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Rebirth
The Tiananmen debacle resulted in a brief spell of conservatism, but within a few years, Deng Xiaoping choreographed the rebirth of reform and openness with his historic “southern tour.” With Deng’s assurance that “to get rich is glorious,” entrepreneurial energy exploded again, concentrated now in the coastal cities. The leadership, guided by economic czar Zhu Rongji, enacted a far-reaching structural transformation of the economic sphere, anchored in privatization of state-owned enterprises. Ironically, China’s lack of full reform—especially in the financial sector and monetary policy—protected the Chinese economy from the vicissitudes of hot money and capital flight that ravaged its neighbors during the East Asian financial crisis. |
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China Roared Ahead After Deng's Southern TourPeriod: Rebirth (1990s)
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Click to expand You look at Deng Xiaoping opening up China, you probably look from '78 to like 1989 and Tiananmen. That was really an experimental period where people were first able to unleash their capitalist instincts, but then they had to hide them. You couldn’t really do private companies, you had to call them village enterprises. So an entrepreneur would work with his village chief and register it as a village enterprise, but it was really that person doing it. But you had to be under some kind of a state cloak. In those days, corruption was rampant, but it was only high-level corruption. It was the people who were really connected who were getting in the middle of deals that were state deals. You know, equipment procurement, land, and so there was an elite group of people making a lot of money and that’s one of the things that led to Tiananmen. That and inflation and just, also, political instability within the Party where there were divisions in the Party. After Tiananmen, this may sound kind of crass, but corruption became more democratic. Really, in a system like this, we can condemn corruption, but if you look at America’s history, in our robber baron era, it was our Congress, our courts, and our entrepreneurs were corrupt as hell. And China’s been going through that same period but, what happened after Tiananmen is, everybody got a chance on getting in on the game, and playing the difference between the state system and the private system. And, also, it became a land of opportunity, everybody had an opportunity and you could actually act like what you were. I was in Wenzhou, when Deng made his trip, his Nanxun [Southern Tour], in late '91, early '92, I guess, and I was meeting with this guy in this private finance company. And as I was sitting with him, the word of Deng’s Nanxun came out, and that, remember Deng went down south, and the papers in Beijing did not cover it. And so he went to Shenzhen and talked, and the Hong Kong papers covered it, and then the Shenzhen papers covered it, and then it got back to Beijing, because the conservatives he put in charge after Tiananmen were even acing him out. So, he had to go offshore to knock them down and then it was like, basically, be Chinese again, be natural. So when this guy heard about it, he goes, "Oh, now I can do my bank." And he pulled out of his drawer blueprints, and that was going on all over China, because in the 80s, people were ready to roar ahead, but then they got stopped by Tiananmen, they had to keep their heads down. So, that’s why, in the early 90s, things just went so fast.
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