'Deng Xiaoping and the Transformation of China' not only provides a credible summary of how China entered the modern world, but also very useful lessons in large-scale organizational change and macro-economics. Author Vogel, Harvard professor emeritus, contends that Deng Xiaoping may have had the greatest long-term impact on world history than anyone else in the 20th century. His pragmatic, driving force behind China's radical transformation lifted millions out of poverty and reshaped global politics. First, however, he had to address the damage done by the Cultural Revolution (CR), end the Mao personality cult with its emphasis on mass mobilizations, class warfare, ideology, intensive collectivization, and central planning, revive agriculture (grain production/person when Deng too over in 1978 was less than that in 1957), and undo the economic system (price and wage controls, central planning) he had helped build. There was also a widespread problem of unqualified military officials and rebels having assumed leadership functions during the Cultural Revolution, factories that still operated did so with 1950s Soviet technology that was in disrepair, universities having essentially been closed for a decade, and no jobs for the educated youth that had been sent out to the countryside during the CR.
Deng's transformation focused not on holding Mao responsible, but the economic and political system that had tried to reach down to exert control at both the household and small enterprise levels. Deng opened China to science, technology, management systems, and ideas from anywhere. He also realized that China's economic problems could not be solved simply by opening markets - institutions had to be built gradually. He saw his job not as coming up with new operational ideas, but devising and implementing a new system, along with selecting a core of co-workers. He also had to provide hope without raising unrealistic expectations, and pace change so as not to split the nation - all while maintaining stability in employment. Deng's credibility was built on the poise of having been a former high-ranking wartime leader (12 years) and Long March survivor, spending half a century near the center of power (Deng was 74 when he became head of China in 1978), and previously leading initial performance improvements in China's railroad, coal, and steel industries. Amazingly, Deng also had been purged three times by Mao - once for eight years, and the last time shortly before Mao's death.
Mao made Deng Vice-Premier in 1975 when China was still recovering from the Cultural Revolution (CR). During that period young people had been mobilized to attack high-level officials and push them aside, plunging the nation into chaos. One of Deng's first moves was to tell the PLA to end internal struggles between CR supporters and opponents and instead focus on their assignments - those that failed to do so would be replaced. Deng also brought back many of the 25,000 former officers 'wrongly accused' in the CR. Deng also downsized the military by 20% to help pay for weapons upgrades, and helped those displaced to find new jobs; he kept all those in the Air Force, Navy, and the Army's technical experts, and resumed training activities. Deng also was careful to obtain Mao's approval for all his major actions. Deng then took on the railroads - they had offended Mao by delaying one of his trips by a week, and were also creating delay problems throughout the economy. Deng focused first on the worst railroad group in terms of accidents and delays, again went through the warning on factionalism, arrested the most cantankerous leaders, improved worker living conditions, made clear that neither position nor seniority would protect against adverse actions for failure to perform, brought in PLA troops to enforce compliance, and canceled CR verdicts on some 6,000 former workers/managers. Performance doubled. Then it was on to coal, China's primary source of energy. Coal had piled up because of poor rail transportation and miners had quit digging. After coal came steel - performance did not meet targets, but did improve about 10%. (After Deng's 1978 visit to Japan, during which he saw their much more modern equipment and methods, he never again relied on exhortation to improve performance - instead, the emphasis was on technology and methods.)
Deng also moved to select for Chinese Communist Party (CCP) membership those who could contribute, and replace those who got there for participating in the CR. He required members have 10+ years experience, and also removed military personnel from civilian positions. Deng continued to emphasize logical arguments acceptable to Mao, checked everything major with Mao before implementation, including revisions suggested by Mao. He continued Zhou En-Lai's 1963 'Four Modernizations' (agriculture, industry, national defense, science and technology) that essentially equated to economic self-reliance by the early 21st century. Foreign technology was sought out, incentives given workers (performance, difficulty, hazardousness), propaganda personnel were removed from the Chinese Academy of Sciences, universities re-opened (the few that were open had switched to admission via nomination instead of examination; achievement again became the criterion; at the time, China's Peking University had been judged about the equivalent of a U.S. junior college).
