The Economic Miracles of China and the Suppression of Political Liberalization



According to Freedom House, democracy in 2020 is in retreat. China, a beacon for political repression – has one of the fastest growing economies on earth, and many are looking to the China modeling and are questioning the inherent worth of liberal democracy.


Today, despite the country’s strong economy, there is a political crisis in Hong Kong, internet surveillance and government persecution of predominantly Muslim ethnic minorities in Xinjiang [1]. The authorities in the country have also been continuing a years-long crackdown on independent civil society.


China has always prioritized development over human rights at home and on the world stage. In this paper, we shall explore the economic miracles of China from 1978 until 1993 ­­– while simultaneously discussing the effects of this culture of growth on the political sphere.


We will achieve this by using the literature on political activity in China from that time period – and we will compare this with the economic trends in the country.


It is found that China’s miraculous economic development under Deng Xiaoping does yield some refreshing freedoms in contrast to Mao Zedong’s totalitarian vision for the state – but the country is yet to enjoy democratization.

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The Economic Miracles of China and the Suppression of Political Liberalization

The year 1978 marks the beginning of substantial economic reforms in China that yield unprecedented economic growth and development [2].


One of these crucial economic reforms is the promotion and liberalization of foreign direct investment (FDI). A robust economy does not always yield free and fair political institutions – and the case of China illustrates this phenomenon perfectly.


Most theories of development seek to explain democratization by postulating that a robust economy is a precursor to significant political liberalization. In East Asia during the 1970s and 1980s – scholars linked trends of democratization with rapid economic growth.


The rapid economic growth in East Asia led to the expansion of a healthy middle class, remarkable strides in terms of economic growth, a rise in per capita income and technological progress.


East Asia saw a rise of independent social movements that pushed against environmental deregulation, labor exploitation and government corruption. These robust social movements serve the purpose of holding government accountable – and their mere existence illustrates the existence of free political institutions.


By contrast, the case of China tells an entirely different story. The Chinese Communist Party has managed to exempt itself from the socialist social contract with the urban working class without losing its grip on political power.


China has maintained a rapid pace of economic growth for over twenty years – but unlike East Asia, it has not had to assimilate to trends of political liberalization. The pattern of ownership diversification stands in stark contrast with other reforming socialist economies that use the East Asia Model for development (Japan, South Korea, Taiwan).


China’s mode of integration into the global economy differs drastically from the experience of other East Asian high growth economies, in particular, Korea and Taiwan.


Foreign Direct Investment has been the dominant source of capital for China – and it far outweighs the more indirect, managed ties to foreign capital established by countries who use the East Asian model of economics.


The miracle of China’s economic growth that delayed political liberalization was a result of a strong Chinese state coupled with a weakened civil society (especially labor). After the death of Chairman Mao Zedong – the new leader Deng Xiaoping ushered in a new era of modern China, but many of the same political institutions under Zedong remained unchanged.


Xiaoping opted to retain the traditional communist bureaucratic state apparatus and only employed slight modifications. He believed that he could utilize local officials to accelerate economic reforms by using the old decision-making channels.


It is important to note that Xiaoping maintained the status quo authoritarian and bureaucratic mechanisms of the state to subvert any political changes that could threaten the authority of the Chinese Communist Party.


The CCP feared the overthrow of Communist rule, which is exactly what happened in 1991 with the fall of the Soviet Union. It is crucial to note that in China, political and economic authority was more decentralized and less institutionalized than it had been in the Soviet Union – meaning that Mao Zedong’s previous efforts of decentralization had left China’s central control over economic life less futile than that of the USSR [3].


Zedong purposefully shifted economic power down to provinces and cities during the Great Leap Forward and the Cultural Revolution. Local governments played a strong economic role – so generally, frail central institutions created an atmosphere for Foreign Direct Investment to flourish later on under Xiaoping.


During the Chinese Cultural Revolution prior to Xiapoing’s tenure, the country’s political and social atmosphere became increasingly tense and politicized.


