By Richard Baum, Ph.D., University of California, Los Angeles
In the aftermath of Deng Xiaoping’s Southern Tour in 1992, China’s economy leaped forward. Spurred by an unprecedented building and construction boom, and by a major influx of foreign direct investment (FDI), economic growth shot upward into double digits. By the end of the decade, both the gross domestic product (GDP) and urban family incomes had more than doubled, and a new Chinese urban middle class had emerged.
The ‘Roaring Nineties’
By 1996, China had become the world’s number one manufacturer of shoes, sweaters, toys, and sporting goods. In terms of regional growth, by the mid-’90s, China’s booming southeast coastal provinces had become so highly capitalized and so closely interlinked with the economies of neighboring Hong Kong and Taiwan that the resulting regional configuration, sometimes referred to as ‘Greater China’, easily surpassed the resource base of the other east Asian ‘little dragons’.
It is not for nothing that this remarkable decade has been called the ‘roaring nineties’. For many Chinese, it was the best of times, rich in opportunities and upward social mobility. But for others, the ladder of success proved more elusive, hard to find, and harder still to climb.
This is a transcript from the video series The Fall and Rise of China. Watch it now, on Wondrium.
Deng Xiaoping’s Anti-leftist Offensive
As had been predicted by Beida president Wu Shuqing, a better life for some was offset by increasing hardship for others. Especially in China’s interior and western provinces, the benefits conferred by Deng’s policies—to the extent they were visible at all—were painfully slow in coming. And for those left behind, the rural poor, the elderly, migrant workers, the unskilled, and the unemployed, the ‘roaring nineties’ would be a time of tribulation.
But all of that lay ahead, in the future. In the immediate aftermath of Deng’s anti-leftist offensive of 1992, the party’s long-suffering liberal wing had reason to be pleased. One particularly exuberant liberal, a Politburo member by the name of Tian Jiyun, couldn’t resist the temptation to twist the knife a little by giving the leftists a taste of their own medicine.
Learn more about the opposition to liberalization.
Tian Jiyun’s Critical Remarks
Speaking at the Central Party School in Beijing, Tian Jiyun offered a tongue-in-cheek recommendation for dealing with conservative opponents of reform. His voice positively dripping with sarcasm, he proposed giving the leftists a ‘special economic zone’ all their own:
Let us carve out a piece of land where policies favored by the leftists will be practiced. For example, no foreign investment will be allowed there, and all foreigners will be kept out. Inhabitants of the zone can neither go abroad nor send their children overseas. There will be total state planning. Essential supplies will be rationed and citizens of the zone will have to queue up for food and other consumer products.
Tian Jiyun went on to poke fun at certain unnamed party leaders who had withheld their support for Deng’s southern initiative until they saw which way the wind was blowing. Referring to such people mockingly as the ‘wind faction’ (fengpai), he chided them for being opportunistic and unprincipled.
Tian’s barb was aimed, among others, squarely at Jiang Zemin. Jiang had initially supported the leftist agenda in the latter part of 1991, only to switch his allegiance back to Deng when the political winds changed after Deng’s Southern Tour. With Premier Li Peng now under a dark shadow, and on emergency medical leave for an alleged heart condition, Deng Xiaoping stripped Li of his responsibility for economic policy, giving it instead to Vice-Premier Zhu Rongji.
The New Regulations
Zhu Rongji had been mayor of Shanghai during Jiang Zemin’s tenure there as party secretary in the late ’80s. He had a reputation for being a tough-minded, no-nonsense pragmatist. Like Deng, Zhu valued results over doctrines. With Zhu Rongji at the helm, the state council in July 1992 issued a major decree on enterprise autonomy, one that went well beyond Zhao Ziyang’s 1984 urban reforms.
The new regulations gave provinces and municipalities greater control over the collection and allocation of local tax revenues and gave enterprises themselves far greater autonomy over a wide variety of managerial decisions that affected enterprise performance. Finally, and most controversially, the decree clarified the conditions under which chronically inefficient or debt-ridden firms would be required to cease production and either be merged, acquired by others, or declared bankrupt.
Learn more about China’s special economic zones.
A ‘Socialist Market Economy’
In October of 1992, the National Party Congress formally adopted Deng’s proposal to change the label applied to China’s national economy from a ‘socialist commodity economy’ to a ‘socialist market economy’.
Though this shift may have seemed merely rhetorical, it was in fact quite important. For never before had the party formally incorporated the ‘M’ word—markets— into its officially approved economic theories and policies.
Because of this, neo-conservatives had been able to malign free markets simply by identifying them with the toxic ‘C’ word—capitalism. Henceforward, this invidious association, markets equal capitalism, would be forever broken.
Common Questions about the Socialist Market Economy of China
China’s booming southeast coastal provinces had become so highly capitalized and so closely interlinked with the economies of neighboring Hong Kong and Taiwan that the resulting regional configuration was sometimes referred to as ‘Greater China’.
Tian Jiyun poked fun at certain unnamed party leaders who had withheld their support for Deng’s southern initiative until they saw which way the wind was blowing. Referring to such people mockingly as the ‘wind faction’ (fengpai), he chided them for being opportunistic and unprincipled.
In October of 1992, the National Party Congress formally adopted Deng’s proposal to change the label applied to China’s national economy from a ‘socialist commodity economy’ to a ‘socialist market economy’.
