming its long-denied seat at the United Nations Security Council. The next year, Mao hosted Nixon and Kissinger, initiating the so-called “strategic triangle” whereby his impoverished nation could be an important player in Cold War international politics, paving the way for Deng Xiaoping’s engagement with the West as an independent actor.
Another achievement occurred in the realm of social reform, especially the nationwide campaigns to eliminate prostitution and overcome opium addiction, mass illiteracy, and infectious diseases. The importance of literacy as a vehicle for nation-building and economic development cannot be over-emphasized. Glen Peterson, author of The Power of Words, examined China’s social and political history of the literacy struggles in rural China, describing its innovative literacy programs as “perhaps the single greatest educational effort in human history.” As an advocate of women’s liberation, as well as rural education and health care, Mao established a novel “barefoot doctors” program to solve rural problems. By the time of the Chairman’s death, Chinese people lived 30 years longer than when he took over the country These represented remarkable achievements for a third world country.
Trade-offs of the Motives and Incentives:
Despite great success in many areas, Mao’s GPES nevertheless produced several major trade-offs. First, while the Chinese people earned freedom from foreign control, they were also denied the freedom and rights that people in other nations readily enjoyed. Ownership of private property was prohibited; further, rural and urban citizens were tied to their respective household registration units and were not free to migrate. While the GPES seemed to offer a basic safety net for majority of the citizens, low-level productivity, lack of personal and economic autonomy, and extensive abuses of intellectuals continued to haunt the nation.
Second, despite initial Soviet aid and technical support, the Sino-Russia split and Sino-US animosity meant that China had to rely solely on itself for industrialization. While it avoided dependence on foreign capital and markets thereafter, China found itself compelled to accumulate capital for modernization from domestic resources only. This highly extractive model required the political discipline of cadres as well as commoners. That discipline, in return, reinforced an authoritarian government. Making the choice between a better life today versus saving for the future, the Chinese were forced to sacrifice the former. This indefinitely delayed the pace for improving living standards, leading to further resentment (I-motive).
Third, Mao’s self-reliance model, while providing security for the nation, left few incentives for foreigners to secure a stake in China’s success. While this self-reliance may have been a necessity during the Cold War, Mao’s radical policy of supporting international communism represented yet another factor. Small wonder that relatively few foreign nations pursued diplomatic relations with Beijing. China, in truth, possessed enemies on almost every horizon in its neighborhood.
Regardless, compared with the Soviet Union, Chinese bureaucracy was paradoxically less entrenched with its production modes more decentralized. After the split, China denounced Khrushchev’s “phony communism” while searching for alternatives. Mao’s denunciation of bureaucratism and elitism, especially during the Cultural Revolution, rocked the bureaucracy so much that it was easier to dismantle the communes-based GPES once the opportunity came. Additionally, unlike the Soviet Union which had only one-fifth of its labor force engaging in agriculture, China had nearly 80 percent dedicated to this sector. Farmers’ resentment of collective farming would pave the way for Deng’s reform.
Innovations by Deng and His Successors (1978-2012)
Deng Xiaoping realized the costs of Mao’s past self-reliance so he advocated a dual-dimensional “reform and opening up.” The former meant boosting competition by shaking up inefficient domestic economic and administrative systems, while the latter meant allowing foreigners to access Chinese markets in return for foreign direct investment (FDI), and technology. Deng, whose commitment to the CCP was cemented in Paris in the 1920s, was a veteran of the Long March, a military strategist and political commissar during the wars against the Japanese and the nationalists. He was among the top leaders on party affairs, finance, and economic matters after the founding of the PRC. He shared Mao’s vision of a “rich and powerful” nation, and backed some of Mao’s disastrous campaigns, including the Anti-Rightist movement and the Great Leap. Deng, the future “architect” of China’s transitions, was appreciatively described by Mao as “a needle wrapped in cotton.” Yet his tough negotiation style made him seem “cruel” to Margaret Thatcher who failed to appreciate his negotiation positions on Hong Kong. Henry Kissinger even termed him a “nasty little man.”
