February 20, 1997OBITUARY
Deng Xiaoping: A Political Wizard Who Put China on the Capitalist Road
By PATRICK E. TYLER
Like Mao Zedong and Zhou Enlai before him, Deng Xiaoping was among the small group of revolutionary elders who fought as guerrillas for the Communist cause and then dominated the leadership of the People's Republic they proclaimed on Oct. 1, 1949.
Few if any figures in this century matched Mr. Deng for political longevity.
Nearly half a century has passed since Mao first installed Mr. Deng in the upper-reaches of power in China, making him general secretary of the world's largest Communist Party in 1954.
Twice he was to be dragged down from those heights -- purged as a ''capitalist roader'' in 1967 during the Cultural Revolution and again -- after a remarkable comeback -- following the death of Mao in 1976.
Only with his second resurrection did Mr. Deng begin to consolidate his power, becoming China's paramount leader in 1978. He was then 74, seemingly too old to be anything but a transitional figure. Instead, he reigned for a generation.
Even after his formal retirement in 1989, Mr. Deng remained an all-powerful patriarch, ordering a purge of the military leadership in 1992 and rescuing his economic reform program from a conservative backlash. As his health slipped precipitously -- his last public appearance was during the Lunar New Year festivities in early 1994 -- he seemed further removed from daily decision-making. But still he was consulted to resolve major policy and personnel issues.
In the 18 years since he became China's undisputed leader, Mr. Deng nourished an economic boom that radically improved the lives of China's 1.2 billion citizens. By early in the next decade, the reforms Mr. Deng ignited may well propel China's economy to the position of third largest, after the United States and Japan, but China's prosperity will be diluted by the increasing number of Chinese. Nearly 270 million will not have jobs at the turn of the century.
At the end of his life, Mr. Deng seemed unable to chart a clear path to economic success his economic reforms still faced daunting challenges. China's rise as a great economic power was becoming a race against time as population growth and incomplete reform were adding to the siege of China's straining foundations. Shortages of water and arable land mounted, and unchecked industrial pollution contributed to an overall degradation of the environmental landscape.
Still, in cities and in villages, real incomes more than doubled in the Deng era. Most Chinese who have watched a television or used a washing machine or dialed a telephone have done so only since Mr. Deng came to power. The struggle to survive in the Chinese countryside has greatly eased.
A former American Ambassador to China, J. Stapleton Roy, who as a young man in Nanjing witnessed the Communist takeover in 1949, said once in an interview, ''If you look at the 150 years of modern China's history since the Opium Wars, then you can't avoid the conclusion that the last 15 years are the best 15 years in China's modern history.''
During most of those years, Mr. Deng symbolized the Chinese aspiration to move beyond the ideological extremism that had marked the Maoist era and reclaim for the Chinese a long-denied prosperity.
But in doing so, he also came to symbolize a stubborn and inflexible resistance to democratic stirrings. For Mr. Deng, China's economic reform could only occur under the authoritarian rule of the Communist Party.
China's security forces, often harsh and brutal under Mao, continued to be so under Mr. Deng. China today remains perennially criticized as a nation whose rulers seem to respect human rights only grudgingly.A Small Figure, A Towering Presence
Mr. Deng's early reputation as a visionary who delivered the Chinese from suffering was blackened most notably by his leading role in ordering the June 1989 military crackdown on pro-democracy demonstrators in Beijing. The tank and machine-gun assault on students and bystanders that came to be known as the Tiananmen massacre diminished his prestige as a world leader and isolated China politically for years afterward.
A generation of students and intellectuals, many of whom had fled the country, held Mr. Deng responsible and scorned his image. But much of the country, particularly the peasantry, seemed grateful to Mr. Deng for providing them with the first prolonged period of peace and stability in this century. If intellectuals could not forgive the brutality at Tiananmen, peasants could not forget that he had ended a long chapter of deprivation.
In foreign policy, Mr. Deng negotiated an end to the last vestige of British colonial power in China with an agreement to return Hong Kong to Chinese sovereignty later this year. Reunification with Taiwan eluded him, but he worked to settle China's border disputes, normalize relations with the United States and repair the 30-year rift with the Soviet Union.
His goal was to focus the totality of national energy on China's economic development. Even the Chinese military had to serve the new national priority by accepting deep budget cuts through the 1980's.
As a leader, Mr. Deng cut a most unusual figure in the Chinese pantheon.
He was emperor-like in a century in which the Chinese overthrew their last emperor after three millenniums of imperial rule. Mr. Deng was first among equals in the small circle of revolutionary elders who survived Mao. The posts and titles Mr. Deng held in the Communist Party hierarchy never quite equaled or conveyed his stature as paramount leader, a term that seemed invented for Mr. Deng, who was still arguably the most powerful citizen of China when he died.
Yet his physical presence offered no clue to his storied abilities to manipulate events ''much like a puppeteer,'' as the political scientist Lucian W. Pye put it. The conventional wisdom was that Mr. Deng was five feet tall but, as one scholar observed, ''that was surely an exaggeration.''
In an essay in 1993, Professor Pye described an audience with Mr. Deng:
''As he settles into an overstuffed chair, his sandaled feet barely touch the floor, and indeed hang free every time he leans forward to use the spittoon. He has an atrocious Sichuan accent, which makes his words slur together like a gargle. There are few signs of liveliness of mind, of wit or humor, and no sustained, systematic pursuit of ideas.''
Xiao Rong, the youngest of Mr. Deng's three daughters, said in a biography of her father: ''In the eyes of his children, Father is a man of introverted character and few words. Only with old colleagues and old friends does he like to talk, and carries on in a loud voice.''
Henry A. Kissinger, who helped to engineer the normalization of relations with China during the Nixon Administration, once pronounced Mr. Deng a ''nasty little man.'' But others found a certain charm.
When Queen Elizabeth II paid a visit in October 1986, she was warmed by his self-effacing greeting: ''Thank you for coming all this way to meet an old Chinese man.''
Although he picked his political heirs carefully, Mr. Deng was plagued by the problem of succession. In May 1989 he worried aloud to the Soviet leader, Mikhail S. Gorbachev: ''The only thing that can't be brought to pass is the abolition from the system of lifelong positions for leaders.''
