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.
By Satya J. Gabriel
"Economic planning is not tantamount to socialism,
because economic planning is also practiced in capitalist countries;
the market economy is not tantamount to capitalism
because a socialist country can also have a market economy.
Both economic planning and the market economy are economic means.
The essence of socialism is to emancipate and develop the
productive forces, destroy exploitation, eliminate polarization,
and attain common prosperity in the end."
Deng Xiaoping, 1987.
The current Chinese leadership, primarily the Dengist pragmatists (or, more simply, the pragmatists), have a keen understanding of the strengths and weaknesses of market exchange processes, gained over years of experimentation, a grounding in a modernist version of Marxian theory, and struggles to find public policy strategies to maintain economic growth while containing inflation. This leadership has experienced the problems that come out of a command and control allocation system --- severe imbalances between supply and demand, lackadaisical managers, low quality output, stagnation in technological invention and innovation, low worker productivity and morale, etc. The best way to understand the current generation of pragmatists is to recognize that they think like engineers (and in some cases were educated as engineers). Deng set the standard for today's leadership by shifting the focus of Chinese politics from the Maoist concern for building pro-communist social relationships and restraining bureaucracy (the core goals of the Maoist Left) to a pragmatic concern for flowcharting the general steps necessary to achieve Zhou enlai's "Four Modernizations." The Four Modernizations Era, which is associated with the rise to prominence of Deng Xiaoping and the pragmatists, was grounded in the idea that it was more important to innovate the most advanced technologies available to improve the efficiency of agriculture, industry, research and development, and the military than to achieve the social objectives that had been associated with the Maoist Era.
What were the steps in Deng's flowchart? This Dengist path began with agricultural reforms, including decentralization of production units, the fostering of the "individual economy" (or ancientism/productive self-employment), and free markets, which would generate the surplus necessary to subsequent phases of modernization of the transportation, energy, and education systems, upgrading of Chinese industry, and ultimately leading to the advance of China's research and development capabilities to a par with the United States. The rural reforms were followed in the urban industrial sector by a process of gradually devolving control over surplus value from government ministries (under the command of the State Council) to enterprise managers.
This devolution was necessary to the Four Modernizations for at least three reasons: 1) enterprise mangers were understood as better positioned than higher level bureaucrats (whose perspective was embodied in the Plan) to make more efficient investment decisions (and therefore generate more future value from current investments); 2) the relative managerial acumen of enterprise managers could be better judged in an environment where firm performance was the result of firm-level decisions (creating an incentive for managers to make better decisions so as to gain the requisite rewards, including status, of outperforming their cohorts at other firms); and, 4) the existing bureaucratic arrangement was costing the central government value that could be saved under an alternative arrangement and then redeployed for modernization of infrastructure and the military.
The first phase of this devolution was from approximately 1979 to 1983, during which enterprise managers were allowed to distribute a portion of the surplus value generated by their firms, including using some of this surplus value for investment that was outside of the Plan. Managers were still required to meet the objectives in the Plan before they could exercise this discretion, however. The second phase of industrial reform started in 1983 and ended in 1987 and completely severed the role of ministries as appropriators and devolved this power to the enterprise managers in toto. The state simply taxed enterprises, rather than directly appropriating enterprise surplus value. The cost of this freedom from bureaucratic control was the removal of the enterprise from inside the bureaucracy, where enterprise investments and other costs were treated as a line item in the overall government budget, to outside the bureaucracy. Henceforth, enterprises were to finance their own investments and other costs, primarily by borrowing from state controlled banks. Nicholas Lardy and others have pointed out that this transition to enterprise autonomy was not as complete as it would seem on the surface. Although managers were supposed to face harder budget constraints, the reality was that most managers could continue to count on the state controlled banks to bail them out of financial trouble, providing low interest rate loans to patch holes in the income stream, helping managers to meet claims on surplus value, even when the amount of surplus value generated internally was insufficient to do so.
