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Reckoning
The later 1980s were a period of erratic growth—rapid but unstable. Tigers and sea turtles spurred development throughout the decade: East Asia’s “tiger” economies—Taiwan, Hong Kong, Singapore, and South Korea—paved China’s way in state-led, export-intensive growth. China's “Sea turtles” were the many overseas Chinese who brought capital and knowledge acquired abroad back to their mother country. However, unresolved contradictions lurked in the new political economy of Deng’s China. Frustrations over stalled political reform—enflamed by widespread urban economic grievances over inflation and corruption—erupted in street demonstrations that paralyzed the PRC in the spring of 1989. The Tiananmen crisis would have lasting political repercussions on the cause of democracy—but also unintended economic aftereffects. |
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Expectations Are the Most Important Growth FactorsPeriod: Reckoning (1985-89)
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Click to expand If it was a democratic or semi-democratic regime that was committed to Reform and Opening, there could still be economic development. Because one of the important conditions for economic development is not the stability of authoritarianism or totalitarianism but, rather, the country's ability to provide people with a long-term expectation for society. Then, people are willing to bind their property, wisdom, time, and energy to the nation. There might be a lot of instability or political change in the near term but, in the long run, they still believe China will move forward. So, they want to invest. It's like when you invest in options. If I already know what the price of a stock will be next year, no matter what fluctuation there may be in the meantime, I will definitely invest in it. The most important thing is not that the price is always rising during this time, but the belief that, in one year, the price will reach a certain level. During this period, the price can even drop below the current price, I don't care. The belief that the future price will be higher is the most important thing. Deng used his grand vision to give expectations to the social elites of that time. The success of those elites has given their children expectations. The open market, joining the WTO, globalization have given hope to the generation born after 1990. The hope is handed over generation by generation. But there is an unshakeable belief, no matter what kind of political instability occurs, that, in the future, China will maintain a relatively open attitude and will be tied to the whole world.
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