How Pragmatism Drove China's Economic Transformation

By Saliem Fakir · 5 Jan 2015

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Picture: Inonews
Picture: Inonews

Decline can happen rapidly and all before one’s eyes. Sometimes the response to it can be slow and even result in total neglect. First, there’s denial or the inability to speak up. Then there’s some acceptance that things are not going well and finally there may be a belated attempt at collective mobilisation to tame the rot gripping the sinews of political and economic institutions. It can come just in time or be too little too late.

China pulled itself out of the ashes of war in 1949 after the Communists defeated the nationalists, the Guomintang, and sent them off to Hong-Kong and the island of Taiwan.

Then came the period of ideological consolidation under the Chinese Communist Party (CCP) and the dominance of chairman Mao Zedong. Mao ruled with vigour and authoritarianism. Nothing would pass without his approval or alignment to his doctrine. China’s politics and economy were held hostage by the dominance of a single leader over his party and country.

What followed were several years of disastrous policies. The Great Leap Forward led to a massive famine where close to 30 million people died due to collectivisation policies in rural areas.

The consequence was that the country sunk into economic chaos and hopelessness. Agricultural growth and industrial development were arrested and poverty was widespread.

On top of this, party factionalism, purges that decimated the entrepreneurial, professional and intellectual class, as well as persistent violence in the name of ideology against insiders and outsiders alike, turned a once great civilization backwards and close to economic collapse.

For instance, during the Cultural Revolution, the Chinese Academy of Sciences (CAS) had 24 000 scientists and 104 institutions under its wing. From 1965 onwards many scientist were persecuted, exiled or purged because they were thought to be too independent. CAS was left with just 2 000 scientists and 13 research institutions.

Chinese state institutions were run by soldiers, workers, party cadres or peasants that had no technical qualifications, but were appointed on the basis of their loyalty to Mao and their history with the CCP. Universities suffered to such an extent that the Chinese standard of education was one of the poorest in the world.

To this day, China’s top political echelon continues to brush over the atrocities and excesses of the Mao period.

It’s hard to comprehend this dire picture of China today given its current economic success. But China did turn things on their head with decades of economic growth, some 10% of GDP on a yearly basis, from 1980 onwards.

How did all this come to be given the odds stacked against the country?

China’s success is something of an enigma given that it is not a democracy and remains dominated by a one-party state. Indeed China’s success came without regime change or foreign meddling. It came about because a collective of leaders within the CCP could see that change was needed, even under the watchful eye of Mao Zedong. They were willing to take bold steps despite being hemmed in by the claustrophobic confines of CCP ideologues.

While China’s transformation came about through a collective leadership initiative, Deng Xiaoping stands out as one of the key figures in the country’s transformation. Having suffered persecution at the hands of Mao’s feared Red Guards, Deng was banished to internal exile for his independent views. But Mao himself engineered Deng’s return to the fold in the 1970’s. Details of Deng’s fall and rise are contained in an excellent biography written by Ezra Vogel titled, Deng Xiaoping and the Transformation of China.

The transformation process Deng embarked upon, with a core of senior CCP leaders, was to guarantee that the political authority in the hands of the CCP was strengthened while the challenge of economic reform was adopted boldly.

Unlike other communist states that fell under the old Soviet Union, especially after the collapse of the Berlin wall in 1989, China did not follow the route of political reform first followed by economic restructuring. It went the opposite way.

Deng was deft enough to work within the confines of ideology, but also open a space outside of its restrictions. For instance, when Deng needed to establish a long-term economic development trajectory for China, he was able to create a Policy Research Office (PRO) outside of the CCP and state bureaucracy attracting the best minds and bringing back into the fold once banished intellectuals and technical experts to assist with the task.

Later the PRO was disbanded because Deng’s enemies gained the upper hand and Mao’s ear. It did however play an important role in defining China’s industrial development framework as well as rebuilding China’s scientific institutions whilst ensuring that their scope of work also expanded in the social sciences. The national planning model that China continues to pursue to this day, on a five yearly basis, came out of the work of the PRO around 1975.

