Forty years on from Deng Xiaoping’s reforms, China stands at a crossroads

The late leader's failure to truly liberalise China has imposed enduring costs on the country

Security personnel secure an area in front of a billboard featuring China's late paramount leader Deng Xiaoping on the 40th anniversary of China's "reform and opening up" policy. Nicolas Asfouri / AFP

Exactly four decades ago, the Chinese Communist Party, under its new paramount leader Deng Xiaoping, decided to subordinate ideology to wealth creation, spawning a new aphorism: “To get rich is glorious”. The party’s central committee in December 1978, disavowing Mao Zedong’s dogma, embraced a principle that became Deng’s oft-quoted dictum: “Seek truth from facts”.

Mao’s death in 1976 had triggered a vicious and protracted power struggle. When the diminutive Deng — once described by Mao as a “needle inside a ball of cotton” — finally emerged victorious at the age of 74, he hardly looked like an agent of reform.

But having been purged twice from the party during the Mao years — including once for proclaiming during the 1960s that “it doesn’t matter whether a cat is black or white, as long as it catches mice” — Deng seized the opportunity to usher in transformative change.

The Four Modernisations programme under Deng, which involved investing in agriculture, industry, defence, and science and technology, remarkably transformed China and spurred its phenomenal economic rise. China’s economy today is 30 times larger than it was three decades ago.

If GDP is measured in terms of purchasing power parity, China’s economy is already larger than America’s, according to the International Monetary Fund and the World Bank.

Yet, four decades after it initiated reform, China finds itself at the crossroads, with its future trajectory anything but certain.

To be sure, when it celebrates the 70th anniversary of its communist revolution next year, China can truly be proud of its remarkable achievements. An impoverished, weakened nation in 1949, it has since risen dramatically and now commands respect and awe around the world.

China is today the world's largest, strongest and longest-surviving autocracy. This is a country increasingly oriented to the primacy of the Communist Party. But here's the paradox: the more it globalises while seeking to simultaneously insulate itself from liberalising influences, the more vulnerable it is becoming to unforeseen political shocks at home.

Its overriding focus on domestic order explains one unusual but ominous fact: China’s budget for internal security — now officially at $196 billion — is larger than even its official military budget, which has grown rapidly to eclipse the defence spending of all other powers except the US.

China’s increasingly restrictive internal machinery, aided by a creeping Orwellian surveillance system, has fostered an overt state strategy to culturally smother and silence ethnic minorities in their traditional homelands. This, in turn, has led to the detention in internment camps of at least one million Uighur Muslims from Xinjiang for “re-education”.

Emboldened by a muted international response, Beijing is now replicating its Xinjiang-style crackdown, including on Islamic practices, in other provinces with significant Muslim populations.

Untrammelled repression, even if effective in achieving short-term objectives, could sow the seeds of violent insurgencies and upheavals.

More broadly, China’s leaders, by showing as little regard for the rights of smaller countries as they do for their own citizens’ rights, are driving instability in the vast Indo-Pacific region.

Nothing better illustrates China's muscular foreign policy riding roughshod over international norms and rules than its South China Sea grab. It was exactly five years ago that Beijing began pushing its borders far out into international waters by mobilising its first dredger in service of building artificial islands. The islands, rapidly created on top of shallow reefs, have now been turned into military bases.

The island-building anniversary is as important as the 40th economic reform anniversary because it is a reminder that China has never abandoned its heavy reliance on raw power since the Mao era.

In fact, no sooner had Deng embarked on reshaping China’s economic trajectory than he set out to “teach a lesson” to Vietnam. The February-March 1979 military attack occurred just days after Deng — once dubbed the “nasty little man” by Henry Kissinger — became the first Chinese communist leader to visit Washington.

A decade later, Deng brutally crushed a student-led, pro-democracy movement at home. He ordered the tank and machine gun assault that came to be known as the Tiananmen Square massacre, in which hundreds, perhaps thousands, of demonstrators and bystanders died.

Yet the US continued to aid China’s economic modernisation, as it had done since 1979, when then president Jimmy Carter sent a memo to various US government departments instructing them to help China’s economic rise. In the naive hope that a more prosperous China would liberalise economically and politically, that approach remained in effect until recent years.

But now a fundamental shift in America's China policy is under way, as illustrated by the current trade war and Washington's newly unveiled "free and open Indo-Pacific" strategy. The tougher line against China has also been highlighted by the enactment of two new US laws — the Reciprocal Access to Tibet Act this month and the Taiwan Travel Act in March.

The evolving paradigm shift, with its broad bipartisan support, is set to outlast Donald Trump’s presidency, underscoring new challenges for China at a time when its economy is already slowing and it has imposed tighter capital controls to prop up its fragile financial system and the yuan’s international value.

Simply put, the international factors that aided China's rise are eroding. The changing international environment also holds important implications for China domestically, including the Communist Party monopoly on power. Xi Jinping, who last year ended the decades-old collective leadership system to consolidate his power and this year scrapped the two-term limit on the presidency, no longer looks as invincible as he once did.

The juxtaposing of this month’s twin anniversaries helps shine a spotlight on a fact obscured by China’s economic success: Deng’s refusal to truly liberalise China has imposed enduring costs on the country, which increasingly bends reality to the illusions that it propagates. The price being exacted for the failure to liberalise clouds China’s future, heightening uncertainty in the Asia Pacific.

Brahma Chellaney is a geostrategist and the author of nine books, including Asian Juggernaut: The Rise of China, India and Japan