2P - Economic developments: the 'Four Modernisations' and economic growth
Explain how reforms in agriculture, industry, defence, science and technology promoted growth after 1978, and assess the limits and unequal consequences of China's move towards markets.
Four Modernisations and pragmatism
The Four Modernisations were agriculture, industry, national defence, and science and technology. Zhou Enlai had advocated these priorities before Mao's death and restated them in 1975. Deng made them central to the post-1978 programme. Their aim was to overcome poverty and technological weakness and strengthen China; they were not four separate declarations of political liberalisation.
The change in method was crucial. Economic performance, technical knowledge and material incentives acquired greater importance than repeated class struggle. Reformers could support a market mechanism if it improved production without regarding every such mechanism as the restoration of capitalism. In his 1985 discussion of reform, Deng defended foreign investment and a limited private sector while maintaining a socialist identity. This is evidence of his justification of policy, not proof that the actual economy met every stated ideal.
Reform developed unevenly and through experiment. Local initiatives, national decisions, higher prices paid to producers and investment all contributed. Not every change originated in a detailed blueprint personally designed by Deng. His importance lay partly in giving political protection and national endorsement to practices that cadres and communities developed. The resulting economy combined planning, public ownership and markets rather than immediately replacing one complete system with another.
Economic incentive
A reward or penalty that affects a person's production or investment decisions. Allowing producers to retain more benefit from extra output can encourage greater effort and more efficient choices.
Agriculture and household responsibility
The household responsibility system changed the basic organisation of farming. Families contracted to cultivate land and meet obligations to the state or collective; after meeting these obligations, they could retain or sell additional output. Land generally remained collectively owned. Contracted family cultivation should therefore not be described as a general transfer of agricultural land into unrestricted private ownership.
Under communal work, an individual's extra effort might produce little direct extra reward. Household contracts tied the family's effort and decisions more closely to its own income. Higher procurement prices and greater scope to choose production also encouraged output. Experiments in places such as Anhui and Sichuan spread and received national approval in the early 1980s. Communes were dismantled as an administrative and production system, with township and village structures replacing them.
Grain production and rural incomes rose markedly in the first reform years. The gains were not entirely attributable to one institution: prices, inputs and weather mattered too. Nor did success remove all difficulties. Families bore more production risk, access to resources varied, and collective welfare arrangements weakened in some places. Small plots and insecure opportunities could still restrict investment. A contemporary local party document of November 1980 shows officials explaining responsibility arrangements while still using the language of collective socialism.
Industry, markets and opening
Industrial reform extended autonomy and rewards while initially retaining the state sector. Managers received more scope over production, employment and retained profits. The reforms associated with 1984 widened the use of enterprise responsibility. Under dual-track arrangements, an enterprise could fulfil a planned obligation at controlled prices and sell additional output at market prices. This offered a gradual route towards markets, but also created opportunities for people with access to low-price goods to resell them for private gain.
Township and village enterprises expanded rural non-state industry. Their ownership and management varied, often involving local government rather than simple private ownership. They used local labour to make consumer goods and other products, providing employment beyond farming. Their growth meant industrial transformation occurred outside the older urban state factories as well as within them.
Opening to foreign capital, machinery and skills increased the resources available for modernisation. In 1980 the first four Special Economic Zones were established at Shenzhen, Zhuhai, Shantou and Xiamen. They offered favourable conditions for external investment and market-oriented activity. Fourteen coastal cities were opened in 1984; Hainan became a province and Special Economic Zone in 1988. Coastal locations benefited from proximity to shipping, Hong Kong and overseas Chinese investment networks.
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