However, in January 1976 Deng was purged again (replaced by Hua Guofeng) after the Gang of Four and Mao's nephew played on Mao's insecurities (eg. Kruschev had publicly downgraded Stalin after the latter's death, and Mao was near death himself) - Deng knew he could have avoided being purged if he'd just publicly stated that he supported Mao's CR, but Deng refused to do so. The 'good news' is that after Mao's death months afterward, the new Premier, with strong support from top leaders, had Jiang Qing (Mao's last wife) and the rest of the 'Gang of Four' arrested (they had antagonized most everyone), along with their 30 most loyal followers and put on trial. This precluded factional stalemate at the top leadership level, and unwittingly helped set the stage for Deng's return.
Hua supported opening China to the West, a reduced role for ideology, and more emphasis on modernization than class struggle. However, he had little experience in Beijing, none in foreign affairs, and little in military affairs. He also didn't support the scale of return of senior officials under Deng. Deng, for his part, accepted Hua's new role, and was allowed to champion the modernization of science, which he saw as key to to modernizing the other three. Deng quickly ended the practice of having high-school graduates do two years of physical labor before attending college - "the students (forget) half of what they learned in school." He also immediately revived the use of entrance exams for college - there were spaces for only 5.8% of those that took the test. Examinations were later expanded to also select for top elementary and high schools. Worker propaganda teams and troops quartered at universities (a CR leftover) were removed to remove them as a source of conflict. Professors' physical labor and political education requires were lowered to one-day/week. Deng used Chinese-American scientists for guidance on how to improve. The Central Party School was also reopened in 1977, and began allowing more open discussions than previously.
Deng returned to the top position in 1978, and began encouraging CCP leaders to visit other nations to increase their awareness of how far behind China was, and thereby their receptivity to changes in thinking. Yugoslavia was included because it had improved while maintaining socialism, lessening the potential perceived threats by party hardliners. Deng visited Hong Kong, and when informed of the large numbers of Chinese escaping to Hong Kong, directed a focus on improving China's economy rather than a stronger fence - this led to China's first Special Economic Zone (SEZ). Returning 'tourists' decided to begin my improving China's textiles and apparel industries. Deng set the background, stating "If we can't grow faster than the capitalist countries then we can't show the superiority of our system." Criticism of the Gang of Four was stopped to allow focus on increasing production. Deng also noted that 'some would get rich first' - they should then help others. He also pointed out that moral appeals for initiative (Mao's approach) only lasted a short time - they needed to provide rewards and promotions as well. His fellow CCP leaders were worried about repeating mistakes such as Mao's Great Leap Forward and the Cultural Revolutions - thus, they were slow to change Deng's titles to reflect his new position.
Deng himself also visited Japan and the U.S. His Chinese media entourage helped ameliorate negative attitudes towards Japan and the U.S., and spread awareness of China's backwardness. Deng personally worked to create a foundation for partnerships and learning. Japan and the U.S. were particularly receptive to China, seeing the opportunity to draw it away from the Soviets. Deng helped minimize opposition to change in China by using the term 'management' instead of 'Western ways,' and constantly committing to socialism and the CCP. He viewed the U.S. separation of powers as a terribly inefficient way to run China. Normalizing relations with U.S. was made more difficult because of their 'one China' policy vs. Taiwan. Secretary Vance helped Deng over this bump by suggesting that, over time, Americans would come to agree with the 'one China' perspective.
Deng conducted most of his work transforming China at home, beginning the day reading reports and newspapers, then often meeting with people in the afternoon. He attended few meetings, preferring instead to either send his assistant or rely on written comments previously made to those leading the meetings; this was partly due to his being hard of hearing, partly due his age, and probably also a better use of his time. Prior to giving major speeches, Deng cleared them with other top CCP officials, especially those involving economics. Mao's 'management secrets' started with maintaining respect for the CCP by reining in criticisms of the past or present (both within the CCP, and of its leaders), building public support before promoting path-breaking policies, avoiding taking the blame - subordinates were expected to do this, not having to face short-term elections, focusing criticisms on implementation as much as possible instead of policy, avoiding separation of powers (eg. U.S. - Congress, President, Supreme Court), pushing out those committed to old ways (mostly via mandatory retirement, enticed via providing housing and recreation centers), using think tanks and experimental trials (eg. 'let's see how it goes' vs. workers released from farm work joining small firms that sometimes exceeded Marx's admonition over having more than 7 employees; creating 'Special Economic Zones' - SEZs) instead of starting with risky mass changes, being careful to get accurate information (trusted sources, outside experts) - avoiding problems during the 'Great Leap Forward' caused by officials unwilling to tell Mao of problems, taking small steps, using aphorisms to explain complex/contentious issues (eg. not caring whether a cat was black or white, as long as it caught mice; some people will get rich first; crossing the river by feeling the stones), maintaining reasonable expectations, sensitivity to those wanting to repeat adverse historical experiences, presenting his policy as a sound middle course (eg. 'starving peasants [in 1979] should be allowed to find a way to survive' vs. those wanting continued collectivization of agriculture), deferring some troublesome problems until later (eg. Taiwan) for 'smarter generations,' temporarily backing off from change when problems/strong opposition occurred, and soliciting/accepting economic advice - an area he was not that familiar with. In addition, he never wavered in clearly preserving socialism - first by maintaining public ownership of land, precluding capitalists from dominating politics, beginning with a large economic role for 'state-owned enterprises' (SOEs) in key industry areas, and assuring that Chinese firms would not be displaced by foreign businesses as they had in the 1930s. Finally, Deng emphasized results - TV was just coming to China and its populace became quite impressed seeing SEZ skyscrapers. (Deng thought Gorbachev made a major error by setting out to change the political system first - this maximized opposition while providing little/nothing in improvements; actually, Russia's initial foray into overhauling systems was a disaster because it was unable to handle the results of immediate, massive change).
