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  • Writer's pictureShanghai Expat Association

My Forty Years of “Reform and Opening Up”

By William Patrick Cranley, Historic Shanghai

Today, China’s “Period of Reform and Opening Up” is generally recognized to have begun with decisions made by the Central Committee of the Communist Party in December of 1978. That was also the year I started university and began my study of China. It’s been an interesting journey both for the country and for me.

To understand “reform and opening up” (改革开放, gǎigé kāifàng), you have to know what preceded it. Along with its political ideology, New China borrowed a rigid planned economic model from the Soviet Union. To make a long story short, it didn’t work very well, and after the death of Mao Zedong in 1976, the central leadership came up with a new model that would combine state control of some areas of the economy with the market setting prices and guiding investment decisions in other areas [Symbol] a “mixed economy.”

They began with reforms in agriculture. Whereas Mao had insisted upon collectivized farming in “communes,” Deng Xiaoping and his fellow leaders instituted the “household responsibility system,” where farmers signed contracts to supply the state with a certain amount of grain, above which they could sell the surplus in state-approved marketplaces where prices were set by supply and demand. This reform provided obvious incentives to farmers and almost immediately raised agriculture production to new highs. It’s hard to believe now, but the first “millionaires” in New China were farmers—the famous “10,000 yuan households,” at a time when the average monthly salary was only 30 yuan!

The leadership knew that to develop the industrial economy, China would have to attract foreign investment capital. The leadership set up international trade and investment corporations (ITICs) and wrote commercial laws to facilitate foreign direct investment (FDI). State-owned enterprises (SOEs) were encouraged to establish joint ventures (JVs) with foreign companies, and to set up factories in several “Special Economic Zones” (SEZs) – cities along China’s coast that were physically separated from the rest of the country where experiments in trade, investment, and regulation could take place in a controlled manner. These experiments in industry were also wildly successful. The policy of “reform and opening up” was proving its value not just in theory, but in practice.

This was the China that I encountered when I arrived in China as a graduate student studying Chinese economics and politics in 1986. In Shanghai, the first JV international hotels were opening up and plans were afoot for the construction along Nanjing Road of the first modern office/hotel/retail/residential complex in the city: Shanghai Centre. But this was also the period when negative effects of the rapid economic change started to appear, creating tensions between reformers and conservatives, between city dwellers and farmers, and between younger and older Chinese. The optimism of the 1980s ended with the events in Beijing, which reverberated throughout the country and caused many foreign companies to put their investments on hold.

It was not until around 1992 that many of these investors returned to China and the economic growth started to kick in again. That year, Deng Xiaoping made an inspection tour of the SEZ cities in the southern part of the country and declared them a success, signaling to the rest of the country that “reform and opening up” would remain the central government’s policy, and that it was OK for other cities to implement major reforms as well. Shanghai decided to go full steam ahead with its plans to create an entirely new city on the eastern shore of the Huangpu River. At that time, most overseas observers scoffed at the idea that sleepy Shanghai, which had changed so little since the 1949 revolution, could transform itself into a vibrant “world city.” How wrong they were! The economic momentum gained during the mid-1990s has continued with only brief downturns over the past 25 years – meaning that most young people in urban China have known nothing but rapid economic growth for their entire lives, so very different from the experiences of their parents and grandparents.

Tess Johnston

When I brought my family to China in 1995, this was the China we encountered upon our arrival in Beijing. We moved to Shanghai in 1997, when it was known as “the City of Cranes”—construction cranes, not the birds. Everywhere new highways, bridges, tunnels, and subway lines were being built, as were a new airport and the world’s first magnetic levitation high-speed rail line (the Maglev to Pudong Airport). The Pearl Tower was the first tall structure completed in Lujiazui, but it wasn’t long before the other buildings that have come to define Shanghai’s skyline appeared.

The world’s heads of state had a first-hand view of this version of the city when they met in Shanghai in 2001, the same year that China’s bid for membership in the World Trade Organization was realized, adding additional impetus to the country’s “economic miracle.” China’s experiment with “market-oriented socialism with Chinese characteristics” was again on full display at the 2008 Summer Olympics in Beijing and the 2010 World Expo in Shanghai. During the first decade of the 21st century, China showed the world that it had achieved unprecedented progress in less than 30 years after beginning the “period of reform and opening up.”

But of course there were some casualties as a result of this breakneck progress, including the historic built heritage, both physical and cultural, that made Shanghai the “Paris of the East” in the first half of the 20th century, and which survived well into the second half. That was part of the motivation that inspired the formation of Historic Shanghai by Tina Kanagaratnam, Tess Johnston, and me 20 years ago, halfway through the four decades of reform. This group is dedicated to studying the stories of the many magnificent heritage buildings that still stand in Shanghai, and to share what we learn with the community through events and walks. In cooperation with the Shanghai Expatriate Society, we are able to provide monthly walks through historic parts of the city and to spread the word about this unique and irreplaceable heritage.

During recent years, the budget of the city government has increased, along with awareness of the value of Shanghai’s older buildings, and many more resources are being focused on the preservation and restoration of historic buildings and neighborhoods. That is highly gratifying to those of us who have been working to raise awareness for the past two decades, and is a worthy legacy of the first 40 years of “reform and opening up!”

Original Courier publish date: March, 2019

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