1976 to 1978 was a period of intense political activity in China. Mao Zedong died in September 1976 and on 6 October 1976, Madame Mao and her three principal associates (the infamous Gang of Four) were arrested on the orders of Marshal Ye Jianying, Minister of National Defence. They would be subjects of a show trial in 1981 and all would receive lengthy prison sentences.

By the CC meeting of December 1978, after a period of bitter infighting, Deng emerged as the key figure within the Party and it was this meeting that repudiated the “two whatevers” policy – whatever Mao said must be correct, and whatever policy Mao proposed must be adopted. This was replaced with a new Party line, the “Four Modernizations”. To overcome the inheritance of the GPCR there would be a period of huge investment and rapid development of Chinese science and technology which would then be applied to agriculture, industry, and national defence. At the time the proposed programme stressed economic self-reliance but had as its target China becoming one of the world’s major economic powers in the early part of the 21st Century. On 5 December 1978 in Beijing, a former red guard, Wei Jingsheng, posted on the Democracy Wall calling for a Fifth Modernization: “democracy”. He was arrested a few months later and jailed for 15 years.[4]

The CCP was a thoroughly Stalinised Party but claimed the Bolshevik revolution as part of its heritage. It was only natural that Deng should look to the history of the USSR to see what lessons could be learned on how to re-vitalise the Chinese economy and, especially, increase food production. The obvious lesson was the introduction of the New Economic Policy in 1921. This had been tremendously successful in restoring food supplies to Russian towns and had generated a boom in light industry. The main points of the NEP had been: Once the peasants had paid their taxes they were free to sell their surplus at free farmers’ markets in urban areas; Private merchants were allowed to buy and sell produce in a market environment; light industry was left in private hands while state-owned large-scale industry had to be self-funding. Increased wage differentials were allowed so that productivity and level of responsibility could be rewarded; foreign capitalists were offered concessions.

On 4 February 1919, Lenin presented a resolution to the Council of People’s Commissars along the lines, that one way of securing the investment necessary to develop the productive forces of the weak and underdeveloped economy of the young workers’ state was to grant short-term concessions to foreign capital for the long-term benefit of the revolution. It was the delay of the world revolution that forced the Bolsheviks to propose this compromise with capitalism. At that time, however, the foreign capitalists, far from wanting to reach economic deals with Soviet Russia wanted to crush it; first by armed intervention and then by economic blockade. With China, by the late 1970s, it was quite a different matter. The imperialists were perfectly willing to make deals with the bureaucratic, privileged caste running the state. Even the arch-reactionary Nixon had no problems in reaching agreements with Mao.

In the conditions which prevailed in China in the late 1970s some form of NEP was eminently sensible, subject to certain conditions. The Deng wing coined the phrase “market socialism” in which the main levers of the economy remained under state control guided by the state plan including a monopoly of foreign trade. These proposals were acceptable as a means of stimulating and developing the Chinese economy. Deng and his co-thinkers drew the conclusion that the attempts to make China self-sufficient had failed and, correctly, recognised that China could not develop in isolation from the world market. Socialism in One Country, while remaining official ideology was finally, though quietly, buried.

Lenin perceived the NEP as a temporary retreat, but Deng saw it as an advance. The difference was that Lenin’s Russia was a relatively healthy workers’ state, which the NEP would be used to strengthen, whereas Deng’s China was a Stalinist, bureaucratised deformed workers’ state which the introduction of a NEP would weaken.

Deng and his co-thinkers argued that, despite 25 years of almost continuous growth, the Mao era had left the economy in a mess. The GLF and the GPCR had caused serious shortfalls in agricultural and industrial production but, more importantly, as the economy became increasingly sophisticated the centralised, bureaucratic command system was proving so inept, corrupt and wasteful that future growth was threatened. Industrial productivity was declining, the quality of the finished products was very poor, there were inflationary tendencies, and scarcity of consumer goods. Workers and peasants were becoming restless and threatening to take their demands onto the streets.

When Deng came to power in 1978 he had no intention of restoring capitalism. He, and the wing of the bureaucracy he represented, understood the need to introduce the most advanced techniques into the Chinese economy, but the bureaucracy’s inherent conservatism meant that it moved empirically, responding to the needs of the moment. Having accepted a market-led approach, it was only a matter of time before China would open up to foreign investment and participate wholeheartedly in the world market.

  1. Brook, D. Modern Revolution, U.P. of America. 2005.

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