Term Paper on "Chinese Economic History"

Term Paper 9 pages (2985 words) Sources: 1+

[EXCERPT] . . . .

Chinese Economy

Great Leap v. Gradualism: Maoist and Post-Maoist Approaches to China's Economic Growth and Development since 1949.

In the last decades China was able to maintain almost a steady two-digit economic growth, and this spectacular performance has garnered the interest of many Chinese and non-Chinese economists, policy makers, media commentators, and lay people. Many leaders and economic thinkers of developing countries look up to China, as do those Americans who lose their jobs (obviously, for different reasons), and multinational corporations admire China's human productivity force. In light of these, it is interesting to look at the patterns of economic development in Maoist and post-Maoist eras in China and try to find some patterns of development that allowed China to prosper in recent years. There are many factors that can account for Chinese successful economic performance. For example, the nation's enormous human capital as well as traditional belief in the values of hard work certainly are among these factors (Chow, 2010). But a pattern of economic development that really helped China in recent decades is gradual transition from planned economy to market economy.

Gradualism of China is usually contrasted with "big bang" or "shock therapy" rapid economic changes that took place in the former Soviet Union and Eastern Europe (Qian and Xu, 1993). While such comparisons may be useful, they cannot fully explain the reasons for success or failure in any of these economies. All these countries may have domestic and unique features (history, potential, limitations) that distinguish them from each other. A better study of gradualist transition in China may be comprehended better by historicizing the development. For example, one may look at times when China adopted rapid economic changes and contrast them with the era when China embraced gradualism. It is the contention of this paper that rapid changes (for instance, the ones adopted by Mao) did not serve China well. In contrast, gradualism (also adopted by Maoist leadership at different times temporarily and in recent years as a continuous policy) has worked. It is important, therefore, that for future development China should avoid rapid changes -- for instance, wholesale and uncritical adoption of Western models, ignoring traditional Chinese patters of development (including the legacy of Maoism) -- but rather take a cautious approach, gradually embracing the benefits of market economy in a way that befits Chinese national and unique needs and interests.

It is important to note, before discussing any aspect of Chinese economic history, that the economic development cannot be measured solely based on GNP or GDP growth. In fact, it is one of the biases of Western neoliberal approach that assesses economic development in terms of gross economic output. It is true that the country's productivity potential in terms of producing goods and services and engaging in foreign trade is a good measure of development. But it is not a sufficient measure, as some economic historians such as Amartya Sen and Chris Bramall have noted that the measure of development should include, besides the statistical data on gross output, freedom of the population, civil liberties, citizen access to basic necessities such as education and healthcare, and other factors that account for people's satisfaction with the standards of life. This kind of approach ties the measure of development to citizens' "perceived level of happiness" (Bramall, 2009, p. 3). Such an approach will also better explain the complexity of Chinese economic development in Maoist and post-Maoist eras.

In his comprehensive study of modern Chinese economic history, Naughton (2007) notes the shortcomings and failures of the planned economy pursued during Maoist eras. Among these, Naughton lists "single-minded pursuit of industrial development" at the expense of neglecting consumption. For instance, while the gross capital formation grew 13 times from 1952 to 1978, the household consumption only tripled. Another problem, according to Naughton, was the neglect of service growth. Available services declines from 29% in 1952 to 24% in 1978. Furthermore, Chinese policy makers failed to increase employment creation and confined the industrial investment to capital-intensive but technologically demanding sectors. For the same period, however, Naughton notes that the "flow of resources into basic health and education was fairly substantial throughout the socialist period, and Chinese people were healthier and better educated at the end of the Socialist era" (pp. 80-2). So, while China performed poorly in terms of overall economic strategies under Mao, the country also invested heavily in human capital, which undoubtedly helped the country's development in post-Maoist era.

But the complexity of both Maoist and post-Maoist economic developments can be better understood by looking at gradualist and rapid changes the state initiated at different times. In the 1950s, China adopted Soviet strategies of "big push" and mass collectivization wholesale. The state initiated rapid changes that forced the Chinese mass, especially those in rural areas, to adapt to a new environment with different patterns of agricultural and industrial development. For example, in the era of "High Tide of Socialism" in 1955-56, private ownership was abruptly destroyed. Mao initiated a mass campaign, forcing farmers into cooperatives. From 1954 to 56, the number of farmers enrolled in cooperatives increased from 2% to 14%. Private factories and shops in the cities were also largely forced to turn into cooperatives or join "joint public-private" factories which were more tightly controlled by the state. Naughton (2007) explains: "Private ownership, having survived and grown for six years since the establishment of the PRC, was virtually extinguished during six months in late 1955 and early 1956" (p. 67).

The implementation of the Soviet model, which entailed rapid economic and social changes, placed much stress upon the shoulders of Chinese economists trying to cope with the changes and the lay people who suffered from massive economic problems. The rapid changes also caused a stagnation of the agricultural output. Faced with these problems, Chinese leaders responded by relaxing the pace of change, and the Eighth Congress of the Communist Party called for economic moderation. Many proponents of economic liberalism at the time (who would inspire Chinese economic reformers in the post-Maoist era) argued that gradualism was the way to go. Proponents of a movement, labeled the "Hundred Flowers," called for economic liberalism and a slow and gradual detachment from the Soviet model. The movement and the ideas of the time were indeed promising and there is a good reason to think that such a path could have better served Chinese economic development (as it would later in post-Maoist era), but the movement turned out to be short-lived.

In late 1957 and early 1958, Mao initiated a program that greatly slowed down Chinese economic development for many years. The program was dubbed "The Great Leap Forward." At the crux of the program again was rapid change that Mao hoped would bring rapid development in China. Traditional Asian wisdom which suggests that a person cannot jump to the fortieth rung of a ladder but needs to climb up step-by-step was completely ignored by Mao. Instead, Mao wanted to leap forward within a matter of years and achieve rapid development. The policy of ignoring gradualism had a high price. To initiate his policies, Mao targeted intellectuals, dismissing or sending 800,000 people into labor camps within a matter of months. The Leap program was an intensification of the Soviet model, based more on a dream than a realistic plan. Naughton (2007) notes that the "essence of the GLF was the attempt to resolve contradictions by doing everything simultaneously, regardless of real resource constraints" (p. 69). In fact, one of the problems with rapid changes is that human and production resources cannot cope with the demands and challenges of drastic changes.

The implement the Leap strategy, Chinese state emphasized the importance of investment. For a poor country like China, massive investment, especially in iron and steel production, diverted much-needed resources away from consumption, risking and leading to massive famine. "In macroeconomic terms," Bramall (2009) explains, "the Leap involved a transfer of labor (the key input) away from the production of consumer goods -- especially grain -- towards the production of producer goods, notably iron and steel, but also water conservancy projects" (125). The Leap also envisioned the building of communes which were different from collectives. The communes were much larger and incorporated canteens where seventy percent of food was distributed among the workers for free. The new food distribution policy was not tied to the amount of work done, thus decreasing the productivity output. But the greatest cost of the Leap was not economic stagnation or the loss of productivity, but a massive human death toll.

Some scholars suggest until these days that the number of deaths caused by famine following Mao's Leap strategy -- widely estimated to be 30,000,000 -- is vastly exaggerated. For instance, a noted Indian scholar Utsa Patnaik (2004) still subscribes to this position. But even such supporters of Maoism as Bramall (2009) cannot deny the catastrophic consequences of the Great Leap Forward, describing the famine as "the worst in human history" (p. 126). China during the famine… READ MORE

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