That same year, Mr. Deng named Jiang Zemin, the current President and Communist Party chief, as the ''core'' of the ''third generation'' leadership, after him and Mao. But many Chinese say Mr. Jiang could face trouble managing the party now without Mr. Deng behind him and could be swept aside, much as Mao's nominal successor, Hua Guofeng, was swept aside by Mr. Deng.
Neither intellectual nor poet, Mr. Deng was best known as a pragmatist who focused on the problems of the day, unencumbered by history or ideology. His years as a military strategist and political commissar, balancing real military capabilities against the expectations of politicians, gave him a keen sense of what was possible.
He is best remembered for his simple maxims rather than for coherent policies: To defeat ideological attacks from the Maoists, he often quoted the Maoist dictum, ''Seek truth from facts.'' To emphasize that there was no road map for economic reform, he said the Chinese must ''cross the river by feeling out the stones with our feet.'' His most famous aphorism was an old proverb from his native Sichuan: ''It doesn't matter whether a cat is black or white, as long as it catches mice.''Fear of Disorder, Grounded in History
In this century China has been a land of warlords, invading armies, floods, famines and revolution. Tens of millions have died violently, or wretchedly from starvation. Mr. Deng's inherent fear of disorder and the violence it has wrought explains his deep opposition to political pluralism.
''If all one billion of us undertake multiparty elections, we will certainly run into a full-scale civil war,'' he told President Bush in February 1989. ''Taking precedence over all China's problems is stability.''
There was a time when Mr. Deng appeared briefly to embrace democratic ideals: As he struggled to regain power in 1978, he identified with the goals of the Democracy Wall movement in Beijing. But in early 1979, after he had gained the upper hand politically, he crushed the movement and sent its leader, Wei Jingsheng, to prison for 15 years.
When Mr. Wei, once an electrician at the Beijing Zoo, emerged in September 1993 after serving 14 1/2 years, he was still Mr. Deng's fiercest and most fearless critic, and found himself returned to prison seven months after his release.The Dark Shadow Of Tiananmen
In 1984, on the 35th anniversary of Communist rule, students at Beijing University hoisted a banner saying, ''Hello, Xiaoping!'' showing their affection through the familiarity of their greeting. At the outset of 1987, Beijing University students marching for democracy chanted, ''Xiaoping, hear our voice!'' still hoping that Mr. Deng would embrace their goal.
Instead he turned on them, crushed their movement and sacked the Communist Party general secretary, Hu Yaobang, for encouraging the democratic cause.
The more Mr. Deng resisted political reform, the more he seemed a guardian of a party elite that was doing little to bring corruption under control as China's economy gained speed. The party leaders, including Mr. Deng, were being chauffeured around in black Mercedes sedans. Some of their children became known as the princelings of conspicuous new wealth. And the leaders all seemed oblivious to their hypocrisy as they admonished the masses to guard against ''bourgeois liberalization.''
The death of Mr. Hu in April 1989 unleashed pro-democracy forces for a third time in Mr. Deng's first decade as leader, but he was no longer a figure of hope.
One Beijing University poster mourning Mr. Hu captured the antipathy toward Mr. Deng. ''The Wrong Man Died,'' it said.
Zhao Ziyang, the party chief tapped by Mr. Deng as a possible successor, showed sympathy for the Tiananmen demonstrators and was removed on the eve of the crackdown. Mr. Zhao's liberal tone in economic reform and political tolerance was buried by new edicts from the hard-line faction led by Prime Minister Li Peng.
In the aftermath of Tiananmen, Mr. Deng and his family took care to disguise his precise role in ordering the tanks and machine-gunners into Beijing, where they killed hundreds, perhaps thousands, of demonstrators and bystanders.
Mr. Evans, the former British Ambassador, says in his biography that Mr. Deng was angry when he learned of the bloodshed around Tiananmen and told the President, Yang Shangkun, and Prime Minister Li that they had ''bungled the military operation appallingly.''
The sensitivity of fixing historic responsibility for the massacre was never lost on Mr. Deng, who understood that after his death, the harsh verdict with which he branded the Tiananmen demonstrators as counterrevolutionaries could be reversed and he could become history's villain.
Mr. Deng's rule brought China nearly to the end of a century that opened with the Qing Dynasty still ensconced in the Forbidden City, the vermilion-walled palace compound at the center of Beijing.
In the eight decades since the last Emperor, Pu Yi, was deposed in 1911, tens of millions of Chinese have died in war, invasion and famine. Mr. Deng grew to manhood in the midst of chaos and became a revolutionary after spending five years in France on a work-study program, where he toiled in filthy factories that paid subsistence wages to Chinese.
His own family members were victims of a violent century: His father, Deng Wenming, was set upon by bandits near his home and killed in 1938.
During the Cultural Revolution of 1966-76, when Mao sought to tear down the Communist Party leadership, Mr. Deng was branded a public enemy, humiliated in ''struggle sessions'' and sent to work in a tractor factory. His younger brother, Deng Shuping, was driven to suicide in 1967 after weeks of abuse by Red Guards.
Mr. Deng's eldest son, Deng Pufang, was terrorized on the campus of Beijing University and, according to his sister Xiao Rong, attempted suicide by jumping from a fourth-floor physics laboratory window in September 1968. The fall broke his back and he suffered for months without adequate medical attention; he remains paralyzed.
Deng Xiaoping, like many of the emperors, combined the pursuit of a better life for the Chinese people with a studied ruthlessness to preserve the institution of power.
As a young revolutionary, he exhorted peasants to kill landowners because, he is said to have reasoned, once the masses had blood on their hands, they would be more committed to the Communist cause.
Mr. Deng would later earn a reputation as a pragmatist, but in the late 1950's he was an exponent of political repression and accelerated socialism. After intellectuals responded to Mao's invitation to ''let a hundred flowers bloom'' -- to express freely their criticisms of the Communist Party -- Mr. Deng helped lead a witch hunt against those who had taken the invitation in full measure.
In 1980, Mr. Deng acknowledged that the Anti-Rightist Campaign had been excessive, but he asserted that the essence of the struggle had been ''necessary and correct.''
Ever since Emperor Qinshi united China more than 2,200 years ago, the Chinese have looked to an imperial figure to rule them with the ''mandate of heaven,'' a feudal concept that was used to buttress the absolute right of the sovereign, but later evolved under Confucian traditions of benevolence and wisdom.
