Another turning point in the process of China's capitalist restoration on the 30th anniversary of Deng Xiaoping's southern tour

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Peter Chen China Labor Forum

On January 17, 1992, Deng Xiaoping embarked on a train bound for Shenzhen in Beijing and embarked on a one-month "family trip". This seemingly unremarkable journey at the time became a turning point for China to embark on a high-speed capitalist development. To fully understand the process of China's capitalist restoration, it is necessary to understand the history of Deng Xiaoping's southern tour.

In December 1978, the Third Plenary Session of the CPC Central Committee was held, setting off a prelude to reform and opening up. The Stalinist (bureaucratic autocracy) planned economic system built by China after 1949 faced deep-seated problems at that time. Facing the chaos and crisis of the post-Mao period, the CCP leadership tried to find a way to modernize the Chinese economy by introducing some elements of capitalism. Initially, Deng Xiaoping and a group of post-Mao CCP leaders did not have a predetermined blueprint, but rather a reform experiment by feeling the stones. The market reforms that began in 1978 were limited in scale compared to the ones that followed, initially referring to the Stalinist dictatorships of Eastern Europe, especially Yugoslavia. Later, with the economic success of the pro-Western capitalist dictatorships in East Asia, attention turned to the so-called "Asian Tigers" (South Korea, Taiwan, Singapore, Hong Kong).

Background: The twists and turns of the 1980s reform

The pro-capital reform was led by the factions of Hu Yaobang and Zhao Ziyang, who were personally promoted by Deng Xiaoping. The reform method was mainly to assist the development of local infrastructure through the central government. Retention of profits, accumulation of capital, financing (including foreign trade) and reinvestment.

From the establishment of 4 special economic zones (Shenzhen, Zhuhai, Shantou, Xiamen) in the south in 1979, by the mid-1980s, Shenzhen had become a symbol of China's market reforms - local output increased 29 times between 1980 and 1984, The local per capita GDP is 20 times the national average.

A split has emerged within the CCP, with the pro-bourgeois faction increasingly consciously advocating for a restoration of capitalism, while the conservatives want to preserve the bureaucratically controlled planned economy. Similar splits were emerging in Stalinist regimes from the Soviet Union to East Germany, as the Stalinist model was in crisis. They disagreed over which social system and economic policies would best guarantee the power and prerogatives of the ruling clique—that is, whether to continue the privileged bureaucracy over the state-owned (Stalinist) economy, or to abolish the planned economy (implementation of capitalism) and Transform yourself into the new bourgeoisie.

But at the same time, these pro-capitalist reforms have also caused new problems. The "Shenzhen Model" has been attacked by conservatives: foreign imports form a black market, and investment is overreported, most of which come from domestic rather than foreign sources. The projects are mainly low-tech industries, and the amount of investment they attract is not enough to offset the central government's infrastructure investment costs.

In order to support and promote the pace of reform and overcome opposition from conservatives, Deng Xiaoping launched his first southern tour in 1984, affirming Zhao Ziyang's market reforms. Since then, special economic zones have expanded in 14 cities, and basically the entire coastal areas of China have been opened up.

In the second half of the 1980s, the social drawbacks of market-oriented reforms became increasingly apparent. A large amount of investment, coupled with the double-track price system, has led to bureaucratic corruption and reselling, which has led to rising inflation and prices. Civil dissatisfaction also began to accumulate, and in 1986, college students nationwide protested against corruption and demanded political freedom. Conservatives worry that reformist policies will encourage social demands for greater democratic freedoms, and Deng Xiaoping agreed. He replaced Hu Yaobang, thinking that Hu was "too soft" towards students. This is an example of Deng Xiaoping's Bonapartism: he maintains his power by balancing between different opposing social classes and political forces, sometimes to one side and sometimes the other.

The capitalist economic reforms of the 1980s emerged from a series of left-to-right experiments. In order to solve the dual-track price system, the CCP planned to launch a “price breakthrough” in 1988 to raise the prices of most commodities in a short period of time. The inflation rate in 1988 was 18.81%, compared to 18.25% in 1989. And this is one of the reasons why the Tiananmen movement broke out in 1989.

The CCP in 1989 was in the midst of internal and external troubles. The domestic backlog of contradictions eventually erupted into a revolutionary movement. After the bloody crackdown, the CCP was sanctioned and isolated by the West for a time, even though the United States maintained close diplomatic ties with the Deng Xiaoping regime at the time. A large number of foreign investors have suspended investment, high-tech exports to China have also been restricted, and China's foreign trade exports have declined, and the economy has been severely affected.