Thousands of intellectuals, professionals, and officials were fired from jobs and imprisoned. Ordinary citizens had to worry about being criticized by their coworkers and neighbors [4].


On the economic front, China was lagging behind its East Asian neighbors during the cultural revolution. This inspired China to modify the system and create a robust economy that could compete with East Asia.


China wanted to achieve this without opening the door to political liberalization. Xiaoping achieved economic renewal in China by using provincial politicians to enforce central directives and articulate local interests. This enables Xiaoping to push his reforms through the bureaucratic decision-making processes and avoid the risks of changing the political rules of the game.


Xiaoping’s crucial decision to retain the traditional communist polity was momentous. By processing crucial economic reforms through the same bureaucratic institutions that plagued China since the 1950s – Xiaoping enhanced ambitious economic change without enabling substantial political reforms.


China under Xiaoping was able to make considerable progress towards being a competitive socialist economy. This was achieved by expanding foreign trade and investment, encouraging private and collective business, decentralizing fiscal revenues to local governments, and allowing state factories to keep a share of their own profit.


All of this created a culture of growth that enabled and encouraged economic and career incentives of bureaucrats and managers to give them a real interest in promoting reform.


Xiaoping and CCP’s economic philosophy was that slow and steady wins the race – meaning that if the political and social order of Mao’s China is to stay in place, earth shattering economic reforms in China must assume form gradually.


The trajectory of China’s industrial reforms during Xiaoping’s tenure was shaped by consensus decision-making – meaning that instead of sweeping out central planning in one bold stroke, elements of market competition were introduced gradually and tacked onto central planning, prolonging the period of transition from planned to market economy.


Contrary to popular belief, radical economic changes are possible in an authoritarian political setting. China, which is an authoritarian system, has managed to generate more popular support for the economic reform process than India, which is a democracy [5].


Attempts at economic reform in 1980s and 90s China have been much more successful than India’s economic reform efforts. This variance could be attributed to the different political systems in both countries.


The distinction between China and India supports interpretations that point to the key role played by authoritarian regimes in fostering the move to a market economy [6]. India’s slow pace at reducing state intervention could then be seen as a result of its democracy while China’s spectacular success could be attributed to the more authoritarian one-party ethos.


India’s robust democracy and accountability mechanisms may be less friendly to FDI and business more generally – by contrast, China’s authoritarian system allows for economic reforms to assume form and enhance economic growth gradually.


Achieving economic reform is easier in authoritarian than in democratic systems because, among other reasons, the opposition of a variety of political interests can be stifled and controlled more easily.


A major component that paved the way for China’s economic flourishing was that a large segment of the Chinese citizenry supported these economic reforms, and there was little space for dissent.


Overall, Xiaoping and the CCP’s economic innovations encouraged the central government to move to a market economy that aimed to develop sustainable economic growth.


By the 1990s, this desire for growth paid off. In the 1990s, China has had phenomenal growth ranging from 9% to 12%, a record that has meant that in the 1980s and the 1990s “China has been the world's fastest growing industrial economy”.


Undoubtedly, China’s economic experiences has paved the way for fruitful economic liberalizations that seem clearly more comprehensive, sustained, and effective.


The role of the Chinese Central government in initiating economic reform reiterates the political identity of the state – which operates on the promise that it must dictate the terms of political activity and subvert any sustained political participation from the general citizenry.


The success story of China’s economic bildungsroman is not one where the general citizenry demanded economic reforms vis-à-vis democratic institutions – instead, the masses were informed of economic policy and were encouraged to take advantage of them. Xiaoping actually told them that getting rich was glorious.


The role of the Chinese Central government in initiating economic reform reiterates the political identity of the state – which operates on the promise that it must dictate the terms of political activity and subvert any sustained political participation from the general citizenry.


The success story of China’s economic bildungsroman is not of one where the general citizenry demanded economic reforms vis-à-vis democratic institutions – instead, the masses were informed of economic policy and were encouraged to take advantage of them. Xiaoping actually told them that getting rich was glorious.