Mao had moved much of China's industrial base inland out of fear of invasion - Deng returned production to coastal areas with their improved access to shipping and better infrastructure. Another early, major change came when Deng learned that thousands had been imprisoned for trying to escape into Hong Kong. Deng's response was to stop trying to 'build a better fence,' but instead improve their economic opportunities. This led to talks and agreement to establish the first SEZ across from Hong Kong, with relaxed regulations; the first project involved a native Chinese entrepreneur who had moved to Hong Kong, yet was a member of the Communist Party, and whose project (scrapping unwanted Chinese ships for their steel) did not require much investment. Other projects soon followed - the timing was perfect because Hong Kong was running out of labor. Three other SEZs soon followed. Early lessons learned by government officials were that businesses preferred 'one-stop decision-centers' to obtain permits, arrange infrastructure, etc., areas where officials kept their promises, and labor, fees, etc. charges were kept reasonable. By 1984, the four SEZs became 18, Taiwan dropped its ban on doing business with the mainland and its businesses became major investors in China, and one SEZ even eliminated set prices on many foods (prices rose, then fell back after supply increased).
Peasant income roughly doubled between 1978 - 1982, thanks to household contracting replacing collectivization, reduced taxes, a 20% increase in prices paid for their products, and the doubling of fertilizer availability. The small commune workshops and stores that had been part of collectivization became 'Town/Village Enterprises' (TVEs) owned by local governments, but no longer bound by the former commune's former area. TVEs went from 28.3 million workers in 1978 to 105.8 million in 1992; their advantage over SOEs was not having to provide housing, health care, or schooling. Unemployment resulting from improved agricultural productivity/no longer requiring students to gain humility from working the earth also spread to urban centers, the violation of Marx's caveat on 'large' firms, and another unplanned experiment that helped Deng's cause. (The 1987 Party Congress then officially made these 'larger' firms legal - potentially highly contentious debate was side-stepped, both by the experiment and Deng's duck aphorism wondering why a farmer was a socialist with three ducks, but then became a capitalist with four.)
Deng set and pursued a goal of increasing year 2000 GDP to a level 4X its 1984 level; the more cautious leaders objected, and he ignored them - though he also asked the World Bank for an opinion on its feasibility. The Soviet Union and Mao both had sent few students abroad, worrying about a 'brain drain' - Deng did not, and very quickly had tens of thousands of Chinese students abroad. McNamara and others convinced Deng that the World Bank didn't work for the U.S., and Deng eagerly accepted its help - beginning with arranging training for Chinese economists. Visiting East European economists convinced the Chinese to not try dramatic all at once restructuring, and suggested using 'dual-pricing' (production over quota could be priced at market) as a transitional tactic. Japan was another major learning source, thanks to its transition from a tightly managed post-war economy to free-markets.
Deng's stocked soared further when he negotiated a peaceful return of Hong Kong in 1984; he also shifted his definition of 'socialism' to 'public ownership' instead of central planning, and emphasized common prosperity instead of egalitarianism. Deng, however, made a major miscalculation in 1988 by freeing many prices in an effort to avoid corruption by those taking advantage of the dual prices - inflation soared to 26% because the production couldn't meet new demand, he was forced to reverse the decision, the ground was set for Tiananmen in 1989, transformation slowed, and Deng lost face vs. his much more cautious counterparts.