The Communist revolution that raised the flag of the People's Republic of China on Oct. 1, 1949, aimed at crushing this past and creating a perfect egalitarian society. But neither Mao nor Mr. Deng seemed able or, indeed, willing to completely bury the imperial tradition.
Mao created a cult of personality so broad and pervasive that he had the whole nation mimicking his style of drab clothing, memorizing his quotations from little red books and living under the gaze of his ubiquitous portraits.
Under Mr. Deng, China broke out of the monochromatic Mao era to life in full color. A walk down Nanjing Road in Shanghai today reveals the new Chinese glitz under the sparkle of a thousand boutique windows. In the throng of new consumers, the hairdos bounce with the latest styles from Hong Kong above leather jackets trimmed in fur.
In contrast to Mao, Mr. Deng was no cultist. Mr. Deng preferred to maneuver on the sidelines, out of the public eye, to exhort policies with occasional pronouncements.
Each time that Mr. Deng was purged from power, he fought his way back. Rehabilitated in 1973 after the worst of the Cultural Revolution, he was purged again as Mao lay on his deathbed in 1976. Denounced as an ''unrepentant capitalist-roader,'' it appeared that the notorious Gang of Four, the radicals led by Mao's wife, Jiang Qing, had defeated him. Mao himself decreed that Mr. Deng should be relieved of all his posts
Mr. Deng lived under house arrest for nearly a year until one of his old military cohorts, Marshal Ye Jian-ying, intervened after Mao's death, insisting that Mr. Deng's voice be heard in the leadership.
The Chinese rejoiced at Mr. Deng's comeback and at the fall of the Gang of Four. To Mao's successor, Hua Guofeng, Mr. Deng pledged his support ''with all my heart.'' But in less than two years, Mr. Deng had rendered Mr. Hua a harmless figurehead and had set about steering China on a new economic course.
As the economy soared, Mr. Deng acknowledged that he was as much a witness to history as he was its architect.
''I am a layman in the field of economics,'' he said in 1984. ''I proposed China's economic policy of opening to the outside world, but as for the details or specifics of how to implement it, I know very little indeed.''
Where Mao had preached ''Communes are good,'' Mr. Deng simply preached ''Markets are good.''
The Chinese did the rest.From Sichuan Village To French Factories
Deng Xiaoping was born Deng Xixian to a landlord family in the heart of China's most populous province, Sichuan, on Aug. 22, 1904.
The Deng household was the wealthiest in the village of Paifang. Mr. Deng's father, Deng Wenming, controlled about 25 acres of land with an annual output of about 10 tons of grain. When his wife could not bear children, he took a second wife, or concubine, whose family name was Dan. Her dowry in 1901 included the red-lacquered bed in which the future Chinese leader was born three years later.
Mr. Deng was just entering primary school in 1911 when the last Qing Emperor was overthrown by an amalgam of forces led by Sun Yat-sen.
Revolution was gathering throughout China and Mr. Deng would soon be part of it.
By 1919, Mr. Deng's father, joining the nation-building spirit of the times, decided to send his son to France for a work-study program. When Mr. Deng, age 16, and 200 other students boarded a steamer at Shanghai on Sept. 11, 1920, he was never to see his parents again.
Mr. Deng arrived in Marseilles, and found Europe a seething, ideological vortex of the Industrial and Bolshevik revolutions. He was quickly pulled into its currents.
In Paris he befriended the articulate and dashing Zhou Enlai, an ''elder brother'' to Mr. Deng. By 1922, Mr. Deng had joined the Communist Party of Chinese Youth in Europe.
To escape the French police, Mr. Deng plotted his departure from France in 1926. His route took him to Moscow, where his revolutionary training continued.
During five years in France, Mr. Deng learned few industrial skills that could be transplanted back to China, but he saw the power of Western technology. He seemed unmarked by France's high culture or by its philosophers of democracy and human rights. His daughter Xiao Rong says the reason is that Mr. Deng was part of an under-class in France, exploited as a foreign laborer and persecuted as a Communist.
''What he came in contact with was not democratic,'' Ms. Deng said.Political Conversion, And Return to China
After 11 months of ideological and military training in Moscow, Mr. Deng began taking orders from the Communist International. He returned to China as the chief political adviser to one of the powerful warlords who had carved up northern China.
But the Nationalist leader Chiang Kai-shek was determined to eradicate the Communists. Mr. Deng fled south where he was reunited with Zhou Enlai at Wuhan in 1927. There, Mr. Deng was named secretary to the Communist Party Central Committee. He adopted the name Deng Xiaoping, whose origin he has never publicly explained.
Civil war was raging. Communists were rounded up and executed, particularly in Shanghai, where the party headquarters and Mr. Deng had moved by the end of 1927.
In the chaos, Mr. Deng suffered the first of many personal tragedies when his first wife, Zhang Xiyuan, another young revolutionary whom he had met in Moscow, died after a miscarriage in early 1930. Mr. Deng, a widower at 26, did not attend the funeral, his daughter wrote, because, ''Revolution came first.''
In 1929, Mr. Deng led his first successful Communist uprising, in southwestern Guangxi province. But his campaign toward Guangzhou proved a disaster. His Seventh Red Army in tatters, Mr. Deng reached Mao Zedong's base in 1931. His loyalty to Mao's vision of the revolution briefly cost him his freedom during the internal party struggles of the early 1930's.
Mr. Deng married Jin Weiying, another party member, in 1932, but when he came under political attack, she left him to marry his chief accuser, Li Weihan.
In October 1933, Chiang Kai-shek marshaled one million men to crush Mao's Communist base in Jiangxi province by building a chain of block houses across the countryside. Thus began in 1934 a yearlong, 6,000-mile retreat known as the Long March. Death from exposure, suffering and frequent attacks thinned the Communist Army from 70,000 to 10,000 as it passed through treacherous and hostile country.
Rehabilitated after his first purge, Mr. Deng set out on the Long March as the editor of Red Star, the party paper. By the time the routed army reached the caves of Yanan in remote Shaanxi province, Mr. Deng had nearly died of typhoid fever. And Mao had reversed his own political fortunes and never again lost his command of the revolution. Mr. Deng was one of his closest lieutenants.
