Allen C. Lynch is professor of politics at the University of Virginia and former director of the university’s Center for Russian & East European Studies (1993–2008)
Resume: Deng understood China much better than Gorbachev did the Soviet Union. Also, Deng was incomparably better positioned to manage the risky structural reform – even along just one (economic) dimension – than was Gorbachev.
“My father thinks Gorbachev is an idiot.”
Deng Zhifang, Deng Xiaoping’s son, 1990
Since 1970, the economic standing of the People’s Republic of China (PRC) relative to that of Russia (and before 1992 the Soviet Union) has changed dramatically. Most starkly, while in 1970, Soviet GDP was more than four times larger than Chinese, by the early 1990s China’s GDP had surpassed that of post-Soviet Russia’s and in 2010 Chinese GDP was four times as large as Russia’s. Just as astounding, even Chinese per capita GDP (with a population of 1.3 billion) had made substantial strides towards Russian levels (with a population of 140 million): while in 1990, Chinese GDP per capita stood at just 10 percent of Russia’s, by 2009 it had reached 43 percent of the Russian level. From 1978-2010, China increased its share of world GDP more than sevenfold (from <1 to 7.4 percent), while the USSR/Russia’s share has dropped from approx. 3 to <2 percent.
These data underscore that China’s remarkable pattern of economic growth coincides with the series of reforms introduced by Deng Xiaoping in the late 1970s, while the Soviet and then Russian economy virtually collapsed following the introduction of perestroika by Mikhail Gorbachev. The Chinese experience shows that reform of communism is possible.
There is great irony in this outcome, since, beginning in the late 1950s, Soviet economists had begun to elaborate fairly sophisticated models of a more complex, decentralized system of economic decision-making, with provision for adequate material incentives for plant managers and workers. These ideas extended even into the agricultural sphere. Many Soviet economists implicitly embraced the views of John Maynard Keynes, seeing his endorsement of significant government regulation of the market as validating a “convergence” between capitalism and communism that might justify a more humane as well as more efficient Soviet system. Such views, while often contested, were nevertheless mainstream within the Soviet economics profession.
By contrast, Mao’s political terror between 1957-1976 scarred a generation of Chinese intellectuals, technical as well as cultural, and led to a generalized suppression of reformist thinking that, after a brief hiatus, was resumed in the late 1960s, when the universities themselves were shut down. In consequence, Chinese economists devoted little public attention to elaborating alternative models to Maoist “economics” while the Great Helmsman was alive. Chinese leaders thus seemed less well armed conceptually for undertaking major economic reform than did their Soviet counterparts.
It is our thesis that elements that seemed to place China at a major, even extreme disadvantage in terms of prospective modernization as compared to the Soviet Union/Russia, actually served – when exploited by Deng’s artful political leadership – to propel China’s economic growth by unleashing hitherto untapped or underutilized resources. In particular, Deng’s reforms allowed China’s major comparative advantages over the Soviet Union to come to the fore, especially (a) household-based farming energies in the absence of a significant social safety net in the countryside, and (b) capital-rich and patriotic Chinese diasporas abroad willing and able to invest in a very low-cost labor environment within China. We shall thus analyze a series of factors, both domestic and international, that framed the choices that Soviet and Chinese leaders, above all Deng and Gorbachev, made. These include the implications of the Stalinist and Maoist political legacies, respectively; consequences of fundamental differences in social structure, as well as in economic structure, between the two communist giants; the role of international factors in the reform process, including traditional diplomacy, direct investment, cultural orientation of elites, and diasporas; and finally, differences in strategies of reform undertaken and the idiosyncratic role of political leadership.