Deng’s Approach and the A-Motives
Deng’s first task after his consolidation of power was to rehabilitate the victims of the Anti-Rightist Campaign and the Cultural Revolution. The move won for him the intellectual community’s endorsement of his reform. He then introduced meritocratic promotions for cadres, the backbone supporters of his policy. In 1980, he instructed senior Party leaders to undertake a “four-way transformation” in officials’ selection. This new incentive system prioritized those around 40 years of age who were “younger, revolutionary-spirited, more educated, and better technically trained.” This reform secured both CCP loyalty and technical competence; in fact, it produced a new crop of technocrats to rule China. These included future Chinese presidents Jiang Zemin and Hu Jintao. Political decentralization enhanced the powers of local governments to shape an informal federalist ruling style. Orderly succession processes were also soon initiated. After Deng’s passing in 1997, China moved to “collective leadership” with term and age limits.
Second, Deng wanted to break the extreme dogma of -isms, including the simple dichotomy in the minds of many that “Socialism is good; capitalism is bad.” He countered those with a statement that “poverty is not socialism.” He proposed a new benchmark in a Cat Theory for testing whether a system actually functions: “It doesn’t matter if a cat is black or white, so long as it catches mice.” This simple elucidation was quickly accepted and debates about the -isms stopped.
Third, during Deng Xiaoping era, China formed a distinct political and economic system, different from either the Soviet nor the American. It allowed the “visible hand” of government and the “invisible hand” of the market to work simultaneously. Like Mao, Deng encouraged the Chinese to form their own model of economic development through experiment. Since there was no clear route or blueprint to successful transition from a planned to a market economy, China must, in his words, “cross the river by feeling for the stones.” Even the crackdown on the Tiananmen movement of 1989 did not stop him from continuing the reform and open-up policy.
Interface of A- and E-Motives
Deng’s opening up took advantage of the Cold War confrontation, which was impossible for the Soviets. His visits to Japan and the U.S. normalized both official and people-to-people exchanges. Chinese students could now study abroad; foreign capital, investment, technology, and even developmental models were no longer off-limits to China. To attract foreign direct investment, Deng created special economic zones along Chinese coastal areas. Foreign capital poured in, typically from Hong Kong, Taiwan, and its East Asian neighbors. China created its own stock market during the 1990s. Despite that, when foreign bankers lobbied Beijing for financial liberalization, Beijing listened attentively but acted very cautiously.
Deng’s internal reform, however, was more forthcoming. He unleashed a nationwide pursuit of material well-being. This stood in contrast with Mikhail Gorbachev’s initial reform which delivered only “psychological incentives.” Much like Mao, who started his revolution in the rural areas, Deng initiated agricultural reform in 1979. The process, however, embraced an unprecedented approach. Instead of having a clear vision on what to do, Deng greenlighted the peasants’ practice of dividing up lands into small plots and signing contracts with the state for using public land. The experiment provided the peasants opportunities to try new production modes while it allowed the central planning administration to continue to function. This quickly produced bumper yields to feed the population. Soon it was adopted as official policy. To decollectivize the communes, Deng turned to this so-called “household responsibility system” in the villages. Then he allowed the township and village enterprises (TVEs)—i.e., rural factories owned and run by local governments—to emerge in competition with inefficient state-owned enterprises (SOEs). Then, as noted, Deng opened up the coastal areas by setting up special economic zones (SEZs) to take advantage of foreign markets.
Compared to the Soviets, Deng’s reform followed the correct approach: first harvesting low-hanging fruit without damaging the tree (the state planning system). It adopted the right sequence: implementation began with rural areas, then moved up to small cities, and in the end was launched in coastal areas. This process echoed Mao’s effective “villages surrounding the cities” approach in the economic sphere. China’s industrialization also followed the natural pattern of learning: manufacturing simpler goods first (toys and textiles), then more sophisticated products (televisions and computers), and finally hi-tech products (high-speed rail and commercial airplanes). When they did not possess the know-how, they turned to foreign companies, offering incentives to operate in China. As a result, Chinese reform proved much more spontaneous than the Soviet. These reforms created interconnected incentives: Private farming freed many peasants from the land; the TVEs absorbed surplus labor in the rural areas; and, they prompted the SOEs to be more efficient. The more competitive TVEs then moved to the coastal SEZs to compete for the “two-heads outside” model of production. They thus took advantage of international markets. Most importantly, these businesses granted local officials, as well as multinational corporations, a stake in China’s reform because they were allowed to keep a portion of the profit.
