Deng Xiaoping's Reform & Opening-Up

Chinese Political History II: Reform, Opening & the Rise of Modern China

Chapter 1 · Deng Xiaoping's Reform & Opening-Up

Chinese Political History I ended by asking who held power after Mao: it traced the contest between Hua Guofeng and Deng Xiaoping to the December 1978 Third Plenum and stopped there. This course begins by asking what the winners then did. This chapter does not retell the Deng–Hua struggle (see Chinese Political History I Chapter 10); it looks at the policy content of that moment and at the first institution it produced, the Special Economic Zones. Each date and figure was checked against sources, and where sources disagree the chapter says so.

What the Third Plenum Actually Decided

The Third Plenary Session of the 11th Central Committee met in Beijing from 18 to 22 December 1978, at the Jingxi Hotel. It was the formal end of a longer process: the plenum largely ratified positions worked out at a Central Work Conference held in the weeks before, where Deng had cemented his advantage over Hua. Its real decisions fall into three groups.

1. A change of focus

The plenum decided to stop using the slogan "take class struggle as the key link" and shifted the focus of the party's and state's work to economic construction. Its communiqué declared that large-scale, turbulent mass class struggles had "in the main come to an end." The "Two Whatevers" policy was repudiated.

2. Rehabilitations

The campaign over the 1976 Tiananmen Incident was reversed, and figures including Peng Dehuai (whose purge is covered in Chinese Political History I Chapter 8), Tao Zhu, Bo Yibo and Yang Shangkun were rehabilitated. Chen Yun had pushed for exactly these "leftover problems" at the preceding conference.

3. New people in new posts

Chen Yun joined the Politburo Standing Committee, became a party vice-chairman and first secretary of the newly re-formed Central Commission for Discipline Inspection. Hu Yaobang, Deng Yingchao and Wang Zhen joined the Politburo, and nine more members were co-opted onto the Central Committee.

The "Four Modernizations" — agriculture, industry, national defence, and science and technology — were not new. Zhou Enlai had called for them at a January 1963 conference in Shanghai and restated them at the Fourth National People's Congress in January 1975, with the goal of comprehensive modernization by the end of the twentieth century. What changed in December 1978 was that they became the party's organizing task, in place of continuing class struggle.

Not a Clean Break With Mao — Yet The plenum's repudiation of Maoist practice was partial. One account notes that the Cultural Revolution was openly rejected as a whole only in 1981. December 1978 changed the party's priorities and freed a number of victims of earlier campaigns; it did not yet produce a full official verdict on Mao's era.

Deng's Speech of 13 December

The text most often cited from this period is Deng's speech "Emancipate the Mind, Seek Truth from Facts, and Unite as One in Looking to the Future." It is often described as a plenum speech. The published text's own heading places it a few days earlier, on 13 December 1978, at the closing session of the Central Work Conference that was preparing the plenum. The plenum then adopted the direction it set out.

What Deng said (from the published text)What it signalled
"Our drive for the four modernizations will get nowhere unless rigid thinking is broken down."Ideology was named as an obstacle to the economy: the same argument as the "practice is the sole criterion of truth" debate, applied to policy.
"Allow some regions and enterprises and some workers and peasants to earn more and enjoy more benefits sooner than others."Openly unequal outcomes were to be accepted as a route to growth. This is the policy root of the special zones later in the chapter.
"Expand the decision-making powers of mines, factories and other enterprises and of production teams."Decisions were to move away from central planners toward the units doing the work.
"It is better to have some laws than none."A modest, practical statement about legality, made after the Cultural Revolution's disregard for it.

What the Plenum Did Not Decide

It is easy to read "1978 launched reform" as if the plenum had approved the changes that followed. On agriculture, the largest sector of the economy, it had not. The plenum endorsed devolving production responsibility to production groups (baochan dao zu) but still prohibited delegating it to individual households (baochan dao hu). Its communiqué, in effect, forbade dividing the collective land among families.