Phase three of the industrial reforms moved the relationship between the state-owned firms and the bureaucracy even further from the old patriarchal/Confucian arrangement (with the state as father and the firm as dependent). This phase lasted from about 1987 to 1992/3, was marked by legalization of the private sector as a "complement" to the public sector, and inaugurated a "contract system," loosely based on the baogan daohu (individual contract) system already in place in rural China (where the communes had been terminated in 1985). Enterprise managers negotiated their level of taxation with the ministries, rather than having the tax rate simply imposed from above, as was the case during phase two, and the first tentative steps towards creation of capitalist labor markets, where workers' ties to the firm were less permanent, were made. Enterprise managers became freer to operate outside of the Plan, with their own capital budgets, more control over employment, and the ability to negotiate joint venture arrangements with foreign firms.
We are currently in phase four, which began in 1992/3 and was codified in the constitution in 1993 with the phrase "socialistic market economy." This is the period of establishment of the "modern enterprise system," as called for by the fourteenth Congress of the Communist Party of China (CPC). This phase represents the decision of the CPC leadership to replicate the corporate governance structure common to capitalist economies of Europe and Japan, with the complete autonomy of formerly state controlled enterprises, even ones with a majority of shares owned by the state. The labor market has become fully capitalist. Contracts between workers and firms can be "broken and bought" (maiduan). It has also been marked by the growing importance of share ownership, in general, with many shares of state-owned firms having been floated on financial markets and more planning to go that route. The increasing importance of shareholding in the Chinese economy has buoyed the hopes of those promoting neoliberal strategies of development that China will, even if only gradually, follow the path of other so-called transition economies in adopting a fully "liberalized" economy.
Did this era of reforms in rural and urban China, the "Four Modernizations Era," represent a displacement of Marxism by neoclassical/neoliberal economic thought in China? While it is true that Chinese economists have become multilingual in theories, expanding their knowledge beyond the subset of Marxian theories that prevail within Chinese academia to include neoclassical, neo-Keynesian, Austrian school, and other so-called Western economic theories, it must be understood, especially in a world dominated by the neoclassical/neoliberal cult of the market (where social scientific analysis of social relationships has given way to arguments grounded in a supernatural notion of "the market" --- the market as God), that this theoretical shift from Maoism to Dengism (or from the radical Left to the pragmatic Right) was not a sign that the Chinese leadership had joined the neoliberal congregation. Their promotion of greater reliance on the market was not based on neoclassical scripture, but on Deng's own version of Marxism (much as the Soviet's adoption of the "New Economic Policy" had been based on a particular understanding of Marxism). In other words, the policies of the pragmatists could be constructed completely within indigenous theoretical frameworks. Nevertheless, in a world of relatively open communication of ideas, indigenous ideas are always, in part, the result of cross-fertilization with "foreign" ideas. There is no doubt that the theoretical underpinning of the pragmatists (just like that of the various oppositions within and without the Communist Party of China) are shaped, to some extent, by the full range of intellectual traditions common to academic discourse in France, Japan, Great Britain, the United States, Italy, and so on, as well as intellectual discourse within China itself.
In this sense, the pragmatist modernists in China are considerably more eclectic (and less ecclesiastical) than the neoliberal modernist leadership that dominates policy making in the West. The pragmatists are aware (as was Marx himself) of the efficiency of market exchange processes in sending signals from consumers to producers, from retailers to wholesalers, from wholesalers to producers, and from producers to producers. They understand that the relatively low cost and rapid transmission of information via the interaction of and negotiations between buyers with sellers (and the effects of failed negotiations, such as unintended inventory buildups) provide a key ingredient in improving the effectiveness of economic institutions. This is particularly the case when these institutions are subject to the "discipline" of the market, i.e. are allowed to suffer, even cease to operate, because of an inability to meet the rigorous demands of market transactions. In this sense, the pragmatists share with the neoclassical/neoliberal conservatism of the "West" a respect for the importance of "the market." But they also understand that there is no magic in market exchange processes. Markets, as collections of buyers and sellers transacting, are not infallible. By the very nature of the interactions among market participants, mistakes (from the standpoint of the society taken as a whole) can be made. The problems that are called "negative externalities" in neoclassical orthodoxy are understood by the Chinese leadership to be innate to the very process of transacting. For example, the Chinese leadership is acutely aware that allowing agricultural production and marketing decisions to be made purely on the basis of private market transactions could lead to shortages of certain staple foods in certain regions and cause human-made famines. In a society that has significant centrifugal forces at work, it is considered necessary to keep a greater degree of control over these transactions than might be thought appropriate in a more "free market" environment (as embodied in neoliberal policies).
