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Emancipation
“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. |
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Factory Managers Did Not Understand BusinessPeriod: Emancipation (1978-84)
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Click to expand It's utterly and completely different. In the early visits, both in 1975 and in my second visit in 1982, when I spent a month visiting all of the special economic zones with a colleague from the University of Toronto -- I was then at the University of Toronto -- it was very clear that factory managers were not involved in business. And the clearest example of this came in 1982 when I visited a plant in Shanghai that was producing sewing machines and we're talking to the head of the plant. And I asked him what the production cost of one sewing machine was and he said he didn't know. I had been in China three weeks by that time and I lost my temper, which I shouldn't have done, and I said, "Don't give me this rubbish." I said, "Tell me it's a secret, tell me you're not allowed to share that kind of information with foreign visitors, that's fine, every country has its own secrets and, as a visitor, I have to accept this just as you would if you came to me." I said, "Don't tell me that you, the head of this factory that produces 60,000 sewing machines a year, don't know what the cost of production is." In the end, I was convinced he really didn't know. He said, "We just make them here. Some zonggongsi over there, they can tell you what the production cost is. We don't know." There are many examples of this. In the first trip, in 1975, we went to a factory that was producing what the Chinese call shoulatoulaji, garden tractors. And we arrived there and they had a parking lot with hundreds of tractors sitting out there, rusty, and so on and we could see, Chinese machinery has little tags on it that give the date of production, a serial number and the name of a factory. I became addicted to reading these tags the first day I was in China, so it was clear before we went in the factory that they were just producing these tractors and putting them outside and they were just sitting there. And we asked them, "Why are you producing these things, because there are already hundreds of them just sitting out there?" And they said, "Our job is to fulfill the plan, which means producing the number of tractors that we've been assigned and when we put them out there, they become the property of the Commercial Department and we have nothing to do with them. And it's their problem."
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