China: From Mao to Deng....Peasant society to Industrial super-power

      In 1949 Mao proclaimed that " China has arisen " and in 1990's Deng declared that " To get rich is glorious" and China which became the " manufacturer to the world " under Deng's pragmatic "socialist market economy", is now looked upon as the hope of the world..... the engine of global economic growth.

      It was the forward looking Dend Xiaoping, who is responsible for this " great leap forward". As early as 1961, he signaled his pragmatic approach when he was quoted as saying, that " I do not care if it is a white cat or a black cat so long as it catches mice" in response to those who wanted to emphasise the communist approach. Being productive is more important than whether you follow communism or capitalism is what he meant. He  and his family would be persecuted and imprisoned during the Cultural Revolution, but when he was brought back to the Party by Zhou Enlai, he continued his progressive thinking. After the death of Mao in 1976, he defeated the Gang of Four and their choice to succeed Mao, Hua Goofeng.

      Transition began slowly in 1978 and picked up steam in the 1990's, when China opened up to joint ventures and attracted major western corporations and foreign capital poured into the country. The large population created a huge cheap labor market, which allowed these ventures to flourish and China to become the manufacturer to the world.

      Deng's political flexibility... " we must not fear to adopt the advanced management methods applied in capitalist countries. The very essence of socialism is the liberation and  development of the productive systems. Socialism and market economy are not incompatible" he declared. His "Socialist market economy"( socialism with Chinese characteristics),  combines substantial state ownership of large industries with private enterprise. In this system major state-owned industries compete with each other. It differs from market socialism because the government does not intervene in the setting of prices, nor does it attempt to favour state-owned enterprises over private ones. Also by 2004, 50% of state-owned enterprises were transformed into joint stock companies, which generated one-third of the nation'S GDP. 

      " A planned economy is not the definition of socialism, because there is planning under capitalism: the market economy, happens under socialism too. Planning and market forces are both ways of controlling economic activity" He dared to undeify Mao by saying that Mao was " 7 parts good, 3 parts bad" and he was influenced by the four East Asian Tigers of Taiwan, Hong Kong, South Korea and Singapore. He travelled abroad and had amicable meetings with western leaders and was the first Chinese leader to visit U.S.A. and met with President Carter in the White House in 1979. He signed agreements with Britain and Portugal for the return of the colonies of Hong Kong and Macao and promised not to change capitalist system for 50 years ...... One coumtry, two systems. He also improved relations with historic enemy, Japan and used it as an example for China's future growth. These visits and agreements allowed previously skeptical and hesitant investors to become more confident of trusting China.

      What Deng started and pushed along until his death,( Gaige Kaifang....Reforms and Openness),  made it possible for his successors to carry out even further reform. It has been a phenomenal success.....tremendous growth spurred on by exports, an economy second in size only to the U.S.A.

      The world now looks to China. It is still on the right side of recession and it is spending both internally and abroad. Hundred of billions of dollars are earmarked for infrastructure spending and relieving the job losses that have occured because of the drop in exports and the closing of factories. The 11th Congress is very aware of the potential for internal instability and have targeted transportation, manufacturing and the energy sector. Its internal market is huge and is crucial in weathering the 20% loss in orders from abroad. China has also gone on a buying spree abroad in order to secure its energy and resource future. It has $2 trillion in foreign reserve and have already scooped up $70 billion worth of global resourse assets.....$19,5 billion for 18% of Australia's Rio Tinto, $25 billion to Russia's largest oil producer, Rosneft, and $10 billion to Petrobas of Brazil. Billions more are being poured by Chinese investors into Australian and Mongolian iron ore mining companies and gas and pipeline deals in Turkmenistan and lead and copper in Kazhakistan. There has also been a $443 million offer for Calgary based Verenex Energy Inc. to give China National Petroleum Corp. a stake in a Libyan oil concession. It is expected that the buying spree will pick up pace. Australia with " an open attitude" to Chinese investment is expected to be a major target. North America will be next, especially Canada with its huge resources...oil, gas, potash and forestry.