The most important post-reform change to the Chinese GPES was the decentralization of authority to local governments and certain SOEs, thus creating a market-preserving federalist system. This incentivized competition among subnational governments to provide economic growth. This would transform the unproductive army of cadres—those who administered the policy network and could hoard valuable information—into a productive force driving regional development. To compete with other localities for foreign investment, the officials coach local businesses within their jurisdiction, sometimes taking in bribes for their services. These practices prompted scholars to think that corruption in China was not as destructive as in other developing countries because they coincide with and in some ways are part of, if not important to, China’s breakneck economic growth.
Forty-Year Achievements and Challenges
From 1978 to 2018, the Chinese economy increased 60-fold; even more impressively, its total merchandise trade exports saw a 220-fold increase. Today it ranks the largest export nation in the world, accounting for 20 percent of global trade. The PRC is also an economic powerhouse with US$3 trillion in foreign-exchange reserves. During this remarkable economic ascendance, China avoided the fate of total collapse suffered by the former Soviet Union and its Eastern European client states. The PRC dodged the Asian financial crisis of 1997 that plagued its neighbors and then escaped the 2008 global recession triggered by the US subprime crisis. Along with its economic rise are the Chinese technology companies. Standing with Google, Facebook, and Amazon are China’s Huawei, Alibaba, Tencent, and the search-engine giant Baidu. It has been noted that China possesses nine out of the world’s 20 largest tech firms last year.
Beijing took full advantage of its World Trade Organization (WTO) membership to reform China’s GPES into a “distinctive, state-directed yet marketized and globalized economic model.” In fact, Andrew Nathan and Andrew Scobell suspect China’s GPES to be “more competitive than the market economies” of the west. Despite that, the question remains of whether or not the ongoing trade war with the United States will stop China’s momentum. There are certainly signs that the PRC’s economic growth has slowed. To date, one of China’s responses has been to counter the impact by increasing domestic consumption.
Tradeoffs Between I- and M-Motives
If Mao gave the nation a backbone, Deng Xiaoping provided the people a full stomach and a bulging pocket. Certainly, on the positive side, Deng transitioned the Chinese system from an impoverished nation with revolutionary ideals into a pragmatic East Asian developmental state. There is no doubt that his reform brought freedom to rural residents. At the same time, various external rewards led to pollution and brain drain of the rural areas; that is, a “floating population” (migrant laborers) rushed to the cities. This exodus left home villages with a sense of lost community.
Beyond those growing pains, Deng’s successful transition produced a Chinese puzzle that liberals could not fathom: high corruption coexisting with high growth. Several reasons account for this. First, the dual track system incentivized those with political and business connections to obtain low-priced goods from the planned channel to sell them to the market, of course, for a high profit. Clever officials started to trade power for financial gains. Guanxi, a social phenomenon that has existed in the Chinese society for thousands of years, made a splendid comeback. The result was that corruption permeated into every corner of the society with the new market economy. A popular saying observes that instead of serving the people (renmin) as Mao taught, the officials now serve “the people’s currency” (RMB), becoming servants of money. Paradoxically, the widening rich-and-poor divide and rampant corruption makes memories of Mao more welcome. Perhaps nostalgic, people perceive him “a symbol of a simpler, fairer society.”
Second, economic reforms generated new forms of social injustice and inequalities. After the communes were dismantled, education and health care were privatized; concomitantly, social services were reduced. Mao’s workplace cradle-to-grave system lost its political relevance as well as its economic foundation. Market reform was introduced; private property crept back. De-collectivization created independent agents who no longer saw profit as a sin. Previous moral incentives promoted through political indoctrination no longer worked. Encouraged by Deng’s slogan “to get rich is glorious,” many saw pursuing wealth by whatever means as legal. Traditional role models in movies of the socialist era no longer seemed valid when celebrities were repeatedly netted in tax scams and shady business dealings. Anger over official extravagance, injustice, and declining moral standards represented part of the tinder sparking the 1989 Tiananmen student protests.
