Pursuit of quick success and instant benefits (Part 2)

By Lacille De Silva

In China, agriculture had long been the most pivotal sector of the economy. A large majority of people had lived in rural villages, until recently. However, by the time Mao’s period ended, China’s peasants had been impoverished and thoroughly demoralised by those disastrous policies. Deng Xiaoping succeeded in bringing good fortune for Chinese people. He began economic reforms from the vast countryside.

Under Mao’s policy trade with foreign countries was miniscule. In 1980, the Deng Government had designated five areas as ‘special economic zones’. The goal had been to attract foreign investments, technology and to produce the finished goods for export. Since the projects had been immensely successful, steps had been taken to increase new economic zones which had gone on until late 1990s. 

After Deng took over the leadership, poorest parts in the country began experimenting with a new farming system too on their own initiative.  They disregarded the previous commune system, introduced during Mao days. Deng replaced the commune system with a new scheme called the ‘Rural Household Responsibility System’. Under this system, the State abolished the collectively owning age-old system of lands and introduced the innovative 30-year leases to individuals. The new property right procedure became the catalyst for the fundamental transformation, which swept rural China to greater success year after year. A Chinese expert had said that the new system had essentially turned the 200 million or so rural households into 200 million small but independent enterprises. 

During the 1979-1989 period the gross output of farming and other related industries had grown by more than 75%, the highest in post-1949 China. Accordingly, Deng leadership achieved resounding success in moving 100 million farmers out of poverty. The net income of Chinese peasants had risen from 200 in 1980 to 600 Yuan.

Fundamental transformations

The Deng Government had vigorously pushed through three fundamental transformations: Urbanisation, industrialisation and marketisation. Balancing the processes and carrying forward a massive reformation activity had been a daunting task for Deng and his team. 

Deng had sought to raise rural incomes by broadening the work performed by the peasants beyond agricultural production. They had found out that when several number of members in the family work together to cultivate a small farm, much of their labour had been wasted. It had become necessary therefore to increase the productivity of the rural workforce further, by moving surplus labour out of farming and into other areas, without completely detaching these workers from their rural roots. This has been called ‘de-agriculturisation’. 

Many peasants, known as ‘floating population’ in millions, roughly around 10% of the total population, had found employment in large and medium-sized cities, bringing a major source of supplementary income for rural families. This rural-urban migration has had a significant impact in developing rural China. 

Deng leadership also relocated more villagers into towns and small cities. It had helped immensely the process of industrialisation and urbanisation. This had facilitated to improve the living conditions. In 1978 there had been less than 3,000 towns. Around 2000, it had exceeded 17,000 townships. As a part of the rapid urbanisation process, the State had encouraged major urban city centres to incorporate adjacent rural areas into their city limits.

In 1988, as a preliminary step, village-level elections had been introduced. Steps thereafter had been taken to expand the system to townships too. In 2002, Land Contract Law had been passed to provide a legal framework for dealing with various disputes and to provide guidance for various relationships in rural China. 

It was unfortunate, local officials had selfishly continued to act with virtual impunity due to lack of institutional checks and balances at the local level. Political analysts had believed that the root cause of this problem had been due to one-party-system. (However, the situation in a multi-party-system in Sri Lanka does not seem to be better). It had also been found that the emphasis on economic but not political reform had created a rich soil in which bureaucratic abuse, corruption and violations of individual rights had flourished. These deficiencies in rural areas had undermined the very objective of economic reforms Chinese leadership had dedicatedly pursued for the benefit of the countrymen. 

Despite all these efforts of Deng and the team, rural institutions had remained particularly weak, unfocussed and out of step with the fast pace of China’s economic reforms. Corrupt officials in many instances had gobbled up resources intended for reforms. Bureaucratic mismanagement, inefficiencies, insensitiveness and the absence of effective supervision had caused other delusive problems to the Deng Government. 

