China and Market Reform: Paper Example

Published: 2023-08-28
China and Market Reform: Paper Example
Type of paper:  Essay
Categories:  Politics Marketing International relations Asia
Pages: 7
Wordcount: 1701 words
15 min read

Chinese market reform was an opening-up policy that began in 1978 under the leadership of Deng Xiaoping during the Third Plenum. Apart from initiating the re-consolidation of power and the reunification of a fractured society, the Third Plenum began the process of re-channeling the creativity, enthusiasm, and energy of the Chinese people from class conflict politics to that of social modernization. The idea of market transformation was born, leading to the change of China from a poor and stagnant socialist economy to one of the most dynamic economies in the world. In particular, China introduced market incentives and private business to a communist state-led system. Studies emphasize that the Chinese state has been addressing issues that arose since its launch of market reform almost four decades ago. This paper will highlight the main political and economic issues identified by the Chinese state and why as well as how the state has addressed the issue. Besides, the discussion will examine the outcomes and implications of the actions of the state.

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To kick-start, the reform process, the Chinese government under Deng Xiaoping had to first overcome the political and economic challenge of land ownership and state-owned enterprise. However, it has to be understood that the economic reforms have been characterized by experimentalism and gradualism, a process that Deng Xiaoping referred to as “crossing the river by feeling the stones.” After years of the mismanagement of the agriculture sector, food production and supply was so bad leading to the reforms that it was feared that tens of millions would face famine as had been during the Great Leap Forward.

Deng Xiaoping began reforms in this sector by introducing the household-responsibility system which entails the division of the land into private plots. Farmers had greater control of the land under the new system. They would however be required to sell a portion of their produce to the government. The experiment resulted in about a 25% increase in agricultural output. Deng Xiaoping saw the reform as a success and expanded the privatization agenda to other economic sectors such as the urban industry that was primarily composed of state-owned enterprises. Deng Xiaoping began the reforms into this sector by introducing a dual-price system.

As per the system, state-owned industries would be allowed by the government to sell any surplus production at both market and plan prices. This reform enabled the country to avoid shortages. Besides, for the first time, private businesses would be allowed, further contributing to the eventual industrial output.

The other economic issue identified by the state was the need to expand trade through private firms and foreign investment. Deng Xiaoping and the state realized that there was a need to expand trade by opening up means for foreign businesses that were looking for the means to set up shop in China. An open-door policy was launched in 1978 to facilitate foreign investment.

The state created a series of special economic zones for investments from abroad. These investments were relatively free of China’s bureaucratic interventions and regulations that had previously hampered trade and economic growth. Through the Special Economic Zones (SEZs), the state of China managed to pilot new economic reforms in areas that were geographically contained. One of the success stories towards this front is the city of Shenzhen. Due to foreign investments, the city exploded from a small fishing village into one of China's most dynamic and wealthy cities. The open-door policy allowed for market-oriented resource allocation within a framework of state control.

In general, the reforms have led to a unique development path, uniquely known as the “China Model” of development. What is, however, clear is that the reforms and the policies of opening up the economy can be regarded as a success story because over four decades, the country has enjoyed a prolonged period of double-digit economic growth as well as lifting about 740 million people out of poverty. Today, China is the second-largest economy in the world after the United States.

Response by the State

However, in the process of implementing the open door policy and inviting foreign investment, the state has experienced a significant loss of control and the response has been to reassert itself. Despite the progress felt in some areas, the state felt threatened by a certain loss of control, leading to a period of re-asserting itself at the expense of the market and its ideals. Early in the year 1989, Tiananmen Square had been the site of pro-democracy peaceful protests.

However, in June, the government stepped up a crackdown on pro-western ideas that the party viewed as a threat to those of its own. Tiananmen crackdown was one of the suppression strategies that the state used to reassert control. With calls for greater political freedom growing, protestors continued to enter into demonstrations after the death of Hu Yaobang, demanding for the end to restrictions on freedom of assembly and press censorship. In response, the state-imposed martial law and ousted western reporters.

