Friday, November 09, 2007

An Amateur Evaluation of China's "Open Door" Policy

I recently wrote a term essay for my PS2248: Contemporary Chinese Politics module in response to the essay topic of: "Based on the reforms launched by Deng and his supporters and successors, discuss the pros & cons of China’s ‘open-door’ policy"; thought that I will reproduce it here for those of you all who may be interested in China affairs.

It is an oft-quoted saying that when one opens one’s windows, one will have to not only expect getting the inflow of fresh air but also contend with the inevitability of having flies & other pests flying in through the open windows. This saying, in a nutshell, perhaps sums up the impact which the various reforms, in particular that of the “open-door” policy, launched by Deng Xiaoping, his supporters and successors have on China. While these reforms undeniably brought about much positive effects, especially in the realm of economic development, for China, it is at the same time undeniable that these reforms also created a plethora of problems, which could be found mainly in the socio-political arena, for China.

However, before I move on to discuss in detail what are the benefits and problems created by the various reforms initiated by Deng and his successors, it would be, in my opinion, necessary, if we are to have a proper and full understanding of the entire issue at hand, to first look at what exactly are the reforms that were put in place and the context in which they arose.

Thus, allow me to use the next few paragraphs to briefly discuss and examine the historical context in which the various reforms by Deng were launched and what these reforms were.

It was in December 1978, at the Third Plenary Session of the Eleventh National Congress of the Chinese Communist Party (CCP), that Deng announced the launch of the “Four Modernisations”, that is the modernisation of science & technology, industry, agriculture and defence [1]. In effect, this announcement meant the introduction of a whole range of market-oriented economic reforms, which included the introduction of material incentives, the creation of Special Economic Zones (SEZs), a greater level of local autonomy in economic affairs and a greater focus on light industries and exports-led growth [2]. And most notably of these reforms was that of the implementation of what was to be termed as the “open-door” policy, that is the opening up of China’s economy to not only foreign trade but also foreign investment from all around the world.

These reforms departed radically from the economic policies implemented during Mao Zedong’s tenure in power which, while they may have been motivated by benign intentions, greatly impeded, if not disrupted, the economic development of China. By the time when Deng announced the abovementioned economic reforms in 1978, China was burdened with several critical economic problems ranging from chronic underdevelopment in its agricultural sector [3] to a massive budget deficit [4].

Hence, it may be observed that the economic reforms put in place by Deng and his supporters were primarily aimed at putting China’s long disrupted economic development back on track. It should also be noted that though these economic reforms had an inescapable capitalistic tint to them and thus not coincide with China’s claim of being a socialist, if not communist, state, Deng justified them with the argument that these reforms were essential to build up an early stage of socialism in China and provide the proper material conditions for China’s eventual progression to becoming a full-fledged communist state. Also, it was the aim of Deng and his supporters that by introducing these economic reforms, it will enable certain segments of China to develop and prosper first before the resources arising from this development and prosperity could be used to aid in the development of other segments of China [5].

Now, having introduced the historical context in which the economic reforms by Deng were initiated and what these reforms were, I would now move on to discuss and look at the various effects, positive or negative, that these economic reforms had for China.

One evident positive effect of the economic reforms, in particular that of the “open-door” policy, launched by Deng would be that as a result of these reforms, a great influx of foreign investment into China’s economy occurred. China’s trade with foreign countries also increased exponentially from being just 10% of China’s Gross Domestic Product (GDP) in 1978 to 44% in 1994 [6]. This, of course, greatly contributed to the rapid and steady growth of China’s economy. Evidence of this rapid and steady growth of China’s economy can be clearly seen in how China’s economy managed to maintain a constant double-digit growth from 1984 to 1995 [7]. In fact, according to the latest official statistics, for the first half of this year, that is 2007, China’s economic growth is estimated to be at a positive rate of 11.5% [8].

