Reforms after 1978 China in the World Economy, autumn 2024 Questions from last time •How was Maoism distinctive from Marxism and Leninism? • Questions from last time •How was Maoism distinctive from Marxism and Leninism? •What is the doctrine of „democratic centralism?“ Questions from last time •How was Maoism distinctive from Marxism and Leninism? •What is the doctrine of „democratic centralism?“ •Name the most important institutions of the Chinese Communist Party. • Questions from last time •How was Maoism distinctive from Marxism and Leninism? •What is the doctrine of „democratic centralism?“ •Name the most important institutions of the Chinese Communist Party. •What are the supposed advantages of central planning? • Questions from last time •How was Maoism distinctive from Marxism and Leninism? •What is the doctrine of „democratic centralism?“ •Name the most important institutions of the Chinese Communist Party. •What are the supposed advantages of central planning? •Which sector of the economy did Communist governments typically tried to develop at the expense of which other sector? • • Questions from last time •How were prices created under central planning? Questions from last time •How were prices created under central planning? •How did China conduct trade under central planning? Questions from last time •How were prices created under central planning? •How did China conduct trade under central planning? •Which types of industries or sectors are typically neglected under central planning? Which ones are heavily supported? Today •Brief run through the Maoist period •Reforms in the late 1970‘s and 1980‘s – transition towards a market economy •The Tiananmen interlude • Literature • Obsah obrázku text, voda, loďka, vodní skútr Popis byl vytvořen automaticky • Obsah obrázku osoba, muž, vázanka, interiér Popis byl vytvořen automaticky Obsah obrázku text, voda, loďka, vodní skútr Popis byl vytvořen automaticky Obsah obrázku osoba, muž, vázanka, interiér Popis byl vytvořen automaticky Obsah obrázku osoba, muž, vázanka, zeď Popis byl vytvořen automaticky First years of the PRC - 1949-1953 • First years of the PRC - 1949-1953 •Massacre of landlords > circa 2 million victims First years of the PRC - 1949-1953 •Not full central planning yet! • First years of the PRC - 1949-1953 •Not full central planning yet! •Industry – slow nationalization of companies •Agriculture – independent farmers – pressure to form cooperatives – not collective ownership • First years of the PRC - 1949-1953 •Not full central planning yet! •Industry – slow nationalization of companies •Agriculture – independent farmers – pressure to form cooperatives – not collective ownership • •Participation in Korea > the CCP was not strong enough to control all of the economy • First Five Year Plan (1953-1957) • First Five Year Plan (1953-1957) •Soviet model, Soviet equipment, Soviet advisors First Five Year Plan (1953-1957) •Soviet model, Soviet equipment, Soviet advisors • Obsah obrázku text Popis byl vytvořen automaticky First Five Year Plan (1953-1957) •Soviet model, Soviet equipment, Soviet advisors •Centralized, hierarchical, technocratic First Five Year Plan (1953-1957) •Soviet model, Soviet equipment, Soviet advisors •Centralized, hierarchical, technocratic •Main point – develop modern industry at the expense of agriculture First Five Year Plan (1953-1957) •Soviet model, Soviet equipment, Soviet advisors •Centralized, hierarchical, technocratic •Main point – develop modern industry at the expense of agriculture •Full nationalization of industry, collective farming Obsah obrázku strom, exteriér, bílá, černá Popis byl vytvořen automaticky Obsah obrázku text, tráva, exteriér, obloha Popis byl vytvořen automaticky Obsah obrázku text Popis byl vytvořen automaticky First Five Year Plan (1953-1957) •Progress in industry, but stagnation in agriculture • • First Five Year Plan (1953-1957) •Progress in industry, but stagnation in agriculture •Mao – that‘s not good enough! • • • First Five Year Plan (1953-1957) •Progress in industry, but stagnation in agriculture •Mao – that‘s not good enough! •1957 – turn in a more radical direction • • First Five Year Plan (1953-1957) •Progress in industry, but stagnation in agriculture •Mao – that‘s not good enough! •1957 – turn in a more radical direction • •Hundred Flowers Campaign – „you can criticize us without fear“ • • • First Five Year Plan (1953-1957) •Progress in industry, but stagnation in agriculture •Mao – that‘s not good enough! •1957 – turn in a more radical direction • •Hundred Flowers Campaign – „you can criticize us without fear“ •Anti-Rightist Campaign – another purge; full one-party state; led by Deng Xiaoping! • • • „Great Leap Forward“ (1958-1962) •Basic idea – simultaneous progress in cities and the countryside • „Great Leap Forward“ (1958-1962) •Basic idea – simultaneous progress in cities and the countryside •Local patriotic and ideological enthusiasm will replace Soviet-style centralized technocracy • „Great Leap Forward“ (1958-1962) •Basic idea – simultaneous progress in cities and the countryside •Local patriotic and ideological enthusiasm will replace Soviet-style centralized technocracy •Local party leaders should heroically struggle to achieve great results • „Great Leap Forward“ (1958-1962) •Basic idea – simultaneous progress in cities and the countryside •Local patriotic and ideological enthusiasm will replace Soviet-style centralized technocracy •Local party leaders should heroically struggle to achieve great results •Abolition of private land ownership, farms to be fused into large scale „village communes“ • „Great Leap Forward“ (1958-1962) •Basic idea – simultaneous progress in cities and the countryside •Local patriotic and ideological enthusiasm will replace Soviet-style centralized technocracy •Local party leaders should heroically struggle to achieve great results •Abolition of private land ownership, farms to be fused into large scale „village communes“ •Small industrialization carried out by these village communes • • „Great Leap Forward“ (1958-1962) •Communes were supposed to produce their own steel Obsah obrázku osoba, exteriér, lidé, dav Popis byl vytvořen automaticky Obsah obrázku exteriér, strom, staré, země Popis byl vytvořen automaticky Obsah obrázku země, exteriér, staré, lidé Popis byl vytvořen automaticky „Great Leap Forward“ (1958-1962) •Communes were supposed to produce their own steel •„They probably have a lot of spare workers who aren‘t doing anything valuable, let‘s force them to work in manufacturing“ „Great Leap Forward“ (1958-1962) •Communes were supposed to produce their own steel •„They probably have a lot of spare workers who aren‘t doing anything valuable, let‘s force them to work in manufacturing“ •People fulfilled their quotas by melting down tools and reforging them into useless, low-quality iron „Great Leap Forward“ (1958-1962) •Unrealistic production quotas > all the food was forcibly confiscated „Great Leap Forward“ (1958-1962) •Unrealistic production quotas > all the food was forcibly confiscated •Biggest famine in China‘s history – 30 million deaths „Great Leap Forward“ (1958-1962) •The program had to be called off in 1962 „Agriculture first“ (1962-1966) •Intermezzo - more pragmatic policies aimed at repairing the damage „Agriculture first“ (1962-1966) •Intermezzo - more pragmatic policies aimed at repairing the damage •Less ideology, more management •Material rewards „Agriculture first“ (1962-1966) •> alleviate the hunger and poverty of rural villages > higher prices for agricultural products „Agriculture first“ (1962-1966) •> alleviate the hunger and poverty of rural villages > higher prices for agricultural products •Industrial firms – mostly remained under local control, but run in a more professional manner „Agriculture first“ (1962-1966) •> alleviate the hunger and poverty of rural villages > higher prices for agricultural products •Industrial firms – mostly remained under local control, but run in a more professional manner •Basic economic model until 1978 „Agriculture first“ (1962-1966) •Except for the first Five Year plan, China never had true Soviet-style central planning „Agriculture first“ (1962-1966) •Except for the first Five Year plan, China never had true Soviet-style central planning •Decision making was divided between different levers of party and government „Agriculture first“ (1962-1966) •Except for the first Five Year plan, China never had true Soviet-style central planning •Decision making was divided between different levers of party and government •Typically, many enterprises were controlled on the provincial level etc. „Agriculture first“ (1962-1966) •Except for the first Five Year plan, China never had true Soviet-style central planning •Decision making was divided between different levers of party and government •Typically, many enterprises were controlled on the provincial level etc. • •> opaque system, it is difficult to say who is in charge of what Cultural Revolution (1966-1976) •Mao was partially discredited by the Great Leap Forward and faced opposition inside the party (Deng Xiaoping) Cultural Revolution (1966-1976) •Mao was partially discredited by the Great Leap Forward and faced opposition inside the party (Deng Xiaoping) •Attempt to turn Mao into a mere figurehead and create a more technocratic and collective leadership Cultural Revolution (1966-1976) •Mao was partially discredited by the Great Leap Forward and faced opposition inside the party (Deng Xiaoping) •Attempt to turn Mao into a mere figurehead and create a more technocratic and collective leadership •Abroad – deconstruction of Stalin‘s cult of personality, more „boring“ and less bloody rule in the USSR Cultural Revolution (1966-1976) •Cultural Revolution – attack on intellectuals and