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Chapter 1

Evolution in the Revolution

Crossing the river by feeling for stones.

A phrase popularly attributed to Deng Xiaoping and emblematic of China's pragmatic approach to reform since 1977

First of all we must recognize the huge gap between China and the rest of the world in the area of science and technology. We cannot fool anyone because you can't visit our country without seeing how backward we are. We can only fool ourselves by saying that we are not backward.

Deng Xiaoping, October 23, 1977

I accompanied Deng [Xiaoping] in 1992 [on his Southern Journey-nanxun], and one day he met officials and said that historically [China] was poor for thousands of years-we need development as soon as possible. This is our task. Cities like Guangzhou need a fast growth rate. If [the growth rate of GDP] is below 10 percent [per year], we cannot handle the problems and it brings lots of difficulties.

Mayor of Guangzhou Li Ziliu, "Remarks," June 9, 1994

Beginning in 1979, Chinese have experienced great transformations in their lives. Of course future difficulties will be inevitable. But as we Chinese often say, the most important thing is that "we've broken the ice and the ship has begun to sail."

Professor Li Shenzhi, "The History and Future of Sino-American Relations"

The core interest is regime survival and regime security. "Opening and reform were not to improve China, it is to improve the survival of the party; it is a by-product of the improvement. For its own survival [the party] has to bring benefits to the people, as the Kuomintang [in Taiwan] did before 1987."

Remarks of a senior academic, August 1, 2011

In 1977, the question for China was simple: Could the nation and the state become stronger and more prosperous? More than thirty-five years later, the original question is almost laughable, and now the question is: Can a much stronger China control itself, become more just, and contribute to global stability and development?

Deng Xiaoping's second communist-era revolution cannot be as precisely dated as the first, which officially started on the day that the PRC was founded, October 1, 1949, and which I choose to end in mid-1977, when Deng Xiaoping reappeared after his second Cultural Revolution-era exile. From the vantage point of the twenty-first century, the revolution we associate with Deng and his reform-minded colleagues represents the accumulation of initial key strategic decisions concentrated in the eight years following his return. Some consequences of these early decisions were anticipated, others were not, and still others have yet to be fully revealed. These outcomes have included

• Vastly improved material circumstances for the Chinese people and an enormously expanded, relatively positive role for China in the world

• Growing economic and social inequality and market failures resulting from the spread of market mechanisms in the absence of effective regulatory and tax institutions, the absence of land rights in rural areas, and the presence of corruption on a very large scale

• The explosion of China's accumulated capital, the abrupt expansion of international financial and trade roles, and the global imbalances to which all of this has given rise

• A staggering pace of urbanization and a swiftly growing middle class that is gradually becoming a force for participatory political change1

• Economic growth that is testing the still blurry outer limits of environmental sustainability, as well as the capacity to keep military strength within bounds that China's neighbors can accept

Thus, while Deng Xiaoping pushed the stone of "his" revolution down the mountain, its precise route, effects, rate of movement, and final resting place have been and will continue to be shaped by a myriad of forces, many of which will prove to have been beyond initial intentions, expectations, or control.

This scene-setting chapter first describes the seven principal strategic decisions made at the outset of the Deng era and then examines some of the resulting transformations. In subsequent chapters we examine how Chinese leaders at various levels and in different areas of responsibility have understood important continuities and discontinuities since 1977 and how they have sought to shape the developing circumstances in which they find themselves and their nation.


Following Chairman Mao Zedong's death on September 9, 1976, there was a brief interregnum in which Mao's nominal successor, Hua Guofeng, and a cohort of revolutionary elders around him were rooting out the key leftist Cultural Revolution holdovers, stabilizing the economic and political situation, and deciding what role, if any, the still-exiled Deng Xiaoping would play moving forward.2 On July 17, 1977, the issue of Deng was officially announced as settled by the Third Plenary Session of the Tenth Party Congress: he was reinstated to all the positions from which he had been ousted in April 1976 (vice-chairman of the Central Committee, vice-chairman of the party's Central Military Commission [CMC], chief of the general staff of the People's Liberation Army [PLA], vice-premier of the State Council, and, of course, member of the Central Committee and the Politburo Standing Committee). Little more than a year earlier a failing Mao Zedong had yet again turned on Deng in the aftermath of unrest in Beijing that had been sparked by Premier Zhou Enlai's death in January 1976-unrest that the Cultural Revolution leftist contenders for power in the fast-approaching post-Mao era correctly judged was aimed at them, and for which they found it expedient to blame Deng.3

Upon returning to his duties in the summer of 1977, Deng initially focused on science and technology and education policy. However, he rapidly accumulated influence and started to make a series of policy pronouncements establishing the overall direction and dimensions of change that he foresaw. By 1982, Deng had completed easing Mao's weak successor Hua Guofeng out of power, though as a sign of things to come he did not humiliate him. Unlike Chairman Mao, Deng left his vanquished opponent with a shred of dignity by letting him recede gracefully into the background, thereby lowering the temperature of elite politics considerably.4 After this, though never as omnipotent as Mao, Deng became China's uncontested principal leader, or its primus inter pares, by a considerable margin. Between 1977 and 1985, Deng identified and initiated the principal strategic policy departures associated with the second Chinese communist-era revolution.

Below, we examine these directions and the transformations to which these policy changes have given rise. China's point of departure in comparative economic and social perspective at this moment is illustrated in table 1, which shows the situation in 1980 according to World Bank figures. China's then nearly 25 percent of global population accounted for somewhere around 2 percent of global GDP. The PRC at that time accounted