How China’s capitalist entrepreneurial spirit arose from the ashes of revolution
- Communist father of modern China left much chaos that would become the spark for market-based reforms
- These reforms now mean private companies are the Middle Kingdom’s major job creators
The world is getting used to a China that is an engine of innovation in digital payments, artificial intelligence, green energy and e-commerce. It’s a vastly different China from the one envisioned by its founding father, Mao Zedong.
In 1949, in the ruins of World War II and a civil war at home, the Communist Party led by Mao quickly made plans to transform China into a socialist state modelled on the Soviet Union.
It set up agrarian co-operatives – which later morphed into People’s Communes – in the countryside and pressured private merchants in cities to hand control of businesses to the government.
By the end of 1956, Mao had purged millions of landlords and business owners to eliminate any form of private property, which he saw as the basis of capitalism, according to The Cambridge History of China.
A collectively owned, centrally planned command economy took shape, controlling everything from factory output to workers’ wages and product prices.
But the string of tragic economic and political disasters that happened during the following two decades, including mass starvation that left millions of Chinese dead, prompted Deng Xiaoping and other party leaders to see the system’s deep-seated problems when they rose to power.
To rescue the country from the brink of bankruptcy after Mao’s Great Leap Forward and Cultural Revolution, Deng in 1978 shifted the party’s priority to economic development from class struggle, and decided to reform the economy.