FUTURE OF MARKET SOCIALISM IN CHINA

INTRODUCTION
1. Inheritors of the world’s oldest civilization, the Chinese can be justly proud of their achievements. Creation of a written language, development of elaborate techniques of silk weaving, wet rice cultivation, invention of the compass and gunpowder are but a few of the more outstanding of these accomplishments.
2. Socialist China, with a 5000 years old culture and one fifth of the population of world is historically a special country; Chinese have had for centuries, a continuous society and self contained civilization with its own racial, social, cultural, spiritual and technological characteristics. They are among the world’s most tenacious and resilient people. China is a large country. Her 3.8 million square miles of territory is forty times the size of United Kingdom and larger than United States including Alaska and Hawaii. This immense domain has made it extremely difficult to be annihilated by other nations.
3. Over the last two decades China has experimented boldly and has fired the imagination of the world. The present Chinese government, under the pressure of communism’s failure in Eastern Europe, is reshaping its ancient civilization. They are well poised to play a major role on the international political scene in the present day uni polar world. Their desire is peaceful environment, which is imperative for domestic economic development. In view of the progress made by China over the last fifty years, one is naturally inspired to project the changes in the next century in order to look at probable future of this great nation.
AIM
4. To carry out an analyses of the future of market socialism in light of reforms introduced by Deng Xiao Pang.
SCOPE.
5. The subject shall be dealt in the following manner
a. Part I Historical Perspective
b. Part II Synopsis of Dengism
c. Part III Future of Market Socialism
d. Part IV Conclusion
PART I – HISTORICAL PERSPECTIVE
6. More than a century ago Napoleon Bonaparte had remarked, ” China, there lies a sleeping giant let him sleep, for when he wakes he will shake the world” . Within a century of Napoleon’s death, China began to awaken, and its awakening has indeed shaken the world.
7. For some 3000 years, China has been one of the main centres of the world. Rivaled for sheer power and sophisticated living only by the Roman imperial colossus, Despite many vicissitudes, China has continued to endure as a political entity, and in it has once again surged to the forefront of the international affairs. Prehistoric China is shrouded in mystery from 2000 BC to 1500 BC. Following dynasties followed the course of history until early 20th century :-
a. Xia(2000-1500 BC)
b. Shang(1700-1027BC)
c. Western Zhou(1027-770BC)
d. Eastern Zhou(770-221BC)
e. Chin (221-207 BC).
f. Western Han (206 BC – 9 AD).
g. Eastern Han(25-220)
h. Sui (581-617 AD)
i. Tang (618-907 AD).
j. Song (960-1279 AD)
k. Yuan (1279-1368 AD)
l. Ming (1368-1644 AD)
m. Manchu(Qing) (1644-1912 AD)
8. During different dynasties there was always a certain kind of political and administrative machinery. Thus, China’s political past gave her almost everything, a society needs.
9. China under Mao (1949-1976). By 1926, the Kuomintang was facing many internal and external threats. Taking advantage of this unrest, the communists started their campaigns. The two groups fought each other from 1927 to 1949. The Red Army of Mao took 25,000 miles Long March, which took a year and involved large scale fighting against the Kuomintang. This Long March of the Red Army opened the path to liberation, and ultimately brought the downfall of the Kuomintang in the Mainland China, in 1949. This ushered in the success of Chinese Communist Party -forming its Government in China. Immediately the new Government established its contact with the Soviet Union and based its principles on the concept of Leninist party organization .
PART II – SYNOPSIS OF DENGISM
“It doesn’t matter if it’s a black or a white cat, as long as it catches mice”
Deng Xiao Pang
10. When Deng Xiaoping returned to power, he was highly critical of the country’s economic situation. In December 1978, at the widely publicized Third Plenum of the Chinese Communist Party’s (CCP), Deng reintroduced the Four Modernizations with much fanfare, and added to them a sweeping reform of the planning and management system in industry and agriculture. The order of the four modernizations put agriculture first, followed by light and then heavy industry. Science and technology and defense were prioritized third and fourth, respectively .