1989-1991: The capitalist policy was suspended

Internationally, the Soviet Stalinist Eastern European bloc began to disintegrate. As the great revolutionary Trotsky explained, a planned economy requires the democratic control of the masses, just as "the human body needs oxygen". Stalinist years of bureaucratic rule and economic mismanagement have stifled the economy, leading to economic stagnation and even recession, while workers' living standards have deteriorated and many necessities have been in short supply. These so-called "communist" dictatorships use socialist rhetoric to justify their evil deeds, causing many to distrust socialism. In contrast, the popular misconception that the Western capitalist economy is doing well and the living standards of workers is high is spreading. In the absence of a real socialist party to lead the struggle against bureaucratic autocracy while defending the public-owned planned economy, capitalism was rapidly restored in various countries, and Western capitalism declared "the end of history" with a triumphant gesture. These developments have brought a huge crisis of life and death to the CCP regime.

In this context, the CCP began to have more doubts about the pace of reform. The central government is dominated by conservatives led by Chen Yun, who advocate slowing reforms and blame past inflation and crises on Hu Zhao's reforms.

However, Chen Yun does not represent a bureaucratic plan to restore the old Stalinism, but thinks that the pace of reform should be slowed down—reforms in ten years, not just a few years—and to avoid budget deficits and worry about reforms too fast The resulting inflation advocates that the central state plan should be the mainstay, supplemented by market reforms.

In fact, as early as in September 1988 at the Third Plenary Session of the 13th National Congress of the Communist Party of China, in order to deal with the inflation and social panic caused by the removal of price controls, conservatives had the upper hand at that time. To address inflation, the authorities lowered growth targets and spending, reduced the money supply, centralised and strengthened capital and financial controls, and attempted to reduce the fiscal deficit.

As a result, GDP growth in 1989 was only 4.2%, and in 1990 it was 3.9%, which is very low compared to China's annual economic growth rate of over 9% since 1982.

In 1989, although Deng Xiaoping still advocated the restoration of capitalism, he needed to unite conservatives and hardliners to suppress a revolutionary movement, because despite the limited "reform" vision of student leaders, the Tiananmen mass movement had the potential to overthrow the CCP's rule. After Zhao Ziyang was placed under house arrest, he appointed former Shanghai Jiang Zemin as the general secretary of the CCP, and later promoted Shanghai's Zhu Rongji to the central government. The "Shanghai Gang" among the Communist Party's elite is more pro-reform than Beijing officials. Even the US government is aware of this fact and reassures US capitalists who fear that China will return to the Stalinist project.

However, Jiang Zemin was still under pressure from conservatives such as Chen Yun and Li Peng in the central government.

January 1992: Southern Tour

Deng Xiaoping was very concerned about the slow pace of economic transformation at that time. The collapse of the Soviet Union and Eastern Europe stemmed from the economic crisis and caused popular discontent. If China's economic development is not fast enough, he worries that the CCP will end up in the end of the Soviet Union's collapse of the party and the country.

The power struggle at the top of the CCP has also intensified. Deng Xiaoping failed to influence the overall situation at the center, so he turned to local governments for support. In 1991, he first used Shanghai's local media to advocate for more aggressive pro-capitalist reforms. However, the conservatives in the central government used the People's Daily to refute, and the two sides opened fire in this way. Like other Bonapartist CCP leaders, including later Xi Jinping, Deng Xiaoping bypassed official structures to try to achieve his goals.

By the Eighth Plenum in November 1991, conservatives still had the upper hand.

On January 17, 1992, Deng Xiaoping embarked on a historic journey on his southern tour. At that time, the covert operation in the name of "family travel" was not even informed by other leaders of the Party Central Committee at the time, including Jiang Zemin. The People's Daily did not send reporters to follow. The whole journey was arranged by the armed police of the military reformists.

Before leaving Beijing, Deng Xiaoping also greeted Guangdong and asked not to be reported. The entire journey was completely unreported by the media in China at the time. Instead, the well-informed bourgeois "liberal" media in Hong Kong took the lead in exposing the incident. Ironically, the relative freedom of the media in Hong Kong has been crushed by the Xi Jinping regime today.

The purpose of Deng Xiaoping's visit here is to win over local officials. All of them have gained many benefits from the reform in the 1980s and will definitely support the reform. Deng Xiaoping wanted to mobilize the emerging local bourgeoisie forces to force the central government to submit.

