Revenge Strategy, wasting the power of your hate on the guiltless (XL): Extended promenade to the last 100 years of China´s history (part 2).

eleonoraescalantestrategy 23 Nov 2019 Leave a Comment

Good morning. Before proceeding further, please take into consideration that CCP means the Chinese Communist Party, under the leadership of Mao Zedong. Whenever I use the term China, it refers to the PRC or mainland China, or the People’s Republic of China. And Taiwan Island is the Republic of China (ROC) where the Nationalist Chiang Kai-Shek established himself after Mao´s rise to China´s power.

Graphic: Communist China timeline from 1949 to 2009. Source: Reuters.

Let´s continue what we left pending yesterday:

China after Communism (China AC) – Mao Zedong Era (1949-1979)

As soon as the communist leader Mao Zedong took China´s territory, he sat out a few goals for the mainland PRC: to overhaul land ownership, to make China a productive nation, and to restore the economy after decades of war. Mao and his team created a strategic plan, through a State Planning Commission which created a 5 years-plan with specific strategic goals and objectives.

From 1953 to 1957, Mao locomotive began the basis of his regime. His program’s aimed to help his population to shift from a rural purely agricultural economy to China’s industrialization process. To begin, he provoked an Agrarian Reform which was criminally executed. Human Rights history records have told us that Mao´s distribution of the land suppressed the old proprietors’ rights in an unsatisfactory way. Force was used to expropriating, which was not the best adequate approach. Nevertheless, Mao wanted to create a new communal farming system, to provide the basics to the rural communities, basics as food and shelter.

Next, Mao installed the Great Leap Forward from 1958 to 1962. It was a campaign that continued to conduct China into an industrial transformation. Mao kept and encouraged the communal farming system for basic subsistence. But his plan was not successful. Why? Again, natural disasters, and particularly some administrative deficiencies affected the agricultural results—causing an economic breakdown and famine. In parallel to his agriculture communal system, the industrialization strategic axis was Mao´s priority. He kicked off the banking state system and proceeded to build new routes of communication between the rural and urban cities. Mao´s kept his diplomatic relations with Russia in exchange for Russia´s returning the rights of China´s lands under soviet control, train-rail systems and port Arthur (now called Lüshunkou District in the city of Dalian). Russia also injected some capital and technical assistance to China.

mao-zedong-anniversary-horizontal-large-gallery

Mao Zedong. Source: https://edition.cnn.com/2013/12/26/world/asia/mao-120-anniversary/index.html

Between 1962 to 1966, ideologically, Mao´s continued with the strengthening of the Chinese Communist Party (CCP) foundations, and introduced institutional policy frameworks for the PRC’s future. Through education, he led the “education reform” to install the communism roots scheme at every school. Mao´s relations with Russia were hurt during this period of time, given China´s influence to help Albania against the soviets, and Mao´s intervention in the Korean war. Mao´s insisted on the United Nations to neglect recognition to ROC or Nationalist China (Taiwan). In terms of foreign affairs, Mao´s was expanding his apparent success as a model to attain power through revolutionary implementation. China offered his support to revolutionary movements in African countries, the Middle East, India, and Latin America. Mao´s entered into conflict with India when they took control of Tibet; when he enforced constant attacks to India in Ladakh, and by rejecting the McMahon frontier line between India and Tibet. And if that was not enough, China also joined the nuclear production weaponry industry. In 1964, the Vietnam War started, and the US presence in Vietnam posed a potential threat to the PRC, which began to send more military and technical assistance to the North Vietnamese.

Mao´s regime craved to silence the Intellectual Chinese socio-economic group. Anyone who created opinions against his polity was persecuted, sometimes punished or with luck, exiled.

Great Proletarian Cultural Revolution

For a decade, between 1966 to 1976, Mao launched the Great Proletarian Cultural Revolution. It all started by using speeches to students gathered in Tiananmen Square in Beijing. This unleashed a decade of often destructive mass-mobilization. Bands of student-aged Red Guards were at the vanguard of the movement, which quickly descended into chaos. In 1967, a group of radicals took over and temporarily shut down the Foreign Ministry, forcing the PRC’s foreign relations to a halt for several months. By 1968, the PRC Government had reined in the worst excesses, and it controlled the urban chaos by sending urban youths to the countryside for re-education.