Japan's invasion of China in 1937 provided Mr. Deng and the Communists the opportunity to defend the nation. It was the period of their greatest exploits as they competed with Chiang Kai-shek's Nationalists for the affection of the masses.
During eight years of war, Communist forces grew from 50,000 to 900,000 in strength and party membership swelled from 40,000 members to 1.2 million. Mr. Deng was appointed top political officer of the 129th Division.
By the time Mr. Deng was in his early 30's, he had traveled extensively and commanded armies in the field, experiences giving him a keen sense of the limits of military power and the importance of political discipline in marshaling it. The battlefield hardships Mr. Deng endured created many lasting bonds with China's top field commanders. These bonds also served his rise in the party and may have saved his life when he was later purged.
Absorbed with his war duties in 1938, Mr. Deng had little time to react when he received word that his father had been murdered by bandits back in Sichuan. He did not return home.
But the next year, during a visit to Yanan, Mr. Deng married for the third and last time. Pu Zhuolin, the daughter of a merchant from Yunnan province, had came to Yanan from Beijing University, where she had studied physics. Mao attended the wedding in September 1939.
Never active in politics, Zhuo Lin, the name she adopted in Yanan, bore five children between 1940 and 1952 and stood by her husband through a series of crises.
In addition to his wife, Mr. Deng's survivors are his five children: the oldest, Deng Lin, an artist who has exhibited her work in New York and Paris; Deng Pufang, the paraplegic son, who for the last decade has worked on behalf of the handicapped in China; a second daughter, Deng Nan, a vice minister of the State Science and Technology Commission; the youngest daughter, Xiao Rong, who has served her father as a personal aide since 1989, and the youngest son, Deng Zhifang, who studied physics in the United States before returning in 1988 to enter high-profile business ventures.Victory in War, And in Revolution
Victory over the Japanese and then over the Nationalists brought the Communists to power with the founding of the People's Republic of China on Oct. 1, 1949. Mr. Deng was dispatched to pacify southwest China and Tibet before returning to Beijing in 1952.
Reunited with Zhou Enlai, he served his mentor and the economist Chen Yun on the Economic Commission before taking over the Finance Ministry. But Mr. Deng's administrative skills and wartime connections propelled him upward. He was appointed secretary general of the Central Committee in June 1954 and, by 1956, secretary general of the Communist Party. With Yang Shangkun as his deputy, Mr. Deng virtually controlled the party personnel apparatus, placing thousands of cadres in jobs and building a party network that became the foundation of his power.
Beginning in January 1955, one of his most secret tasks was to help Mao and Zhou create and finance the scientific organization that would build and detonate China's first atomic bomb. With the detonation of a fission bomb weighing 3,410 pounds on Oct. 16, 1964, China became a nuclear power.
Mr. Deng's rise to the top of the party in the 1950's coincided with Mao's growing disaffection with those who would succeed him. When the Soviet leader Nikita S. Khrushchev attacked Stalin in a secret speech in 1956, Mao was appalled that his putative heirs seemed to identify with the attack. If Stalin's position was not sacred in Soviet history, Mao reasoned, neither was Mao's in Chinese history.Great Leap Forward, And Many Setbacks
With a series of internal political campaigns, Mao began assaulting what he perceived as his many enemies. The Anti-Rightist movement of 1957 led into the Great Leap Forward in 1958. The rupture in relations with the Soviet Union soon followed, becoming apparent in 1960 with the abrupt withdrawal of Soviet aid. In July 1963, a final effort was made to patch up the ideological split when Mr. Deng was dispatched to Moscow in what proved to be the last formal contact between leaders of the two Communist parties for 26 years.
In the early stages of the political campaigns, Mr. Deng was the instrument of Mao's revenge, sending thousands of Chinese intellectuals to manual labor camps and prisons.
Mao was not satisfied. He wanted to propel China forward with agricultural communes and steel production. His Great Leap Forward was perhaps the largest policy-induced economic disaster in history. Backyard furnaces turned the peasantry's tools and cookware into useless molten globs. China's harvest rotted in the fields. No one dared tell Mao of the failure; grain exports continued. Then famine struck.
As many as 30 million Chinese died of starvation in the next four years.
The catastrophe seemed to remold Mr. Deng, and he thereafter placed more emphasis on practical measures for economic growth, especially those that contained incentives for China's peasantry to increase individual production.
As Mr. Deng worked more closely with Yang Shangkun and President Liu Shaoqi, Mao began to suspect they were plotting against him. He complained the party leadership was treating him like a ''dead ancestor'' and he singled out Mr. Deng for making decisions like an ''emperor.''
Luckily for Mr. Deng, he slipped and broke his leg in 1958, thus avoiding the worst confrontation over Mao's policies at the Lushan conference of 1959.
Mao mounted a withering counterattack and Mr. Deng did not escape for long. Mao unleashed the Cultural Revolution in 1966 to destroy his adversaries in the party. He exhorted the masses to ''bombard the party headquarters'' and thrust China into the decade of chaos that fostered civil conflict in every school, factory and municipality.
Thousands of young Red Guards were allowed into Zhongnanhai, the leadership compound in central Beijing. They rampaged through the homes of President Liu, Mr. Deng and other leaders. Mr. Deng was branded the ''No. 2 capitalist-roader'' in the party after President Liu.
Mr. Deng's mordant self-criticism had failed to appease the Red Guards. They continued to attack him as a ''capitalist despot.''
Mr. Deng's penitence and the patronage of Zhou Enlai may have saved his life, but he was stripped of all offices except his party membership. The Deng family was ordered to the countryside. The children were dispersed. Mr. Deng and his wife were sent to Jiangxi province, where they worked in a tractor factory and gardened.
By the early 1970's, China seemed to be falling apart. Mao's chosen successor, Lin Biao, was discovered plotting a coup and was killed in a plane crash; Mao feared nuclear war was imminent with the Soviet Union; the economy was in chaos, and Prime Minister Zhou had cancer.
After President Nixon's 1972 visit to China, reporters covering a state banquet in April 1973 for the Cambodian leader, Prince Norodom Sihanouk, were surprised to see a small man in a gray Mao suit, white socks and black oxfords. It was Mr. Deng, recalled a month earlier to help heal the country and perhaps succeed Zhou.