Thus, the Chinese leadership remains fairly conservative in their "liberalization" or "reform" efforts. They continue to follow the approach embodied in Deng Xiaoping's phrase "Mozhe shitou guo he" or "Crossing the river by feeling for stones." The building of the "socialist market economy" is, then, understood to be another of those great Chinese experiments, a continuation of the "permanent revolution" that Mao espoused, albeit a revolution that the Maoist Left might have considered reactionary. To be sure, it is hardly an experiment on the magnitude of the Great Leap Forward. The version of market socialism being constructed in China builds on ideas that had already been tested, even if to a limited extent, elsewhere. And the experimentation was in the context of a carefully thought-out "path" of development, which can be identified in ideas dating back to Zhou enlai and embodied in the Selected Works of Deng Xiaoping. In other words, the experiments (the stones) were designed to find a workable way to traverse the theorized developmental path (the river).
The pragmatist leadership recognized, from direct experience, as well as from evidence gathered more indirectly, that economic rewards and punishments were an important way to motivate economic agents to avoid waste and to respond to a rapidly changing economic environment. Government bureaucrats were neither motivated nor equipped to respond in such a manner. Shortages can go undetected or uncorrected for a very long time if it left up to bureaucrats to solve the problem. But if an economic agent is in a position of being rewarded for correcting such a problem, by supplying the product, for example, then economic efficiency can be greatly enhanced. This is a fundamental lesson of the difference between the speed of functioning and efficiency of market exchange processes versus command and control systems. Lenin, Trotsky, Bukharin, Preobrazhensky, and other members of the Bolshevik leadership in the USSR had some rudimentary understanding of this when they pushed forward the New Economic Policy. The Chinese leadership had a similar rudimentary understanding of this from the period prior to the 1949 Revolution when they governed "liberated" areas of China and, for clearly pragmatic reasons, did not interfere, to any significant extent, in local markets.
But why does the Chinese leadership continue this careful " feeling for stones . . . " approach to economic liberalization? Why not take the approach preferred by Jeffrey Sachs and others who argue for a "big bang" strategy to re-forming socialist economies? The answer is, in part, that the Chinese leadership doesn't have Jeffrey Sachs' faith in the so-called market. They see market exchange processes as an institutional tool, but not a panacea. They have, therefore, rejected the self-adjusting-equilibrium (or market-as-God) discourse of mainstream neoclassical economics. Zhu Rongji, the new premier and top economic reformer, is a strong advocate of making use of the "market mechanism" and of minimizing the role of the bureaucracy in the economy. But Premier Zhu, like most of the current leadership, also believes that market exchange processes are capable of "getting out of control" and producing chaos. President Jiang Zemin, the first paramount leader to have a childhood spent in preparing for an intellectual life (as an engineer), has even shown an interest in "chaos theory" as a tool for social analysis. Chen Yun, China's paramount economist and a guiding intellectual force in the reform era, has described the market as a bird and the state planning institutions as a cage. Chen warned that a bird without a cage would fly away, but he also warned against making the cage too small. Markets, in the conception of the Chinese leadership and many academic economists advising them, are not naturally equilibrating, as in the Sachs' world-view, but are chaotic, though rapidly responding, relationships constrained from flying apart into chaos by strictly enforced institutional rules and relatively rigid institutional structures.
Whether it is falling investment and rising unemployment, debt crises, work stoppages, "runaway" inflation, oil shortages, excess supplies and rapidly rising inventories, or any number of other problems, the transactions that make up the so-called market are always capable of generating social problems and sometimes very severe social problems. For Zhu Rongji and the other Chinese leaders, these problems are not aberrations or the simple result of external shocks, but are simply possible outcomes of normal market functioning, given that markets are nothing more or less than the interactions of various economic agents, with differing economic power, knowledge, and social connections. And Premier Zhu no doubt recognizes that market-determined crises are not always undesirable, at least from the standpoint of some subset of economic agents. The Chinese leadership may very well make use of the market as a tool for the destruction of some "inefficient" state owned enterprises (that have acted as a drain on the government's revenues) --- leaving the blame for any subsequent rise in unemployment to the impersonal market mechanism, rather than to conscious government policy. Thus, even though the ideas of Marx and contemporary Marxian theorists play a relatively minor role in shaping public policies in the post-Mao China, there remains among the Chinese leadership a latent Marxian ontology of economic life as a continuous series of tensions and struggles which are sometimes unresolved, sometimes resolved favorably for the parties involved, sometimes resolved favorably for only some of the parties and not so favorably for others, and sometimes result in a generalized crisis that threatens social cohesiveness (or some combination of these outcomes).