These sorts of economic freedoms are common places in democratic societies – but China combined these economic freedoms with an authoritarian system of governance. It is important to note that peasants and local elites may have had the most substantial influence on China’s economic success story – as they worked with the CCP to help reform and reimagine the country’s economy.


In China, the decentralization of fiscal authority and the ability of local elites to retain the revenues through township and village enterprises led local elites to become more active supporters of reform.


The success of China’s economic reform proves that social cohesion provides the best atmosphere for economies to flourish – and that China’s local authorities implemented economic development in the country on a large scale.


The China model for economic growth and civil liberties (or lack thereof) has proven to be a tempting system of governance [7]. The China model has instant appeal among authoritarian elites who seek modern formulas for maintaining power while also growing economies – and it has begun to win over people where decades of democracy and free-market reforms have failed to stimulate any meaningful economic growth. The China model has one main objective, and the viability of the model has been challenged near the end of Xiaoping’s tenure.


The top priority of the CCP under Xiaoping is the same as it is today – it is to maintain absolute political power – and no other goal, be it economic, military, diplomatic, or nationalistic – trumps this aim.


This phenomenon of weakness within the CCP was especially illustrated in 1989, which was Xiaoping’s last year of governance. In the wake of the crackdown on prodemocracy protestors in Beijing’s Tiananmen Square ­– it became evident that the moral and ideological standing of the Chinese Communist Party (CCP) was at an all-time low and that the China model was not invincible.


Indeed, 1989, like the year 1978, was a revolutionary year in China’s history, but not for the same reason. In the year 1978, China saw fresh leadership and innovative economic reforms.


In the year 1989, the CCP saw popular complaints about corruption and special privileges for the elite were widespread. Idealistic language about socialism was seen as empty sloganeering – and the Tiananmen killings showed that the “people’s army” could open fire on the people themselves.


Meanwhile, the Tiananmen killings showed that the “people’s army” could open fire on the people themselves. Meanwhile, China’s agricultural economy had been partially liberated, but the urban economy still seemed locked within the iron framework of a work-unit framework system that was both inefficient and corrupt.


Deng had overseen China’s transformation from a hermetic, agrarian, and often tumultuous Communist society into an authoritarian state with a market-led economy, eager to sell its products abroad and expand its role in global affairs even as it trampled on internationally recognized human rights – but it was time to expand on these policies to maintain the CCP’s absolute control over the country [8].


Following the crackdown, the CCP tapped Jiang Zemin, then Shanghai mayor and party boss, to replace the relatively moderate Zhao Ziyang as party secretary-general. Jiang became state president in 1993 and was widely recognized as China’s new paramount leader following Deng’s death in 1997.


Mr. Jiang continued Deng’s policies of selling off state firms, encouraging private enterprise, and rolling back China’s social welfare system. China’s leaders appeared to agree that continued market reforms would be necessary to boost living standards and circumvent calls for political reforms. Quite presciently, the CCP feared that freeing up the economy too fast could increase social hardship in the near term, thus threatening the party’s hegemony.


Now, nearly 30 years later, the prestige of the CCP has risen dramatically and there is a revived Han Chauvinism – which is a political ideology used to glorify the ethnic Han Chinese people. The expectation that more wealth in China would lead to more democracy has been shattered, as one man rule still persists and still seems stronger than ever.


Burgeoning wealth remains largely in the hands of a political-economic elite that has successfully co-opted business and intellectual circles, far from forming a middle class that might challenge authority, these groups now have reason to join their rulers in repressing “instability” among the people.


Meanwhile, the CCP has also deliberately stoked and shaped Chinese nationalism, and many Chinese inside China now feel pride in the CCP’s authoritarian model.


It was Xiaoping’s reform that made the China model robust and viable. Indeed, Xiaoping instituted political and economic reforms that not only greatly changed China, but it planted the seeds for the continuation of a model of the state that combined economic development with political suppression.