STALINIST VERSUS MAOIST POLITICAL LEGACIES
It has been commonly and correctly observed that a crucial difference between Deng’s reform strategy and that of Gorbachev, and a key explanation for the different outcomes in each case, is that Deng pursued economic reform while strictly limiting political reform whereas Gorbachev wound up pursuing both at the same time. Yet was this simply Gorbachev’s mistake? In practice, Deng had the paradoxical advantage that the economic and societal chaos wrought by Mao’s Cultural Revolution served broadly to discredit Mao’s extremism and those associated with it. To give just one example: When Deng left in 1974 with a small delegation to make an historic address at the United Nations announcing a new Chinese openness towards the outside world, the government could scrape together just U.S. $34,000 from the national treasury for the trip. Mao closed the country’s universities for a decade, wreaking immeasurable damage on China’s infrastructure of human capital. By the late 1970s, the top Chinese leadership was receiving regular reports of widespread malnutrition and near starvation throughout the countryside. Such circumstances afforded Deng the opportunity, which he ably exploited, to craft a winning political coalition for Mao’s eventual succession and only then to embark upon the economic reforms that stamped his tenure as China’s ruler.
By contrast, when Gorbachev came to power in March 1985, he was faced with a party and government administration that was still dominated by officials who were propelled into national affairs by Stalin in the late 1930s. Early attempts by the Brezhnev-Kosygin administration at structural economic reform were ended in the aftermath of the Soviet invasion of Czechoslovakia in August 1968. In the political system, Brezhnev’s policy of “trust in cadres” meant that Soviet officialdom could in many cases literally die in office. In effect, the Soviet leadership foreclosed consideration of serious economic reform for nearly twenty years. This was itself a major handicap to Gorbachev’s eventual reform efforts; but the very tenacity of the “Stalin generation” in power meant that Gorbachev – a virtual outsider to Kremlin politics – would have his hands full in establishing his political authority once in power.
These leaders and their networks, while bereft of ideas for the future, still dominated Soviet bureaucracy in the early Gorbachev years. Like Deng, Gorbachev would have to consolidate his political authority before being able to move decisively on economic reform. But unlike Deng, Gorbachev was unable to do so quickly and never did so decisively. Eventually, the old guard would seek to overthrow Gorbachev in the failed coup of August 1991, after Gorbachev had concluded that political reform and economic reform had to proceed hand in hand.
DIFFERENCES IN SOCIO-ECONOMIC STRUCTURE
It is well known that Deng Xiaoping began his economic reform program by focusing on the farming sector. On the eve of his reforms, the leadership was receiving regular reports on alarming deficiencies in the food sector. It was clear to Deng and his political network that the system of collectivized agriculture in place since the 1950s was simply not up to the task. Still, effectively eliminating the collective farm infrastructure was a major political challenge for Deng and he moved only after having shored up his political base between the Third and Fifth Plenums of the 11th Party Congress (December 1978-February 1980).
The results were quickly in and they were astounding. Without advancing a comprehensive program of reform, Deng preserved the socialist form of Chinese farming while gutting it of its content. Public ownership of the land was maintained and local officials still assigned a fixed quota of production to each household. Yet once households had fulfilled their quotas, which they were free to meet in any way that they deemed fit, they could market the surplus at market prices or consume it for their own benefit. In 1982 the village commune was abolished and by the end of that year, nearly all rural households operated on the basis of individual contracts with the local production unit. Between 1978 and 1982, average peasant income nearly doubled, grain production was up 33 percent in 1984 versus 1977, and major peasant gains were registered in the consumption of beef, pork, poultry and eggs. These results, welcome in themselves as they were, also proved to be a major political boost for Deng and his reform strategy, helping him to intensify and broaden the reform program.
Gorbachev, in contrast, began his economic reforms by focusing on the industrial sector. His industrial policy sought – without removing state ownership – to make existing industrial units more efficient by allowing plants greater freedom to plan their output but without changing the pricing structure or the quasi-monopoly distribution of Soviet industrial production. As a result, most Soviet factories simply stopped making low margin consumer items and massive shortages of everyday items quickly set in (e.g., salt, sugar, matches, cooking oil, washing powder, baby clothes, etc.). By mid-1989, coal miners in Donbass had no soap to wash with after a long day in the mines, a development that triggered massive strikes and a coalition of workers and intellectuals against the Soviet system and Gorbachev himself. Moreover, Gorbachev had begun his tenure as General Secretary of the Soviet Communist Party by introducing a widely publicized anti-alcohol campaign; whatever its merits in principle, it had the effect of rendering Gorbachev broadly unpopular among both masses and elites right from the outset of his administration. In this respect, Gorbachev proved quite the opposite of Deng, who carefully marshaled political capital at every step of the reform process. Gorbachev’s economic policies, termed “perestroika” (for “restructuring”), soon became popularly known as “katastroika” (meaning “catastrophic restructuring” – Ed.).