The Russian model of planning was abandoned in favour of a uniquely Chinese approach. Planning was not driven by ideology but by necessity.

China is a vast country and resources were being used wastefully. China needed to make budgetary cuts and allocate resources to priority areas for its development. But plans had to be carefully crafted to avoid the stigma of being seen to be capitalist endeavours and be couched as “Mao’s plans”.

At the same time, one still had to deal with Maoist ideological idiosyncrasies like the idea that if you employed more than eight people you were a capitalist exploiter or if your farm produced more than three chickens, you were profiteering.

In any event, the PRO’s five-year plans became the only political means, after China’s State Council approved them, to reign in errant officials and ensure coherence to the programme of implementation Deng wanted to pursue.

Of the four things Deng identified as focus areas for China’s modernization, the development of science and technology was topmost in the list of priorities. China could not embark on agricultural transformation, industrialisation and the modernization of its military without strong scientific and technical capabilities. Deng spent most of his later life ensuring China’s scientific capabilities drew on the experience and knowledge of the most advanced countries in the world to overcome its drawbacks.

Between 1977-1980 China also opened channels of exchange with numerous countries and set up special economic missions to visit both western and eastern countries to observe and understand how these countries pursued industrial development and economic reform.

The country China would most draw on for lessons turned out to be Japan; also China’s historical arch enemy given the fact that it was occupied by Japan at various periods of its history. But pragmatism prevailed over enmity. Japan, more than any other country in the world, assisted China not only with expertise but exchanges with its best industrialists, economists and soft loans from the state.

Deng’s transformations included cutting the size of the military personnel, building a state bureaucracy on the basis of merit rather than political affiliations and experimenting with economic reform programmes in two key provinces, Guangdong and Fujian. These provinces were chosen because they were poor, so as to win over the conservatives and ideologues before Deng could widen the process of economic transformation.

Guangdong, in particular, helped to open a southern gateway to Hong-Kong and the rest of Asia. Deng knew that because of the proximity of this province to the coast, foreign knowledge, capital and managerial expertise would flow across the border into China, especially its special economic zones. Between 1978-1992, two-thirds of foreign direct investment came via Hong-Kong.

Deng also relied on Chinese expatriates in the US and elsewhere in the world to either invest or bring their expertise back to China. China could draw on a diaspora of about 20 million people. By the time Deng retired as chairman of the CCP, Guangdong alone was exporting a third of Chinese goods to the world. The entire region saw rapid internal migration, urbanization and low-skill industrial development on an unprecedented scale.

This, in effect, is the story of how China became the world’s factory.

Stark economic realities and mismanagement pushed China’s CCP leaders into a programme of pragmatic economic reforms. But while economic reform is admired in China, political reform will not be so easy. Ironically, economic success has served to entrench the dominance and continued role of the CCP.

These days, a new set of sovereign interests governs the way China and the CCP thinks of itself and its place in the world. China is less married to Communist tenets these days but its economic power is making it more nationalistic and outwardly looking in terms of rivalling the US both in military and economic power.

China may or may not serve as an example for South Africa, yet we cannot ignore the facts of its past and its successful transformation.

South Africa is also entering a period of ideological conflict that will not be settled any time soon. We can learn a thing or two from China about pragmatism triumphing over ideology to make a real difference in ordinary’s people’s lives and change the destiny of a nation as a whole.

Fakir is an independent writer based in Cape Town.

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Dominic Tweedie
7 Jan

Very Poor Cold-War Article

There is so much anti-Chinese and anti-communist cliche in this pot-boiling, boilerplate article that it is hard to know where to start, but let's go to the bald statement that China "is not a democracy". This is the People's Democratic Dictatorship we are talking about. Saliem Fakir ignores the entire political logic of the country, as well as its actual electoral system, the CPC's inner-party democracy, and that of other mass organisations in China. Why? If he wanted to trash all this, then he should have tried to do so, but he thinks that in a cold-war atmosphere he can get away with just refusing to see any of it. This is not the way to write about China, or about democracy, for that matter.