party bureaucrats Cultural Revolution (1966-1976) •Cultural Revolution – attack on intellectuals and party bureaucrats – Mao‘s opponents Cultural Revolution (1966-1976) •Cultural Revolution – attack on intellectuals and party bureaucrats – Mao‘s opponents •Officially: attempt to prevent the Communist party from becoming a new elite – permanent revolution Cultural Revolution (1966-1976) •Red Brigades – groups of fanatical young comrades Obsah obrázku text Popis byl vytvořen automaticky Obsah obrázku text, pózování, osoba, skupina Popis byl vytvořen automaticky Obsah obrázku osoba, exteriér, skupina, pózování Popis byl vytvořen automaticky Cultural Revolution (1966-1976) •Red Brigades – groups of fanatical young comrades > attacks on „bourgeois elements“ etc., taking over of factories Cultural Revolution (1966-1976) •Red Brigades – groups of fanatical young comrades > attacks on „bourgeois elements“ etc., taking over of factories •Destruction of Chinese cultural heritage („old thinking“) Obsah obrázku exteriér, jeskyně Popis byl vytvořen automaticky Cultural Revolution (1966-1976) •Red Brigades – groups of fanatical young comrades > attacks on „bourgeois elements“ etc., taking over of factories •Destruction of Chinese cultural heritage („old thinking“) •„Sending down“ – young intellectuals sent to work in villages > waste of talent and potential • Cultural Revolution (1966-1976) •Red Brigades – groups of fanatical young comrades > attacks on „bourgeois elements“ etc., taking over of factories •Destruction of Chinese cultural heritage („old thinking“) •„Sending down“ – young intellectuals sent to work in villages > waste of talent and potential •„Self-criticism“ – public humiliation and torture Obsah obrázku text, osoba, dav Popis byl vytvořen automaticky Obsah obrázku text, osoba, exteriér, lidé Popis byl vytvořen automaticky Cultural Revolution (1966-1976) •1968 – the army had to move in to rein in the Red Brigades • Cultural Revolution (1966-1976) •Officially no major change to the economic model – but omnipresent chaos and radicalism Cultural Revolution (1966-1976) •Officially no major change to the economic model – but omnipresent chaos and radicalism •Mao‘s final years (1970-76) – the situation slowly calmed down • •“Had Mao died in 1956, his achievements would have been immortal. Had he died in 1966, he would still have been a great man but flawed. But he died in 1976. Alas, what can one say?” Mao‘s final years •Power struggle between pragmatists (Deng and Zhou Enlai) and hardcore Maoists (Gang of Four – Mao‘s wife) Mao‘s final years •Power struggle between pragmatists (Deng and Zhou Enlai) and hardcore Maoists (Gang of Four – Mao‘s wife) •Material incentives and focus on economic performance vs. ideological purity and revolutionary zeal Mao‘s final years •Power struggle between pragmatists (Deng and Zhou Enlai) and hardcore Maoists (Gang of Four – Mao‘s wife) •Material incentives and focus on economic performance vs. ideological purity and revolutionary zeal •Both Mao and Zhou died in 1976 Mao‘s final years •Power struggle between pragmatists (Deng and Zhou Enlai) and hardcore Maoists (Gang of Four – Mao‘s wife) •Material incentives and focus on economic performance vs. ideological purity and revolutionary zeal •Both Mao and Zhou died in 1976 •Brief interregnum, Deng‘s faction emerged victorious in 1978 Mao‘s final years •Power struggle between pragmatists (Deng and Zhou Enlai) and hardcore Maoists (Gang of Four – Mao‘s wife) •Material incentives and focus on economic performance vs. ideological purity and revolutionary zeal •Both Mao and Zhou died in 1976 •Brief interregnum, Deng‘s faction emerged victorious in 1978 •„Gang of Four“ – blamed for the excesses of the Cultural Revolution so that Mao himself could be absolved of all responsibility • Obsah obrázku osoba, lidé, stojící, oblek Popis byl vytvořen automaticky China‘s situation in 1978 •GDP per capita – similar to India and sub-Saharan Africa •Overpopulation China‘s situation in 1978 •GDP per capita – similar to India and sub-Saharan Africa •Overpopulation •The Party itself was ravaged by years of purges •> bad economic data! China‘s situation in 1978 •GDP per capita – similar to India and sub-Saharan Africa •Overpopulation •The Party itself was ravaged by years of purges •> bad economic data! •Some excellent centers of learning and science – but small, isolated, decimated by the Cultural Revolution China‘s situation in 1978 •Unhealthy focus on heavy industry and military technologies China‘s situation in 1978 •Cities – complete state ownership, zero room for enterprise •= not centers of commerce but bastions of the Party China‘s situation in 1978 •Cities – complete state ownership, zero room for enterprise •= not centers of commerce but bastions of the Party •Rural areas – somewhat looser rule, farmers were sometimes allowed to de facto own plots of land •Most of the