The 70th anniversary of the proclamation of the Chinese People’s Republic on October 1, 2019, left the world in awe as China celebrated one of the most transformational moments in its over 3,000 years of history. After showing off its high-tech military arsenal during the anniversary parade, international observers remained enthralled at China’s growing power. Such admiration is not unwarranted when factoring how tumultuous the 20th century was for China.
From War to Political Centralization
To say the last century was a political rollercoaster ride for the East Asian nation, would be an understatement. After braving several military onslaughts during the Chinese Civil War (1927–1937), the Second Sino-Japanese War (1937–1945), and then the last phase of Chinese Civil War (1945–1949), Mao Zedong and his Communist forces took complete control of mainland China by 1949.
With nationalist forces scurrying to the island of Formosa (now Taiwan), Mao faced no real internal threat to his rule. By then, it was just a matter of consolidating the Chinese bureaucracy and laying the groundwork for his political dominance. Starting in 1958, Mao unveiled the Great Leap Forward, a plan to catapult China into modernity. Under this plan, China would collectivize its economy and put the Chinese state at the commanding heights of the economy.
Fancy propaganda posters and high expectations aside, the economics of this plan were fatally flawed from the start. Private property and the price system became afterthoughts during this period.
Sub-optimal economics doesn’t even scratch the surface. Given the scale of this program and China’s already underdeveloped economy, it proved to be a humanitarian calamity for millions of Chinese people. The decimation of China’s agricultural sectors caused famine conditions which resulted in the deaths of 20 million to 45 million people. The Great Leap Forward became another gut-wrenching case of democide, as central-planning sent millions to their deaths.
Chairman Mao’s political image took a hit during the 1960s and was compelled to regroup politically after the Great Leap Forward proved to be a “Great Leap Backward” for China. Whispers around the halls of Beijing began to question the very validity of Mao’s vision. But this did not prevent Mao from undertaking other ambitious political ventures.
The Cultural Revolution of 1966 to 1976 was the final gasp of Maoism. During this tumultuous period in modern Chinese politics, Mao attempted to re-engineer Chinese society according to his top-down vision. Convinced China was not sufficiently purged of “bourgeois” elements, Mao launched the Cultural Revolution to cleanse it of these residual influences. In iconoclastic fashion, Mao destroyed many relics of Chinese history and imprisoned hundreds of thousands of dissenters during arbitrary purges.
Similar to his Great Leap Forward, the Cultural Revolution demonstrated the limits of Mao’s fanatic political vision. By then, certain circles of the Chinese Communist Party leadership grew weary of Mao’s power. When Mao died in 1976, political uncertainty loomed across China. It was clear to pragmatic elements within the CCP that Mao pushed the envelope too far both economically and politically.
A new path was needed.
China Embraces Market Pragmatism
In 1978, Deng Xiaoping filled the leadership void as paramount leader of China. Deng left his mark by introducing a set of reforms that liberalized the Chinese economy and gradually incorporated market features. These measures, albeit limited in nature, made all the difference in boosting China’s economy and getting millions out of abject poverty. The privatization of small plots of land and the establishment of special economic zones brought back life to the Chinese economy and finally made it attractive to the outside world. Certain estimates point to annual GDP growing around 9.5 percent annually from 1978 to 2013. Further, China’s per capita GDP increased over tenfold during this period thus lifting millions of Chinese citizens out of poverty.
The lurid images of starvation and economic misery of the Great Leap Forward became distant memories as skyscrapers were erected from Tianjin to Shanghai and factories churned out unprecedented numbers of goods. By the 1990s, “Made in China” became a fixture of consumer affairs worldwide. None of this would have been possible without China at least trying to loosen the state’s grip on the economy.
Political Freedom is Still a Fleeting Prospect in China
It was commonly assumed that China’s economic growth would be accompanied with enhanced political freedoms. After all, Milton Friedman argued that generally speaking, economic freedom usually sets the stage for expanded political freedoms. As economic freedom sets in and the nouveau riche and rising middle classes become settled, demands for civil liberties tend to follow. China was no exception to this trend.