Reform From Below: Xiaogang In Xiaogang village, in Fengyang county, Anhui province, eighteen farm households signed a secret agreement to divide the commune's land into family plots. Each household would deliver its quota of grain to the state and the collective, and keep whatever was left. Each pressed a fingerprint onto the contract. The date is given as 24 November 1978 in one source and simply as December 1978 in another, so it came either just before or during the plenum; either way it was illegal under the policy the plenum then confirmed.

The often-repeated results — a 1979 harvest larger than the previous five years combined, and per-person income rising from 22 to 400 yuan — come from later retellings of the story and are widely reported rather than independently audited. The vivid details, such as the villagers' pledge to raise one another's children if one were punished, are similarly part of the tradition around the contract.

What is better documented is how the practice was later handled at the top. In May 1980 Deng remarked of the household system that worries it would hamper the collective economy were "unnecessary"; the Central Committee's No. 1 Document of 1982 officially established it. The pattern is worth noticing: local actors, among them provincial leaders such as Wan Li in Anhui, ran the experiment first, and central approval came after results were visible. It recurs below with the special zones.

Two Slogans Deng Did Not Coin

Two phrases are attached so often to Deng and to this period that they are treated as its motto. Both need correcting.

"Black cat, white cat"

The saying that a cat that catches mice is a good cat is a Sichuan proverb, and its usual form is yellow cat, black cat. Deng quoted it in a 1962 piece on restoring agricultural production, after the Great Leap Forward famine, and reportedly borrowed it from General Liu Bocheng. It predates the reform era by sixteen years and was not a plenum statement.

"Crossing the river by feeling the stones"

The phrase is associated with Deng but was put forward by Chen Yun, the man given the discipline commission at the plenum. He emphasized it at a Central Work Conference in December 1980; some accounts trace an earlier use to 1950. It describes reform as cautious experiment, which fits the way the zones were built.

Opening: From Idea to Special Zones

Reform at home was matched by opening to the outside world. The route from an idea to four legally defined zones took about two years, and the sequence matters.

DateEvent
31 January 1979Li Xiannian approves the Shekou project, a China Merchants investment on the Guangdong coast. The slogan "Time is money, efficiency is life" later becomes identified with Shekou.
April 1979At a Central Work Conference, Xi Zhongxun, first secretary in Guangdong since December 1978, submits a proposal for special zones. Deng agrees, and proposes the name.
15 July 1979The central government decides Guangdong and Fujian should take the lead in opening up, with "special policies and flexible measures."
May 1980"Special export zones" is changed to "special economic zones."
26 August 1980The 15th meeting of the Fifth National People's Congress Standing Committee, chaired by Ye Jianying, approves the Regulations on Special Economic Zones in Guangdong Province. Shenzhen, Zhuhai and Shantou in Guangdong, and Xiamen in Fujian, are designated.
Two Details to Handle Carefully The quotation. Deng is widely quoted as telling Xi Zhongxun that the central government had no funds but could offer favourable policies, and that Guangdong should "fight a bloody path out." The quoted lines come from a secondary account that does not document their source, so treat the wording as attributed, not certain.

The date. One reference page gives 26 August 1979 for the zones' establishment. The primary text of the Regulations states approval on 26 August 1980, and the July 1979 decision came first. The 1979 date is an error.

The rename in May 1980 was deliberate: one account says the word "economic" was chosen to stress that only economic, not political, experiments were to be carried out. That is worth holding on to when reading the Regulations themselves.

Reading the Regulations

The 1980 Regulations are short, and the text survives in English translation, so the zones can be read as written rather than as later described. They cover the three Guangdong cities; Xiamen was designated in the same decision but under Fujian's own arrangements.