Mao threw Mr. Deng into a Politburo dominated by radicals, and they soon turned on him. When Zhou died in January 1976, thousands of Chinese swarmed into Tiananmen Square to praise Zhou and to express their opposition to the radicals. Mr. Deng was blamed for the revolt and Mao, near death, agreed to purge him for a final time. Mr. Deng was placed under house arrest.
Mao died in September that year, and the Gang of Four was arrested the following month. Mr. Deng pressed to return to his duties and crucial military allies like Marshal Ye Jianying rallied behind him.
Mao's last chosen successor, Hua Guofeng, delayed on releasing Mr. Deng, but Mr. Deng's allies prevailed. Mr. Deng's political comeback gathered momentum through 1977 until December 1978, when he was able to establish himself as the country's paramount leader.Eye for Strategy, In War and Peace
Mr. Deng moved quickly to get China back on the road to economic modernization.
In agriculture, he allowed the provinces to dismantle communes and collective farms, but the peasants moved even faster, dividing up plots of land for private tilling. Output soared. So did profits.
Mr. Deng told the military that the threat of world war was receding and, therefore, the military would have to serve the civilian economy. Arms production stopped in many factories and military modernization was deferred, except for strategic weapons to maintain China's nuclear deterrent.
Because he had seen what modernization had done for the West, Mr. Deng's strategic vision was broader than Mao's.
He told President Carter in January 1979, ''The Chinese need a long period of peace to realize their full modernization.'' And to American businessmen, he said China needed their money and technology.
After establishing full diplomatic relations with Washington on Jan. 1, 1979, Mr. Deng made a whirlwind tour of the United States that was full of extraordinary images, from Mr. Deng kissing the children who sang in Chinese at the Kennedy Center to wearing a white 10-gallon hat in Texas.
Back home, it seemed for a time that Mr. Deng's openness to economic reform would lead him to support significant democratic reforms.
He told party leaders that he endorsed the spirit of China's new democracy movement. ''Democracy has to be institutionalized and written into law,'' he said.
But when Wei Jingsheng and his Democracy Wall colleagues turned their criticism on Mr. Deng, the Chinese leader smashed the movement and persecuted its intellectual leaders. Mr. Deng began to equate democracy with the political turmoil of the Cultural Revolution. ''Our people have just gone through a decade of suffering'' and ''cannot afford further chaos,'' he said.
Mr. Deng wanted the energy of the economic reformers, but could not tolerate their political challenge.The Focus of It All: Economic Change
Of the changes that Mr. Deng oversaw, economic restructuring was central. And the Chinese often did not wait for new policies as they ''dove into the sea,'' the metaphor for going into business.
Farmers began raising fish, shrimp and fruit for new markets that sprang up in every township. Private and collective enterprises multiplied as former peasants began manufacturing toys, fireworks, bricks, clothing -- all manner of everyday items.
The agricultural changes were easily accomplished and the farmers, by any previous standard, were getting rich. The first thing many did was to build a new houses, creating a huge demand in the construction industry.
In industrial reforms, Mr. Deng started cautiously, creating special economic zones in China's coastal provinces of Guangdong and Fujian, where tax subsidies attracted Hong Kong's manufacturing tycoons. Mr. Deng said the coastal provinces could get rich first, but the real strategy was incrementalism because Mr. Deng feared failure and discredit at the hands of the party's Marxist conservatives.
The economic zones ignited an export explosion that continues today, with China dominating the world market in toys, shoes and textiles. The zones multiplied, forming a rimland of coastal wealth, but extending inland only to major cities like Beijing.
Along with the wealth came scourges. Child labor and sweat shops appeared as parents sent their children to work, not to school. Shoddy and unsafe factories became firetraps where thousands died in accidents or fires. Fly-by-night companies produced dangerous or useless products, including one ubiquitous contraption that promised to make people taller.
Criminal gangs, prostitution and the sale of women into bondage spread from rural to urban areas. Old Communist cadres who wiped out narcotics trafficking in the 1950's were repulsed at its return. Heroin and opium were back.
Grafting the success of the coastal provinces onto the larger Chinese economy proved beyond Mr. Deng's capabilities. Today the core of China's economy, the state-owned industrial sector, remains largely unreformed, mired in debt, a slave to party apparatchiks, many of whom are corrupt or incompetent.
Over 18 years, Mr. Deng's attempts to restructure this monolithic sector, the source of the Communist Party's power and revenue, have led to a series of ''boom and bust'' inflationary cycles that continue today.
Mr. Deng wanted the party to reform the state factories, to make the managers responsible for their profits and losses, and to raise worker productivity.
Bankruptcy, as a concept, entered the Communist lexicon for the first time. But the political consequences of widespread layoffs always prevented Mr. Deng's reformers from acting boldly.
When they did act, there were no macroeconomic levers to adjust the money supply, only blunt instruments of jawboning from Beijing.
When inflation got out of control after the price reform drives of mid-1988, panic buying added to the unrest that sent hundreds of thousands of workers into the streets in support of democracy, but also to protest corruption and mismanagement.
The military crackdown at Tiananmen Square and martial law brought the hard-liners back to pre-eminence in economic policy and Mr. Deng had to go along. After the removal of Zhao Ziyang in 1989, Mr. Deng and the other revolutionary leaders could not agree on who should rule. Their compromise was Jiang Zemin, the Shanghai party boss whose strongest suit was consensus-building.
The economic bubble that had expanded in the late 1980's finally burst, the economy fell in on itself, production ground to a halt in many industries, foreign investors fled and credit dried up.
In November 1989, Mr. Deng announced his retirement from his last formal post, head of the Central Military Commission. But the emphasis in Chinese culture on seniority made it impossible for him to leave politics, or for politics to function without his intervention.
The failed Soviet coup in August 1991 and the subsequent collapse of the Soviet Communist Party seemed to convince Mr. Deng that the most powerful antidote to such a fate for Chinese Communism would be economic growth. He began to criticize conservatives who obsessed over Western ''plots'' to topple Communism through ''peaceful evolution.''
''Say less and do more,'' he admonished them, trying to return their focus to practical steps to promote economic growth.
