A new page in diplomacy

Relations with the West improved markedly during Deng's term. The PRC had joined the UN in 1971, replacing the ROC. In February 1972, US President Richard Nixon had made an unprecedented eight-day visit to the People's Republic of China and met with Mao Zedong. On February 22, 1973, the US and PRC agreed to establish liaison offices. Although both sides intended to establish diplomatic relations quickly, this move was delayed until 1979 due to the Watergate scandal. 

The Gang’s Fall

Mao Zedong died on September 9, 1976. At his death, China was in a political and economic quagmire. The Cultural Revolution and subsequent factional fighting had left the country much poorer, weaker, and isolated than it had been in 1965. Scores of capable party officials, bureaucrats, intellectuals, and professionals were languishing in prison or laboring in factories, mines, and fields. Many schools had been closed, and an entire generation of young people was left without an education.

Mao’s designated successor Hua Guofeng had assumed the post of party chairman, but was unaware that the Gang of Four were plotting his downfall until Defense Minister Ye Jianying and several generals warned him about this, saying that he'd better do something before it was too late. Hua was surprised, but he agreed, and in October 1976 the Gang were arrested. None of them put up any resistance, although one of Jiang Qing's housekeepers reportedly spat at her as she was being taken away. The demise and arrest of the Gang of Four prompted nationwide celebrations, including parades in the streets of Beijing and other major cities. The Gang of Four symbolized everything that had gone wrong during the ten years of chaos of the Cultural Revolution.

The Two Whatevers

In late 1976 and early 1977, the state propaganda machine was working overtime to promote Hua Guofeng. He was billed as being Mao's personally appointed successor and as having saved China from the Gang of Four. Hua tried to fill his mentor's shoes by, among other things, sporting an identical haircut. He stated that "in order to honor Chairman Mao, we should govern in accordance with his wishes." and proclaimed the “Two Whatevers,” meaning that "Whatever Chairman Mao said, we will say, and whatever Chairman Mao did, we will do." Throughout 1977–1978, policy efforts centered on economic recovery. Schools began to reopen, and the more extreme aspects of Mao's personality cult were toned down. At the time Deng Xiaoping was still living in seclusion because of "political mistakes," and the issue of his return to politics was yet again considered. Though Hua attempted to keep Deng on ice, in July 1977, Deng was restored in his former posts

Deng becomes Paramount Leader

Although Hua continued in his leadership role, his power began waning the moment Deng returned to Beijing. Hua was widely seen as being nothing more than a vacuous party hack with no ideas of his own, as reflected in the 1978 constitution, which still contained references to proletarian internationalism and continuous revolution. Deng restored the University Entrance Examinations, and opened post-secondary education to nearly a generation deprived of this opportunity by Cultural Revolution. 

Deng chaired the 11th National Congress of the Communist Party of China, China's de jure legislative body, and stressed the importance of the Four Modernizations: expanding rural income and incentives, encouraging experiments in enterprise autonomy, reducing central planning, and establishing direct foreign investment in Mainland China. By then Deng was poised to make a final move to gain political power, and Deng's novel and pragmatic stance gained increasing popularity. In late 1978, many emboldened people began staging rallies and protests in Beijing. They erected a large number of wall posters (the so-called "Democracy Wall") criticizing the Cultural Revolution, Mao Zedong, the Gang of Four, and Hua Guofeng. All these were tolerated because of being more-or-less in line with official positions. Those calling for democracy and open elections were answered by authorities who stressed that the Party would continue to hold power and guide the nation towards socialism. Nonetheless, writers began criticizing corruption, privileges enjoyed by Party officials, and unemployment, all things that supposedly could not exist under socialism.

Economic Reform and Opening up

The new, pragmatic leadership emphasized economic development and renounced mass political movements. At the pivotal Third Plenum, opened on 22 December 1978, the leadership adopted Deng’s Four Modernizations. The strategy for achieving these aims, all of which were designed to help China become a modern, industrial nation, was "socialism with Chinese characteristics". It opened a new era in Chinese history known as "Reforms and Opening up"(改革开放) to the Outside World. The Plenum also decided to accelerate the pace of legal reform, culminating in the passage of several new legal codes by the National People's Congress in June 1979.

However, these changes were not managed without overcoming opposition in the party, bureaucracy, and military. There were still a few extremist followers of the Gang of Four, though not many, and efforts were made to weed them from the party. There did exist a large number of Stalinists who believed in orthodox central planning, and socio-political conformity. This group generally wanted to return to the ways of the 1950s and restore ties with the Soviet Union, believing that the communist world was China's natural friend. In particular, many of the Stalinists thought that Deng Xiaoping went too far in dismantling Mao's legacy and allowing greater freedom of expression. Many of them were in the military, and complained about having its budget cut from 10% of China's total GDP in 1978 to 5% by 1982. Several weapons projects that had been in the works during the '70s were dropped due to being too expensive and unnecessary. Generals also objected to being asked to produce consumer goods instead of receiving badly needed defense modernization. Deng stressed the need for military obedience to Party directives. A higher degree of professionalism was emphasized in the PLA during the 1980s and the system of ranks that had been abolished in 1965 was gradually restored. On National Day (October 1) 1984, China would stage its first military parade since 1959, though it would show that China’s armed forces were 25 years behind the Soviet Union.