Mao Zedong attempted to regain power and support after his failures. However, his measures caused more deaths by the usage of violence and again crippled the Chinese economy. China´s intervention into foreign affairs, particularly Africa and Indonesia, accelerated the doubts about Mao´s diplomacy mistakes.

China joined the United Nations in 1971. The PRC replaced the ROC (Taiwan) as a permanent member of the United Nations. By 1972, US President Richard Nixon was the first sitting U.S. President to step foot into the PRC. This helped re-establish diplomatic relations between the two nations.

Source: https://www.visualcapitalist.com/china-economic-growth-history/

The communism totalitarian regime vanished “petit a petit” after Mao Zedong´s death.

In 1976, When Mao Zedong passed away, China started to change. In 1979 the “One-Child Policy” took place. “From 1980 onward, China worked on opening up its markets to the outside world, and closing the inequality gap”. In 1977, China released a brand new leader, Deng Xiaoping, and quickly emerged as China’s paramount individual. US President Carter assumed office. During the next months, the United States and China entered into a negotiation mood. After the US recognized the PRC as the sole government of China and affirmed that Taiwan was part of it, then formal embassies were established in Beijing and Washington the following year.

In 1979, the United States and the PRC commenced normal diplomatic relations and soon thereafter Deng Xiaoping visited the United States to meet with U.S. officials to encourage business. Later that year, the two countries signed a trade agreement that enabled Chinese products to receive temporary most favored nation (MFN) tariff status.

Source https://www.cnbc.com/2019/09/24/how-much-chinas-economy-has-grown-over-the-last-70-years.html

In an effort to jumpstart China’s stagnant economy and improve the lives of its citizens, Deng Xiaoping embarked on a major process of economic reforms. Deng provided specific measures such as tax incentives to attract foreign investments. In 1981, the National Household Responsibility System was implemented. Companies from the United States, Europe, and Japan began to flock to China to take advantage of the new opportunities. China also joined the IMF and the World Bank. It was during this time that Special Economic Zones (SEZs) were established. Several cities as Shenzhen were designated as SEZs.

Between 1982 and 1984, Ronald Reagan as the new president of the United States, resolved with Deng Xiaoping to approach a reunification with Taiwan and China. By 1986, China joined Multilateral Institutions, the Asian Development Bank; applied for membership in the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). The United States did not initially support China’s entry into the latter two organizations because of reservations about the degree of openness of China’s economy. In 1989 China launched the Coastal Development Strategy.

1989: Temporary Interruption in U.S.-China Relations

Chinese Workerchinatiananmen photo. 1989

The famous image of a man standing defiantly in front of a line of tanks near Tiananmen Square, Beijing, in June 1989. Credit…Jeff Widener/Associated Press

After Reagan left the US government, it was on times of President George H.W. Bush, when the Chinese military crushed on mass demonstrations in Beijing’s Tiananmen Square. The United States and other nations imposed economic sanctions on China, and many U.S. citizens evacuated the country. President George H.W. Bush maintained communications with Beijing to reassure Deng Xiaoping and the Chinese leadership that the United States would maintain ties. Tensions continued into the next year, with criticisms aired from both sides, although diplomatic ties were never severed and China remained open to foreign trade. Business continued between the USA and China.

In 1991, China Joined the Nuclear Non-Proliferation Treaty (NPT) and the Asia Pacific Economic Cooperation (APEC). The Shanghai and Shenzhen stock exchanges opened. Combined, the Shanghai (SSE) and Shenzhen (SZSE) stock exchanges are worth over $8.5 trillion in total market capitalization today.

The year 1992 asterisked the reopening U.S.-China Relations. The United States and China reached an agreement to allow the U.S. Peace Corps to begin sending volunteers to China.

It was in 1993 that President Clinton tied the “Most Favored Nation” (MFN) trading status to the PRC, given the Human Rights progress in China. Then in 1995, China Hosted the U.N.´s Fourth World International Women’s Conference with First Lady Hilary Clinton in attendance. This was the largest and highest-profile international event to be held in China to date.