Yet was Gorbachev’s decision to focus on the industrial sector (whatever the merits of the specific policy chosen), as opposed to agriculture, simply a mistake? Consider that, whereas the Chinese economy was 80 percent agricultural in the late 1970s, the Soviet economy was nearly 80 percent urban-industrial. Moreover, Soviet party and government interference in the agricultural (and more broadly rural) sector was both much broader and deeper than in the case of China. This meant that rural political interests would be much more affected by a decision to de-collectivize agriculture in the Soviet Union than in China, as sensitive as it was there. Illustratively, while Gorbachev proposed moving to a leaseholding in farming in August 1987, this was strongly opposed from the start by Yegor Ligachev and the still powerful Soviet old guard. By March 1989, Gorbachev had been outmaneuvered: the Central Committee of the Soviet Communist Party formally affirmed that the collective farm would remain the foundation of Soviet agriculture.
Relatedly, an extensive Soviet welfare state providing security of job and income (largely independent of effort), medical care, subsidized housing, pensions and a range of social services encompassed the countryside, very much unlike China, which simply could not afford it. Exit from Soviet collective and state agriculture would thus mean exit from an impressive social safety net and a leap into market farming unknown on a significant scale for more than half a century. Taken together with the very different rural demographic profile in each country – disproportionately young, old and female (and sick) in the Soviet case versus a balanced population in terms of sex and age in China – it is far from clear that Gorbachev could have achieved significant early gains in the agricultural sphere. This judgment is reinforced by a consideration of general Soviet attitudes towards economic reform. A careful poll taken in December 1989 showed that 50 percent approved of leaving collective and state farms as they were and just 10 percent approved even leasing (as distinct from selling) farms to private individuals. In effect, most Chinese farmers could be expected to exploit the removal of state controls in ways that were not true of most Soviet farm workers in the 1980s: they had to, or they would face utter ruin and even starvation. The fact that rural officials were vastly underrepresented at the national political level also facilitated Deng’s decision. In this respect, the Chinese situation in the early 1980s was comparable to the Soviet decision to remove the state from the farming sector under the New Economic Policy (NEP) in the 1920s, when Soviet Russia had a socio-economic profile comparable to that of China in the late 1970s (i.e., 75-80 percent rural-agricultural) and no social safety net in the countryside. This was decidedly not the situation that Gorbachev faced in the Soviet Union in 1985.
STRATEGIES OF REFORM
Deng pursued a strategy of incremental reforms in a pragmatic manner, building on economic success that he converted into political capital and gradually enlarging the reform process from farming to associated enterprises in the countryside, special economic zones along the southern coast and larger and larger regions of the country and sectors of the economy. He moved with energy and vision but was always careful to secure a dominant political coalition before proceeding further. In this he was no doubt helped by the enormous prestige that he wielded among China’s political class; even Chen Yun, who was much more conservative than Deng and frequently took issue with many of his policies, conceded that Deng was immeasurably more qualified for the leading position than was he. Deng was Mao’s right-hand man in government administration in the 1950s and early 1960s, had survived several of Mao’s purges with dignity, had taken the lead in the PRC’s confrontation with the Soviet Union in the early 1960s, and had a well deserved reputation for carefully thought-through policies and courage, political as well as personal.
