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China Reform of the Economic System, Beginning in 1979
At the milestone Third Plenum of the National Party Congress's
Eleventh Central Committee in December 1978, the party leaders
decided to undertake a program of gradual but fundamental reform of
the economic system. They concluded that the Maoist version of the
centrally planned economy had failed to produce efficient economic
growth and had caused China to fall far behind not only the
industrialized nations of the West but also the new industrial
powers of Asia: Japan, the Republic of Korea, Singapore, Taiwan,
and Hong Kong. In the late 1970s, while Japan and Hong Kong rivaled
European countries in modern technology, China's citizens had to
make do with barely sufficient food supplies, rationed clothing,
inadequate housing, and a service sector that was inadequate and
inefficient. All of these shortcomings embarrassed China
internationally.
The purpose of the reform program was not to abandon communism
but to make it work better by substantially increasing the role of
market mechanisms in the system and by reducing--not eliminating--
government planning and direct control. The process of reform was
incremental. New measures were first introduced experimentally in
a few localities and then were popularized and disseminated
nationally if they proved successful. By 1987 the program had
achieved remarkable results in increasing supplies of food and
other consumer goods and had created a new climate of dynamism and
opportunity in the economy. At the same time, however, the reforms
also had created new problems and tensions, leading to intense
questioning and political struggles over the program's future.
Data as of July 1987
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