Since the late 1970s is China’s “reform and opening up” been key to the country’s spectacular growth? Or are they smoke screen for retrograde statist control to bolster the last major communist regime on Earth as the late Mao era became a potent global rival to the US – perhaps the dominant superpower of the 21st century.
Historian Frank DikÖtter, looks at the current travails of the Chinese economy, as it grapples with the falling growth, escalating debt, a yawning property crisis and huge misallocation of capital, and impact of zero-Covid policy.
DikÖtter examines 600 documents form provincial and municipal archives and the secret diaries of Mao’s one-time secretary, Li Rui, who subsequently became vice-director of the party organization department, revealing the impact as the leadership veered between hectic growth and retrenchment.
DikÖtter’s account of the policy contortions of a regime he characterises as being marked by “bitter backstabbing and fighting for power among endlessly changing factions”, intrinsic corruption and a leadership most of whose members do not understand even basic economics.
Mao’s successor Deng Xiaoping, in the late 1970s, as China abandoned the collectivization of the Mao years, private enterprise was tolerated and trade and foreign investment encouraged. Local authorities were allowed to go their own way, creating baronies in their regions that fanned inefficiencies by going after the same targets and the same self-enrichment. According to one Chinese academic “everything was overleveraged”. The build-up of credit and debt by local governments, officials and state companies was there from the start, with the state banks acting as the feeding trough. A Bank inspector in the 1980s is quoted as “ some cadres walk into a bank to get cash because it is more convenient for them to do so than to go back home and fetch their wallets.”
The basic lesson to be learned from the days of Deng to the present under XI Jinping, is that Chinese economic policy is a function of politics whose core concern is to maintain Communist rule.
DikÖtter cites quotes from leaders in Beijing, many of whom appeared to the world as reformers, that they would never deviate from Marxist socialism, without political reform market reform cannot exist”.
“Leaders from Deng to Xi have never even considered opening up the economy to real market competition, as they indulged in only tinkering with a planned economy, what the regime has built over the past four decades is a fairly insulated system capable of fending off the country from the rest of the world”. Xi urges China to pursue “self-reliance” and reject foreign ideas such as competitive democracy, the rule of law and the separation of powers”.
In 2012, when Xi became party leader and Li Rui closed his diary, DikÖtter’s comparison of China with “a tanker that looks impressively shipshape from a distance with the captain and his lieutenants standing proudly on the bridge while below deck sailors are desperately pumping water and plugging holes to keep the vessel afloat”.
Xi faces the easy option huge cheap labour force, access to foreign technology and investment plus a benign international climate have been contracting or are proving self-destructive. DikÖtter concludes “ how to address structural issues of its own making without giving up its monopoly on power and its control of the means of production”. That may seem dead end but it looks like shaping Chinese policy for the years ahead, with major consequences for the world at large.
DikÖtter examines China’s approach to the 2008 financial crash, the country’s increasing hostility towards perceived Western interference, and its development into a thoroughly entrenched dictatorship – one equipped with a sprawling security apparatus and the most sophisticated surveillance system in the world.
China After Mao: The Rise of a Superpower by Frank DikÖtter, Bloomsbury £25/ $30, 416 pages.
