After 40 Years of Reforms, Here Comes the Chinese Dream

19/12/2018

The PRC celebrates 40 years since the start of those economic reforms that led China to become the superpower it used to be. From the “factory of the world” to the world forerunner: how have the politic opening changed the history?

 

“What’s a road? A trodden path in a place where there was previously no road and a passage opened from a place where there were only thorns,” said the Chinese author Lu Xun, quoted by Xi Jinping during his speech in Beijing yesterday.

40 years have passed since Deng Xiaoping’s reforms policy and, during these years, China has changed as no one expected. From foreign eyes, the Middle Kingdom is unrecognizable from the country it used to be and it continues to change day after day in both its economic environment and city framework.

 

On December 18, the Beijing’s Great Hall of the People hosted the celebrations of the economic reforms that have made the great change possible.

 

However, as President Xi warned in his speech, to reach the country’s goal, many challenges are yet to come. It might be an indirect reference to the Trade War with the US or to the recent consumption slowdown, but what he made clear is that the Dragon is ready to face any difficulties.

Nowadays, the PRC is the second world’s largest economy and the world’s biggest manufacturing country. The Dragon’s impact on International Relations is bigger than ever, reaching again the supremacy held during the Imperial age. On one hand, the government is selecting investments in specific areas – despite Jiang Zemin’s “liberalization” – on the other hand, Chinese people are changing too. Beijing thus continues its reform policy while people re-discover its Chinese identity and love for the tradition.

 

40 years of reforms - shenzhen - cifnews

© 123rf. Shenzhen was one of the first SEZ and it saw the rise of many hi-tech companies such as Huawei or DJI.

 

For what concerns the population, Millennials embody the future of the country as well as the tow of the economic reforms. These are the people who do not remember before-Deng’s China but whose digital personality needs a leader who is able to embrace technological innovations and to speak to new generations.

However, since the general opening started in the late 70s, Chinese leadership prefers to take more cautious decisions on how to pursue the road to reforms and keep up with the time. But in order to better understand Chinese economic policy, it is also necessary to retrace the steps that have brought Chinese power back into vogue.

China’s socio-economic environment in 1978 was completely different from the country we now know. The PRC was still facing the consequences of the Cultural Revolution together with diplomatic isolation.

 

But while people were wondering how to recover and reach Western economies, the following leader was ready to rewrite Chinese history.

 

In fact, it was the pragmatism and vision of the Paramount leader to make the greatest economic changeover ever possible in just 20 years, which turned a peasant and hungry country into the actual global superpower.

It all started in Xiaogang village, Anhui province, the real testbed of rural reforms. Here, local farmers signed a secret agreement to subdivide their common land in 1978, after which the production of grain increased dramatically.

This led to the abandonment of collectivized farming across China and the village was held up as a model for Deng Xiaoping’s reforms. The secret signing of the contract in Xiaogang is now widely regarded as the beginning of the period of rapid economic growth and industrialization of China.

 

40 years of reforms - ancient china - cifnews

© Unsplash. In 40 years, the People’s Republic has succeeded in getting about 800 million people out of poverty.

 

The real change came at the end of the year when the Third Plenum of the Central Committee of the Party authorized for the first time the creation of manufacture plants whose production was destined for export. Since then, many provinces took the opportunity to take the necessary measures to attract foreign capital and technology creating those areas also known as Special Economic Zones (SEZ).

By the slogan “enrich yourself”, the socialism-poverty equation was broken while brand-new free-market socialism was rising. After that, the day China entered the World Trade Organization (WTO) in 2001 changing the whole international game is now well-known history.

 

“The world thought it would change China, but China’s success has been so spectacular that it has changed the world,” wrote Philip P. Pan in The New York Times.

 

However, after reaching the goals of the economic rapid growth and the opening towards international markets, the Dragon still has to manage the escalation of inequalities between rich and poor.