In his reform policies, Deng proved himself to be a pragmatist with vision, as it were. He was driven by a burning commitment to modernize China but was not wed to any preconceived ideological notion of how to accomplish that objective. A philosophy of “try what works” informed his approach. Compared to Gorbachev’s views on Stalin, Deng held firm to the conviction that China could not afford an open-ended debate on Mao and Maoism; he preferred to keep the public focus on the future. Also contrary to Gorbachev, Deng would not risk experiments with the political monopoly of the Chinese Communist Party, although he proved much defter in establishing his leadership over it than did Gorbachev over the Soviet counterpart. And when Deng saw that discussion of Western democracy implied a challenge to Communist Party rule, he drew a bright red line; again, this was very much unlike Gorbachev, who ended his tenure torn between a Soviet Communist Party that he could not abandon and democratic forces that he would not embrace.
Above all, Deng deeply believed that China required authoritarian government, backed by force if absolutely necessary, if it were to make the transition from a still traditional society to a truly modern one. In this, he was joined by virtually all Chinese party and government officials, as well as by a permissive majority of China’s intellectuals, who rallied to the patriotic cause of China’s rise. Here too, Deng’s China differed greatly from Gorbachev’s Soviet Union, for once Gorbachev’s policy of glasnost took root, it became apparent that a major part of the Russian intelligentsia was culturally Western by orientation and gave powerful expression to these views in the new mass media that spread under Gorbachev. Relatedly, insofar as Gorbachev took his primary task to be expunging the spirit of Stalinism from Soviet life, this meant eliminating, if at all possible, the use of force in practice or even as a threat. He was true to his word.
Deng thus pursued economic reform but not political reform, even as he tightened the grip of his network through the Chinese Communist Party and government. During the “Democracy Wall” movement in 1978 and again in Tiananmen Square in 1989, Deng proved unwilling to countenance direct or even implicit challenges to the communist political monopoly. The enormous reservoir of political capital that Deng had built up as a result of his undeniable economic successes, his foreign policy breakthroughs with the United States, Japan and even the Soviet Union, as well as his continued cultivation of close ties with the country’s military leadership allowed Deng to isolate dissent and maintain the country on the path of economic but not political reform.
Gorbachev pursued almost the exact opposite strategy. By January 1987, Gorbachev concluded that the entrenched nature of the still neo-Stalinist bureaucracy meant that economic reform could not be pushed through without far-reaching political reform. Having failed to obtain either greater efficiencies or new sources of growth through the initial policy of “acceleration” (in 1985-86), Gorbachev introduced the prospect of structural economic reforms (perestroika, 1987) and then “democratization” (1988), which meant that he was now pursuing economic and political reform simultaneously, a breathtaking political challenge. By early 1989, multi-candidate elections were introduced as a check on the old guard but before they could be effectively swept aside entirely new political forces were being generated. Between 1989 and 1990, strong nationalist movements had emerged along the western periphery of the Soviet Union and they embraced the new elections in order to clothe themselves with a democratic legitimacy that Gorbachev himself – having refused to put himself up for popular election – lacked.
There is, in addition, the question of simple political competence. It is impossible to imagine Deng doing what Gorbachev did in late 1990: he appointed to leading government posts a series of party conservatives (Gennady Yanaev, Boris Pugo, Valentin Pavlov et al.), who then proceeded to organize a coup d’Оtat against Gorbachev himself. Gorbachev’s sheer remove from reality was broadcast on Soviet television upon his return to Moscow after the coup from his Crimean captivity: he looked forward, Gorbachev declared, to working with the Party as “the leading force of perestroika.” At that moment, Gorbachev revealed a breathtaking unrealism and lost all further control of the country.
Both Deng and Gorbachev understood just how far their countries had to go in order to catch up economically with the advanced capitalist democracies. Each leader also concluded from the beginning that their country required a comprehensive and systematic improvement in relations with the outside world, irrespective of ideological coloration. For Deng, this was in part designed to avoid encirclement by the Soviet Union during the Sino-Soviet cold war; close ties with the Americans served to counter Moscow’s influence in Mongolia, Vietnam, and Afghanistan, as well as the formidable Soviet military machine along the Chinese frontier. Yet Deng’s opening had much broader purposes: to expose the Chinese to the most modern techniques in science and technology and in the workings of modern society more generally, in the process serving to accelerate the development of the Chinese economy. From the very outset – and here Deng differed dramatically from Gorbachev – he encouraged tens of thousands of Chinese students, scholars and scientists to study abroad, whether they came home or not.
