“Reform and opening” started from the top with the seminal leadership transition from Mao to Deng. Deng Xiaoping heralded China’s boom in late 1978 when he called for experiments with “economic democracy” and “emancipation” from orthodox ideas. But the boom was not simply a top-down, state-orchestrated phenomenon. In fact, the biggest contribution of the state, especially in the first phase of growth, was to get out of the way. Farmers were liberated from collectives, sparking a wildfire of capitalism in the countryside. Urban markets and industry were freed to “grow out of the plan,” making profits on surplus production and creating powerful incentives for rapid growth.
Mao Yushi, is the chairman of Beijing's Unirule Institute of Economics. In 1958, he was labeled a rightist and later was sent to labor at the Datong Locamotive factory during the Cultural Revolution. In 1975, he started research in Macroeconomics and in 1979 he worked out the mathematical method of the Principle of Optimal Allocation. Professor Mao currently holds various titles including: certified consultant for the Asia Development Bank; consulting editor for the China Economic Review; and Honorary Professor at Mineral College in Shandong, Foreign Language and Trade University in Guangdong, and Northwest University in Xi'an. Professor Mao has run a poverty alleviation mini-credit foundation in Shanxi since 1993, and a Vocational Training School since 2003 for rural girls seeking employment in Beijing. Mao’s areas of research focus on institutional economics, energy and environmental economics, transportation, policies on economic reform and poverty alleviation.
Deng's open door policy was launched after a series of Mao's poor decisions for this country left people without enough to eat, enduring a bitterly tough life, and with no freedom at all. No matter their position in society, whether a farmer, intellectual, bureaucrat, or worker, everyone wanted change. So, there were no obstacles to reform. There were debates over whether to choose a communist or capitalist government. After Deng's visit to the US, having seen America, his doubts about this debate vanished. He decided to forge ahead in a direction referred to as "Socialism with Chinese Characteristics," which, as a matter of fact, is capitalism. I believe that Deng's visit to the US was the most salient reason for this decision. Deng visited the US in 1980 [in fact it was in January 1979]. Deng's biggest concern after having re-entered the government was to choose which route, whether communist or capitalist, to follow. Once he had visited the US, he made up his mind. I think that the main reason for the "China Boom" is western influence. From the First Opium War in the 1840s to today, China has made a lot of progress. I think the main reason behind this progress has been that China has learned a lot from the West. In all aspects, not only in technology, but also the economic system, we have learned from the west. If there were no communication with the west, China would have remained the old China for the last 100 years, there would have been no progress. China is not an innovative nation, but a very conservative nation. The Chinese have no particular distinction in natural sciences and modern civilization. In the fields of physics, chemistry, biology, astrology, the Chinese have not contributed a lot. The Chinese have learned a lot from the west. From their economic system, to their banking system, to their stock market system, it has all been learned from the west. The question of whether to learn from the west or not has been a point of debate since 1840. At that time, the Chinese opposed the idea of learning from the west. This debate continued until Mao's time and, even now, the debate goes on but, for the most part, the debate on this issue has been resolved. Everything we do here is from the West. Televisions, telephones, airplanes, these are all things that we have gotten from the west. Even the political system, the National People's Congress, is all western. The Empress Cixi would not be enthusiastic about the National People's Congress. The main reason that China has made so much progress is because they have learned from the west.
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