The difference in wealth between coastal cities and more internal areas is still high. But while during the 70s China was generally poor, in the following decade, it managed to build a fairer society. Now, the gap is still present but it is easing, according to Chinese State Analysts.

By the early 1980s, a new middle class emerged in Chinese Tier 1 cities and it is quickly spreading in lower-tier areas, which represent the hubs of Chinese economic and technological rise.

This emerging middle-class society is more open towards foreign culture and optimistic about the country’s future. As The New York Times wrote, the former “American Dream” is now turned into a new “Chinese Dream”, where the government engaged in several investments in youth, research and education.

 

new law for cross-border e-commerce - xi'an - cifnews

© 123.rf. Shaanxi, Xian. Second-tier such as Xian, Jinan or Nanjing will drive PRC consumptions in the future.

 

Indeed, the number of graduates in key sectors is significantly higher in China than in Japan or the United States. Moreover, not only Beijing was able to build an educated middle class but it has also risen out of poverty over 800 million people.

 

After 40 years of economic reforms, 800 million people have risen out of poverty and the wide emerging middle class now moved the “American Dream” to China.

 

Families’ daily life has changed together with the country. While people during the Cultural Revolution used to own just a bicycle and a manual sewing machine to make their own dresses, today urban households are used to spend on clothing 224 times more than 40 years ago.

From coupons to buy basic necessities at the end of the 70s, Chinese moved to the use of WeChat QR code building the first real cashless society. Moreover, with almost 900 million active users globally connected, China’s 80s telegrams and letters seem to come from another age.

The Chinese Century is on the rise and the Made in China 2025 plan drives the economic boost. Although Xi Jinping did not explicitly mention the plan, the country’s renewed power and interest in international affairs is the sign that the Dragon is now ready to resume its role and weight historically held in the Eastern region.

 

Not only the PRC was able to transform itself, but its model is now attracting the rest of the world. Made in China trends are leading the international market, and now it is the West that tries to keep up.

 

No one was able to imagine where the 80s reforms were bringing, but Deng Xiaoping’s vision was forward-looking. The Middle Kingdom, tormented by the Cultural Revolution, turned from a big broken country to the forerunner of many fields in just 40 years. Indeed, despite the international suspect, it is effectively changing the world as we know it.

 

40 years of reforms - shanghai - old town - cifnews

© Unsplash. Shanghai, the Old Town. In just 40 years, the People’s Republic has surprised the entire international community.

 

Thanks to the Made in China 2025 plan and Beijing’s investments in many sectors, China became the leading superpower in fintech, AI, and robotics areas. Many steps have to be made in strategic sectors such as aerospace and high technology, but the gap is quickly reducing.

As Xi Jinping highlighted in his latest speech, Chinese transformation is not concluded yet. Nevertheless, thanks to its developing projects, China hopes to complete the macroeconomic and structural changes very soon in order to leave behind the reputation of China as the low-cost “factory of the world”.

Next year, Beijing is going to celebrate 70 years from the founding of the People’s Republic and it has never been so far from that semi-agricultural country inherited by Mao. It is still carrying around many contradictions such as pollution and social gap but the PRC is now more serious than ever in taking the appropriate steps to address the shortcomings.  

 

“For those that ought to be changed or can be changed, we will change; but for those that shouldn’t be changed or cannot be changed, we will firmly not change,” said the President.

 

From the SEZ to a technological leader, now China wants to export itself, its culture and its brands. Despite the Trade War started by Washington, the Dragon now aims to become the international player with which other players should confront.

The White House is rightly afraid of how economic growth in China has been 10 times faster than in the United States over the past four decades, and it is still more than twice as fast. However, far from the “factory of the world” reputation, Beijing seems to enjoy public support while many think the Chinese age is just about to begin.

Although the international thinking, the country that was about to fail, 40 years later has returned to be a superpower. After 70 years from the creation of the People’s Republic, and after such an unexpected growth, how will China’s future be? And how will it affect us all?

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