During the 90s decade, the PRC continued with military tensions with Taiwan. President Clinton was trying to keep PRC closer by not supporting fully Taiwan´s sovereignty. It was during this decade that PRC launched the National “8-7” Poverty Reduction Plan, lifting over 80 million extremely poor people out of poverty during the next 7 years. It was during this decade, that China’s social safety net went through a restructuring as of 1993, and became a nationwide program after strong success in Shanghai.

China’s State Sector: Transformed, but Not So Privatized Large public companies have been opened to individual investors, but control remains firmly in the hands of the central government. Source: https://www.nber.org/digest/jun15/w21006.html

In 1997, the successor of Deng, Jiang Zemin’s visited the United States. The trip suggested that U.S.-China relations were getting back on track under the Clinton Administration. In 1998, President Bill Clinton paid a return trip to China for a summit meeting. China continued with its plan “Grasp the Large, Let Go of the Small”, a program in which Chinese Policymakers were urged to maintain control over the largest state-owned enterprises to “grasp the large”. Meanwhile, the state relinquished control over smaller industries by “letting go of the small” by means of privatization. From 1997 to 1999 China was largely unscathed by the regional Asian financial crisis, thanks to the renminbi RMB (¥) currency’s non-convertibility. While China was unaffected by the crisis compared to Southeast Asia and South Korea, GDP growth slowed sharply in 1998 and 1999, calling attention to structural problems within its economy. In particular, the Asian financial crisis convinced the Chinese government of the need to resolve the issues of its financial weaknesses, such as having too many non-performing loans within its banking system and relying heavily on trade with the United States. Meanwhile, the PRC regained sovereignty of Hong Kong and Macau back from the UK and Portugal, respectively. It was 1999, that the USA accidentally bombed the Chinese Embassy in Belgrade, provoking tensions in Beijing. President Bill Clinton apologized, and hostility eased.

1999: Western Development Strategy

The year I graduated from Cornell University (1999), China was granted the possibility to join the World Trade Organization (WTO). In addition, China launched the Qualified Foreign Institutional Investor (QFII) program – which let foreign investors participate in the PRC’s stock exchanges – contributing to the country’s economic growth. As of the 2000s to the present, China committed itself to the program “Open Up to the West”, which allowed the accelerated economic growth of 6 provinces, 5 autonomous regions, and 1 municipality—each becoming integral to the Chinese economy. President Clinton decided to grant China a permanent Normal Trade Relations status (NTR), formerly the MFN previously explained.

What has China done during the last 20 years? (2000-2019)

During the last 20 years, China has gone through two different new leaders and significative measures: President Hu Jintao, who launched the 15 years Medium-term Plan for Scientific Development. The PRC State Council’s 15-year plan outlined that 2.5% or more of national GDP should be devoted to research and development by 2020.

Then, during the Global Financial Crisis (2008-2009), China experienced only a mild economic slowdown. The country’s GDP growth in 2007 was a staggering 14.2%, but this dropped to 9.7% and 9.5% respectively in the two years following. China learned its lessons from the past 1997-1998 Asian Financial Crisis and was able to overpass it.

China’s Belt And Road Initiative Opens Up Unprecedented Opportunities Source: https://www.forbes.com/sites/greatspeculations/2018/09/04/chinas-belt-and-road-initiative-opens-up-unprecedented-opportunities/

Once Presidente Xi Jinping rose to power, he propelled his signature project: “The Belt and Road Initiative” (2013). It is China’s most ambitious plan outside its mainland, to develop road, rail, and sea routes across 152 countries. This initiative is scheduled for completion by 2049—in time for the PRC’s 100th anniversary. More than $900 billion is budgeted for these infrastructure projects. In addition, by 2015, the program “Made in China 2025” wishes to rebrand China, by elevating its national business model. The PRC refuses to continue being considered the world’s “low-cost factory” any longer. In response, it will invest nearly $300 billion to boost its manufacturing capabilities in high-tech fields like pharmaceuticals, aerospace, and robotics.

Source. Public photo.

And here we are, reaching the context in which President Trump triggered the recent ongoing trade dispute with China as of 2018. In my next publication, we will go for a walk to the memoir of American Capitalism during the last century. To be continued…

Thank you for reading to me.

dongfeng