China After Mao

(1976 - )
 Political Economy Regime
• Combination of economic liberalization
and political authoritarianism
• Economic policy choices by post-Deng
leadership
– to maintain control over the aspects of
economy most vulnerable to world market
– to maintain a more conservative and secure
position in world economy
 Economic Liberalization
• Deng Xiaoping’s “Reforms & opening up” since 1978
• Separate Party from government 黨政分開
– halted after 1989 Tiananmen
• Separate state from economy 政經分開
– market mechanism and privatization
• Separate government from enterprises 政企分開
– reinforced after 2001 WTO
– introduce competition and deregulate industries
– increase role for law
– limit corruption
 Separate state from economy (1)
政經分開
• break down bureaucratic interests and
economic paternalism 家長式
– 1998: industrial ministries were reorganized
as bureaus
– 2000: industrial bureaus were eliminated
– 2003: State Development Planning
Commission was reorganized as the State
Development and Reforms Commission 國家
發展和改革委員會
 Separate state from economy (2)
政經分開
• Further restructuring of state institutions
– 2003: State Economic and Trade Commission
was eliminated
– 2003: the Ministry of Foreign Trade and
Economic Cooperation and the Ministry of
Internal Trade were merged into the new
Ministry of Commerce
• foster professionalism within government
 Separate state from economy (3)
政經分開
• Economic liberalization accelerated since
1990s
• The “bubble economy” of 1993
- decentralization and marketization
- financial laxity and inflationary pressure
Separate government from enterprises (1)
政企分開
• introduce competition into monopolized industries
– telecommunications industry
• China Telecom 中國電信 , China Mobile 中國移動 China Unicom 中國聯通

– electric power industry (plant-grid separation)

• Grids: State Grid Corporation of China 國家電網公司 ; China Southern
Power Grid 中國南方電網
• Plants: China Datang 中國大唐 ; China Guodian 中國國電 ; China Huadian
中國華電 ; China Huaneng 中國華能 ; State Power Investment 國家電力投資

– airline industry
• Air China 中國國際航空 , China Eastern Airlines 中國東方航空 , and China
Southern Airlines 中國南方航空
Separate government from enterprises (2)
政企分開
• State sector continues to shrink
– downsized 機構精簡 , privatized 私有化 , or go
bankrupt 破產
• non-state sector continues to grow
 Zhu Rongji’s policy regime
• Zhu Rongji 朱鎔基
– Vice-Premier (1991-1998)
– President of the People’s Bank of China
(1993-1995)
– Premier (1998-2003)
• macroeconomic restraint 宏觀經濟調控
• regulatory reforms 體制改革
 Macroeconomic Restraint
宏觀經濟調控
• Conservative monetary policy 貨幣政策
• banks faced harder budget constraints 預算約
束 but also more authority
– banks gained bargaining power
• to resist demands from especially State Own Enterprises
(SOE)
– banking laws re-centralized banking system
• to resist demands from local governments
– banks were forced to be profitable
 Regulatory Reforms
體制改革
• market-oriented reforms in 1980s
– let the economy “grow out of the plan” 摸着石头过河
• improving the legal and regulatory environment in
1990s
– privatization of State Own Enterprises (SOE) 國有企業
– abolished the “dual-track” 雙軌制 of exchange rates
– fiscal reform 財稅改革 to re-centralize tax revenues
 Political Authoritarianism 威權主義
• The Four Cardinal Principles 四項基本原則
the principle of upholding 堅持
– the socialist path 社會主義道路
– the people's democratic dictatorship 人民民主專政
– the leadership of the Communist Party of China (CPC), 共產黨的領導 and
– Marxism-Leninism and Mao Zedong Thought and 馬列主義 毛澤東思想
• allowed no organized opposition to the Party leadership
• democracy movements immediately followed by suppression
to crack down political dissidents
– late 1970s: “democracy wall” movement
– late 1980s: Tiananmen Square protests
– late 1990s: China Democracy Party
Deng’s handpicked successors
• First two
– were selected as economic reformers
– were purged for political liberalization
• Hu Yaobang 胡耀邦
– CCP General Secretary from 1978-87
• Zhao Ziyang 趙紫陽
– CCP General Secretary from 1987-89
Deng’s handpicked successors
• Last two
– were selected as technocrats
– politically “reliable”
– economic reformers
• Jiang Zemin 江澤民
– CCP General Secretary from 1989
• Hu Jintao 胡錦濤
– CCP General Secretary since 2002
From Jiang Zemin to Hu Jintao
First peaceful and orderly leadership succession
in PRC history

•CCP General Secretary (2002)

– 16th National Party Congress
– Hu Jintao replaced Jiang Zemin
•PRC State President (2003)
– 10th National People’s Congress
– Hu Jintao replace Jiang Zemin
 Political Economy Regime:
Potential opportunities

Globalization
• expansion of trade & foreign investment
• weed out inefficient state enterprises
• erode local protectionism
• curtail industrial monopolies
 Political Economy Regime:
Potential challenges
Political instability
• urban-rural divide
• regional differences
• unemployment
• social unrest
• demographic changes