Respond to this comment

7 Jan


I am sorry that Dominic has to feel so defensive. I think his got the wrong end of the stick. The article if anything tries to represent the political and economic challenges that Deng and others faced. In the end realism - for whatever its merits - prevailed over ideology. Dominic should read the article properly. I am aware of the CCP's internal democracy and in fact the article is an attempt to paint a historical relation of policy change in China to counter all the very ahistorical debate that is going on in the press at the moment. And, to agree with Dominic there is little of substance in the media and this article is an attempt to enrich the discussion. If anything some people will certainly perceive the article as being too pro-Chinese. Dominic should rather read Ezra Vogel's book because it is written by somebody who would not ordinarily be the sort of person writing the book. Vogel paints a much more nuanced, complex and balanced picture of China than a lot of pop-culture books from so-called Chinese experts.

I am not sure why Dominic thinks China was in the throes of a Cold-war against the west. It was and it wasn't. At the time of Deng, relations with the Soviet Union were not good and China was busy seeking to counter Soviet influence in the region because of the support it was giving Vietnam. It feared being encircled by Vietnam and Russia. So it started making overtures to the US. It also invaded Vietnam to signal to both Vietnam and Russia that it would not take threats to its sovereignty lightly. China sided with Pol Pot in Cambodia despite his atrocities. I wonder what Dominic has to say to that? How does one explain one Communist country pitted against another?

The problem is that you cannot understand China simply from a moralist lens like most liberals do and unfortunately Dominic defends China with the same tools as the liberals, but from a different vantage point. It is better to understand China as a country seeking to resurrect itself from a dire economic situation, facing untold geopolitical threats and the challenge of internal stability. In the international arena China is no different from other great powers - they are all driven by three things: fear, self-interest and honour. International moralism is a form of soft-power and often has nothing to do with the hard stuff that happens behind the scenes. It is the only way to explain the US's wars, its continued support for dictators and democracy at the same time. Why would China not also have a set of contradictory national and international policies. The word is realism - both liberals and communist ideologues don't seem to grasp this.

I have also written on China previously. I am also of the view that China is not old school communist anymore but rather tilting or has already tilted towards a form of nationalism as a way of binding Chinese national identity and its global role. So, perhaps the Communists in SA should catch up to the changes in China. So please put my work in context don't read your own selective views on what I wrote or did not write.

Dominic Tweedie
7 Jan

Revolutionary Theory in China and in South Africa

Good Morning Saliem. Thanks for your reply.

The view that "China is not old school communist anymore but rather tilting towards a form of nationalism" is a deaf or blind view, similar to the deaf or blind view that passes for comment on South Africa's "ideological conflict" in some places, notably here on the SACSIS site.

Not all of such comment is in the wrong ball park, like I think you are today, Saliem. Not all of it ignores actual views and preoccupations of the Chinese, for example, or those of the SACP.

Whatever other similarities and differences there may be between the Chinese and South African parties, the broad problem of class alliance is a shared concern. I would invite you to read the speech made by Dr Blade Nzimande yesterday at the graveside of Joe Slovo. You will find that there is a detailed explanation of this question there. You do not have to agree with it. But please, don't just write as if you are the first person to think about such things. When you do that, it puts us in separate rooms, and that is not productive.

Likewise the Chinese, not from Deng's time, but even from Mao's time, and particularly at the birth of the People's Republic in 1949, gave deep consideration to the class make-up of Chinese society and consequently did not declare socialism, let alone communism. That is why it is called "People's Republic", and not something else. The Chinese continue to discuss this question, which is the question of class alliances and class relations, very openly, and have done so at all stages in between 1949 and now.

This is where there is a broad similarity between China and SA. Here, too, there is no attempt to abolish or suppress any class using state power. On the contrary, we say it is by National Democratic Revolution that we will arrive at the point where there is a mass political "subject" that can take us to socialism, if it wishes.

None of this is new in communist thinking. You can take the discussion back at least as far as the Communist Manifesto of 1848 where Marx and Engels wrote that the proletariat had to "win the battle of democracy".

You can also read Lenin on this topic of democracy, notably in "The State and Revolution", where he says that democracy is the indispensable means by which the collective popular will can be formed.

