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National Economies in the World Market

Under the leadership of Deng Xiaoping, China has become one of the most economically vibrant nations in the world. Xiaoping was a capitalist leader of China who took over the leadership of the Communist Party after the death of Chairman Mao. Chairman Mao had led China under communism, during which he famously insisted that, if people of China were going to be poor, they all must be poor at the same time. China had, therefore, been under a closed marketing system that was not open to the international market. With bursting population, this meant that basic needs and employment opportunities were not available for the Chinese, even though the government, through Chairman Mao, placated people with all the wraths that capitalism could bring to them.

According to Harvey, Deng Xiaoping is a Communist Party leader who embraced the tenets of neoliberalisation in China during early 1980s and 1990s (120). He brought reforms in economic, social, and political sector of China and opened the country to international market and creation of cheap docile labor. If China has gained any developmental milestones in manufacturing, agriculture, technology, urbanization, international trade, and any other sector of the economy, it is because of the reforms that Deng Xiaoping started in the country when he took over. The reforms, however, were so rapid and sudden that they have created a class of bourgeoisie and proletariat. Class creation is related to the segregation system that the Chinese authority under Xiaoping created by favoring the urban dwellers over the rural ones. For instance, under Xiaoping’s reforms, the urban dwellers were given preferences over their rural dwellers in terms of residency, land ownership, welfare and pension benefits, market accession, and education among others, which led to the widening of the gap between the rich and the poor. The political class was, thus, made up of a few rich people who have the capacity to exert control. As such, these tinted reforms under Deng have initiated the mass migration of people from the rural China to urban centers, leading to the concentration of cheap, docile, and skilled labor in cities, which were at the mercy of the exploitative and capitalistic life style.

Deng Xiaoping’s Economic Reforms and Mao Zedong’s Historical Problems

China’s economic reforms under the watchful eye of Deng Xiaoping have grown to a certain kind of economic market, which has increasingly incorporated neoliberal elements punctuated by control of authoritarian central government. Thus, Xiaoping set China to the road that was to embrace authoritarianism and Capitalism as a way of ensuring economic success. Initially, given the economic circumstances the country was emerging from, this was important. That is, the government needed to take control of the market sectors because it certainly had the capacity to give loans through state owned banks to business people and farmers in rural areas. Deng Xiaoping’s economic reforms did not do away completely with the egalitarian state that Mao had established, even though it rode on individual and local initiatives as a recipe for increased productivity and economic growth (Harvey 126).

Chairman Mao’s leadership led China into historical problems, due to which the country was struggling to provide even basic commodities such as food and housing to its plummeting population. Mao was a communist who believed that the society was only capable of becoming rich collectively, and thus, he discouraged innovative and creative efforts from the Chinese, if there were any at all. The market structure gave the central government the control over prices, and this further exacerbated the benefits that Chinese creators and innovators could get. In essence, the country was in a state of economic downtown since 1959 Great Leap Program, which failed miserably.

Using the slogan of xiaokang and advocating for an ideal society that is self sufficient in terms of basic needs, Deng Xiaoping focused his economic reforms on four main sectors of agriculture, education, industry and science, and defense (Harvey 120). With these four in mind, Xiaoping set out to stimulate competition among the state owned enterprises with the ultimate view of stimulating innovation and finally growth in different sectors. The market forces were, thus, to be brought to control first within China before opening up to the world, even though this was not planned as such by Deng and the Communist Party leaders.

An important feature in the economic reforms that Deng Xiaoping started was the introduction of market pricing, which the previous regimes had neglected to the detriment of the Chinese market regulation. A lack of market pricing meant that there was a dual market pricing that was exploitative to the poor producers in the rural areas while transferring the benefits to the urban dwellers. Market pricing was followed by the devolution of political and economic power to the localities, ensuring that there was no power confrontation with the Beijing authority. The local initiatives granted a particular kind of autonomy from the central government and this encouraged innovation, creativity, and competition among the localities while pioneering unique ways to new social orders (Harvey 132).

Similarly, another vital tenet of economic reform under Xiaoping leadership was the opening of the Chinese market for foreign direct investment (FDI) and foreign trade, even though under strict regulation by the government. As such, isolation of China from the world market ended. The culmination of this was the joining of the World Trade Organization that provided some forthright goodies, including exemptions from certain WTO, IMF, and US Federal laws. The decision of opening up to the world market was twofold. First, it necessitated technology transfer from the West to the Chinese rural. The ventures between Chinese partners and foreign capital were achieved through emphasis on Joint Corporation. The second reason was to enable the government to amass enough foreign reserves to purchase the required means in supporting stronger internal changes in the economic growth. Evidently, the government in Beijing had visualized a massive economic growth that required self-sustenance, and therefore, it intentionally embarked on amassing foreign reserves for this purpose. 