The effects of Xiaoping’s policies continued to shape its political future for centuries to come. Xiaoping’s tenure represents a shift from Zedong’s totalitarianism to liberalization – even though the same mechanisms for political repression remained robust throughout the CCP’s history.


In the twentieth century, democracy and totalitarianism are regarded as the two ends of the political spectrum [9]. From this perspective, Zedong built a totalitarian state system in 20th century China, and Xiaoping tore it apart and instituted his own policy that enabled economic development, which in turn paved the way for some economic freedoms and enhanced economic development under one party rule.


It is important to note that Xiaoping had to do a tightrope walk in the post Zedong period. Xiaoping had to balance between doing too little and doing too much – if he did too little, there would be no reform, but if he did too much, he would undermine the legitimacy of Communist rule.


Deng gave top priority to economic development ­– and this stood in stark contrasts with Zedong’s overenthusiastic proposition that it is better to be poor under socialism then it is to be rich under capitalism.


Mr. Xiaoping did not fundamentally deny Mao’s wish to develop the productive forces but instead proposed that many of the methods Mr. Zedong used were fundamentally flawed. For instance, Zedong rightfully estimated that from 1958 to 1978, the living standards of peasants and workers barely rose, and that China’s GNP per capita did not reach $250 in 1978.


Mr. Xiaoping vehemently advocated for economic development, as it would not only satisfy the people’s needs – it was in direct accordance with people’s needs – as well as the Marxist fundamental principle of developing the productive forces. Mr. Xiaoping’s authentic obsession with economic development is well documented with his notion of “one center” and “two basic points.”


The center refers to the objective of accelerating economic development – and the two basic points are concerned with the means to achieve that goal, which is adhering to the four cardinal principles and adopting the policy of reform and opening up – and this stands in stark contrast with Mr. Zedong’s rigid economic philosophy.


Mr. Xiaoping threw the Marxist idea of class struggle into the historical dustbin – and he renounced class struggle and mass campaigns as the way of socialist revolution and construction.


In the late 1978 -1979-time frame, most of China’s so-called “five bad elements” (landlords, rich peasants, counterrevolutionaries, rotten elements, and rightists) were held to have remolded themselves into self-supporting laborers. Class struggles meant little in Mr. Xiaoping’s contemporary China.


Another crucial component of Mr. Xiaoping’s economic and political contribution to China and the CCP was that he made CCP less ideological and more pragmatic. Indeed, Mr. Xiaoping exhibited pragmatism and prudence – and this explains his departure from Mr. Zedong’s rigid totalitarianism. Scholars prescribe a variety of events or periods to explain the phenomenon.


For instance, Mr. Lowell Dittmer identified three origins of Mr. Xiaoping’s reform: the golden 1950s, the post-leap revisionist period, and the Zedong Cultural Revolution. Likewise, Mr. Brantley Womack emphasized the importance of the Cultural Revolution in shaping Mr. Xiaoping’s reforms. By contrast, Mr. Dali Young traced Deng’s reform to the 1956 – 61 famine.


The most plausible view is that Mr. Xiaoping’s political ethos has to characterized by a combination of factors – and the first factor is that the Chinese people were simply disillusioned by Mr. Zedong’s legacy – and Mr. David S. G. Goodman rightfully points out that Mr. Zedong’s policies dissatisfied all social forces except the military. Indeed, the living standards of urban workers had not improved during the previous twenty years – and since the Great Leap Forward, the peasants had been alienated from the party.


Mr. Xiaoping had an opportunity to reshape the country after the tenure of Mr. Zedong – and he had to make a fundamental choice between political democratization and economic development.


Both political development and economic development provide people with more freedom of choice – as democratization allows people to choose their rulers, and development enables them to choose richer and more diverse lives. But good things don’t always go together.


Sometimes a choice has to be made between democratization and economic development – and it looks like Mr. Xiaoping favors the latter. Mr. Jack Donnelly, a Political Scientist, identifies three trade-offs between development and human rights. Specifically, the “needs trade off” sacrifices people’s consumption for development.


