Transformation of China in the last forty years

Oinam Nabakishore Singh *

After communist movement overthrew Chiang Kai Shek and took the path of communism and socialist model of economy in 1949, private business and farming got abolished throughout the length and breadth of the country. Means of production got transferred to the government. The economy of the country was mainly agricultural and based on farming. Farmers were organized in communes and collective farming was practised throughout the country.

The yield from collective farming, where farmers work together without any incentive to the individual farmer, was quite inadequate to meet the requirements of foodgrains of the members. The practice of such farmingcontinued through the “Great Leap Forward” and “Cultural Revolution” with more vigour and adherence to the policies of communist party of China. Millions of people starved. The Great Chinese Famine happened between the years 1959 and 1961 characterized by widespread famine. Drought, poor weather, and the policies of ruler Mao Zedong contributed to the famine. The relative weights that contributed to the famine is disputed. The number of deaths due to the Great Famine ranged between government estimate of 15 million and 45 million by Frank Dikotter.

After the death of Mao Zedong in 1976, a new leadership took the reign of communist party in China. The most remarkable and transformational leader of the party, who led China to the present economic miracle is Deng Xiaoping. Deng had exposure to factories in France, where he worked to support his studies in 1920s. He had also gone to Russia and had some practical knowledge of working there.

In order to increase productivity and solve the problems in starvation in rural China, Deng carefully introduced a new way of farming. In 1979, three years after Mao’s death, Deng Xiaoping began dismantling the “rigidly” controlled agriculture collectives and encouraging farmers to raise crops in individual plots. According to rules that varied from province to province, farmers were allowed to hire a certain number of laborers, and sell their surplus.

Peasants were not allowed to own land but they were given long term leases and rights to renew the leases so there was an incentive for them to take care of the land. Land rights—except in terms of buying, selling and titled ownership—was given to agriculture labor organization of individual families. In effect the pre-revolutionary system was restored with state holding claim to part of the crop instead of the landlord. In the 1980s, families in areas affected by the reforms were given a little over half an acre to tend.

Those that possessed good fertile land were able to make a healthy profit growing rice, vegetables, sugar and other products. Those that wanted more joined together with other farmers and improved irrigation and roads and became more productive and made even more money. Deng also introduced incentive price bonuses for above-quota grain production and launched a “responsibility system” which allowed farmers to sell surplus crops on the open market after they met their government quotas. In 1984, in an effort to increase production, the quota was dropped completely in 1984 for all crops expect cotton and grain.

Even though many farmers used hoes instead of tractors, crop yields jumped dramatically. Wheat production doubled between 1978 and 1985 from 41 million to 87 million tons. By 1987 the output of grains and tubers was three times that of India and almost equal to that of the U.S. and Soviet Union.

During the rule of Chairman Mao, academic pursuits, science and technology. Research, etc. was not given due importance. Intellectuals were looked upon with suspicion and as reactionary. They were sent to rural camps for imbibing the communist ideology and adopt the ideology of communism. Deng Xiaoping, on the other hand, encouraged higher education, science and technology, and research. He introduced National Entrance Examination for selection of brightest students for admission to Universities. The new system raised the standard of education. In appointment of civil servants from among the party cadres, he introduced merit based selection so that only competent people are in administration.

Deng Xiaoping was convinced that if China was to catch up with developed countries like Japan, Korea and Europe, it was necessary to learn from these countries in respect of technology, management and skills. He sent out teams of high level officials and official for study visits to advanced countries. Fortunately, leaders of these countries were willing to share their experience and knowledge. After long consultation and discussions with communist party leaders, Deng was able to usher in a new era of “reform and opening up of China” in a careful way so as not to look as if Mao thoughts and priorities were being forgotten.

The most important steps in economic reforms in China including opening of the country to foreign direct investment(FDI). There was huge inflow of FDI especially from Chinese expatriatebusinessmen living in different parts of the world. Huge investments came from Taiwan, Hong Kong and other countries. In late 1990s, annual FDI in China was about US$42 billions against about US$ 2 billion in India. Along with inflow of investment came managerial skills and technology to China.

Chinese with good higher education were quick in adopting and adapting technology to the local situation. To produce goods for exports, special economic zones(SEZ) were set up in the east coast. The most successful SEZ is Shenzhen inGuangdong Province in the south east bordering Hong Kong. When SEZ was planned at Shenzhen, the population of the town was about 30,000, which has now grown to 1.25 crore now.

It had the advantage of closeness to Hong Kong, where modern business management has developed as in any developed place on the planet. Shenzhen benefitted from the knowledge and skills of Hong Kong. While Shenzhen was developed, it was given provided all the enabling facilities to promote manufacturing for import and export of goods including capital goods and raw materials. Now, it is a hub for several kinds of manufacturing ranging from textiles to robotics. It is compared to Silicon Valley in USA.

There are several other SEZs, which too became hubs for manufacturing. Now, share of China in manufactured goods is 20 percent in the world. With rapid industrialization, there has been huge transformation of China on many fronts. The per capita income of China now is US$ 8827(nominal) in 2017 against US$ 89.5 in 1960. The size of Chinese economy is now second only to USA at US$ 12.24 trillion in 2017.

It may be interesting to note that gross domestic product of India in the same year, 2017 was US$2.6 trillion with per capita income of US$ 1964 in the same year. According to World Bank, about 500 million people were lifted out of poverty in China on account of rapid economic growth of double digit over a long period. Now, the present poverty figure of China is about 2 percent, which will be reduced to nil in 2020.

Even today, China’s economy is growing at 6.5 percent per annum. Since the base of its economy is already very large, annual addition to the economy is, indeed, enormous. With the present growth rate, China is going to overtake USA in future.

China is changing its strategy for growth. Export led growth is planned to be replaced by domestic consumption. During the celebration of 40th year of reform and opening of China on 18th December, 2018, Xi Jinping, President of China outlined the future reforms with commitment to socialism with Chinese characteristics.

Views expressed here are personal.