Deng Xiaoping's Contribution to World Market

With over 1 billion people, China provides sufficient market to all kinds of goods and services that are known to humanity. This huge market, however, was closed to the international manufacturers, especially during the times of Chairman Mao, who openly loathed the tenets of Capitalism advocated for Communism with the argument that China was able to develop itself from within. Thus, the Western businesses could not access the buoyant market that existed in China, and the Chinese people continued to leave in poverty and political uncertainty characterized by riots, hunger, and power struggles among the power brokers in the Communist Party.

Under the leadership of Deng Xiaoping, China stepped on the center stage of foreign relation with Foreign Direct Investment (FDI) quadrupling within a span of less than fifteen years and jumped from 7% in 1978 to over 40% in 1990s. The huge market enabled the entrance of the multinationals from the Western countries, particularly America and Canada, to make investment in the country where profit margins were greater than in their home countries. Xiaoping encouraged an export-led economy in China and facilitated the joining by the country to the World Trade Organization, which was an important milestone considering the business potential that it opened up. The potentials were lined up both for the Chinese, who would then be able to work in foreign markets, and the world, because it would get market to most of its products following the free trade agreements in the WTO (Harvey 134). 

Deng Xiaoping reforms also led to positioning of China as the most economically viable international market, especially with the devaluation of currency in 1994 that invariably led to inflationary effects inside China. However, it positioned it as the most dynamic and successful market in the world. The strategy positioning of Hong Kong played a crucial role in opening up the Chinese market to the world, leading to a full governmental engagement in foreign trade and foreign direct investment in 1992 through Hong Kong. The town was center of Capitalist dynamism and had already established itself as a center for Chinese business Diasporas, which needed to remit back foreign currency into China.

Another Deng’s contribution to the world market is the opening of the coastal cities and other economic regions for foreign investment. This was important in two ways. First, the actions helped to provide cheap and highly skilled labor to the international multinationals, whose cost of labor in their original country was skyrocketing and hurting their return on investment. With the opening of Chinese market for foreign trade, companies could capitalize on the cheap skilled labor that the Communist Party under Xiaoping had created through a vibrant education system in early 1980s. Of course, this profited the multinational companies as they benefited from the cheap skilled labor. The second importance of the opening of China to foreign trade is that it provided the central government with a way of releasing its burden of dealing with a docile mass of people from rural to urban centers. The government, through State Owned Enterprises (SOEs) and later Township and Village Enterprises (TVEs), had failed to provide job opportunities to the people. Part of the reason was the rate at which the education system was churning out labor did not meet the rate of creation of job opportunities.

Economic Reforms and Communism with Chinese Characteristics

The economic reforms that Deng Xiaoping started undoubtedly have brought China to the world stage as the country continues to pull first against the well-known powers such as the United States, Britain, and Japan. Arguably, China’s economic growth if sustained will put it among the world superpowers in the next decade. Booming construction of both real estate and infrastructures has reached a high record with people migrating to urban centers in search for job opportunities. International business and marketing of the Chinese products are felt all over the world. Nevertheless, these achievements have come with a lot of challenges to the social strata of the Chinese society because, as it is expected, Capitalism has created a concentration of wealth in the hands of the few while rendering many more poor (Hervey 142).

These outcomes can be pinpointed to the initial reforms that the government initiated in the early 1980s. For instance, the government adapted a land policy that denied rural farmers the rights to own land. The land was only used under commune system, and the farmers could only lease out, hire or rent their land, but they did not have the right to own the land. Similarly, the system of the State Owned Enterprises (SOEs) and later Township and Village Enterprises (TVEs) allowed the shareholding of these lucrative entities to be concentrated in the hands of a few individuals in the name of managers. The poor workers were forced to sell their shares with little premiums, if they were lucky, or even be threatened with retrenchment if they did not sell their shares in those enterprises willingly. This kind of system meant that the state corporations and even private institutions were in the hands of a few individuals with political connections.

The economic reforms under Deng Xiaoping also caused problems with state banks using the public money to bail out defaulters in state corporations. It is important to remember that a few individuals owned the most of the state corporations that were bailed out. What makes this situation sad is that public money, from the society’s poor tax, was used to pay off the bills of loans that a few powerful individuals had accumulated through state, but privately, owned corporations.

Another injustice of economic reforms that led to the widening of the gap between the rich and the poor was the priority that urban dwellers were given over the rural dwellers. It is sad to note that even the social welfare programs were in favor of urban dwellers, which were given incentives through medicals and pensions from the government, while the poor rural dwellers were denied these rights. The rural people were required to have residency permits whenever they travelled to the city, while the city dwellers had absolute rights to construct houses in cities with land permits dished out to them by the government. Ultimately, this kind of system created a situation where poor rural dwellers could not access both their rights and those benefits given to the rich people in the city. Since, rural education was vibrant, the rural started churning out many highly skilled workers who could not get jobs in the rural and, therefore, instigated a massive human migration into the city.