One opposing view to ours is the one that says that we should have "gone straight to socialism" or something like that. It is true that the SACP has no programme for imposing socialism, or of requiring the ANC to adopt such a programme of imposition. So we disagree with that criticism. But the merit of it as compared with yours is that it at least confronts the matter directly, and to some small extent recognises the communist point of view.

Communists are energetic democrats, as any empirical study would easily show, whether in SA or in any other place. The contraposition of communism and democracy is a cold-war trick that needs to be left behind now.

It is a poor kind of argument that invents the motives of its opponents, while ignoring the clearly and repeatedly and honestly expressed, actual rationale of your opponent.

Dominic Tweedie
7 Jan

More about Alliance and Unity

Just to give a flavor of the great breadth and diversity of this discussion as it has gone on down the years. It is about how to combine, or unite for a political goal. Here are some touch-points:

One is the Hammer and Sickle, symbol of class alliance.

Two is the two books, "The Class Struggles in France", and "The 18th Brumaire of Louis Bonaparte", both by Karl Marx, both about the iron necessity of class alliance, and about the historical period of the 1848 revolutions and the subsequent upheavals.

Three is Lenin's report-back to the Plenary of the 2nd Congress of the Communist International from the Commission on the National and Colonial Question - stating the original concept of the NDR.

Four is Joe Slovo's "The South African Working Class and the National Democratic Revolution", where class alliance is discussed in our context, and as against its challengers.

Five is Samir Amin, in Monthly Review, Volume 64, Issue 10, March 2013, about China.

Six is the ANC, discussing who the "motive forces" are (e.g. in the Strategy and Tactics debate at Polokwane).

Seven is COSATU President Sdumo Dlamini in his New Year’s message, where he says: "the golden rule in a political struggle is always to isolate the most dangerous enemy, while at the same time strengthening to the maximum the progressive camp."

Dale McKinley thinks it is all a Gordian knot that has to be cut by a modern-day Alexander the Great.

The point is not whether one agrees with all of this track record, or not. Feel free to disagree with all of it. But to put out trite remarks about "pragmatism triumphing over ideology" is not making public dialogue so much as refusing it.

Dominic Tweedie
7 Jan

Opening paras of Samir Amin's 2013 MR Article

The debates concerning the present and future of China - an "emerging" power - always leave me unconvinced. Some argue that China has chosen, once and for all, the "capitalist road" and intends even to accelerate its integration into contemporary capitalist globalization. They are quite pleased with this and hope only that this "return to normality" (capitalism being the "end of history") is accompanied by development towards Western-style democracy (multiple parties, elections, human rights). They believe - or need to believe - in the possibility that China shall by this means "catch up" in terms of per capita income to the opulent societies of the West, even if gradually, which I do not believe is possible. The Chinese right shares this point of view. Others deplore this in the name of the values of a "betrayed socialism." Some associate themselves with the dominant expressions of the practice of China bashing in the West. Still others - those in power in Beijing - describe the chosen path as "Chinese-style socialism," without being more precise. However, one can discern its characteristics by reading official texts closely, particularly the Five-Year Plans, which are precise and taken quite seriously.

In fact the question, "Is China capitalist or socialist?" is badly posed, too general and abstract for any response to make sense in terms of this absolute alternative. In fact, China has actually been following an original path since 1950, and perhaps even since the Taiping Revolution in the nineteenth century. I shall attempt here to clarify the nature of this original path at each of the stages of its development from 1950 to today - 2013.

Dominic Tweedie
8 Jan

Now It's in The New Age

Saliem Fakir's article is now in The New Age, 8 January 2015, under the headline "China's Great Leap Forward". What a travesty!

Rory Verified user
12 Jan

Ideology or bust

I personally have a problem with ideologues and ideologies. The problem is that the implementation of ideologies always seems to bring about suffering. None of us actually knows how society should be organised, even if we think that we do, thus the best that we can do is to pragmatically deal with problems as we become aware of them, with our minds always open to responding to feedback from the situation as it unfolds. If you are in the grip of an ideology it is highly unlikely that you will be able to do that.

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