The reforms were turning loose forces that eventually would challenge the party, whose ideology had lost its moral sway. Millions of Chinese were turning to religion and Confucianism, seeking a moral structure to replace the void left by the party.
Mr. Deng understood that economic reform and the forces that it unleashed in Chinese society would eventually challenge the Leninist rule of the party.
Thus began a period in which the Communist Party's legitimacy arose from its ability to deliver economic growth and rising incomes.
''In the end, convincing those who do not believe in socialism will depend on our nation's development,'' Mr. Deng said in late 1991. ''If we can reach a comfortable standard of living by the end of this century, then that will wake them up a bit. And in the next century when we, as a socialist country, join the middle ranks of the developed nations, that will help to convince them. Most of these people will genuinely see that they were mistaken.''One Last Battle Against Conservatives
But even as Mr. Deng spoke, the hard-liners in Beijing refused to act and Jiang Zemin was paralyzed by the lack of consensus.
At the beginning of 1992, Mr. Deng was rampant against his old adversaries, principally the hard-line faction led by the conservative patriarch Chen Yun. Mr. Chen and many other elders retired as Mr. Deng dominated the 14th Party Congress, which enshrined a new national goal of creating a ''socialist market economy'' by 2000.
Mr. Deng also moved against Yang Shangkun and his younger half-brother, Gen. Yang Baibing, who had created a power base in the military that was threatening the post-Deng political order.
But the pace of reform was too fast for Mr. Deng's successors, who craved social stability above all to consolidate their rule. Unemployment, sagging state industries and labor unrest bedeviled the leadership up to the moment of Mr. Deng's death.
And the pro-democracy forces have gradually been suppressed. Instead of charting a clear path, Mr. Deng's successors stumbled politically, seeking concessions from the world on trade and human rights but offering little in return.
A Clinton Administration review of human rights reported that by the end of last year, public dissent had been ''effectively silenced,'' by intimidation, prison or exile.
As long as Mr. Deng drew breath, it seemed that China could cope with its contradictions. But as his health inexorably declined, the Chinese seemed to pause and to wonder about the future.
The Chinese economic reforms are long in the making, an unfolding process that has spanned most of the twentieth century. In fact, it completely fit the definition of a full reform. Unlike the other countries reforms, Chinese economic reforms can be characterized overall as very successful. When the other countries, such as Russia, were trying to do the same thing but did not success, China has increased its country s economy greatly. China has the fastest growing economy in the world within the past two decades, with an average annual growth rate of approximately 10 percent since its economic reforms began in 1979. Between 1979 and 1996, Chinese real GDP has quintupled from US$150 billion to US$750 billion. Recent Chinese economic policies have shot the country into the world economy at full speed. As testimony of this, China's gross domestic product has risen to seventh in the world, and its economy is growing at over nine percent per year , which is very amazing. Starting in 1979, the Chinese have implemented numerous economic and political tactics to open the Chinese marketplace to the rest of the world. Just a few areas China's government is addressing are agricultural technology, the medical market, and infrastructures, like telecommunications, transportation and the construction industry. China is one of the very few countries that have made a successful transition from a centrally planned economy to a market economy.
Worldwide China has friends who would like to see it march on to socialism and communism through reforms. In this regard, ever since China took up the reforms promoted by Deng Xiaoping, commentators have been concerned that these reforms to the Chinese economy lead to the restoration of capitalism and will once again bring China under the yoke of foreign domination. Many Chinese leaders did not believed that economic reform of China was necessary until after Mao Zedong died for a couple years. By 1978, Chinese leaders were searching for a solution to serious economic problems produced by Hua Guofeng, the man who had succeeded Mao Zedong as CCP (Chinese Communist Party) leader after Mao's death. Unfortunately, the movements by Mao and Hua left China in a state where agriculture was dormant, industrial production was low, and the people's living standards had not increased within over twenty years. The gross output value of industry and agriculture has only increased by 810 percent and national income grew by 420 percent [between1952 and 1980] average, and individual income increased by only 100 percent. From the late 1950s to 1979, the economy of China was at a standstill. The living standard of the Chinese citizens was not improving and becoming worse. Industry was producing at only fifty percent. However, attempts at economic reform in China were introduced not only due to some kind of generosity on the part of the Chinese Communist Party to increase the populace's living standards. It had become clear to members of the CCP that economic reform would fulfill a political purpose as well since the party felt, properly it would seem, that it had suffered a loss of support. All members of the leadership of the Chinese Communist Party accepted the idea of economic reform enthusiastically in 1978. To a great extent, the issue of economic reform became politicized as the issue was used as a means by Deng Xiaoping to attain the leadership of the Chinese Communist Party. Deng took advantage of the economic crisis to discredit Hua and aim for leadership of the party. Reform policies became Deng's platform against Hua for post-Mao leadership. In fact, for the history of the economic reform of China, under the system economic questions are necessary to be the political questions.
In late December 1978, the "Deng Era" began. During the "Deng Era," Deng Xiaoping proved thoroughly that he was a force of good by spending the remainder of his career reforming China for the better. One of the first things Deng Xiaoping did for the country was to make Mao less "Godlike." To make Mao less "Godlike," he convinced the people that Mao did make mistakes while he was in power. Deng Xiaoping told people in China that Mao's greatest mistakes were the Cultural Revolution and the Great Leap Forward Policy . After Mao was made less "godlike," it became easier to reform China. The first policy Deng Xiaoping reformed was the land policy. In 1979, he eliminated communes and began to give greater independence to the 800 million peasants. He leased the land to the peasants and allowed them to decide what to grow. Due to this policy, production of food greatly increased and the net income of a farm family more than doubled. Soon the Chinese were enjoying a higher standard of living (to be discuss later on in this essay).
Deng also wanted to improve the industry of China. He did this by allowing small private enterprises do business. These enterprises were usually small restaurants and other types of shops. In 1979, Deng Xiaoping also created four special economic zones (discuss later on in this essay), where foreign investors could invest their money. In 1984, fourteen more special economic zones were opened. Deng has implemented economic reforms in a way that there are no losers at all. Therefore, no Chinese citizen is made worse off as the result of the Chinese economic reforms. Moreover, Deng had China had an abundant supply of new resources, and most of them were invested efficiently. Approximately 80 percent of the capital stock in 1996 is due to the investment made since 1979.
