Economic Policy During China's Reform Era

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  • 0:00 Socialism with Chinese…
  • 1:00 Developing the Country
  • 2:06 Deng's Reforms
  • 3:29 Transition to Full…
  • 3:59 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught middle and high school history, and has a master's degree in Islamic law.

Sixty years ago, China's economy was almost entirely based on farming. Now it is poised to overtake the United States in terms of total productivity. In this lesson, we look at the major events that made that change possible.

Socialism with Chinese Characteristics

Forty years ago, the Chinese economy was in ruins. For more than twenty years, from 1949 until 1976, China had experimented with a variety of methods to grow its economy. However, most of these had ended in spectacular failure. In fact, there was some real concern among observers around the world that China's experiment with socialism would come to a massive and monumental end. However, the last 40 years have proven that the Chinese economy has been anything but a failure. In just a few decades, the country went from being a developing country to having the second-largest economy in the world. By some measures, it has even surpassed the United States. All of that begs one question - how?

In this lesson, we're going to take a look at what has permitted such explosive growth in China. However, to fully understand the impact of the reforms of the past few decades, we have to go back a little bit further to realize just how far China had come economically.

Developing the Country

Like I said, China was incredibly undeveloped at the end of 1949. Finally under communist control, China would have to industrialize to have any hope of succeeding as the world's newest, and largest, communist country. The Soviet Union had at least had a modernized core in some parts of European Russia, but China had none of those advantages. Instead, it just had hundreds of millions of people. So, those people were put to work. The whole country was collectivized, meaning that people worked together as community-based teams, and pushed into the Great Leap Forward. The people were told they would surpass even the United States within only a few years.

But the Great Leap Forward failed spectacularly. Intellectuals from the cities were told to grow rice, despite the fact that they didn't know how to use basic tools. Meanwhile, peasants who could have grown food were told to instead smelt iron in backyard furnaces. Ultimately, millions of people would die, and there was more than a bit of suspicion about what would happen when the government started to talk about economic progress.

Deng's Reforms

All of this makes Deng Xiaoping's reforms all the more remarkable. By the time he took power in 1978, there were serious threats to political stability. However, Deng recognized that many of those concerns would disappear if he focused on the economy. After all, well-fed people tend not to revolt in the street on the account of food shortages. Deng called his new plan Socialism with Chinese Characteristics and made allowances for the fact that China was simply not as well developed as other communist states had been. He also pointed out that Marx never forbade private ownership.

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