On the night of 3rd June, the army moved in with the order to clear the demonstrators from the square. Over 100 tanks and 200,000 troops converged on Tiananmen Square and began to forcefully clear the square. The soldiers used clubs, bayonets, and rifles with expanding bullets. It is believed that up to 10,000 demonstrators were killed. The crackdown demonstrated to the people and the world that the government was willing to suppress ideas that it considered alien and unacceptable by all means possible.

Secondly, the state led by the Communist Party has engaged in brainwashing to preserve the history of the nation. In the increasingly globalizing world, the Communist Party has felt threatened by the presence of other nations. To preserve the history and destiny of the country, the nation has found itself brainwashing children through education. The brainwashing has been taking place from kindergarten to the university.

The history being taught to the children followed a particular narrative where China is depicted both as a positive character as well as a victim of bullying by the foreigners, bravely fighting back. In this curriculum forged alongside national humiliation, the children are not taught anything to do with the nationalist Kuomintang. In China, it was the nationalists who fiercely fought against the Japanese invaders.

The reality is that while the nationalists were uniting the country and fighting against the Japanese alongside the allies in the Second World War, the communists spent most of the time hiding in the mountains to escape the battle. After the nationalists were weakened by war, the communists quickly gathered from the countryside and won the civil war that followed.

The implication is that young children have been taught a distorted history that glorifies the role and actions of the Chinese Communist Party (CCP) while omitting the role played by foreign powers and the nationalists in forging the history of China. In the end, one of the most important subjects in the national education system has emerged as a history of national humiliation.

Lastly, to counter the influence of foreign powers, the CCP has carefully carved out a form of Chinese patriotism that has an acute sense of victimhood and nationalist rage. As countries and people interact more due to the need to trade and co-exist, the need to preserve the Chinese culture and identity has emerged. A sense of insecurity has gripped the CCP, sensing that more interaction could erode its power and control of the people.

As highlighted, the establishment of the Special Economic Zones has attracted a lot of foreigners to China to take advantage of the opportunities there. The CCP has interpreted the presence of these foreign cultures as a threat to its nationalism, forcing it to counter it with a particular brand of patriotism. However, due to the acute sense of victimhood and nationalist rage, the people and the party now tend to overreact to the presence and sight of foreigners as they are seen as abusers. It is no wonder that an online army of ultranationalists tends to leave threats and abuse at the social media accounts to people who are viewed as a threat to Chinese nationalism.

Besides, to overcome this sense of victimhood, China has in the recent past launched ambitious dreams about gaining more power and intervening around the world on military and media capacities. Towards that goal, the country has rejuvenated efforts to claim territories that it deems its historical right to justify its territorial ambitions. Also, particularly around the South China Sea, the state has used false history to make claims on territories that are outside its jurisdiction. All these territorial ambitions seem to emanate from a point of victimhood that the state now wants to overcompensate for.


The discussion has highlighted the main political and economic issues identified by the Chinese state and why as well as how the state has addressed the issues. Besides, the discussion has examined in length the outcomes and implications of the actions of the state. Some market reforms opened the country to foreign presence and influence, including some ideas of the freedom of the press and assembly. After launching the market reforms to modernize China about forty years ago, almost immediately, the state and the Chinese Communist Party started to view modernization as a threat to the survival of the nation. To counter those ideas, as outlined, the state began to suppress ideas that it deemed foreign with a level of heavy-handedness and barbarity as witnessed in Tiananmen Square. Besides, the state has also engaged in massive brainwashing and the reforming of the education system to distort history. The result is a people who have a false sense of nationhood and a wrong perception of the role of the Communist Party in the history of the nation. Still, in the background of a false sense of patriotism founded on an acute sense of victimhood and nationalism rage, the state has embarked on territorial expansion, using dubious historical claims to justify territorial ambitions. It is likely that rejuvenated by this false sense of victimhood, the state will rapidly claim territories and threaten world peace while the majority of its citizenry think that they are regaining the country’s former glory and right.

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