BUSA Jeremiah Wenogo’s insightful comment about economic reforms in China is reflective of the measures which China has taken to publicise its economic transformation.
Busa Wenogo stated that China’s gradualist policy initiated by Deng Xiaoping (pictured) could provide the blueprint Papua New Guinea needs to foster development.
The comment led me to think about the lessons PNG can learn from Deng Xiaoping’s reform of China. There are many, but one need to understand the fundamental changes that happened in China during Deng’s tenure.
After Mao Zedong died, Deng took charge and initiated a series of reforms to change the course of China’s future. He was able to address the developmental needs of that time and help transform the lives of many people in China.
Although Mao talked about rural industrialisation, there was nothing substantial in his approach because China was isolated from the international community.
Western countries had the technology and know-how for modernisation. But since China was isolated, there was little chance of accessing what they required.
Deng saw this dilemma and figured that the only way to progress was to open up China to the world and be part of the globalisation process.
Improving relations with the outside world was the second of two important philosophical shifts in Deng’s program of reform - ‘gaige kaifang’ (reforms and openness).
The domestic social, political and economic systems went through significant changes. The goals of Deng’s reform were summed up by the ‘four modernisations’ - agriculture, industry, science and technology, and military.
The strategy for achieving these aims of becoming a modern, industrial nation was to create a ‘socialist market economy’.
A rational method of developing China’s economy was determined at the 5th National People’s Congress (NPC) meeting in June and July 1979.
The policy was summarized in four key catch-words – readjustment, reconstruction, consolidation and improvement. The aim was to firstly adjust China’s economy by reconstructing the framework to consolidate economic growth and improve the living standards of China’s populace.
This course of action was reaffirmed by the August-September 1980 meeting of the NPC when, surprisingly, two major new factors were introduced to stimulate production and increase foreign trade, respectively ‘free enterprise’ and ‘decentralisation’.
Deng realized that to modernise, China had to open up to the world, thus he created the ‘open door policy’.
This manifested in a number of ways; for example, a large range of commodities was transferred from planned state production to regulation by a market economy; factories were made responsible for profits and losses; individuals were encouraged to set up collective enterprises; workers were allowed to invest in the factories they worked in.
The decentralisation of economic decision-making encouraged provinces to work for their own well-being, hence, rural firms called Township and Village Enterprises were created and allowed to compete.
By the late 1980s, they accounted for most of China’s exports, as well, small family firms were encouraged, and eventually foreign and domestically-owned private firms were allowed.
Deng attracted foreign companies through the establishment of the exclusive economic zones, where foreign investment and market liberalisation were encouraged.
The government encouraged local firms to engage in joint ventures with foreign firms who brought in their much needed technology, investment, managerial know-how, and market access.
The changes in economic policy, particularly free enterprise and decentralisation, were the fundamentals of the new socialist market economy.
Deng used socialism to justify his introduction of a free market. Market socialism is a doctrine that socialism can achieve without a massive state apparatus. It posits that, while capital can and should be owned cooperatively, or in some cases by the state, decisions about production and exchange should be left to market forces and not planned centrally.
Deng was careful in the way he distinguished capitalism from socialism in terms of economic liberalisation.
He was not interested in getting rid of Marxism and Socialism. He wanted to amalgamate Marxism and tailor Socialism to Chinese conditions with specific Chinese characteristics.
His thought was influenced to a certain degree by Confucian-Taoist philosophy. The well known yin-yang (black and white) circle shows the harmonious co-existence of opposite ideas. Fusing together elements of capitalism with socialism, Deng was able to take a pragmatic approach to reforming the economy.
Deng said socialism was the primary stage of communism. At the advanced stage, the principle of from each according to his ability and to each according to his needs would be applied. This called for highly developed productive forces and an overwhelming abundance of material wealth.
Consequently, the fundamental task of the socialist stage was to develop the productive forces. The superiority of the socialist system was demonstrated by the faster and greater development of those forces than under the capitalist system.
As they developed, Deng believed poverty would be reduced.
Decentralisation was the icing on the cake; it was implemented to make sure the intended development process was bottom-up instead of top-down.
The processes of China’s reform have brought about influential changes, none more prominent than the reform Deng under took to transform China from an isolated and stagnant nation to a rapidly growing economic powerhouse.
Deng reformed China, a Communist country with a centrally-planned economy by merging elements of free market into the existing traditional economic system, justifying his actions with the theory of Market Socialism and Confucian-Taoist philosophy.