Once in the south, Deng met with local officials and inspected different development projects. Although his speech did not publicly name the central government, it was obvious that there were thorns in his words. He kept repeating that "there are too many meetings and too long speeches", and he should "do more practical things and talk less empty words" and "whoever does not reform will step down." He also said that "China should be wary of the right, but mainly to guard against the left." By "right" he meant the political reform liberals within the party, which were suppressed after the 1989 massacre. As for what he considers "left" is a conservative or semi-Maoist who is slowly moving towards capitalism. At that time, all factions within the CCP had given up the planned economy and realized the inevitability of capitalist restoration. The only difference between the two factions was the speed and scale of capital-traveling, and each faction was also trying to protect itself in the process. vested interest.

The nature of the coup

It can be said that the secret nature of the Southern Tour, which draws local officials to oppose the central policy, is characterized by a power struggle coup. In fact, Deng Xiaoping did even discuss a coup during his southern tour.

According to Ezra F. Vogel's biography "The Era of Deng Xiaoping", Deng Xiaoping participated in a secret meeting in Zhuhai during his southern tour, which is not officially recorded by the CCP. Other high-level party and government officials who participated in the meeting included: Qiao Shi, member of the Standing Committee of the Politburo, Yang Shangkun, Chinese President and First Vice-Chairman of the Central Military Commission who holds actual military power, Liu Huaqing, Vice-Chairman of the Central Military Commission, and Yang Shangkun's younger brother, Secretary-General and Chief Political Officer of the Central Military Commission Department Director Yang Baibing.

At the meeting, Deng Xiaoping reiterated: "Whoever does not reform will step down... Our leaders seem to be doing things, but they are not doing anything useful."

The lineup that participated in the meeting was strong. Jiang Zemin, who had no real power in the military, did not participate. Instead, Qiao Shi, who was regarded as Jiang's potential competitor among the Politburo Standing Committee, participated in it. This all points to the military's support for a new leader to push for reform if necessary.

Jiang Zemin, who received the news in Beijing, quickly realized the change in the balance of power, and resolutely sided with Deng Xiaoping. He ordered Deng Xiaoping's southern tour speeches to be compiled into party documents, which became mandatory reading for the Central Party leadership. Suddenly, the atmosphere within the CCP changed.

Quoting Vogel: "After the turmoil in Beijing in 1989, if anyone had doubts about the Chinese leaders' attitude towards reform and opening up, that doubt disappeared in 1992."

In October 1992, at the 14th National Congress of the Communist Party of China, Jiang Zemin proposed that the goal of China's economic reform is to "build a socialist market economy". "Socialist Market Planned Economy". Jiang Zemin set the economic growth forecast at 8-9% at the party conference, which is much higher than the 6% announced by Li Peng at the beginning of the year.

At the same time, the Central Advisory Committee was abolished and director Chen Yun retired.

The Southern Tour can be seen as a decisive turning point in the power struggle within the CCP, where the emerging bourgeoisie surrounding Deng Xiaoping gained full dominance, not as an external force, but as part of the CCP’s autocracy.

China's reform and opening up was not actually "reform," but a capitalist counter-revolution: a series of attacks on the old planned economy to clear the way for the emergence of China's super-rich bourgeoisie today.

There was more than one turning point in the process. The 1989 movement against the S-Maoist dictatorship, although without a clear program, was the germ of a workers' democratic revolution or "political revolution". The CCP suppressed the movement, sweeping away the threat of mass resistance. If 1989 was a turning point, then 1992 was another - Deng Xiaoping purged the party's remaining opposition and established the CCP's rapid development of capitalism within the framework of an autocratic regime without compromising on liberal capitalist political reforms. route.

Conclusion: Another turning point in the restoration of capitalism

Since then, the CCP’s road to high-speed capitalist market reform has been basically undisputed for 20 years. In the mid-1990s, Jiang Zemin and Zhu Rongji carried out large-scale privatization of state-owned enterprises with the policy of "grabbing the big and letting go of the small". In 1998, the housing sector was privatized in one fell swoop, laying the foundation for today's hyper-speculative and unaffordable housing market. In the late 1990s, 60 million workers from state-owned enterprises were laid off to qualify China to join the WTO in 2001. These brutal pro-capitalist policies continued and accelerated during the Hu-Wen era.

This phase lasted until the global capitalist crisis in 2008 and the arrival of Xi Jinping in 2012. The 2008 crisis exposed the catastrophic failure of capitalism, which also led governments around the world toward more state intervention, regulation, and deglobalization. The CCP has also begun to move towards a more state-capitalist means of control that has become a hallmark of Xi Jinping’s rule. Of course, this does not mean returning to the Stalinist "socialism" of the past, which the CCP capitalist regime is unwilling and impossible to achieve today, but to take more measures to try to control the destructive power of capitalism in order to maintain "Stability" under capitalism.