The Chinese economy is the fastest growing and the largest in the world. The reasons for this outcome, however, often remain misunderstood by the majority of observers. A common misconception is that Chinese government intervention in the markets has facilitated the steady growth the Chinese economy has experienced in the past few decades. In reality, it all started at the Labour Conference in 1978. Deng Xiaoping delivered a speech presenting his idea of socialist economy with Chinese characteristics with a ten-year action plan. In particular, the rules created by Mr Xiaoping’s government broke from the approval of Chinese control authorities.
The decisive turning point in shaping the Chinese economy was at the beginning of the leadership of Deng. After his speech, his policies failed. Chinese citizens stopped complying and started resisting the personal and legal norms set by the regime. This was crucial for China to become an economic miracle. Disobedience began in the villages where production communes disbanded and were transferred to independent family entities, which were farming the land. However, this does not happen with the consent of the government. On the contrary, the collapse of collective farms was strictly prohibited. The authorities in charge of compliance with the law and order in the State realized the emerging potential for development. Hence, they deliberately ignored the policies of the headquarters in Beijing. The government’s instructions were disobeyed by local authorities that instead took steps more in keeping with a liberalized market system. The rule breaking of the countryside gradually spread to private industries in the cities. Many organizations continued to act on behalf of the government but their management was taken over by private companies. This change began in the agricultural sector and was anything but accidental.
Deng Xiaoping has always stressed the leading role of the Communist Party. Although China’s the relaxation of China’s economy has often been attributed to the CCP’s reforms, the real reason for the deployment of the free economy is largely coincidence. Since 1978, when the unexpected market liberalization began, China has been enjoying economic prosperity. The country succeeded only because people did not obey Deng’s policies.
Today, the Chinese government aims to revitalize the state’s role and increase market intervention. In other words, it is taking an approach contrary to that which has been delivering prosperity for decades. Forbidding private enterprises access to credit as well as placing restrictions and prohibitions on international companies is the main obstacle to foreign investors and local entrepreneurs trying to enter into the modern Chinese market.
Only time will tell whether the political leaders of Beijing are going to continue on the current path or realize their mistake and continue the Chinese economic miracle.