land was still collective, though • China‘s situation in 1978 •Foreign trade – extreme isolation, focus on autarky China‘s situation in 1978 •Foreign trade – extreme isolation, focus on autarky •Result of the break with the USSR in the 1960s China‘s situation in 1978 •Foreign trade – extreme isolation, focus on autarky •Result of the break with the USSR in the 1960s •„Double air-lock“ – tight control of both currency and the movement of goods China‘s situation in 1978 •Foreign trade – extreme isolation, focus on autarky •Result of the break with the USSR in the 1960s •„Double air-lock“ – tight control of both currency and the movement of goods •12 monopoly state trading-enterprises – bridges between China‘s regulated prices and the world market China‘s situation in 1978 •Need to import technology China‘s situation in 1978 •Need to import technology •= machines and the know-how embodied in them (= capital goods) •> reverse engineering • China‘s situation in 1978 •Need to import technology •= machines and the know-how embodied in them (= capital goods) •> reverse engineering •It would be ideal to purchase whole assembly lines etc. China‘s situation in 1978 •Need to import technology •= machines and the know-how embodied in them (= capital goods) •> reverse engineering •It would be ideal to purchase whole assembly lines etc. •Problem – need for foreign exchange (dollars, yens, pounds) • China‘s situation in 1978 •How does a country gain foreign exchange? • China‘s situation in 1978 •How does a country gain foreign exchange? •Export! • China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Developing countries – food, natural resources, textiles • • China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Developing countries – food, natural resources, textiles •China – barely above subsistence > „What can we export?“ • China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Developing countries – food, natural resources, textiles •China – barely above subsistence > „What can we export?“ •Oil (!) • China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Developing countries – food, natural resources, textiles •China – barely above subsistence > „What can we export?“ •Oil (!) > then we can afford to purchase equipment from Western Europe and Japan • China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Developing countries – food, natural resources, textiles •China – barely above subsistence > „What can we export?“ •Oil (!) > then we can afford to purchase equipment from Western Europe and Japan •Oil production didn‘t work out > need to boost other exports • • China‘s situation in 1978 •„averted oil curse“ – lack of oil production forced China into reforms that led to far more significant growth than oil could ever deliver China‘s situation in 1978 •„averted oil curse“ – lack of oil production forced China into reforms that led to far more significant growth than oil could ever deliver • •Similar in other East Asian countries China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Loans > dangerous debt denominated in a foreign currency China‘s situation in 1978 •How does a country gain foreign exchange? •Export! •Loans > dangerous debt denominated in a foreign currency •Exchanging money in currency markets – weakens the domestic currency • Balance of payments •Trade surplus Balance of payments •Trade surplus > foreign exchange reserves grow Balance of payments •Trade surplus > foreign exchange reserves grow > country becomes a net foreign investor Balance of payments •Trade surplus > foreign exchange reserves grow > country becomes a net foreign investor • •Trade deficit Balance of payments •Trade surplus > foreign exchange reserves grow > country becomes a net foreign investor • •Trade deficit > the opposite Balance of payments •Trade surplus > foreign exchange reserves grow > country becomes a net foreign investor • •Trade deficit > the opposite > the country typically goes into debt Balance of payments •Trade surplus > foreign exchange reserves grow > country becomes a net foreign investor • •Trade deficit > the opposite > the country typically goes into debt •= „double deficit“ Balance of payments •Formal terminology: current account and capital account Balance of payments •Formal terminology: current account and capital account • •NX = NFI Structure of GDP •GDP = C + I + G + NX • • Structure of GDP Structure of GDP Structure of GDP •United States: •I = 18 % •C = 68 % Structure of GDP •S = I + FI Reforms • Reforms - agriculture •Major overhaul of the rural economy •Huang – the most significant and drastic reform Reforms - agriculture •Major overhaul of the rural economy •Most collective land was distributed back among the peasants (= what they hoped for in 1949!) Reforms - agriculture •Major overhaul of the rural economy •Most collective land was distributed back among the peasants (= what they hoped for in 