11. Of a host of reforms introduced by Deng, few major ones are described in the succeeding paragraphs
a. Agricultural Reforms. Deng fixed quotas for the farmers for each produce. Anything they raised or produced beyond these quotas was theirs to keep, or to sell in the free market. To bolster agriculture, more credit was made available to it than ever before. In 1978 alone, state banks and credit cooperatives put an unprecedented 25 billion Yuan at the disposal of production brigade.
b. The Private Sector. In urban areas, Deng’s reforms called for a rapid revival of the private sector. By the end of 1983, the private sector employed seventeen million people. As of 1990, this had risen to twenty five million .
c. Private Enterprises. The lynchpin of economic reforms, however, laid elsewhere; in the delegation of greater authority to individual enterprises in order to transform them into more independent units that would be responsible for their own successes and failures. Beginning in 1979, the government issued a number of directives and regulations designed to implement decentralization. Many state imposed mandatory quotas were lowered. Instead of requiring factories to turn over their profits to the state, taxes were levied .
d. Price System Reforms. In 1983, a transitional two-tier price system was adopted; a government set price for materials covered by the state plan and a negotiated price that was normally well above that of the government set price, was introduced .
e. Revival of Examination System. Intellectually rigorous examinations were reintroduced as the criterion for admission to universities . At the same time, the requirement for political reliability was quietly downgraded.
f. Red and Experts. Under the new regime, “redness” was to be less important than “expertness”. In order to enlist the support of intellectuals, the Maoist characterization of them as the stinking ninth category” was removed.
g. Class Labels. Class labels, such as “capitalist and landlord”, that had been awarded as long as thirty years ago and that had been hereditary, were removed . An investigation was promised into the verdicts rendered during Cultural Revolution, those discovered to have been wronged their verdicts reversed.
h. Religious Freedom. A new, much more tolerant policy was announced with regards to religion. Services could again be held and the government offered help in rebuilding Mosques, Churches and Temples that had been destroyed.
i. Political Reforms. As far as the political system is concerned, constitutional guarantees and procedures would also be extended to the electoral system . In sharp contrast to the practice of the previous decade, party and the state organs would hence forth meet at their scheduled times. Elections for the representatives thereto were to be held by secret ballot. There would be more candidates than the positions, although only in lower level elections. This would be the first step towards competitive elections.
j. Politics of the Economy under Deng. The profit motive was restored. Factories were allowed to retain their earnings beyond a certain amount, and peasants were free to sell in the free market whatever they raised beyond fixed quota to be delivered to the government. By modernization Deng appeared primarily to mean industrialization and attainment of higher standard for the population.
An Overview of China’s National Economic and Social Development.
12. Till 1997 China continued to deepen its reforms and open wider to the outside world. Substantial progress was made in restructuring the national economy, which continued its steady pace of development.
a. The national economy realized “high growth with low inflation” in 1997. The GDP reached 7,477.2 billion-Yuan, an 8.8 percent increase over the previous year, calculated in constant prices.
b. Country’s total grain output reached 492.5 million tons , the second-highest yield in China’s history.
c. Key projects were boosted in 1997, as a total of 145.7 billion Yuan was invested in 129 key national projects.
d. Over the year, the volume of import and export trade totaled 325.1 billion US dollars, an increase of 12.1 percent over the previous year.
e. Per capita disposable income of urban residents was 5,160 Yuan, and the per capita net income of rural residents was 2,090 Yuan, increase of 3.4 and 4.6 percent respectively.
PART III – FUTURE OF MARKET SOCIALISM
13. At the third plenum of the 11th Communist Party Congress, a newly reinstated Deng Xiaoping assumed control of the country, promising to replace class struggle with modernization. In the two decades since that pledge was made, the mainland has been transformed both materially and culturally. Mobile phones are as ubiquitous today as Little Red Books were during the Mao era. Karaoke parties now take the place of class-struggle sessions. The number of high-rise buildings in the country is possibly greater than in the rest of the world combined. Coastal cities look surprisingly like metropolises in any middle-income country .
14. As the mainland is still changing its national statistical system to reflect a market economy, there is bound to be a problem with the accuracy of statistics. Any assessment therefore of how successful this has been and weather or not the market socialism has a future, presents problems of what weight to assign to the various criteria of success. For example, those who place high value on the criterion of a system’s ability to keep peace , or that of satisfying its citizen’s minimal needs for existence, will make a judgment very different from those whose greatest concern are things like human rights and freedom of the press. Another problem is how to assess the system’s failure. Should one consider it as aberration of the system and therefore discount its disastrous effects, or as evidence of fatal structural flaws in the Chinese Communist system itself? In addition, every political system has both its backers and detractors. A critical analyses of these may help us arriving at some sort of a conclusion:-
Analyses
15. Strengths. Implementation of Deng’s reforms started improvement in living standards of a common man. The Chinese economy turned in a creditable performance over the past decade. Deng’s legal reforms are generally regarded as a significant improvement over the legal nihilist views of the Cultural Revolution.