ArticleWhat it providesWhy it matters
1Zones exist to develop economic cooperation and technical exchange with foreign countries and to promote "the socialist modernization programme"; investors include foreign citizens, overseas Chinese, and compatriots from Hong Kong and Macao.Foreign and diaspora capital was the target, and the goal is stated in socialist terms.
2Enterprises and individuals must abide by the laws and decrees of the People's Republic.The zones were economic exceptions, not legal or political ones.
9Products are to be sold on the international market; sales into the interior need approval and must pay customs duties.The zones were export platforms, kept separate from the domestic economy.
12Land is owned by the People's Republic; investors get it according to need, with preferential use fees and terms.Land was leased, not sold: state ownership was kept.
13Capital goods, spare parts and raw materials imported for production are exempt from import duties.The inputs for export manufacturing came in cheaply.
14Enterprise income tax of 15 percent, with special treatment for firms set up within two years, investing US$5 million or more, or in higher technology.An explicit, quantified incentive, with a deadline to reward early movers.
16Investors who reinvest profits in the zone for five years or more may apply for a tax reduction or exemption.A reward for staying.
19–20Workers are tested before employment and sign labour contracts; enterprises may dismiss them by the procedures in the contract, and workers may resign.A very different arrangement from the guaranteed-job model of state enterprises.
23–24A Guangdong Provincial Committee for the Administration of Special Economic Zones plans and approves investment; Shenzhen is under its direct management.Control stayed with the province. The zones were not self-governing.
"Special" Meant Separate Read together, Articles 2, 9 and 23 describe a walled experiment: legally inside the People's Republic, commercially separated from the interior by customs procedures, and administratively under provincial supervision. This is the practical meaning of the 1980 decision to keep the experiments economic. A relaxed tax and labour regime was allowed in a defined area precisely because it was defined and controlled.

The Scale of What Followed

The figures below are as reported in one reference source, and the two years may not cover exactly the same territory, so the ratios are rough. Before designation, Shenzhen was Bao'an county.

19801990Rough change
Population332,9001,677,000about 5×
GDP (current yuan)270 million17.167 billionabout 64× in nominal terms

The GDP ratio is nominal and takes no account of price changes, so it overstates real growth. It still marks an enormous change. The experiment was extended in 1984, when fourteen more coastal cities were opened, and in 1988, when Hainan became the largest SEZ; both are taken up in later chapters.

A Pattern to Carry Forward Two different reforms in this chapter — household farming and the zones — share a sequence: a local experiment, then central permission for it, then formal codification. Shekou was under way in 1979; the Regulations came in 1980. Xiaogang's contract came in 1978; the No. 1 Document endorsing the system came in 1982. Later chapters will ask how far that sequence, experiment first and law second, shaped how the party governed a changing economy.

Hands-On Exercises

Exercise 1

The Third Plenum is often said to have launched reform, yet it still prohibited household contracting in agriculture. Explain what that shows about how the reform actually moved, using the Xiaogang episode and the later official approval.

Exercise 2

Using Articles 2, 9, 14, 19–20 and 23–24 of the 1980 Regulations, identify which features made the zones "special" compared with the rest of the country, and which features show how limited the experiment was meant to be.

Exercise 3

Choose one popular claim about this period that the chapter corrects (the cat saying, "feeling the stones," the plenum-as-launch idea, or the date of the special zones), say what the evidence shows, and explain why such attributions tend to gather around one leader.

Quick Reference

  • 13 December 1978: Deng's "Emancipate the Mind" speech, closing the Central Work Conference that prepared the plenum
  • 18–22 December 1978: Third Plenum; class struggle dropped as the "key link," focus moved to economic construction; Two Whatevers repudiated
  • Also decided: rehabilitations (Peng Dehuai, Tao Zhu, Bo Yibo, Yang Shangkun), the Tiananmen Incident reversed, Chen Yun to the Standing Committee and discipline commission
  • Not decided: household contracting, still prohibited; group contracting was allowed. Xiaogang's 1978 secret contract (24 November or December, sources differ) went further. Official establishment came with the 1982 No. 1 Document
  • Slogans corrected: the cat saying is a Sichuan proverb quoted by Deng in 1962 (yellow cat, black cat); "feeling the stones" is Chen Yun's phrase
  • July 1979: Guangdong and Fujian given special policies; May 1980: "export" replaced by "economic"
  • 26 August 1980: NPC Standing Committee approves the Regulations (Shenzhen, Zhuhai, Shantou; Xiamen designated in the same decision). 15% income tax, duty-free capital goods, labour contracts, sales into the interior by approval and customs duty
  • Shenzhen, as reported: 332,900 people and 270 million yuan (1980) to 1,677,000 and 17.167 billion yuan (1990)