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Reform and opening-up to economic miracle

By Gao Xingwei China Daily Updated:2022-10-20

In the report he delivered to the 20th National Congress of the Communist Party of China, Xi Jinping said China has advanced reform, opening-up and socialist modernization, and has written a new chapter of miraculous fast economic growth and long-term social stability.

Contrary to some outsiders' claim that China will close the door on economic reforms, the door of China's reform and opening-up will only open wider and wider.

The Third Plenary Session of the 11th Communist Party of China Central Committee, held on Dec 18, 1978, was the turning point in the country's economic development, because it decided to reorient the focus of the Party and the country on economic development by launching reform and opening-up.

Economic reform started in rural areas with the introduction of the Household Contract Responsibility System. Thanks to the autonomy granted to them, farmers were motivated to work harder to increase their income. As a result, about 200 million farmers shook off poverty, and quite unexpectedly, township and village enterprises sprang up, providing employment for about 50 percent of rural surplus laborers. With the rural reform bearing fruits, the authorities launched economic reform in urban areas.

State-owned enterprises were freed from government functions and enjoyed greater autonomy. The practice of "eating from the same big pot" where individual performance meant little in terms of income was abandoned and a modern enterprise system was introduced. People were also encouraged to start their own business.

Before the launch of reform and opening-up, private businesses were not allowed to employ workers, as it was wrongly deemed to be a deviation from socialism. Nevertheless, a self-employed businessman called Nian Guangjiu, from Wuhu, Anhui province, made good profits by employing workers to prepare and sell sunflower seeds under the brand Shazi Guazi (Fool's Sunflower Seeds).

The issue was quite controversial and brought to the notice of Deng Xiaoping. Deng responded, saying: "Don't mess with it, otherwise people would have doubts about our new policy. Just let it be! What harm could be done? Will socialism be undermined?"

Thus a new economic system started taking shape. Although SOEs remained the mainstay, diverse forms of businesses, including self-employment, private enterprises and foreign-invested enterprises, developed together. And in 2001, after 15 years of arduous negotiations, China eventually joined the World Trade Organization, accessing the fruits of economic globalization while sharing its development dividends with the world.

Since the 18th National Congress of the CPC in 2012, to promote higher-quality development, the CPC has been focusing on supply-side structural reform while expanding domestic demand and further opening up the Chinese economy to the outside world.

Since the launch of reform and opening-up, generations of Party leaders have devoted themselves to poverty alleviation work. In particular, since the 18th Party Congress, nearly 100 million people have been lifted out of poverty, fulfilling the last and also the most difficult task on the road to building a moderately prosperous society in all respects.

By the end of 2020, more than 770 million people, mostly rural residents, had been lifted out of poverty, contributing more than 70 percent to global poverty alleviation, and China had built a moderately prosperous society in all respects. As a result, the Chinese people are leading better lives today. What bothers the Chinese people now is not how to get enough food, but how to stay in shape.

In fact, the best compliment a person could get today is a friend or relative saying: "You look awesome! Must have lost some weight!"

In the 1970s, to stop people from the Chinese mainland from sneaking into Hong Kong, the Shenzhen local government erected high wire fences on the border and deployed police officers there to prevent people from crossing over into Hong Kong. But the prevention measures were not entirely successful, as people then were prepared to take great risks to make it to Hong Kong.

Why?

There was a world of difference between Shenzhen and Hong Kong at the time. While Hong Kong was bustling with activity, Shenzhen was down at heel. Deng Xiaoping and Xi Zhongxun, the then Party leader of Guangdong province, knew well that the main reason why mainland people were sneaking into Hong Kong was the wrong economic policy of the mainland.

They also knew that once the right economic policy was implemented and the mainland's economy developed, people would stop sneaking into Hong Kong. After the Shenzhen Special Economic Zone was established on Aug 26, 1980, the problem slowly disappeared. Not long after, those who had crossed over to Hong Kong started returning home, for they saw brighter prospects ahead in Shenzhen.