1949!) •Legalization of enterprise > farmers can further process their products – turn cotton into clothes, or milk into yogurt, etc. Reforms - agriculture •Major overhaul of the rural economy •Most collective land was distributed back among the peasants (= what they hoped for in 1949!) •Legalization of enterprise > farmers can further process their products – turn cotton into clothes, or milk into yogurt, etc. •> „township and village enterprises“ (TVEs) – formally public, de facto usually private Reforms - agriculture •Major overhaul of the rural economy •Most collective land was distributed back among the peasants (= what they hoped for in 1949!) •Legalization of enterprise > farmers can further process their products – turn cotton into clothes, or milk into yogurt, etc. •> „township and village enterprises“ (TVEs) – formally public, de facto usually private •Local banks and funds – collection of savings, investment Reforms - agriculture •Rural sector – became far more commercial than the cities during the 1980‘s! •Poverty alleviation, lifting people out of agriculture Reforms - agriculture •Rural sector – became far more commercial than the cities during the 1980‘s! •Poverty alleviation, lifting people out of agriculture •Small-scale industrialization – (what the Great Leap Forward hoped for!) Reforms - agriculture •Rural sector – became far more commercial than the cities during the 1980‘s! •Poverty alleviation, lifting people out of agriculture •Small-scale industrialization – (what the Great Leap Forward hoped for!) •Rural areas were no longer squeezed for cash by the state Reforms - agriculture •Rural sector – became far more commercial than the cities during the 1980‘s! •Poverty alleviation, lifting people out of agriculture •Small-scale industrialization – (what the Great Leap Forward hoped for!) •Rural areas were no longer squeezed for cash by the state •Some successful entrepreneurs moved into the cities Reforms – urban areas •„Dual-prices“ Reforms – urban areas •„Dual-prices“ – state-owned enterprises (SOEs) must fulfill the plan, then they can sell any surplus products and keep the profits Reforms – urban areas •„Dual-prices“ – state-owned enterprises (SOEs) must fulfill the plan, then they can sell any surplus products and keep the profits •> official prices within the plan + market prices Reforms – urban areas •„Dual-prices“ – state-owned enterprises (SOEs) must fulfill the plan, then they can sell any surplus products and keep the profits •> official prices within the plan + market prices •Hybrid firms – a university or research center can start an enterprises and commercialize some invention made there Reforms – urban areas •„Dual-prices“ – state-owned enterprises (SOEs) must fulfill the plan, then they can sell any surplus products and keep the profits •> official prices within the plan + market prices •Hybrid firms – a university or research center can start an enterprises and commercialize some invention made there •Far fewer true private enterprises than in the countryside! Reforms – urban areas •„Dual-prices“ – state-owned enterprises (SOEs) must fulfill the plan, then they can sell any surplus products and keep the profits •> official prices within the plan + market prices •Hybrid firms – a university or research center can start an enterprises and commercialize some invention made there •Far fewer true private enterprises than in the countryside! •Few privatizations – the private sector grew next to the state sector Reforms – urban areas •Increased motivation and production • Reforms – urban areas •Increased motivation and production •Significant corruption – typical result of intermingling of private and public resources and interests • • Reforms – foreign trade •Special economic zones (SEZs) Reforms – foreign trade •Special economic zones (SEZs) •– Goungdong and Fujien •= close to Hong Kong and Taiwan Obsah obrázku mapa Popis byl vytvořen automaticky Reforms – foreign trade •Special economic zones (SEZs) •– Goungdong and Fujien •= close to Hong Kong and Taiwan •HK had bigger exports that all of China in 1978 (!) Reforms – foreign trade •Special economic zones (SEZs) •= special legal regime allowing the use cheap Chinese labour force to work for Taiwanese and HK companies Reforms – foreign trade •Special economic zones (SEZs) •= special legal regime allowing the use cheap Chinese labour force to work for Taiwanese and HK companies •Textile industry, later more sophisticated products – electronics Reforms – foreign trade •Special economic zones (SEZs) •= special legal regime allowing the use cheap Chinese labour force to work for Taiwanese and HK companies •Textile industry, later more sophisticated products – electronics •FDI, export Reforms – foreign trade •Not a major source of growth in the 1980s! •The economy was still relatively closed, most trade was domestic Reforms – foreign trade •Not a major