Still Crossing the River: Forty Years of Change, Progress, and Doubt
Confucius declared that when he was 40 he “had no doubts.” Yet on the eve of the 40th anniversary of China’s “Reform and Opening,” the country’s place in the world remains mired in uncertainty. But what’s clear is that few major economies have witnessed as much change and disruption over the past four decades.
A Chinese born in 1978, when Deng Xiaoping launched the Reform and Opening experiment, has seen her country rise from the ashes of the Cultural Revolution and catapult itself toward becoming a peer competitor of the United States. In her lifetime, the Chinese economy has grown more than 30-fold, leaping from eleventh to second place in global rankings.
This transformation would’ve been impossible without fundamental changes that were as much political as they were economic. At its core, Reform and Opening forced a Maoist system to accept more competition and less control as the Party-state retreated enough to let market capitalism and private enterprise take root. In short, the effect of Reform and Opening was the overwhelming democratization of economic opportunity for the Chinese people.
Anniversaries tend to elicit sweeping retrospectives. We at MacroPolo, however, will refrain from retracing the broad yet familiar arc of China’s economic development. Instead, we offer a unique analytical series that examines specific key elements that made the Chinese economy what it is today. We approach each element, whether foreign investment or industrialization, through a single case—a company, a commodity, or a bureaucracy.
In the first essay, we analyze foreign investment through the twists and turns of Qualcomm’s tenure in the China market. Not only does Qualcomm illuminate China’s evolving FDI regime but it is possibly the company that epitomizes US-China competition over technology and standards.
Next is a close look at steel, a commodity that, more than almost any other, symbolizes China’s hyper industrialization. Steel, long exalted by Chinese leaders, shows how market competition could quickly turn scarcity into abundance.
Coffee is a commodity that sheds light on other key aspects of China’s development: agricultural reform and the rise of a consumer class. In the third essay, we examine how the advent of coffee mirrors China’s post-industrial transition to consumption-led growth.
Finally, this series would be incomplete without reflecting on the state’s sustained yet diminished role in the economy, aptly captured in the evolution of China’s central planning agency. The waning authority of today’s National Development and Reform Commission reveals important shifts in the contest between state and market.
Whether China’s next 40 years will be defined by economic progress or political regression depends largely on how reforms continue. We do not have all the answers but hope that this series will shed light on China’s improbable but incomplete journey from poverty to wealth.