The “equality trade-off” sees inequality as an inevitable social force and consequence of, if not a contributor to, development. The “liberty trade-off” cautions that human rights might disrupt development – and this proposition seems to animate Mr. Xiaoping’s political philosophy.


Mr. Xiaoping’s preference for development over democracy is seen as justifiable for some people – as many citizens in country would have made the same choice. it does not take Marx or Maslow to understand why a piece of bread serves a person better than a piece of ballot paper – and besides, people living in poverty or with memory of poverty are more concerned with survival than democratic reforms and freedoms – and Mr. Xiaoping and the CCP knew this.


It would take a whole generation to change preferences – and more importantly – Mr. Xiaoping’s deconstruction of totalitarianism further decreased the Chinese people’s desire for democracy – since as we very well know, people tend to tolerate a repressive regime until it becomes excessive.


Overall, Mr. Xiaoping’s economic reforms enriched the largest number of human beings in history ­– and the whole world, especially the Chinese people, credits him with this achievement.


American Political Scientist Michel Oksenberg and Bruce J. Dickson highlight the importance of sequence of reform, which is based on “the strategic decisions about pace, levels, sectors, regions, and the strength of the opposition”.


Mr. Xiaoping emphasized the importance of sequence – so his reforms originated in the countryside, where the commune system could not feed the people, especially peasants. He made the bold decision of dissolving the commune – and he instituted a “responsibility system” instead.


Under this system, the land systems of communes were distributed to individual peasant households, which replaced the production team as the basic unit of agricultural production.


These reforms yielded gradual results over time. In 1978, 66% of rural income was derived from collective sources; by 1989, the comparable figure was less than 10%, while 81% of income was from family.


This new system stipulated that as long as peasants fulfilled output quotas, it was up to them to decide what, how, and how much they would produce – and since income is linked to output, peasants showed tremendous enthusiasm for production.


Not only did Mr. Xiaoping’s economic polices boost agricultural production, the new system allowed peasants to branch into sideline industries that commercial activities. Given the fact that from 1957 to 1988 China’s arable land decreased by 15%, and its population rose by more than 80% – it was a momentous achievement that China realized food self-sufficiency. The country has Mr. Xiaoping to thank.


At the time of the rural reforms, Mr. Xiaoping also abandoned Mr. Zedong’s principle of self-reliance – thus opening up the country to the outside world. Mr. Xiaoping understood that economic development could not occur without foreign capital, technology, and markets – so in the early 1980s, China established four special economic zones as “windows on the world,” hoping that they would have ripple effects first on the coastal regions and then on the interior regions.


It didn’t take long for China’s economy to skyrocket because of the much-needed reforms. From 1979 to 1991, China absorbed $80 billion in foreign loans and investment and imported $24.6 billion worth of foreign technology and equipment.


China’s economic miracles that sprung due to foreign investment didn’t end there. Miraculously, from 1980 to 1992, the total volume of foreign trade increased from $38.2 billion to $165.6 billion – which moved China from the world’s thirty-fourth largest trading nation to eleventh.


From 1978 to 1992, the percentage of exports in GNP increased from 4.65% to 19.5%, surpassing the average 12% for very large countries. Since then, China has been integrating at warp speed in the world economy.


Mr. Xiaoping rural reforms were highly successful – so he looked onward to urban reforms. According to Marxism, if the individual economy is allowed to develop freely, it will generate freely – so Mr. Zedong’s China discouraged individual economies.


Mr. Xiaoping built back the individual economy, and this provided opportunities for unemployed and underemployed, an act that not only reduced the government’s burden of providing employment but enhanced production and commodity circulation.


It is important to note that these economic reforms had their own logic. They were primarily designed to legitimate Communist rule, but they had the reverse effects. The economic reforms have weakened state power over Chinese society. Unlike many East European countries, China did not privatize large state enterprises, but non-state sectors have grown very fast vis-à-vis the state sector.