source of growth in the 1980s! •The economy was still relatively closed, most trade was domestic •Trade with HK and Taiwan raised revenue necessary to finance imports Reforms – foreign trade •Not a major source of growth in the 1980s! •The economy was still relatively closed, most trade was domestic •Trade with HK and Taiwan raised revenue necessary to finance imports •„Export processing“ – all the stuff Taiwanese companies make in China has to be exported Reforms – foreign trade •Not a major source of growth in the 1980s! •The economy was still relatively closed, most trade was domestic •Trade with HK and Taiwan raised revenue necessary to finance imports •„Export processing“ – all the stuff Taiwanese companies make in China has to be exported – so it does not compete with Chinese companies Reforms – foreign trade •Outside of EPZs – more firms were given the right to trade outside the original 12 monopolies •- but still restricted to specially designated SOEs! Reforms – foreign trade •Outside of EPZs – more firms were given the right to trade outside the original 12 monopolies •- but still restricted to specially designated SOEs! •„Canalization“ – if you want to import something, a firm with foreign trade rights must do it for you The Tiananmen interlude •1980s- discussion about political reform The Tiananmen interlude •1980s- discussion about political reform •Deng – „party elder“ – informal influence •Desire to separate the Party and the state, introduce term-limits for officials The Tiananmen interlude •1980s- discussion about political reform •Deng – „party elder“ – informal influence •Desire to separate the Party and the state, introduce term-limits for officials •CCP leadership was meant to be collective (x Mao) The Tiananmen interlude •1980s- discussion about political reform •Deng – „party elder“ – informal influence •Desire to separate the Party and the state, introduce term-limits for officials •CCP leadership was meant to be collective (x Mao) •Feud between reformists and „conservatives“ The Tiananmen interlude •1980s- discussion about political reform •Deng – „party elder“ – informal influence •Desire to separate the Party and the state, introduce term-limits for officials •CCP leadership was meant to be collective (x Mao) •Feud between reformists and „conservatives“ •General Secretary – Hu Yaobang, followed by Zhao Ziyang – both favored some form of political liberalization • • The Tiananmen interlude •Hu – dismissed because of pressure of conservatives in 1987 •Died in early 1989 •Demonstrations in large Chinese cities – calls for more political reforms (also economic demands – lower inequality etc.) • • Obsah obrázku text, obloha, exteriér, lidé Popis byl vytvořen automaticky The Tiananmen interlude •CCP – more behind the scenes infighting The Tiananmen interlude •CCP – more behind the scenes infighting •General Secretary Zhao – supported the protesters •Prime minister Li – favored a harsh crackdown The Tiananmen interlude •CCP – more behind the scenes infighting •General Secretary Zhao – supported the protesters •Prime minister Li – favored a harsh crackdown •Deng (chairman of the military committee!) – undecided, in the end he reluctantly joined the conservatives The Tiananmen interlude •CCP – more behind the scenes infighting •General Secretary Zhao – supported the protesters •Prime minister Li – favored a harsh crackdown •Deng (chairman of the military committee!) – undecided, in the end he reluctantly joined the conservatives •> martial law, army units gathered around Beijing •„June the 4th incident“ – massacre of protesters The Tiananmen interlude •CCP – more behind the scenes infighting •General Secretary Zhao – supported the protesters •Prime minister Li – favored a harsh crackdown •Deng (chairman of the military committee!) – undecided, in the end he reluctantly joined the conservatives •> martial law, army units gathered around Beijing •„June the 4th incident“ – massacre of protesters •Followed by (less violent) crackdowns in other cities The Tiananmen interlude •Party conservatives led by Li Peng seized power, Zhao dismissed – spent the rest of his life under house arrest •Attempt to overturn the economic reforms – central planning briefly reinstated! • The Tiananmen interlude •The ability of the CCP to brutally crush the protest movement and get away with it without a wider uprising / civil war is a testament to the robustness of its power • The Tiananmen interlude •The ability of the CCP to brutally crush the protest movement and get away with it without a wider uprising / civil war is a testament to the robustness of its power •Meanwhile – demoralized Communist regimes in Eastern Europe collapsed with barely a whimper… • Next time •Continuing reforms in the 1990s •The early 2000s – China‘s most capitalist moment •The fallout from the 2008 Financial Crisis •Xi Jinping, China‘s technological ambitions