Continuing from the point above, it can also be observed that besides opening up China’s economy to foreign investment and trade and thereby contributing greatly to its growth, the introduction of the “open-door” policy also allowed for the transfer of important skills and expertise into China. In other words, as foreign countries and companies invested and set up businesses in China, there is perhaps an indirect transfer of skills and expertise, such as managerial and technological expertise, from these foreign entities into China. Hence, with this indirect transfer of skills and expertise, China is perhaps able to incorporate these skills and expertise into its own system as a means of improving it.

In addition, it should also be noted that the economic reforms initiated by Deng, besides bringing about obvious positive effects for China’s economy, also had certain positive effects in the socio-political arena of China.

One such positive effect would be that the legitimising effect that these economic reforms brought about for the governance of China by the CCP. By this, I am referring to how the impressive economic growth brought about by these economic reforms, especially that of the “open-door” policy, helped to legitimise the one-party dominance of the CCP in the eyes of the Chinese people (and perhaps also even in the eyes of foreigners) and enabled the CCP to maintain its preponderance of power in Chinese politics. In other words, through its ability to not only keep China’s economy afloat but also create impressive economic growth, the CCP has perhaps justified and convinced people of its continued governing of China.

And as a slight aside, allow me to address the point of whether it is necessary for the CCP to legitimise its rule of China to the Chinese people. Although it is true that the political system in China is one of an one-party state and that the CCP need not be concerned about being ousted from power through the medium of popular elections, I would argue that it nonetheless remains necessary, if not critical, that the CCP legitimise its continued governing of China, if not to the world, then at least to the Chinese people. This is considering that though the CCP need not worry about being ousted from power through the medium of popular elections, there remains the possibility that the CCP could be ousted from power through other means if it does not maintain its political legitimacy. Also, it should be noted that the concept of political legitimacy, in the form of the “Heaven’s Mandate”, is one which is deeply embedded in the minds and memories of the Chinese people. Hence, it can be seen that it remains both necessary and critical that the CCP maintain its political legitimacy in China.

Moving on, it can also be seen that as China opened up to the world, its trade and commercial relations with other countries increased greatly. This increase in trade and commercial relations, coupled together with Deng’s foreign policy prescription of “韬光养晦” (which can be roughly translated into as “to bide one’s time and keep a low profile”) [9], then contributed to the improving of diplomatic relations between China and other countries. Although there remained the occasional tensions between China and other countries and while China did engage in some military conflicts with its neighbouring countries, China’s foreign relations, through its prudent foreign policy and its strong economic ties with the rest of the world, have been, for now, largely positive. This has enabled China to stay clear of any major & entrenched conflicts with other countries and to concentrate on its own internal development.

Furthermore, China’s great increase in its economic prowess, besides allowing it to emerge as a major economic power, has also contributed to its becoming of a major regional, if not global, power. This has allowed China to become more confident in its foreign policy, though it nonetheless still largely abides by a policy of prudence, and to have a greater say in both regional and international affairs [10]. Also, it may be observed that this “peaceful rise” of China as a major power on the international stage has perhaps boosted the national pride of the Chinese people, which, in turn, help to further legitimise the CCP’s continued rule over China.

And, last but not least, another benefit of the economic reforms launched by Deng can be seen in that, as China’s economy grew dramatically due to these reforms, China was able to acquire the necessary resources to utilise on its own internal development. Although, of course, as it shall be discussed later in this essay, critics have pointed out that such internal development remains uneven with more resources being allocated to certain regions in China over other regions. Nevertheless, it remains undisputed that China did indeed reap the benefit of having more resources to employ for its own internal development.

However, as already mentioned in the beginning of this essay, while it is undeniable that the economic reforms, in particular that of the “open-door” policy, initiated by Deng and continued on by his successors did bring about great positive effects for China, they too brought about a plethora of problems for it, especially in the socio-political arena. Hence, departing from the discussion above about the positive effects that Deng’s economic reforms brought about, the remainder of this essay would look at what are the problems created by these same reforms.

