Opinion How far has China come?

The history of the People’s Republic so far can be divided into two periods of about 30 years each: Maoism from 1949 to c.1979,and the post-Mao period from 1979 to 2009.

Maoism,1949-79

Seen in a positive light,Mao made China diplomatically independent. China succeeded in building its modern arsenal with nuclear weapons. It was a force that President Nixon recognised in the global strategic siege against the USSR and the Warsaw Pact. One must remember that it was the US and NATO that lobbied China to join an anti-Soviet alliance. China did not create that alliance.

Seen in a negative light,Mao spent about 80 per cent of his time and energy purging Chinese society. No social stratum or individual was left untouched. One can name the 1950-3 “Suppression of Anti-Revolutionaries” (zhenfan,sufan),the 1951-2 “Three-Anti and Five-Anti Movement” (sanfan wufan),the 1955 “Purge of the Hu Feng Anti-Party Clique” (hufeng fandang jituan),the 1957 “Anti-Rightist Movement” (fanyou),the 1957 “Internal Rectification Purge” (zhengfeng),the 1959 “Lushan Purge against the Party Right-Wingers” (lushan huiyi),the 1964 “Four Cleansings” (siqing),and the 1966-76 “Great Proletarian Cultural Revolution” (wuchan jieji wenhua dageming).

What Mao achieved by the end of his life was a severe economic crisis. His Cultural Revolution alone cost China 800 billion yuan,equivalent to China’s total capital stock of the state-owned enterprises in 1979. Mao’s rule left China with a third of its population officially illiterate (as in 1979). By the World Bank food-intake standard (2,185 kilocalories per day),the entire population in Mainland China was in absolute dire poverty,living on just 2,009 kilocalories per day. China’s per capita income was at the very bottom of the world league table at US$ 190 (as in the 1970s).

The provision of public goods was poor. During the 1959-62 Great Leap Famine,about 30 million people died. There was no record of effective famine relief by the Maoist state. In 1965,on the eve of the 10-year long turmoil of Cultural Revolution,China’s infant mortality rate was as high as 165 per 1,000 births. That level of infant mortality applied in 2004 only to the poorest countries on earth with life expectancies of around 40. The commonly cited life expectancies at over 60 under Mao’s rule are highly questionable.

Moreover,by the time of Mao’s death,the Chinese economy remained predominantly rural and structurally pre-modern. Employment in the modern industrial sector was frozen at about 60 million workers vis-à-vis a total population of around 900 million. As a matter of fact,the communist iron rice bowl mainly applied to this 60 million. If anything,only the tiny minority (less than 10 per cent of the population) benefitted from Mao’s communism.

Yet,one comes across very high GDP growth figures for the Maoist period,easily making 8 to 9 per cent per year. It is sensible to ask if China’s development was so great,why was Mao’s China so poor?

In contrast,Taiwan prospered under Republican rule. It had had no famine after 1949. By 1978,it had successfully joined the ranks of middle-income economies in the world. From the 1980s,it has been one of the main donors of capital and technology to Mainland China to facilitate Deng Xiaoping’s reforms to rescue China’s population from acute poverty and salvage China’s failing economy from chronic waste and incompetence.

Post-Mao,1979-2009

When Deng Xiaoping took over the party and state,he faced the carnage of 30 years of Maoist practice. Deng’s rescue plan,known as “socialism with Chinese characteristics” had the following goals:

• To re-build law and order,

• To resume supply of well-educated bureaucrats,

• To resume economic incentives and freedom for ordinary people,

• To ease tension with foreign powers,

• To promote foreign trade and FDI,

• To build “comfortable material life for all” in exchange for the party’s legitimacy to rule.

In rural China,farmers were re-incentivised,by the state’s permission to keep some of their output,through legal contracts (“the Household Production Responsibility Scheme”). This was a great success. China’s per capita food consumption soon returned to the 1930s level at around 3,000 kilocalories per day.

In urban China,Special Economic Zones were set up,fully compatible with Western capitalism,to attract foreign capital,technology and market sales. These zones have offered a cheap labour force,easy regulations (including environmental allowances) and tax holidays,too good to refuse for foreign investors. This was another great success. In 2004,with over US$ 60 billion of foreign capital invested,China surpassed the United States and became the largest FDI recipient in the world. From 1978 to 2000,the total value of China’s foreign trade increased 110 times. China finally came out of the Maoist agrarian trap and became the “workshop of the world:” 90 per cent of China’s exports are manufactures. Nowadays,China’s economic landscape is changing fast. The East Coast is visibly modern and heavily industrialised.

All this has been achieved with very similar GDP growth rates with Maoist period: 5.9 per cent a year in 1980-90 and 8.2 per cent in 1990-9.

But there is a downside to the post-Mao growth: environmental damage and social inequality. By relaxing controls over environmental damage in exchange for foreign businesses,China has increasingly become an international dumping ground for out-dated production practices. In terms of energy efficiency,to produce per unit of GDP,China used 2.5 times as much energy as India,4 times as much as the US and 7 times that of Japan (as in the 1990s). It is not at all surprising that China is now one of the most polluted countries in the world. The estimated damage to China’s soil,air and water systems is worth US$ 60 billion,the same as China’s total FDI intake. So has China’s particular path to modernity been worth it?

The greater problem is income inequality between the urban and rural sectors,and between the coastal regions and the interior. China’s Gini coefficient has jumped from 0.28 (as in 1983) to an alarming 0.48 (2000),which has made contemporary China one of the least equal societies in the world.Taking environmental damage and social inequality into account,there is a real danger that China’s growth is not sustainable. The road for China’s growth and development in the past 60 years has been bumpy and hazardous,even though much can be learnt from China’s experiences.

The writer is chair of China studies at the London School of Economics