China under Deng Xiaoping, economic policies and the Four Modernizations

2.2.1 China under Deng Xiaoping

• Deng had full control of the Party and the government by 1982
• He wanted to make important changes so that China could compete West
• He also thought that it was important to start separating the government from the Party as he wanted to put in place policies which would differ from communist ideologies
• The goal was to modernise China so that it could compete with the West in consumer goods and industrial production
• Even though Deng wanted to put in place Western policies he was still a communist and made sure that the political system remained communist

2.2.2 The Ten Year Plan

• Hua Guofeng announced the new Ten Year Plan in 1978
• The plan focused on economic sectors with a heavy industry
• The goal was to reach a level at which China would be able to support itself and compete with the West
• Deng was put in charge of these political changes
• The opening up of China to the West by Mao and Zhou was very beneficial to the plan as it provided some of the capital needed for the plan
• The plan focused on China's development, especially steel production
• Goals where set for natural resource extractions (oil, petroleum, coal and non ferrous-metals)
• In addition the plan included extensive infrastructure development which involved electricity, rail roads and water transport
• The plan proved to be too ambitious and the government could not afford the costs so in 1979 the goals of the plan were modified
• The plan would focus on the Four Modernizations: agriculture, industry, science and technology and the military 

2.2.3 Open Door Policy

• The Party introduced the Open Door Policy in December 1978
• This was a major factor for the success of the Plan and the Four Modernizations
• A high level of capital was needed to make the changes and the Open Door Policy provided this capital
• Also China would benefit from learning and importing science and technology by trading with the West
• China focused on quality of its products, the diversification of its exports, the devaluation of the Yuan and built up its currency reserves
• China became very attractive to investors like Japan, West Germany and the United States

2.2.4 Agriculture

• The goal  was to increase the yields of farmers
• The government wanted farmers to move away from traditional farming methods 
• Instead of manual work the government wanted to introduce mechanised farming
• The government wanted to improve water supply to farmers 
• The government supported and promoted the use of chemical fertilisers 
• The government supported personal incentives and diversification
• There where set quotas
• 12 commodity and food base areas would be created to allow for better regulation and distribution of food
• A big turning point was the implementation of the Household Responsibility System
• Under this system even though there was still no private ownership of land, each farming household received a plot of land 
• The farming households could use this plot of land as they wanted
• They would have a contract with the local commune in which they had to hire a certain amount of workers and plant a specific amount of crops
• The farming households had control over the labour within their households and could distribute this labour however they wished
• Also all farming household surplus could be either sold or kept which was a great benefit to farmers
• In exchange for using the land for a period of 15 years a quota that had been predetermined would go back to the local commune
• The Household Responsibility System was very successful, by 1989 90% of households where involved in the system
• The System alone allowed to increase productivity by more than what had been set by the Ten Year Plan
• China became the largest agricultural producer
• Agricultural improvements lead to increased productivity
• Due to this increased productivity, factories where built and the communes saw the revival of local crafts
• This meant that farmers could leave their family plots and work locally in the factories

2.2.5 Industry

• The main focus was on capital construction and improving heavy industries
• Attention was drawn to steel, iron, coal and oil production, 55 billion Yen was invested into these
• There was a total of 120 projects to be completed however the plan proved to be too ambitious and so in 1979 it was readjusted
• The Industrial Responsibility System was introduced
• Under this system, the supervisory body of a State Owned Enterprise (SOE) would have a contract in which a percentage of the production and/or profit would go to the state and the SOE could keep the surplus, quality of production became a factor in the later stages
• This improved the attitude and motivation of industrial workers, increasing productivity
• In October 1984 the Resolution on the Reform of the Economic System was introduced 
• Public ownership was not allowed however the government gave more freedom to enterprises 
• The management of these enterprises was a lot more free 
• In doing so the government hoped to increase production 
• Private groups could lease small enterprises but larger ones remained under the control of the state

2.2.6 Science and Technology

• The Cultural Revolution had devastating effects on education
• China was lacking even the basic technology that was standard in all other developed countries
• There was a need for more scientists, doctors, engineers and architects
• A number of goals were put forward
• The government wanted to be able to compete with the developing countries my repairing the damages caused by the Cultural Revolution
• By 1985 the government wanted to be only ten years behind the developing countries
• The goals included to increase the number of scientists, develop the centres used for experiments and to complete a nation wide system of science and technology research 

2.2.7 Military

• China had the largest army in the world however it seriously lacked in military technology
• Nuclear research had come to an end
• Science and military modernisation had a direct link
• The centres of research that were being either built or improved made it possible to develop new weapons
• It was estimated that the government spend up to 10% on developing and buying new technology

2.2.8 Results of the Ten Year Plan

• Mixed results, the plan succeeded in some ways but not in others
• According to government statistics industrial production and agriculture had an average annual growth of 11%
• Growth rates where even higher in the production of coal, steel, electricity and oil
• The GNP reached 778 billion in 1985
• There was also success in the regions of infrastructure development and construction
• There was also tremendous improvements in science and technology
• However there were problems with the workforce
• Young workers often trained abroad with modern equipment and then had to reintegrate themselves on their return within an outdated system
• Also, older workers who had suffered from a lack of education due to the cultural revolution felt threatened by the younger workers as they were scared of unemployment and the younger workers did not respect them as elders
• The increased production brought about inflation
• The plan focused on modernisation, economic growth and the availability of consumer goods however other issues affecting the quality of life where not payed attention to
• Beijing became very polluted and China suffered deforestation on a big scale
• The one child policy was put into place which penalised families with more than one child
• Corruption occurred as the Party members were spared from the policy
• Also, the children of Party members had many benefits, they were automatically accepted into universities and did not have to serve in the military