With China’s economy booming throughout the 1980s, its citizens started to think beyond material benefits. Post-Mao China was shrouded by a cloud of political uncertainty, as the newly-empowered middle class began to agitate for more political freedoms. Above all, the student classes demanded certain Western-style reforms such as free speech and government transparency. Protests then started popping up across China, with the principal ones concentrated around Beijing.
Fearing a potential upheaval could threaten China’s political cohesion, Deng and his Communist Party brain trust agreed to send troops to quell the protests. The infamous Tiananmen Square crackdown of June 1989 gained international attention for its brutality and repression. Certain estimates have several hundred to thousands of people being killed during the protests, while thousands of other protestors and journalists were arrested. Like any paranoid authoritarian regime, Deng’s government purged officials it suspected of harboring sympathies toward protestors shortly after this incident.
Although the Tiananmen Square crackdown received condemnation from international observers, China’s possession of nuclear weapons and meteoric economic growth shielded it from direct military confrontation or economic retaliation with other countries who were disgusted by its actions. This was in stark contrast to 19th century China, which became a punching bag for European powers and yielded spheres of influence to countries such as France, Japan, Russia, and the United Kingdom. The days of China being bullied around were over.
China is Here to Stay
Love or it hate it, political elites have had to come to grips with the presence of a steadily rising Chinese authoritarian government with a large mixed-economy. Successors to the reform minded Deng, like Jiang Zemin, Hu Jintao, and Xi Xinping have maintained the CCP dominant leadership and have made very few moves to bring democratic reforms to China. The last of those leaders — Xi — is currently undertaking an unprecedented censorship program that has the Chinese state partnering with tech companies to implement a social credit system in China.
Furthermore, China has made its intentions clear of fully incorporating Hong Kong into Beijing’s orbit since the island was handed over to the Chinese in 1997. Beijing has taken a more gradualist approach under the one country, two systems principle, which allows the island to enjoy relative autonomy until 2047. Nevertheless, the inevitably of Chinese control has kept tensions high, as evidenced with the recent string of protests in Hong Kong concerning an extradition bill that many protestors fear would utterly dissolve Hong Kong independence.
Indeed, post-Mao China has been situationally pragmatic when it comes to its adoption of a limited form of capitalism. China’s multiple millennia of centralized control is well-ingrained in its political fabric. It goes contrary to the West’s emphasis on basic principles of governance such as decentralization, free speech, and voluntary association. So, it will take a considerable amount of time for it to transition to anything resembling a Western-style government, if ever.
Although China has boomed, it is still subject to the many laws of economics that Western countries routinely violate through central banking and fiscal mismanagement. It’s fragile banking system may be on the verge of bursting due to years of artificial credit expansion.
In sum, China has made progress in eradicating the extreme poverty of its previous Maoist era. However, it still has a long way to go in terms of economic freedom and restoring basic civil liberties that both the West and its developed counterparts in East Asia — Japan, South Korea, and Taiwan — enjoy.
The Mises Institute exists to promote teaching and research in the Austrian school of economics, and individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. These great thinkers developed praxeology, a deductive science of human action based on premises known with certainty to be true, and this is what we teach and advocate. Our scholarly work is founded in Misesian praxeology, and in self-conscious opposition to the mathematical modeling and hypothesis-testing that has created so much confusion in neoclassical economics. Visit https://mises.org
This post has been republished with implied permission from a publicly-available RSS feed found on Mises. The views expressed by the original author(s) do not necessarily reflect the opinions or views of The Libertarian Hub, its owners or administrators. Any images included in the original article belong to and are the sole responsibility of the original author/website. The Libertarian Hub makes no claims of ownership of any imported photos/images and shall not be held liable for any unintended copyright infringement. Submit a DCMA takedown request.