a. Party and government deserve credit for feeding and clothing 22% of the world’s population on a mere 7% of the world’s arable land. The average Chinese has a life span of just over 70 years, putting China nearly at the level of more developed nations and well ahead of many developing areas.
b. Thousands of miles of railroad and highways have been built, and the country’s industrial base has been greatly expanded.
c. The Chinese have developed a nuclear deterrence capability and sell a variety of military equipment to the third world. It is regarded as a major actor in the international affairs.
d. China is a respected member of United Nations and permanent member of UNSC.
e. Deng Xiaoping‘s education policy has succeeded in changing a literacy of 25% to one of almost 85%.
f. The one-child policy was rigorously enforced. The population has grown 28 per cent in the past two decades, compared with 47 percent in the previous two decades.
g. Peasants had become sluggish and inactive under the People’s Commune system. When they were given back their land, it ignited a revolution in agricultural productivity.
h. Investment by the non-state sector, mainly by township and village enterprises and foreign investors, was encouraged in the mid-1980s, which sparked the most spectacular export boom.
i. The most important accomplishment of Dengism was its success in releasing the economy from the stranglehold of leftist policies without incurring massive social upheaval, which would have meant widespread starvation.
16. Weaknesses. Following can be turned as the weak points or potential threats to the future of market socialism.
a. The transformation, however, were accompanied by rapidly increasing differences between rich and poor, in terms of both individual person’s and geographic regions. If Deng’s reforms made some people and areas wealthier, they made others relatively poorer. ”
b. Abolition of the communes and decentralization of economic decision making led to deterioration of the capabilities of central level institutions, generally without the emergence of compensatory mechanism to fulfill many of the services they had provided. Local and regional protectionist tendencies in the economy and even in court system caused problems for further development of a nation wide market directed by the party from the capital city. Decentralization and market reforms also strengthened centrifugal forces in ethnic minorities’ areas.
c. The rule of law, the most important component of a modern market economy, has yet to mature in the mainland.
d. The incentive framework has become highly complex and has eroded the state’s capacity to collect taxes. Deng’s pragmatism policy means local governments have been encouraged to give special incentives to fresh investments; but local governments all have ambitious development plans of their own, which require additional funding. This suggests the country
e. should standardize its tax system so it can provide a dependable source of funds for development and is perceived by the people as fair.
f. The separation of government and business is essential for creating a level playing field for investors, a critical factor in the development of a market economy. Businesses alone cannot take advantage of the arbitrage opportunities created by gradualism but government-sponsored businesses can. Existence of such a system often undermines the effectiveness of government agencies in providing public services and creates a prevailing sense that becoming rich is only possible for the powerful.
g. Civil service reform is necessary to slim down the government, delineating better the roles of government agencies and improving material rewards for civil servants.
h. The state enterprise sector is in a critical condition because deflation has destroyed the cash flow of many industries. The chronic need for banks to prop up state enterprises has led to the banking system having a large amount of non-performing assets, making meaningful banking reforms difficult.
i. The mainland must impose discipline on the extension of new loans, based on the financial viability of investments. This would stop non-performing assets being added to the already-large stock in the financial system.
j. The most serious immediate challenge in economics and politics is the need to create enough jobs for the large pool of surplus rural labor (more than 150 million), laid-off state-enterprise workers (10 to 30 million) and new entrants into the labor force (25 million) . The numbers suggest the mainland cannot possibly create enough jobs in the formal economy to solve its employment problem over the next few years. This means wages in the grey economy will be constantly under pressure, exerting deflationary pressure on the formal economy.
k. Housing reform and the replacement of a state-sponsored system by an insurance-like social safety net needs completion.
l. Accession to the World Trade Organization can only aggravate the problem of instability because membership will limit the ability of the regime to defer solutions to critical problems.
CONCLUSION
17. China today is passing through the most critical stage of its history, where even the very existence China is in danger. Unlike Russians the reforms made by the Chinese are gradual and in accordance with their nature, therefore China’s transition to a moderate social structure had a positive impact. In my humble view, it is amply evident that the transformation of a socialist China into a capitalist one is just a matter of time, however this transformation is going to be very slow, controlled and gradual so as to avoid any Russia like turmoil.
18. With the membership of WTO China has been posed another serious problem. In the light of the impacts discussed in the preceding paragraphs I personally feel that if China is able to fight the short term ill effects it is going to benefit a lot in the future and will definitely emerge as the next super power.
BIBLIOGRAPHY
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