One evident problem created by the launching of the economic reforms by Deng and continued on by his successors would be the emergence of higher levels of inequality within China. This inequality can be seen in how while the coastal provinces, such as Jiangsu, Fujian & Guangdong, and major urban centres, such as Shanghai, Nanjing & Beijing, of China are enjoying a high level of economic development and material prosperity, its inland provinces and rural areas, though they too have benefited from China’s growing economy, remain relatively poor and underdeveloped, especially when compared to the coastal provinces and major urban centres [11]. In fact, this geographical inequality has not gone unnoticed by China’s government. According to the latest statistics released by China’s Agriculture Ministry, for the year of 2006, an average urban resident in China earns 3.28 times as much as a rural resident, which is an increase from 3.21 times in 2004 [12].

And such inequality is not only on the geographical level, it is also on the individual level, with certain segments of the Chinese population, usually those who are educated and skilled, enjoying a level of material well-being that other segments, which are most likely larger in numbers, of the population do not get to enjoy [13]. This increased inequality can be observed in how since economic reforms were initiated by Deng, the Gini coefficient [14], a tool used in the measuring of inequality in a country, has increased from 0.30 [15] to 0.44 in 2004 [16], with latest estimates predicting that it may have already hit 0.47 [17]. Also, according to the statistics released by the United Nations in 2004, while the poorest 20% of the Chinese population only partake in a mere 4.7% of China’s consumption income, the richest 20%, on the other hand, has a share of 50% [18].

In addition, it may be observed that even as China opened up to foreign trade and investment, it also inevitably opened itself up to foreign socio-political ideas and influences. This influx of foreign socio-political ideas, which include ideas about democracy and human rights, coupled together with the various sources of discontent by the Chinese people against the Chinese government, an apt example being the increased inequality discussed above, pose an unmistakable threat to the political stability of China and the continued political rule of the CCP. A clear manifestation of such a threat can perhaps be seen in the Tiananmen Incident of 1989, which initially started out as a memorial service for the passing away of Hu Yaobang, an ex-General Secretary of the CCP, before it erupted into mass demonstrations for greater political rights and the redressing of various grievances.

Besides the problems mentioned above, the introduction of economic reforms by Deng and which were continued on by his successors also incurred a high environmental cost for China. In other words, as China focused the bulk of its attention and resources on its economic development, large scale environmental degradation occurred as a result of this fixation with economic growth [19]. The scale of environmental degradation or pollution can be seen in how, in 2002, 4.32 billion tones of waste water was discharged by Jiangsu, one of the foremost industrial provinces in China, into Taihu Lake and thus, together with other sources of pollutants, resulted in the water quality of the lake to deteriorate greatly over the years [20]. Also, it can be observed that recognising the severity of the problem of environmental degradation, the current Chinese government, under the leadership of Hu Jintao, has moved to adopt a policy of sustainable or scientific development so as to mitigate the problem [21].

Furthermore, it should be noted that as China’s economy grew rapidly through the introduction of market-oriented reforms, which have a capitalistic tint to them, the appeal of the socialist & communist ideology and a sense of moral ethos declined amongst the Chinese population. In contrast, the spectre of materialism and individualism began to have a greater influence over the Chinese people [22]. As Mr. Gong Dafei, who is the executive vice president of the China Confucian Foundation, puts it, “In China now, a lot of people only care about themselves and care nothing about other people. That is creating many problems” [23]. Hence, concerned about the negative impact of this decline in moral ethos in the Chinese people and the decrease in popularity of the communist ideology, which remains the official ruling ideology in China, the current Chinese government has acted to counter this problem through efforts to revive Confucianism [24], a traditional moral and political philosophy of China, and Marxism [25].