Owing to these reasons, there had been sharp upsurges in crimes and street demonstrations on the part of outraged citizens. In 1989, university students in Beijing, exasperated by the rise of official corruption and irritated due to the lack of democratic political reforms, had staged a two-month-long pro-democracy demonstration at the heart of the China’s capital. Tension had escalated and finally, on the June 3-4 night, the government crushed the student movement with force. The protestors had named this protest as a struggle for ‘A Communist Party Without Corruption’. ‘The Tiananmen massacre’, commonly known as ‘June Fourth Incident’ became the most tragic incident of the Chinese reform era.

Deng had understood that throughout the history, the well-being of the people had played a key role in the rise and fall of political regimes. During this period, the leaders had been extremely cautious ‘not’ to trigger further social unrest and other disruptions. Deng Government, after having suppressed the student movement, to regain popular support, desperately searched for better alternatives for implementation. (Do the Sri Lankan leaders too having fought a deadly war and two insurgencies, which killed over 100,000 act responsibly or are they carrying on regardless unsympathetically to fatten their bellies only?).

Generate momentum for reform, defuse opposition

Deng Government had been overly vigilant to help generate enough momentum for reform and to defuse opposition. They introduced gradualist approach for the private sector and the market forces to slowly outgrow the public sector without fabricating any shock to the people. Deng Government also ensured attracting much needed managerial skills, bringing in new ideas and loosening the grip of the bureaucracy by exposing China’s economy to follow world standards. He sent thousands of Chinese intellectuals to Western countries to absorb new information and ideas. 

Under the slogan ‘Streamlining governance and decentralising power’, Deng began empowering local officials for greater decision making on issues such as investment, tax collection and economic regulations. All these finally helped China to outperform economically other former Communist States by a large margin.

Boris Yeltsin Government (1992-1999) introduced the ‘big bang’ approach to begin reforms in Russia. They had undertaken massive privatisation etc., which had eventually caused severe depression and dragged the economy down by more than half. China, by contrast, had been able to record 8% annual growth for 25 years consecutively, purely owing to dedicated, pragmatic and principled leadership of Deng and the team. China’s success story in economic reforms is a good case study for Sri Lankan leaders, particularly because Sri Lanka and other former Communist countries in Eastern Europe, Central Asia and Russia had failed in developing open economies.

Since 1990s, there had been an explosive growth in privately owned companies in the areas of construction, real-estate, export-oriented industry and retail. It had thereafter expanded in to other areas such as education, financial and even healthcare sectors. Most of these companies are now enormous conglomerates controlling large market shares and huge financial resources. 

Bold and creative measures for urban development 

The Government took several bold and creative measures to expedite urban development. It began leasing state lands with the right to use urban lands to real estate developers and to investors interested in public-works projects such as highways. By doing so, it killed three birds with one stone. First, monies received from leasing of lands and from investors helped the Government to finance numerous projects that were held up for want of funds. Secondly, values of leased lands increased sharply, which saw a boom in construction industry and related businesses. Third, city dwellers experienced improvements in their living conditions, which helped the Government to gain the necessary support for the reform agenda.

In China, when Deng Xiaoping became the pre-eminent leader, at the age of 74, he provided the steady hand, the clear direction, and the political skill for China to succeed. Deng built close links with leading European countries to prepare China for modernisation. He made the political decision that paved the way for the Treaty of Peace and Friendship with Japan in 1978. He led an official visit to Japan and introduced Japanese movies, literature and television series to help Chinese to learn about Japanese scientists, technicians and business leaders. He also visited USA in 1979 and established god relations with President Carter, Congressional and business leaders. 

Deng had warned ‘Those who do not reform must go’. They had prioritised improving infrastructure by modernising the cities to breathe new life into urban centres and to stimulate growth. Wang Jisi of Beijing University has observed that ‘many developing countries that have introduced Western values and political systems are experiencing disorder and chaos’. 

Finally, the Government had insisted that industrialisation should conform to international standards to build up closer integration with the world economy. China’s success therefore had been purely due to good leadership; and the policies that had conformed to the basic laws of economic development; making it possible to position themselves as a manufacturing hub in the world.

China being the second largest economy, a plan has now been drawn up to build China into an innovative country and a scientific and technological power during the period of the 13th five year plan (2016-2020) and lift the country’s comprehensive innovation capabilities into the world’s top 15.