Deng’s calculation here proved right and the difference with the Soviet experience highlights a major cultural divide between the two countries that shaped their elites’ attitudes towards the West. For the Russians, their historical proximity to Europe allowed them to adapt more effectively to the challenge of modern Europe than could the Chinese. But it also led to the pervasive Europeanization of Russia’s intelligentsia, both cultural and scientific, which tended to express an alienated disaffection from a Russian state that historically excluded them from any political voice. As became clear during the Gorbachev period, when the Russian intelligentsia was allowed relatively free expression, Russia’s intellectuals tended to be cosmopolitan rather than nationalist and saw Russia not simply as behind the West economically and technologically but inferior culturally and even morally. Soviet fear of the defection of its intelligentsia, which was well founded, served to pose extreme limits on the exposure of Soviet students to the West. By contrast, Deng, while aware that China was far behind the West economically, reflected the Chinese tradition – shared by most Chinese intellectuals – that Chinese culture and morals could not and should not be measured by Western standards. The ancient Chinese tradition of including the most brilliant intellectuals into the governmental bureaucracy through the examination system reinforced this tendency by making the intellectuals’ personal interests and those of the Chinese state one. Consequently, China’s intellectuals never developed into an “intelligentsia” in the Russian sense of that term, as a class apart, putatively expressing the conscience of the nation against the government.
Each country also had a fundamentally different experience with its own diaspora. As with China’s native intelligentsia, most Chinese abroad – citizens of Southeast Asian countries, Canada, the United States, Hong Kong, Macao and Taiwan, more than 50 million strong – remained patriotic Chinese, whatever their sympathies for the Communists. Most retained a sincere desire to help the country of their ancestors and Deng’s opening provided the opportunity. Approximately two-thirds of all foreign direct investment in China between 1978 and 1995 came from or through Hong Kong; by the early 1990s, FDI was averaging $35 billion per year and sustaining annual economic growth rates of 9-10 percent. Moreover, as a result of the Cold War, Deng’s China benefited from special access to the enormous U.S. domestic market. In 1979, the United States granted China Most Favored Nation (MFN) status. Chinese exports to the United States increased from $9.7 billion in 1978 to $52.5 billion in 1989, establishing a pattern that would continue in the following two decades.
By contrast, the Soviet diaspora worked almost entirely against the country’s integration into the West. Soviet diasporas after 1945 tended to come from non-Russian ethnic groups who bore especially heavy historical grudges against the Russians (or Soviets): Jews, Ukrainians (mainly from the Russophobic western Ukraine), Lithuanians, Latvians and Estonians, not to mention the important lobby of East European ethnic groups (Poles, Hungarians, Czechs and Slovaks) who identified Soviet power with Russian imperialism. In part as a result, the Soviet Union was never able to obtain MFN trading status with the United States.
One last point, about oil: in the mid-1970s, orthodox Chinese economic planners led by Hua Guo-feng were counting on developing vast new oil fields to fund the purchase (through export receipts) of foreign technologies needed to jumpstart modernization. Had these panned out, they would have been a powerful argument against the kind of bold structural changes that Deng was trying to advance. Certainly, they would have reinforced the influential Chen Yun’s innate skepticism about Deng’s path. By 1978, China’s economic administrators had to admit that their projections on future oil production had failed. This gave Deng a key opening, as it left his opponents without a viable alternative plan of action. A resource-based economic program would have reinforced the status quo, or at least made it much harder to change. The impetus would instead have to come from new sources of capital investment, driven from abroad.
