China Adjusts Strategies for Speeding Economic Growth: China Has Learned Hard Lessons from Its Long History of Revolution and Reform, but the Country Now Seems Poised to Achieve Its Aim of Catching Up with the West

By Zhang, Allan | European Business Forum, Autumn 2004 | Go to article overview

China Adjusts Strategies for Speeding Economic Growth: China Has Learned Hard Lessons from Its Long History of Revolution and Reform, but the Country Now Seems Poised to Achieve Its Aim of Catching Up with the West


Zhang, Allan, European Business Forum


For centuries, China was the 'middle kingdom' surrounded by a group of barbarian tributary states. Its advanced culture, technology, philosophy and level of economic development made it the dominant power in Asia as long as 3,000 years ago. Indeed, Chinese civilisation can claim to be the longest continuous civilisation in human history.

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But this long-held supremacy, together with national pride and confidence, was brutally shattered by the guns of the western powers, starting with China's military failure in the Opium War with the British in 1840. In the following 70 years, China suffered a series of humiliating defeats by the West as well as large-scale domestic uprisings, which eventually brought down the imperial dynasties and led to the creation of China's first republic in 1911.

After China lost the Second Opium War, Japan, a long-time student of Chinese civilisation, switched to the West for inspiration and quickly turned itself into an industrialised country through its Meiji Reform. In 1895, Japan defeated its old master's Royal Navy, occupied Taiwan and eventually controlled the whole of Manchuria. These events, together with the looting of China's imperial garden of Yuanmingyuan by the Eight-Power Allied Forces of Western countries in 1900, left behind strong feelings of humiliation, and something of this 'victim mentality' still lingers on today.

Rejuvenating Chinese civilisation and catching up with Western countries became the key objective for generations of revolutionary activists, including Communists and the ruling Nationalists, who pursued different routes to the same objective. Traditional cultures and values were denounced and a strong wave of westernisation engulfed the country. But the early modernisation process was interrupted by the Japanese invasion during the Second World War and the subsequent civil wars between Communists and Nationalists.

New China, new efforts

When Chairman Mao declared at Tiananmen in 1949 that the Chinese people had 'stood up', China was one of the poorest countries in the world after decades of war and unrest. Its GDP per capita was only $18, compared to $505 for the US and $464 for the UK (see Table 1). And the Chinese economy was 90 per cent agrarian, with modern industrial production only in its nascent stages.

The new Communist government started its reconstruction process by launching a land reform programme--allocating land to poor peasants--after founding the People's Republic. By 1953, agriculture and industrial production quickly recovered to levels seen before the civil war. But the Korean War, which broke out in 1950, again changed China's political and economic agenda. Relations with the US and the West deteriorated as the West imposed trade and military embargos. China then turned to the Soviet Union for support--including copying the Soviet political, economic and social system--and the country stepped on to the road to a socialist transformation.

Mao's therapy for developing China into a modern industrial state was to follow the Soviet model of large-scale industrialisation, focusing on heavy industry rather than consumer goods, and the collectivisation of agriculture. In 1955, the government promoted collective farming and nationalised commercial and industrial companies that had remained in private hands until then. Meanwhile, the Chinese Communist Party (CCP) became heavily involved in almost all aspects of everyday life. Even writers and basketball players were required to serve a social purpose in tune with party policies.

As the Anti-Rightist Campaign of 1957 had quelled all the dissident voices, the increasingly confident Mao launched the ambitious Great Leap Forward movement in 1958. The target was to 'surpass Britain and to catch up with America within 15 years'. Peasants were encouraged--or forced--to abandon their private land and to enter people's communes, where they lived in cooperative units and ate meals at common canteens. …

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