China’s economic rise under Jiang Zemin featured lessons, warnings that still resonate today
- When China was at a critical crossroads in 1989, Jiang helped solidify the groundwork for a socialist market economy via market reforms and international trade
- But the economic awakening was not without its pitfalls, as corruption was widespread in the 1990s and China’s wealth divide turned into a vast chasm
China’s embrace of change in critical times – with bold economic reform and the pursuit of favourable external ties – was seen as a hallmark of Jiang Zemin’s 13-year leadership.
And such proactive pursuits serve as a lesson that many analysts today believe could help the country weather a variety of storms and looming headwinds.
Economically, the push for market reform and international trade rules under Jiang was widely believed to be one of his major legacies that helped elevate China’s economy.
“It was at an important crossroads that China had to make a choice,” recalled Chen Dongqi, former deputy head of China’s Academy of Macroeconomic Research, an institution affiliated with the National Development and Reform Commission.
Chen was one of a dozen state researchers that Jiang invited to a total of 11 closed-door meetings from October-December 1991, when they were asked to freely reflect on three topics: lessons learned from the collapse of the Soviet Union and Eastern European bloc, the post-WWII development of capitalist countries, and what China should do next.
In the meetings, Jiang posed questions such as why productivity in capitalist countries had flourished, rather than collapsed as Soviet Union founder Vladimir Lenin had predicted.
“He acknowledged the mainstream thought of pro-market reforms,” the former government adviser said. “His choice prevented the country from returning to the command economy and laid a solid foundation for [China’s] rising competitiveness and economic status.”
The path was solidified by the late paramount leader Deng Xiaoping, who pushed for renewed reform and opening up during his southern inspection tour in early 1992. This allowed Jiang to officially bring forward the notion of a socialist market economy – a combination of market operations and state control – later that year.
Today, China faces a similarly severe environment as it did three decades ago. Domestic economic expansion has been slowing since 2011, and the economy has failed to achieve its growth potential amid a trade war with the US and the pandemic.
“Much of the Deng-era ideas were actually fulfilled during [Jiang’s] tenure. As a core leader, he made great contributions in determining China’s market reform and open economy,” said Fan Shitao, an economic history scholar with Beijing Normal University. “A majority of the current institutional arrangements derive from changes at that time.”
Most of the country’s economic restructuring through the 1990s was implemented by former premier Zhu Rongji. In addition to privatising home ownership, Zhu spearheaded the merging of dual-track financial markets; a revamp of the fiscal and tax system; the closure of loss-making small state firms, which laid off millions of workers across the country; and the regrouping of the technically bankrupt state banking system.
However, “many of the tasks wouldn’t have been able to start without Jiang’s support”, Fan said.
Jiang brought the pragmatism of the Deng era to new heights, focusing on economic development and sidelining ideological debates.
Compared with Russia’s shock therapy, which brought chaos and fostered an oligarch-controlled economy, the Chinese leader insisted on state ownership as the political foundation. And such a mechanism remains in place today, with the government maintaining a firm grip on key industries such as banking, telecoms, energy, mining and aviation.
While UN Secretary-General Antonio Guterres called him “a steadfast advocate for international engagement”, former Australian prime minister Kevin Rudd said Jiang grasped the strategic opportunity in the 1990s and established the US-China relationship as “the most important of the important”.
“Of all the Chinese Communist Party leaders we’ve seen since its founding in 1921, only Jiang had a genuine facility with English – the foundation of his fascination with the world beyond China’s shores,” Rudd wrote in an article published by the Lowy Institute last week.
To facilitate the return to the global trade system, Beijing agreed to significantly lower its tariffs and open most of its industries to both foreign and private investors, and it accordingly abolished or revised dozens of laws and thousands of government regulations.
In 1999, Jiang’s success in dealing with the fallout and anti-US demonstrations, after the Chinese embassy in Belgrade was bombed, helped finalise bilateral talks on China’s accession to the World Trade Organization.
A peaceful resolution of the row over a plane crash in the South China Sea in 2001, as well as Beijing’s support for Washington’s anti-terrorism efforts after the September 11th attacks, further helped cultivate a long period of bilateral cooperation.
China’s GDP grew fourfold during Jiang’s leadership. When he left office in 2003, the country had been transformed from a poor agricultural nation to a rapidly industrialising country. It had become a darling of global investors, as well as a global manufacturing hub, with mushrooming private businesses.
China’s 2001 WTO accession especially began a new chapter of growth, and its economic size expanded 12-fold in the following two decades. With the growth momentum, China has embarked on a journey to catch up with the US and challenge American dominance.
During his three-year term as minister of the electronics industry in the early 1980s, Jiang proved to be ahead of his time by calling for independent research and self-sufficiency in integrated circuits and computers. And his great interest in foreign technological progress was on full display during his visits to IBM and Bell Labs in the late 1990s.
One of his research papers – published in 2008, five years after his retirement – also stressed the importance of the home-grown development of information technologies.
Widely shared online in the days following Jiang’s death, the paper echoes the current sense of urgency as Beijing’s relations with major Western countries have soured, and as its technological development – particularly in computer chips – has become strangled.
“One of the uncompleted tasks from Jiang’s tenure was the goal – brought forward in the 15th Party Congress – of realising the rule of law,” Fan said. “There’s been no breakthrough so far.”