An Economic History of Modern China

An Economic History of Modern China

Joseph C.H. Chai

As a country’s current development is path dependent, the rise of China and its strategic implications can only be understood in a historical context. Hence, the key to understanding contemporary China is the understanding of its past. So far there has been an absence of a comprehensive text dealing with Chinese economic history in the English language. An Economic History of Modern China fills this important gap, focusing on modern Chinese economic growth and comprehensively surveying the patterns of China’s growth experience over the past 200 years, from the Opium wars to the present day. Key events are traced back to their foundations in history to explain their impact on China’s modern economic growth.

Chapter 13: The Cultural Revolution

Joseph C.H. Chai

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics, economic psychology


PRELUDE TO CULTURAL REVOLUTION: THE POLICY REVERSAL As the famine spread the weakness of the Great Leap Forward (GLF) strategy became too obvious to ignore and forced a policy reversal. However, its implementation was rocky and, in effect prolonged the misery of the people. In the first phase from November 1958 to July 1959 the overcentralized commune structure was modified. The basic accounting unit was shifted back to the production brigade which corresponded to the advanced agricultural co-operative (AAC). Confiscated assets were returned from the commune to its production brigades, from them to the production team, and down to the household. Communal dining halls were closed, free services abandoned and the work point system was restored. There was also a significant liberalization and quasi privatization in the form of ‘three freedoms and one guarantee’. The three freedoms refer, firstly, to the restoration of private plots and the permission granted to farmers to cultivate land they have privately reclaimed. However, their area was not allowed to exceed 5 per cent of total cultivated area. The second freedom refers to the reopening of rural free markets, and the third to the self-responsibility of the household for profit and loss on their farm tasks. The one guarantee refers to the responsibility farm system. To enhance the incentive to work, various systems of contracting jobs to the households were tried out. Firstly there was the ‘three guarantees and one reward system’ used for contracting out farm tasks such as stock and fish breeding and...

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