Local Initiative

Although Deng provided the theoretical background and the political support to allow economic reform to occur, few of the economic reforms that Deng introduced were originated by Deng himself. Local leaders, often in violation of central government directives, introduced many reforms. If successful, these reforms would be adopted by larger and larger areas, and ultimately introduced nationally. Many other reforms were imported from the East Asian Tigers (Philippines, Malaysia, Thailand, Indonesia, Vietnam, Taiwan, South Korea). This methodology was in sharp contrast to the economic restructuring, or perestroika, undertaken by Mikhail Gorbachev in the USSR, in which Gorbachev himself originated most of the major reforms. Many economists have argued that the bottom-up approach of Deng's reforms, in contrast to the top-down approach of Perestroika, was a key factor in China’s success.

At the local level, material incentives rather than political appeals were to be used to motivate the labor force, including allowing peasants to earn extra income by selling the produce of their private plots on the free market. In the main move toward market allocation, local municipalities and provinces were allowed to invest in industries that they considered most profitable, which encouraged investment in light manufacturing. Thus, Deng's reforms induced China's development strategy to emphasize light industry and export-led growth. The revenues that the light-manufacturing sector generated could be reinvested in more technologically advanced production and further capital expenditures and investments. However, these investments were not government-mandated, in sharp contrast to the similar but much less successful reforms in Yugoslavia and Hungary. The capital invested in heavy industry largely came from the banking system, and most of that capital came from consumer deposits. Deng also attracted foreign companies to Special Economic Zones, where capitalist business practices were encouraged.

Another important focus of the reforms was the need to improve labor productivity. New material incentives and bonus systems were introduced. Rural markets selling peasants' homegrown products and the surplus products of communes were revived. Not only did rural markets increase agricultural output, they stimulated industrial development as well. With peasants able to sell surplus agricultural yields on the open market, domestic consumption stimulated industrialization, and also created political support for more difficult economic reforms.

Sino-Vietnamese War of 1979

China's relations with the Socialist Republic of Vietnam began to deteriorate seriously in the mid-1970s. After Vietnam joined the Soviet-dominated Council for Mutual Economic Cooperation and signed a Treaty of Friendship and Cooperation with the Soviet Union in 1978, China branded Vietnam the "Cuba of the East" and called the treaty a military alliance. Incidents along the Sino-Vietnamese border increased in frequency and violence. In December 1978 Vietnam invaded Cambodia, quickly ousted the pro-Maoist Pol Pot regime (perpetrators of the killing fields), and overran the country. China also decried mistreatment of ethnic Chinese living in Vietnam, hegemonistic "imperial dreams" in Southeast Asia, and spurning of Beijing's attempt to repatriate Chinese residents of Vietnam to China.

In February 1979 China attacked along virtually the entire Sino-Vietnamese border in a brief, limited campaign. The Chinese attack came at dawn on the morning of 17 February 1979, and employed infantry, armor, and artillery. Within a day, the PLA had advanced some eight kilometers into Vietnam along a broad front. It then slowed and nearly stalled because of heavy Vietnamese resistance and difficulties within the Chinese supply system. On February 21, the advance resumed against Cao Bang in the far north and against the all-important regional hub of Lang Son. Chinese troops entered Cao Bang on February 27, but the city was not secured completely until March 2. Lang Son fell two days later. On March 5, the Chinese, saying Vietnam had been sufficiently chastised, announced that the campaign was over. Beijing declared its "lesson" finished and the PLA withdrawal was completed on March 16.

Denouement of the Gang of Four

Meanwhile, the Gang of Four went on trial in 1980 on charges of counter-revolution, attempting to overthrow the state, and plotting to assassinate Mao. Only Jiang Qing tried to defend herself, repeatedly interrupting the proceedings with hysterical outbursts and sobbing. She argued that she had never done anything more than follow Mao's orders, saying "I was his dog. Whoever he told me to bite, I bit." and daring the authorities to cut off her head. The others were given life in prison, but Jiang was sentenced to death later commuted to life. She hanged herself in a Beijing hospital in 1991 while undergoing treatment for throat cancer.

Hua Guofeng Replaced 

Hua was replaced by Zhao Ziyang as Premier of the State Council in September 1980, and by Hu Yaobang as CPC General Secretary of the party in September 1982. The post of Chairman was abolished to ensure that no one person could ever dominate the party as Mao Zedong had done. Until the mid-1990s, Deng Xiaoping was China's de facto leader, retaining only the official title of Chairman of the Central Military Commission. Deng's intention was to have power divided, thus preventing a cult of personality from forming as it did in the case of Mao. The new emphasis on procedure, however, seemed largely undermined by Deng himself, who held power, yet assumed none of the official titles on the grounds that they should go to younger men.

Hong Kong’s Repatriation

One of Deng's achievements was the agreement signed by the United Kingdom and the PRC on December 19, 1984 under which Hong Kong was to be transferred to the PRC in 1997. With the 99-year lease on the New Territories coming to an end, Deng agreed that the PRC would not interfere with Hong Kong's capitalist system and would allow the locals a high degree of autonomy for at least 50 years. This "one country, two systems" approach has been touted by the PRC government as a potential framework within which Taiwan could be reunited with the mainland. Deng, however, did not improve relations with the Soviet Union. He continued to adhere to the Maoist line of the Sino-Soviet Split era, which stated that the Soviet Union was a superpower as "hegemonistic" as the US, yet closer.