Under Deng s leadership, having no losers is enable the economy of China is to be fully efficient. The Chinese economic reforms have actually achieved the gain without pain which is the dream of all economic reformers. The economy grew so quickly that inflation occurred and the government had to re-institute price controls. One of the important aspects of Chinese economic reform was the decision of China to join the world economy. Deng Xiaoping and his allies hoped to affect this 1979 revolution in two ways: by expanding foreign trade, and by encouraging foreign companies to invest in Chinese enterprises.
In this paper, the main focus will be on the Dual-Track approach by Deng Xiaoping and the Three Elements of the Chinese economic reforms since 1979.
THE DUAL-TRACK APPROACH
By making the principle no one loses - of the Chinese economic reform works, China had developed the Dual-track approach. The dual-track approach can be defined as two parts: the planned track and the market track .
It started at the end of 1978 with rapid and comprehensive liberalization of the agricultural sector when the other sectors remained under the traditional planning management. The first policy Deng Xiaoping reformed was the land policy. In 1979, he eliminated communes and began to give greater independence to the 800 million peasants. He leased the land to the peasants and allowed them to decide what to grow. Part of his policy was to have the peasants give up a certain portion of their harvest (usually one-third) for a price guaranteed by the government by contract. The rest of the harvest was theirs to sell or keep. Because of this policy, production of food greatly increased and the net income of a farm family more than doubled. Farmers now enjoy a high degree of production freedom: only 5 percent of their production in 1993 was set by the state plan. Soon the Chinese were enjoying a higher standard of living. Before this policy, the people of China usually did not have enough to eat. After the policy, the Chinese were enjoying eggs, meat (which used to be almost nonexistent) and other treats.
A) Dual-Track Production and Price
Other than improving the agricultural in China, Deng also wanted to improve the industry. He did this by allowing small private enterprises do business. These enterprises were usually small restaurants and other types of shops. In 1984, China set quotas for consumer goods much lower than for producer goods. This proportion of plan production has helped to reduce the total industrial output vale from over 90 percent in 1978 to approximately 5 percent in the early 1990s.
By 1984, they were producing more than $1 million worth of rice and a range of side products, including rice wine. Their residential earnings were up to about $200 a year. This meant that they could begin replacing their mud-and-straw hats with solid brick houses. With the introduction of the free markets and the dual-track price system, people continued to be able to purchase freely at any quantity of any good at the free market price.
There are always two prices on one good: the planned price and the market price. All market prices are determined by the equilibration of the supply and demand in the market with the remaining fixed planned price.
Under the dual-track strategy, the central plan remains. All markets are instantaneously open. Producers are completely free to plan what they want to produce and sale. Consumers are also completely free to plan what they want to consume. This led to furious rebuilding and inflow of foreign investments. All this enabled China to remake itself into Asian's hub of finance, trade and culture.
B) Dual-Track Ownership
Foreign investment has played an important role in developing economic reforms in China. Dual markets were permitted the existence of foreign exchange in China from the mid 1980s to the end of 1993. During this period, the government of China did not control the transactions in the swap market, and the exchange rates in the swap market were mostly determined by the supply and demand. This exchange rate reform has turned out to be a complete success.
Indeed, the increase in foreign investments in the last eight years is striking. China has received 3.3 billion dollars in foreign investments during the 1980s. The area received the same amount from foreign investments in 1992 alone. Even more amazingly, in only the first ten months of 1993, the area had received over six billion dollars worth of foreign investments. Approximately 67.5 percent is from Hong Kong, Macao, and Taiwan. Chinese investors make a considerable portion of the investments from the United States and Japan from these countries.
The Chinese pharmaceutical market, much like Chinese industrial markets, is experiencing rapid growth due to reforms in China's economic strategy. For instance, the nation's government has decided to lower import tariffs and remove the necessity of an import license to bring pharmaceuticals into the country. Also, patented foreign drugs, such as Tylenol, are now being protected from counterfeiting by administrative action. The result of these provisions are overseas contractual investments totaling $1.5 billion in the past five years, and income from the medical industry's exports reaching 2.6 times the amount five years ago, according to Zheng Xiaoyu, director of the State Pharmaceutical Administration. The open policy and the coastal development strategy have allowed Deng to entrench his political power, and allowed his power to be sustained even after death. With the billions of foreign dollars coming into the area, it has become necessary to improve the city's facilities. To that end the central has allocated forty billion dollars worth of public works projects government for Shanghai within the last year. These public works projects include new sewers, a new water system, new gas lines, a new bridge, and extensive roadwork. Future plans include the construction of a second international airport, a container port, a new subway system, and more roads and bridges. China and foreign investors in a joint venture are also rebuilding the financial district, which will feature a new stock exchange.
C) Dual-Track Regional Development
In 1979, Deng Xiaoping has chosen four special economic zones where foreign investors could invest their money. The purpose of this act was to minimize the impact on and interaction with the new economic activities on the old-style domestic enterprise, which operate under the state plan. Shantou, Shenzen, Xiamen, and Zhuhai were the four zones, namely Special Economic Zones (SEZs). These four areas were given autonomy to test with the economic reform. For example, they were responsible from many of the regulations that govern foreign investments. The main success of this approach were made possible through (a) the existence of overseas Chinese enterprises were willing to invest in China although the uncertain economics and political background to them, and (b) the existence of the cheap labor in China. In 1984, fourteen more special economic zones were opened. The main effect of this regional development is that the whole country would experience the high growth of economy in the coastal areas due to the more rapid development of the non-state sectors but to the state of industrial reform.
D) Dual-Track Marketisation
Both central plan and market plan existed under the dual-track approach. The output produced outside the plans has grown rapidly due to the frozen central plan at the original level. The proportion of the output at the plan price for both selling and purchasing have declined continuously after the dual-track strategy started in 1978. The plan price of agriculture products in 1978 was 94.8 percent whereas the market price was 6.4 percent. Compared to the 10.1 percent in plan price in 1993 where the market price was 88.3 percent of the output value. It is very clear that by the early 1990 s, the plan price has dropped dramatically to the market price. The plan has phased out many goods. These statistics have proven the importance of demand expansion due to the rapid economic growth that takes place inside of the market price.
