When Chinese leader Deng Xiaoping announced reforms and the opening of China’s economy in 1978, 770 million Chinese people lived at or below poverty. Nearly 40 years later, that statistic declined to 30 million.
This staggering reduction of 96 percent is a feat that no other developing country has been able to accomplish in such a short time.
CGTN America gathered four experts along with host Anand Naidoo at George Washington University for our first ever town hall this month to discuss how China brought forth such significant changes through its reform and opening up.
“Between 1990-2005, China was responsible for three-quarters of the global reduction in poverty,” said author Martin Jacques during the town hall.
“China gets criticized for human rights, but in fact, the greatest human rights you can give people is to deliver them out of poverty.”
DENG XIAOPING’S VISION
In 1978, the leadership saw that the planned economic system wasn’t working; The Chinese GDP was only 1.8 percent of the world’s total, said Zhou Jingxing, Minister-Counselor of the Chinese Embassy in the United States.
“This was not socialism… poverty was not socialism,” Zhou said.
After watching economies in Japan, South Korea, Singapore, and China’s Taiwan take off, China was left far behind, he added.
“They felt a sense of urgency and the pressure to reform the Chinese economy, to open up to the outside world, to learn from the outside world,” Zhou added.
One big step was transforming the Chinese Communist Party by allowing anyone who had the capabilities and who identified with the values of the party, the chance to become a party member, he said.
On an administrative level, China also set up a system of local competition where provinces and localities had to compete with each other, added Yukon Huang, an author and a senior fellow in the Carnegie Asia Program.
Making of a town hall
“Party secretaries and governors… would be given growth targets and objectives, and evaluated on that purpose,” Huang said. “So what he did was turn a system which was moribund into a highly competitive system internally.”
The reforms allowed for the build-up of infrastructure which led to increased physical and social mobility, added Robert Hormats, the vice chairman of Kissinger Associates.
“[Deng] built the cities, but he also created infrastructure for people to come there, and this enabling of people to rise out of poverty was in fact part and parcel of an effort to enable people to be more mobile… to go from poor areas of China to growing areas of China,” Horvats said.
“People had been confined villages before that, now they could move and they could go where opportunity was.”
As an economic advisor to Henry Kissinger in the early 1970s, Hormats described traveling to China at a time when there was no economic relationship with the U.S.
In a discussion with Deng when the leader visited the United States, Deng told him that he was most proud of enabling Chinese students to study abroad.
“I was commenting on changes that were about to take place and he said, just wait, we have 10,000 Chinese students studying abroad, when they come home they will Change China,” Hormats said.
“He understood that the transformation of China would happen with the people of China, and one way was to interact with the rest of the world.”
JOINING THE WTO
When China joined the World Trade Organization in 2001, many in the West believed that the Chinese economy would eventually become just like every other western economy, but internally, the genius of joining the WTO was to push for continue reform, Hormats added.
“Why did Deng Xiaoping go to Southern China on his southern tour? Because he saw the reforms sort of slowing down. He wanted to give them a shot in the arm, a boost. Zhu Rongji wanted to do the same thing and he realized that he couldn’t do it just by pushing internally on the institutions of China,” Hormats said.
“He could go to people who might otherwise not want to do these reforms, and say if you want the benefits of greater access to these markets… we’ve got to do a lot more at home.”
Globally, China’s entry into the WTO was met with some skepticism, Jacques added.
“There was a widespread view in the West that it would probably fail… but if if did succeed, it was basically the thin end of the wedge, and China would become like every Western economy,” Jacques said.
Instead China combined market forces with the role of the state, and the interaction of the two created something new, he said.
“People got it wrong… The lesson here from China’s achievements and Deng Xiaoping’s insight was that what was required was combined market dynamism with the role of the state, with the role of government, and that these two things together interacting could create the potential for something extraordinary,” Jacques said.
“What China really did in an extraordinary fashion was to create something new, a new model which we haven’t seen before.”
CHINA AND THE WORLD TODAY
The next stage of China’s opening up is now taking place in a world where the United States is playing a smaller role in NATO, alliances in the Pacific and in the WTO, IMF, and World Bank, Hormats said.
“The problem today is that the United States is pulling from not only global leadership, but a sense of global responsibility for the international economic order,” Hormats said.
“China now is taking a stronger leadership role in many of those institutions… because it wants to be able to shape the future of the global economy, because it knows it can do it as a participant, and a leader in some of these institutions.”
How this new dynamic plays out could significantly impact the United States.
“America was being seriously challenged on a variety of fronts by China. And it’s very difficult for a country which has been the hegemon ever since the Second World War to adapt to a situation where it can no longer insist and rely on its own primacy in the world,” Jacques said.
“I think that America is going to find this process extraordinary difficult… because its a country that has always always been on the rise. Most countries have been up and down. China has been up and down. America has always been on the rise… when you are up and down you learn a certain resilience… How in that situation china and U.S. relate to each other is going to be a very complicated question.”
Despite global shifts, China’s role has always been one of cooperation, added Zhou.
“We see the world as one in which all countries can coexist with each other peacefully… we should work together to entertain and make decisions on international and regional issues together… to build a better future for our future generations,” Zhou said.
“And we are not in competition with United States or with other countries to fill the vacuum left over by a certain power, that’s certainly not what we want because that is inconsistent with our worldview. And that is also actually inconsistent with the Chinese nation’s DNA.”