Moving on, as already discussed earlier on in this essay, it may be seen that the “peaceful rise” of China as a major power on the international stage has perhaps boosted the national pride of the Chinese people. While this may be interpreted as something positive in that it helped to further strengthen the CCP’s political legitimacy, the boost in the national pride of the Chinese people can also be a problem for the Chinese government. It has been pointed out by several observers that as the Chinese people become more proud of their nation, they are also increasingly demanding that their government adopt a more assertive and uncompromising stance in its international dealings. These demands have perhaps, to certain extent, soured China’s relations with other countries. A prime example of this would be how the outbreak of anti-Japanese protests in China in 2005 could have contributed negatively to an already tense situation in Sino-Japanese relations [26]. While the Chinese government may have, for now, kept a lid on these increasingly nationalistic sentiments of the Chinese people, it remains to be seen whether such a problem can be resolved effectively in the long-term.

And, continuing from the point above, it may also be observed as China ascend to a position of being a major regional, if not global, power, it faces increasing demands from the international community for it to be, as Robert B. Zoellick (an ex-Deputy Secretary of State for the United States) puts it, a “responsible stakeholder” [27]. Also, as China’s international profile gains greater prominence, there are increased demands for it to discontinue its support and protection of its allies (and countries where it has an influence in), such as North Korea, Sudan and Myanmar, which has committed violations against international law or the moral sense of the international community [28][29]. In other words, as China gain greater prominence on the international stage, it is also placed under greater scrutiny by the governments and peoples of other countries, thus reducing the amount of latitude it has in deciding both its domestic and foreign initiatives; gone are the days in which China can totally abide by Deng’s foreign policy prescription of “to bide one’s time and keep a low profile”.

Hence, in conclusion, allow me to reiterate that while it is undeniable that the economic reforms, in particular that of the “open-door” policy, initiated by Deng and continued on by his successors have brought about much positive results for China, it is also undeniable that the same reforms have created a whole plethora of problems for it. For now, it will seem that the benefits have outweighed the problems but it remains to be seen whether this would be the case in the long-run and whether the Chinese government would be able to resolve the problems, while continuing to reap the benefits.



[1] 2003

[2]Galbraith and Lu 2000

[3]In 1978, China’s output per capita for its agricultural sector was only 174 yuan/Renminbi

[4]In 1976, China’s budget deficit reached a high of 10 billion yuan/Renminbi

[5]BBC 2001

[6]Naughton 1996


[8]Li 2007

[9]Kahn 2006


[11]Cheng 2003

[12]Straits Times 2007

[13]Cheng 2003

[14]World Bank 2007

[15]UNDP China 2005

[16]UNDP 2004

[17]UNDP China 2005

[18]UNDP 2004

[19]UNDP China 2002

[20]Chen 2007

[21]People’s Daily 2004

[22]Smith 1994



[25]Guo & Lim 2005

[26]Onishi 2005

[27]Zoellick 2005

[28]Kahn 2006

[29]Metzl 2007



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Chen Gang. 2007. “Lessons from the Taihu algae crisis”. Straits Times. 1 September

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“Deng Theory a new stage of Marxism in China – Xinhua”. 2001. BBC. Factiva. 17 July. Date of access: 3/10/2007

“Development with Equity”. 2005. China Human Development Report 2005. Chapter 2. United Nations Development Programme China. Date of access: 5/10/2007

Galbraith, James K. and Lu Jiaqing. 2000. “Sustainable Development and the Open-Door Policy in China”. World Bank. 5 May. Date of access: 5/10/2007

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“Rural-urban income gap widening in China”. 2007. Straits Times. Agence France-Presse. 15 September

Smith, Craig S. 1994. “Moral Support: Beijing Turns to Confucius In Attempt to Fill a Vacuum”. Asian Wall Street Journal. Factiva. 5 October. Date of access: 3/10/2007

“UN Special Advisor: China’s scientific development strategy lightens a sustainable future”. 2004. People’s Daily. Xinhua. 23 March. Date of access: 5/10/2007

Zoellick, Robert B. 2005. “Engaging the dragon”. Straits Times. 29 September.

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