An Economic History of Modern China
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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.
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Chapter 15: The Reforms

Joseph C.H. Chai


EVOLUTION OF THE REFORM STRATEGY Mao’s death in 1976 sparked an intense succession crisis in the Chinese Communist Party (CCP) because three factions fielded candidates who hoped to succeed the Chairman (Harding 1987). On the far left were the revolutionary Maoists known as the Gang of Four, headed by Mao’s wife, Jiang Qing. They sought to preserve the legacy of the Cultural Revolution (CR). They were opposed by the right-wing coalition of reformers led by Deng Xiaoping; and the centre, known as the restorationists, fielded Hua Guofeng as claimant to the Chairman’s vacancy. This faction aimed at restoring the pre-Great Leap Forward (GLF) and CR political and economic institutions. Initially, Hua Guofeng defeated the revolutionary Maoists, arrested them and governed China. His principles were the ‘two whatever-isms’, which stood for ‘whatever decisions were made by Mao we support and whatever instructions were given by Mao we follow’. Under Hua’s leadership China launched another Great Leap Forward known as the Great Leap Outward. Under this programme a grandiose Ten-Year Plan for the period 1975–85 envisaged China’s modernization in four key areas, namely in industry, science, technology and defence. To achieve the vision China embarked upon a massive programme of importing foreign plant and technology, financed with the help of foreign loans. However, Hua had only a limited power base within the Party and was soon replaced by Deng Xiaoping as paramount leader. Deng boldly cast off much of the Maoist ideological baggage of class struggle and in the Third Plenum...

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