On that note, economic reform led to decentralization. Since the early 1980s, the central government has gradually lost much of its fiscal authority to local governments. China’s total government revenues as a proportion of its GNP dropped from 30% in 1978 to less than 12% in 1994.


From this perspective, the Chinese central government’s revenues in 1994 added up to only about 6.5% of GDP, but the comparable figures in the United States and India were more than 20% and 15%, respectively. Undoubtably, this decentralization does limit state power.


Mr. Xiaoping has showed interest in some form of democratization on two occasions. First, in December 1978, shortly after he came to power, he said that China should emphasize democracy because it had too little democracy for too long.


At the beginning of his tenure, Mr. Xiaoping had plans to fight bureaucratism, the overconcentration of power and patriarchism – but he ended up focusing primarily on economic development.


Secondly, in the Summer of 1986, the progress of the economic reforms ignited passion for Mr. Xiaoping to realize the importance of political reform to economic development. In his view, all other reforms depended on the success of political reform, because human being are in fact agents of reform. Without political change, economic reform would be impossible to maintain and advance.


Mr. Xiaoping’s views on democracy ended up assuming form in a different manner. His view of democracy was a hybrid of Marxist and Chinese thought – and his view of democracy can be better understood by examining what he thought democracy should not be.


Mr. Xiaoping postulates that democracy should not jeopardize stability and unity. In Mr. Xiaoping’s analysis, disorder and anarchy had prevented China from prospering and left it vulnerable to imperialism.


China’s Mr. Xiaoping’s opted not to introduce western style democracy into society for a variety of reasons.


He viewed democratic thought through the prism of class analysis – and he believed that Western democracy serves the bourgeoisie, especially monopoly capitalists, and represents no more than multiparty elections and a balance of the three powers.


He also argued that China’s vast territories, huge population, numerous nationalities, varied conditions, and educational backwardness render it very difficult to hold general elections.


Mr. Xiaoping shied away from western style democracy, but he still instituted political reforms with tremendous focus.


Overall, Mr. Xiaoping intended to institute political reform that were generally administrative, along three lines: separating the party and the government; eliminating bureaucratic inefficiency; and devolving some powers to local authorities.


Conclusion

Although China is a beacon for economic development, its political institutions remain malnourished. In terms of the electoral process, there are no direct or competitive elections for national executive leaders.


Political pluralism and participation are weak – since the CCP seeks to monopolize all forms of political organization and does not permit any meaningful political competition.


In terms of the rule of law, the CCP dominates the judicial system, as it has courts at all levels supervised by party political-legal committees have influence over the appointment of judges, court operations, and verdicts.


Mr. Xiaoping broke China out of Mr. Zedong’s totalitarian political vision – but he favored economic development to political democratization. Mr. Zedong’s reforms were intended to make Communist rule more viable, but they did create a legitimacy crisis, as illustrated by the 1989 Tiananmen square incident.


Mr. Xiaoping’s crackdown at the time excluded the possibility that China would have democratized itself like the socialist countries in East Europe, or for that matter, India and the East Asian countries, although he did look at the Four Asian tigers (South Korea, Taiwan, Singapore and Hong Kong) as a model for economic development.


These four countries once believed that development should come before democracy (South Korea, Taiwan and Singapore have since become robust social democracies).


Mr. Xiaoping opted to focus more on economic development and set China on a path that would not repeat the Russian mistake, which is that they embraced capitalism and democracy at the same time – which is a deadly combination that is bound to produce both political instability and economic decline.


As a result of this, economic development has continued to take precedence over political democratization in China.


It is important to note that Mr. Xiaoping deserves credit for opening up China and expanding freedoms, wither they be economic freedoms or other ones. Although his reforms were more administrative than democratic – they represented a change in system rather than a change of system. Mr. Xiaoping’s reforms paved the way for democratization, but the CCP state apparatus prevented democracy from assuming form.


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[9] He, Kai, and Huiyun Feng. A Path to Democracy: In Search of China’s Democratization Model. Asian Perspective 32, no. 3 (2008): 140-169. doi:10.1353/apr.2008.0016.