Finally, since the hukou system—household registration mechanism instituted in the 1950s, which restricted citizens from changing place of residence or work units—is relaxed, people are able to move to any place in the nation to work and study. While they enjoy as much economic freedom as those in any other countries, this has also increased the difficulty for authorities to identify and track corruption. Widespread corruption, one of most potent sources of public discontent, provides an opening for Xi to win the hearts and minds of his people.
The China Dream: Xi Jinping’s Approach
Xi’s first focus was to fight corruption by hunting the “tigers” (powerful leaders) and swatting the “flies” (lowly officials). He fully recognizes that corruption (I-motive) erodes confidence in government and threatens CCP rule. His call for “putting power in the cage of regulations” resonates well with many who want to see transparency, checks, and balances built into the Chinese political system.
With Xi’s abolishment of the presidential term limit in March 2018, it seems clear that China is now unmistakably in the third 30 years with new rules and philosophy, viz. Xi Jinping Thought. Recall that Mao’s ideology ruled the first 30 years (1949-1978), followed by Deng’s “Cat” Theory (1979-2012). If Xi’s third 30-year has commenced, what are some of its characteristics?
Every paramount leader offers a new vision. Mao’s was the “New China” where “women could hold up half the sky.” Deng’s was the “Reform and Opening up.” Now with Xi, it is the “China Dream,” calling for “the great rejuvenation of the Chinese nation.” Its material vision was unveiled in Xi’s 2012 “Two Centennial Goals.” First, China will build a “moderately prosperous society in all respects” by doubling its 2010 per capita GDP to $10,000 by 2021, when it celebrates the CCP’s 100th anniversary. Second, it will become a “prosperous, strong, democratic, culturally advanced and harmonious” nation in 2049 by the PRC’s 100th birthday.
The Two Centennial Goals call for people to work toward a civilizational revival (a powerful M-motive). They are coupled with a patchwork of 12 sets of values reflected on street posters (see Figure 1). Amidst such universal pursuits of “prosperity, integrity, patriotism, dedication, and friendship,” they highlight three traditions: 1) the Communists-cherished “equality” and “justice,” 2) Western values of “democracy,” “freedom,” and “rule of law,” as well as 3) the Confucian morals of “harmony” and “civility.” Unlike Mao-era’s posters, here one does not encounter such themes as class struggle (Marxism), anti-revisionism (Soviet Union), or anti-imperialism (US). Instead, this echoes Chinese political scientist Gan Yang’s call for integrating the three grand cultural traditions into one civilizational appeal. In essence, Xi’s dream of China builds on nationalistic roots but is also open to the west, especially in terms of trade and investment.
Like Deng, Xi is “progressive on economic and social issues and conservative on political and party matters.” In the crucial relations of government and market, he advocates for free trade, convinced that to make China rich and powerful, the market should be the driving force (E-motive). He also followed Deng’s practice by establishing the Shanghai free-trade zone in 2013, making it testing ground for further policy reforms. Nevertheless, Xi’s ambitions are more global than Deng’s. This can be seen from his “Made in China 2025” initiative. Released in May 2015, the policy aimed at rapid industrialization in ten priority sectors, all in high-tech. Its ultimate goal is to upgrade industry, raise Chinese competitiveness, and to reduce its dependence on foreign technology. This has caused serious concerns, in both the policy goals and the methods to achieve them, from developed countries.
Another aspect of Xi’s China Dream is to eliminate rural poverty and upgrade the national living standard into a more affluent society. Xi emphasizes the importance of being close to the masses by invoking Mao’s mass line as the bulwark of the CCP (June 18, 2013). Although being described as a mass campaign-style movement, Xi’s program of Targeted Poverty Alleviation is politically driven but also market-oriented (A- and E-motives). Instead of the spoon-fed cash transfer method, it mostly offers incentives to encourage locals to become self-employed so that small businesses can be created in rural areas. Xi’s time spent in a poor village of Shaanxi Province during the Cultural Revolution helped mold him into one who cares about the rural people. He advocates equal rights and opportunities for farmers and migrant workers, stressing the importance of making growth more inclusive.