The THREE ELEMENTS of CHINESE REFORMS
In order to maximize the gain without pain in the Chinese economic reforms during the 1980 s, three essential elements of Chinese economic reforms have been developed. They are including (1) The open door Policy, (2) Marketisation, and (3) The contract responsibility system . The results produced by these four elements had led the Chinese economic reforms characterized overall as very successful.
The OPEN DOOR Policy
China's capitalism and boom was born when their president, Deng Xiaoping permitted the provinces to dismantle their communes and collective farms. This led China to venture into free-market economics, although they were still under the communist political system. When President Deng announced that they needed Western money and expertise, China flung their trade doors wide open and China went on a capitalist drive without ever looking back. The open door element that created by Deng is the opening of the Chinese economy to international trade and foreign investment. This policy has been extremely successful. Chinese international trade has been increased dramatically since after 1979. The People s Republic of China is now the world s fourth largest trading nation. It is also the largest recipient of foreign direct investment among developing countries. With the introduction of the "open-door policy" which is proving to be very beneficial, they followed in the footsteps of their strong rich neighbors. He invited different countries in the world to do business in China. He opened the doors to the world, willingly, for the first time in China s history.
Stock markets were established in China in the 1990s. College and University graduates are no longer trapped in a particular area. They can work wherever they wish to. The government for welfare purposes controlled prices of low-graded grain. More than 95 percent of the producer goods and consumer goods have been determined into the market of China in the early 1990 s.
The Contract Responsibility System
This is a system of arranging the devolution of economic decision power. Whether different level of leaders should have the right to make certain economic decisions. Deng had decided which leaders in the country would have the right to make different kind of decisions according to their positions.
China's capitalism and boom was born when their president, Deng Xiaoping permitted the provinces to dismantle their communes and collective farms. In February 1978, Deng Xiaoping led up the Chinese economic reforms, making breakthroughs that only he at the time had the initiative to spearhead. This led China to venture into free-market economics, although they were still under the communist political system. When Deng announced that they needed Western money and expertise, China flung their trade doors wide open and China went on a capitalist drive without ever looking back. By mid 1960's, the Chinese Revolution settled down to the job of ruling China. Its main goal was essentially nationalist: a prosperous modern economy. While there continued to exist substantially economic inequalities, distribution of wealth was probably a bit more equal than in most Western countries. While there were great variations in income between different villages, and between different jobs in the urban sector, the overall averages showed a clear pattern: the cities were much richer than the countryside. Most capital investments were going into urban industries. The urban workers, using considerable amount of heavy machinery, had a much higher average level of productivity compared to the rural workers. The natural consequences were for the city people to arrange themselves an average income level twice as high as that of the people in the countryside.
The most obvious way to attack this poverty problem was to increase production, in all sectors of the economy. Though the easiest way to increase production was to increase capital inputs, China could only afford a limited amount of capital construction. In accordance to this, China went on a construction binge. Whole factories were purchased from abroad while others were built with local resources.
China has quickly become a world leader in trade and will only increase its importance to the global economy. These facts are proven with China's current economic statistics: growing at over nine percent per year and economists' projections of the nation's future China will double its gross domestic product of the year 2000 in the year 2010. The way the Chinese government achieved these impressive economic figures are through a complete renovation of Chinese trade policies. Reform measures in the country range from reduced trade barriers and technical contracts for agriculture.
The dual-track strategy that designed by China in the late 1978 had proven that economic reforms without losers are possible due to the fact that there is a surplus of agriculture labors in China. Moreover, Chinese economic reforms are considered to be gradual. It has the gradualism from easy to hard. It has started with the easy problems first then leave the hard ones for the end. This is one of the main reasons and components, which make Chinese economic reforms so successful even though there are many problems when Deng was trying to carry out this action.
The Chinese people have good reason to be glad with their government s economic policy during the 1980 s. China's economy is doubling every eight years, and its GDP quadrupled between 1980 and 1995. Real GDP growth was 9.7% in 1996, slowing to 8.8% in 1997. China has achieved the average annual growth rate of 9.5 percent since the economic reform. Economic reforms have also attracted a great deal of foreign investment with total investment in China now exceeding US$170 billion. The proportion of labor force engaged in agriculture dropped from 71 percent in 1978 to 53 percent in 1993. The direct foreign investment was $29 billion in 1993 compared to $2 billion in 1981 and the rose from 10 percent of GNP in 1978 to 36 percent in 1993. The Chinese now are going home with fat wallets, stocks, bonds and large bank accounts. Banks are reporting that savings have increased sixty-fold and is still growing. The economic reform has led China to join the world economic community and has become the globe's third largest economy. China is now ranked 11th in the world in exports of trade goods (excluding Hong Kong), with 2% of world trade, and foreign trade accounting for 35% of its GNP.
In addition to its rapid emergence in goods markets, China has also become a major player in international capital markets. China is now the leading developing country destination for foreign direct investment. The stock of inward foreign direct investment now exceeds $100 billion, though some of this is due to "round tripping" as Chinese investment is routed through Hong Kong to take advantage of the more favorable treatment of foreign investors. Firms with foreign equity participation accounted for two-thirds of the increase in Chinese exports in 1992 and 1993 .
Key elements of the economic reforms include: increased openness of the economy to the outside world, relaxed direct planning controls, decentralized economic decision-making, increased reliance on market forces to determine prices and output, and privatization of 300,000 state enterprises.
During the reform process, the State, the enterprises and the people have had sufficient time to make adjustments to the new market system. The reforms benefit the majority of people as the economy has maintained strong growth throughout the whole process.
Given the apparent strength of the Chinese economy as shown by huge public works projects, extensive foreign investments, participation in the world economy, and a generally higher standard of living by the populace, it would appear that China is now ready to join the world as a modern capitalistic and democratic society.
Deng Xiaoping led an interestingly up and down life. He was the leader of the world s most populous nation, and he also spent time in jail. It is difficult imagine the workings of China in the pre-modern periods and the communism only makes it that much more intricate. He, for sure, did the best that he possibly could within constraints such as a lack of freedom and personal expression. He always did things his way, and good or bad, he lived by his decisions. He was never one to shift the blame. As the most important man and leader in China since the death of Mao Zedong, Deng changed the face of China forever.