Shenzhen has transformed from a border fishing village into a metropolis with high-rise buildings dotting its skyline and a global logistics, shipping and IT hub. Its GDP has grown from less than 200 million yuan ($27.79 million) in 1979 to 2.69 trillion yuan in 2019, with an annual growth rate of 21.6 percent. Shenzhen is also home to famous enterprises such as Huawei, DJI and Tencent.

Shenzhen's rate of "building one floor in three days" reflects the speed of China's economic development after the launch of reform and opening-up. No matter from which angle you look at it, China has set the record for the highest continuous economic growth rate for the longest period since World War II.

CPC key to China's miraculous successes

What is the secret behind its success? First, the CPC not only made economic development its central task, but it also is fully aware that only by focusing on development can China make great achievements, improve people's livelihoods, and say socialism is superior to other political systems.

Since the launch of reform and opening-up, China's GDP has grown from 367.9 billion yuan in 1978 to 114 trillion yuan in 2021, making China the world's second-largest economy, largest manufacturer and trader of goods. Its per capita income has grown from 171 yuan in 1978 to 35,128 yuan in 2021. And while its middle-income group has been expanding at an increasing rate, its eldercare insurance covers more than 1 billion people, and basic medical insurance over 1.3 billion. Besides, Chinese people's life expectancy has increased from 66 in 1978 to 78.2 in 2021.

As a Chinese saying goes, "to get rich, you need to build roads first". China has not only built hundreds of thousands of kilometers of roads but also made remarkable progress in building other infrastructure facilities, including extensive networks of highways and railways. In particular, China has built more than 40,000 km of high-speed railways. As a result it takes less than five hours to cover the distance of more than 1,000 km between Beijing and Shanghai by train.

Second, the CPC has motivated the whole country through reform. The Third Plenary Session of the 12th CPC Central Committee in 1984 put forward the principle of "the whole nation, collectives and individuals doing business together", triggering a countrywide fervor of starting businesses.

As it has vowed to build a powerful socialist market economy, the CPC allows the market to play its due role in the economy. In the process, the private economy has grown from strength to strength, contributing more than 50 percent to the country's tax revenue, accounting for 60 percent of China's GDP, 90 percent of its enterprises, over 70 percent of its technological innovations, and more than 80 percent of the urban jobs. Today, private businesses and the self-employed, which make up the vast majority of the 163 million market entities in China, are the major drivers of growth.

Third, the opening-up policy has created opportunities for China as well as the rest of the world. Quality products from all over the world including bananas from the Philippines, rice from Thailand are popular in China, while goods made in China are sold across the world. Eager to grab a bigger share of the world's largest market, global investors have flocked (and are still flocking) to China.

China has become the main market of many giant multinationals. McDonald's and Starbucks have been reaping great benefits from China while creating jobs for the Chinese people. And Volkswagen, one of the first Western auto manufacturers to set up shop in China, has been increasing its investment in the country.

Moreover, China is the source of the largest number of international tourists, contributing greatly to consumption in countries such as France, the United States and Italy.

Fourth, the CPC's founding mission is to improve the lives and livelihoods of the Chinese people. That's why it has been taking measures to ensure the giant ship of the Chinese economy sails in the right direction.

In 2019, a typhoon tore through Zhejiang province, disrupting electricity supply to more than 80 villages. The governor of Zhejiang took immediate action, asking the officials to restore power supply within 24 hours. Power supply was restored within a few hours.

In fact, a 24-hour power outage is unthinkable today even in the Tibet autonomous region despite its high altitude and difficult terrain.

In the mountainous Guizhou province, building expressways through mountains or constructing bridges in remote areas is a costly affair both in terms of money and time. But still such infrastructure facilities have been built to ensure people there lead a good life. This is the advantage of China's socialist system, and the fact that the CPC can lead the people in pooling resources for major undertakings is a major source of strength for the Chinese economy.

Reform and opening-up represent the great awakening of the CPC. They have helped China perform an economic miracle over the past 40-plus years, especially since the 18th National Congress of the CPC.

Now the CPC's goal is to realize common prosperity by promoting high-quality development. Under the leadership of the Party, China is fully committed to deepening reform and further opening up the economy to the outside world to promote national development and continue contributing to global growth.

The views don't necessarily represent those of China Daily.

The author is a professor of economics at the Party School of the CPC Central Committee.

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