Xi’s ideology seems to perch between Mao and Deng, both comrades of his father. Notably, he has made two efforts to bridge the two leaders and their periods, despite observers generally believing them to be antagonistic. In China, as well as in the West, leftists tend to attack Deng and his “capitalism” using Mao’s revolutionary principles. At the same time, some on the right employ Deng’s market principles to assault Mao. Each group blames the other for China’s social ills, including that of corruption. On January 5, 2013, Xi issued a principle of “two non-denials” in a speech where he categorized six decades of PRC history as periods of “essentially socialist construction and explorations under the CCP’s leadership.” On April 1, 2019, he reiterated the “two non-denials” in Qiushi, the top theoretical journal published by the Central Party School. It is believed that Xi, much like Deng, seeks an ideological truce and wants to avoid polarizing debates between the -isms.
In summary, Xi follows Deng but also admires the teachings of Mao, Marx, and Confucius. Xi’s message of rejuvenating China into a powerful nation resonates well with his people. He supports employing Mao’s mass lines and Confucius to fight moral decay, but he is wary of utilizing Marx’ class struggle in political campaigns. Will Xi achieve his China dream? The jury is out on this.
Conclusion and Thoughts on Risks of Reform
The Chinese leaders and the public remain obsessed by the Union of Soviet Socialist Republics (USSR). In March 2013, the newly minted President Xi went to Moscow for his first foreign trip as head of state. He has since visited Russia seven times and formed a close relationship with Vladimir Putin. Despite that, the Soviet ghost still haunts China. The government has authorized multifaceted studies of the USSR, mostly focusing on its failures leading to collapse. Soviet-era songs including the “Moscow Nights” remain popular in China. Some are convinced that the Soviet Union inspired China to seek a new path toward development. Some see the breakdown of the USSR as warning that rash reforms could produce disastrous consequences. Still others wonder why the Soviet Union was unable to produce a Russian Deng Xiaoping capable of steering domestic opposition toward creating a viable socialist market economy.
Yet, in assessing China’s reform, one should not forget that Mao paved the way for Deng’s success. Under his watch, the People’s Republic largely completed its state-building with important institutions in place. Many social ills were mitigated or repaired, despite a high price paid. One of Mao’s greatest legacies was that he left behind a physically solid and moderately educated population on which Deng Xiaoping could build for successful agrarian reform. It is not difficult to imagine, for example, the limits on development and prosperity had rural China been destroyed by infectious diseases.
Deng’s initiation of China’s transformation has far-reaching consequences. It not only drastically improved Chinese living standards, but it also elevated the country to the second largest economy. All the more remarkable, it occurred without following the Soviet fate. Though untidy and even chaotic, political expediency called for extraordinary measures.
Commenting on Mikhail Gorbachev’s failure to understand the risks of reform, British historian Robert Service warned that “the edifice of communism was a tautly interconnected piece of architecture,” and that “the removal of any wall, ceiling or doorway in the edifice carried with it the danger of structural collapse.” Fully aware of the risk, Deng and his successors had no intention of copying the Soviets big-bang “shock therapy.” Rather than rejecting the PRC’s founders, as with Nikita Khrushchev’s denunciations of Stalin and Gorbachev’s perestroika, Deng issued to Mao a verdict of “70 percent right and 30 percent wrong.” His genius formula allowed the nation to move onto a new path without being consumed with an internal ideological struggle. After Deng’s passing in 1997, the New York Times published an obituary calling him “a political wizard who put China on the capitalist road” despite his official communist credentials.
Obviously, China has avoided the collapse of the communist edifice. Deng and his successors have skillfully brought in a combination of building materials to strengthen Chinese structures. When they want to improve efficiency, they use capitalist wood and rocks. When they emphasize their nationalist identity, they return to Maoist and Confucian columns and bricks. When needed, they also repaint the exterior with sickles and hammers. Such a pragmatic system, dubbed “socialism with Chinese characteristics,” though contradictory, is highly efficient in delivering the results.
Foreign observers have marveled at the strange mixture and sought to make sense of it. “While the Chinese leaders may worship in a communist church, they live by capitalist scripture,” observed ex-President Richard Nixon. “They are committed to free-market economic policies—to capitalism with a Chinese face.” As if not enough, Nixon added that this “world’s largest communist society could become the world’s richest capitalist economy in the next century.” Xi seems driven to prove him right.