In this conception, releasing market exchange processes from regulation (doing away with the cage) always runs the risk of unleashing the chaotic (and potentially catastrophic) elements of these processes (the aforementioned generalized social crisis). For example, rather than controlling the number of state-owned enterprises destroyed by the market mechanism, a complete release of such enterprises from any government support or authority might result in a massive collapse of the industrial sector and widescale unemployment. There have already been large-scale demonstrations against the closing down of state-owned enterprises. The Chinese leadership would not want to see this process become too generalized. In other words, given their theoretical understanding of markets, the Chinese leadership is behaving in a manner consistent with risk aversion. They are being careful in how far they go in deregulating markets. They want to make sure the stones are firm before planting their feet on the next one. The "feeling for stones . . ." strategy is based on an understanding of liberalization as a series of tradeoffs between efficiency and increased risk of market-determined social problems (or, at the extreme, of market initiated social disintegration).
The pragmatist leadership is, therefore, willing to allow more "hard budget" constraints on state-owned enterprises, resulting in some increase in bankruptcies and unemployment, for instance, but not too much or too fast. They are open to continued liberalization of financial and housing markets in order to entice more of China's citizen's savings into productive use, but want to keep a tight rein on speculation and inflation. In other words, the Chinese leaders believe the market can operate efficiently in sending information and generating responses to information, but sometimes the information sent and the responses initiated are not conducive to social welfare, social peace, and the long term development of the Chinese nation. Indeed, it is considered possible that an unfettered market could generate an economic crisis that would have among its outputs increased poverty, increased crime and corruption, and a diminution of China's ability to remain a cohesive nation-state. For the Chinese leadership, the market mechanism is rife with contradictions. It is an effective tool for solving some problems, yet creates other problems. It is akin to a wild horse that, when tamed, can be used effectively to get more done, but always has the potential to once again go wild and cause havoc.
The practice of gradual liberalization ("feeling for stones . . .") has clearly paid dividends for the Chinese leadership. China's leadership has built up foreign reserves in excess of $100 billion and has avoided the excessive foreign debt that now plagues nations such as South Korea, Indonesia, and Thailand. They have had greater success in continuing rapid economic growth with relatively low inflation than most governments of less industrialized nations or of the governments of the former Eastern Block (CMEA) nations. Indeed, the double-digit growth rates that China has experienced during the so-called Reform Era have far exceeded even the most optimistic economic projections. Twenty years ago, most economists would have reacted with extreme skepticism to anyone predicting that China (or any country even close to China in size) could grow in a sustained fashion at such rates, much less do so with relatively low inflation and under the tutelage of a communist party. This is, without question, a noteworthy achievement of the gradualist approach followed by the pragmatists that have governed for most of the period since the death of Mao.
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 The most notable proponent of neoliberalism in "transition" economies is Jeffrey Sachs. See, for example, Jeffrey Sachs and Wing Thye Woo, 1994, "Structural Factors in the Economic Reforms of China, Eastern Europe, and the Former Soviet Union," in Economic Policy 18 (April): pps. 101-146 for a well written explication of the neoliberal view. Alternatively, you can read any of the World Bank reports on China.
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 Amartya Sen's insights on the dynamics of famines as market-determined phenomena were among the reasons for his receiving the 1998 Nobel Prize in Economics.
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 China's leadership has generated more rapid economic growth than any of the former socialist nations of the Eastern Bloc and per capita income in Coastal China is double that of countries like Bulgaria and Romania and higher than per capita income in Russia. Coastal Chinese household incomes are, in nominal terms, as high as household incomes in Poland, the economy that many see as epitomizing the so-called Big Bang approach to the transition from centralized, command planning to market allocation and which has received substantial financial and other forms of support from the NATO bloc.
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Copyright © 1999 Satya J. Gabriel, Mount Holyoke College. All Rights Reserved.
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