In addition, the economic reforms were brought by internal transformations, including private property ownership; a departure from the communal system that the Chinese were used to under Mao. The few elite interpreted these reforms with actual Capitalistic minds and took advantage of the ignorant masses to grab public properties. Class outcroppings were encouraged and thrived at the support of the central government’s institution arrangements, which were founded on the principles of capitalist economy; albeit on the benefit of the few in the country.

In my opinion, the economic reforms that Deng Xiaoping started were well conceived and would have achieved more were they not taken hostage by a few diehard capitalists in the government. Apparently, Deng Xiaoping must have been aware of the capitalists who were creating inequality along the economic reforms when he said that it was possible, given the fact that they needed to, “grope the stones while crossing the river” (Harvey 122). The fact that China managed to crop a state managed economy without the influence of external bodies such as IMF and the World Bank meant that economic growth was going to be out of control if corrupt capitalists were allowed to access the country’s vaults.

Similarly, the economic reforms emphasized on education in the rural areas without decentralizing manufacturing and other industries. This meant that labor was concentrated in the rural areas because of so many people coming out from schools in the rural, yet getting no jobs. Jobs were not available because of no industries or government institutions in rural areas where people could work. In this way, the government managed to create a cheap docile labor that manipulated easily with low wages. Consequently, the labor force sometimes engaged themselves in reactionary measures such as boycotts, strikes, and demonstrations in the city to try to force the government to upgrade their working conditions. In the meantime, economic reforms managed to create a cycle where the education system produced more labor than the job sectors could absorb, leading to a chronic problem of surplus labor.

The Future Political Strategy of China

One of the main challenging problems that China faces is the increasing population of its people. Of course, in one way or the other, China’s population has more strength compared to its weaknesses. Take, for example, the market provided by 500 million people. International companies are reported to record more profits in China only than in the rest of the world. The population also provides a divergence of skills and knowledge that the country exports in terms of skilled labor, with the help of political arrangement between countries. Despite their resilience in overcoming tumultuous times such as war and hunger, China may not evade the wrath of an overpopulated country. However, political strategies that are lined up are promising to solve this problem, if it should be called a problem at all (Harvey 146).

China has been on the forefront, albeit through political coercion to educate the public about the importance of planning a family. As such, the government intends to curb population growth by giving incentives to parents who can sign a memorandum that they will have only one child in their entire life. This was well spelled in the “only one child policy” that the government implemented as a way of controlling population growth. The policy was a major step in economic reforms. In addition, it also had a social moral bearing, but it was politically motivated. That is, the political class was looking for ways to cut down on the strain on social amenities like schools, roads, and hospitals that fall under their jurisdiction.

Irrespective of its advantages, this “temporary help” policy had already brought with it problems, such as one child is in duty on four elders, parents and grandparents. One couple is in duty on 4-8 elders. This pyramidal model of obligation to the elders makes the situation of poor people/ rural people/ or people from developing cities, even harder. That is, they are anxious about the elders’ health and living condition when they migrate to larger city in order to earn more money. In fact, some cannot go to big cities to look for employment because of the need to take care of elders. In certain instances, they have had to carry these elders with them due to the expected high living expenses. However the government, through its welfare program for the aged has realized much success in tackling this problem. The program has enabled those who can no longer work, to earn their living, to continue with their initial status of life even after their retirement. This has greatly reduced the dependency ratio.

Another political strategy that will solve the problem that China is facing is the diversification of skills among its people. Through political negotiations, China is able to send its skilled workers across the borders and into other countries in the area of engineering, mechanics, and any other field plausible to the Chinese. Of late, this political strategy has managed to provide some kind of relief to the Chinese government in Beijing, especially in Africa where construction is thriving. China has been in the forefront to talk with governments in Africa to have contractual agreements, where Chinese corporations are given lucrative contracts to construct bridges, roads, dams, airports, stadia, and any other form of construction that the continent requires. In return, Chinese are looking forward to accessing lucrative energy resources.

The Chinese government in Beijing should also be contemplating on how to decentralize public resources and distribute it among its people. This should be aimed at reducing the concentration of the public resources in the hands of a few people, while majority continue to suffer and languish in poverty. This is obviously a tall order for the political class in China, but the faster it is done, the better. Moreover, this will avoid hatred and disgruntlement from the majority that has the potential to cause crisis economically, socially, and politically. Just for illustration purposes, supposing the 700 million poor Chinese decided to boycott government services and cause chaos in demand for equality. How will the government respond to this crisis? Therefore, it is important to look for a solution before it becomes worse. To this end, the Chinese government in Beijing is trying very hard to provide political solutions (Harvey 141).


In conclusion, neoliberalism that started with Deng Xiaoping came with a number of economic reforms that have had both the good and the bad results to the Chinese people. Nevertheless, if the foundational principles of opening up to market, foreign trade, foreign direct investment, among other measures are pursued, China will continue to enjoy the fruits of neoliberalisation that it started enjoying in 1990s.

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