In contrast, following the discovery of vast new fields of oil and natural gas in western Siberia in the mid-1960s, the Soviet Union had become the world’s largest producer of such fuels in the 1970s and early 1980s. Throughout the 1970s, high oil prices tended to reinforce the institutional status quo in Moscow, all the while rendering the Soviet economy (and system as a whole) increasingly vulnerable to any significant decline in world oil prices: it was, after all, easier to buy short-run political and social peace by paying off clients with oil revenues than by the much riskier path of structural economic reform. By the Gorbachev period, another decade had been lost in redressing the obvious deficiencies in the Soviet economy, further increasing the burden that Gorbachev had to bear. Moreover, in 1986, the Saudis pumped up production by two million barrels per day and the price of oil plummeted to $10 per barrel. Gorbachev was thus forced to undertake the precarious (and as we have seen ill-thought out) program of structural reform with a radically reduced resource base; the Soviet economy had lost its shock absorber.
While it was probably always going to be a more complicated task to reform the much more heavily institutionalized Soviet system, it is clear that Deng also understood China much better than Gorbachev did the Soviet Union. Moreover, Deng was incomparably better positioned to manage the risky process of structural reform – even along just one (economic) dimension – than was Gorbachev. Where Deng spoke with a lapidary authority, Gorbachev lectured and hectored, suggesting that he was not in firm control. Where Deng defended the Chinese Communist Party, the only organization that integrated the country as a whole, Gorbachev undermined the Soviet Communist Party without having in place an alternative and legitimate system of authority. While Deng had many disagreements with colleagues like Chun Yun over the scope and pace of reform, he managed to maintain unity of command; Gorbachev failed in this crucial respect, as the coup and the rise of the nationalities against him demonstrate. Deng kept the loyalty of the military, and kept them close; Gorbachev simply alienated them and the top command joined the coup. Deng took care to build public support by identifying himself with policies that had clearly succeeded (especially de-collectivization), while Gorbachev identified himself with manifestly unpopular policies ahead of time (the anti-alcoholism campaign and “katastroika” in the economy more generally). Deng took care to base his decisions on multiple sources of information, while Gorbachev over time became increasingly dependent on a (hostile) KGB for his intelligence. Once Deng had made up his mind, he was bold; Gorbachev, in contrast, was often reckless but seldom bold: in the end, he could not make up his mind whether to back the Communist Party or the new social and political forces that his own policies had set in motion. Whereas Deng proceeded incrementally, and built on success both politically and economically, Gorbachev required grandiose programmatic statements before proceeding; aside from their inherent unrealism, such statements allowed opponents to marshal their forces for sabotage and defeat. In sum, Deng acted so that when he acted, it seemed as if the entire Chinese system was acting. This skill proved beyond Gorbachev.
How much of the difference in the Soviet and Chinese reform stories is due to circumstances and how much to the choices that Deng and Gorbachev made? As we have seen, Gorbachev faced an arguably narrower range of choice on coming to power than did Deng. At the same time, virtually all China specialists, Chinese and foreign alike, agree that there was no other leader at the time save Deng who could have moved China so decisively. So just how decisive can such leaders be in shaping the course of events?
Consider, as a counterfactual thought experiment, what might have happened had Yuri Andropov lived as long as Deng (who died at 93 in 1997). There can be little doubt that the Soviet Union, in response to the exhaustion of its model of extensive economic development, would have introduced significant economic reforms. Andropov was well aware of the structural impasse of the Soviet economy. And judging from Andropov’s programmatic statements in 1982-83, as well as his long record at the summit of Soviet politics, there can be little doubt that he would not have countenanced anything remotely resembling Gorbachev’s political reforms or that he would have hesitated to use force to stop public challenges to communist rule. Moreover, Andropov’s networks in the Party, KGB, government and military were incomparably stronger than Gorbachev’s and he might well have leveraged a viable coalition for piecemeal reform of the Soviet economy. While the long-term success of Andropov’s economic vision may be questioned, it is entirely plausible that the Soviet Union – like Communist China – might still be with us. Likewise, if Deng had lived only as long as Andropov, he would have died before having the chance to introduce his reforms and China would have embarked on a much more conservative path of economic reforms. If these considerations are sound, they would tend to sustain the thesis that Deng and Gorbachev each were decisive agents within the range of choice that structural factors presented them: Deng in acting so as to maintain and expand his political capital with each major move, Gorbachev by wasting it. By such criteria are political leaders, and political leadership, fairly judged.