4. Process of China’s Open-up

There exists many interpretations and criticisms of Emperor Qianlong’s meeting with British diplomat George Macartney [21].

Notably, at the Washington Naval Conference of 1921, at China’s insistence, extraterritoriality became one of the main topics of debate. After years of negotiations, on October 10, 1941, China finally prevailed—Western powers pledged to officially terminate their extraterritoriality in China starting January 11, 1942. However, the end of Western extraterritoriality did not mean that China was treated with equality in the international community. Over the next decades, China’s core national interests were constantly being threatened by the US and subsequently the Soviet Union. In particular, between 1943 and 1949, when the People’s Republic of China was founded, the US took advantage of the civil war between the CPC and KMT, attempting to coerce unequal treaties upon the ruling KMT regime, model China after itself, and put China under its control. From 1949 to the late 1950s, it was the Soviet Union that intensified its efforts to control China. Ultimately, in the 1960s, China decided on an “anti-hegemony” strategy, targeting “American imperialism” and “Soviet revisionism”, further distancing itself from the international community [27].

For example, from 1956 to 1977, China provided over $2.476 billion of economic aid to African countries, accounting for 58% of all international aid China offered in the same period [30].

From 1952 to 1973, the US imposed a full embargo on Chinese, forbidding all trade, tourism, and financial transactions. The Soviet Union implemented a similar embargo in 1960 [22].

On November 16, 1976, an article published on People’s Daily criticized Jiang Qing’s opinion, saying that those who label the introduction of all Western technologies, including necessary ones, “reptilianism” and “servitude to foreigners” are in fact proposing closing off China from the outside world. This is willful ignorance of human civilization’s advancements and a distortion of the independence and self-reliance policy [37].

Mao said to Nixon, “We too could be too bureaucratic. For decades we have adamantly refused your proposals for personnel and business exchanges. Everyone, myself included, thought that only when the big issues are out of the way can we concede on smaller issues. Then we realized you were right, so now we have ping pong” [42].

In resuming diplomatic relations with the US and Japan, Mao’s approaches were mainly concerned with military strategy and national security. Through visits to the US and Japan, Deng Xiaoping expanded the relations, opening up China’s economy and gradually almost all other spheres. Recalling those years, Deng said, “The wheels of history were rolling on, but we came to a halt and fell behind others… In the 1950s, for example, the gap in technology between China and Japan was not great. Then we closed our doors for 20 years and made no effort to compete internationally, while during the same period Japan grew into an economic power.” Deng visited the US in January 1979. The visit convinced him that China must open up, otherwise, fast development would not be possible [43, 44].

In the early 1970s, as Western economies entered stagflation and China’s modernization called for more resources, developing economic and trade relations became China and Western countries’ common goal. The Shanghai Communique of February 1972 was an important turning point, as was the $4.3-billion "4-3 Plan", formulated after a whole year of political effort. On 22 January 1972, Li Xiannian, Ji Dengkui and Hua Guofeng jointly submitted to the State Development Planning Commission the Report on Importing Complete Sets of Synthetic Fiber and Fertilizer Technological Equipment which proposed importing $400 million’s worth of equipment for the synthetic fiber and fertilizer industries. It was met with approval from Mao. On August 6^th, following Li Xiannian’s instructions, the State Development Planning Commission proposed the Report on Importing 1.7 Meter Continuous Plate Mill, a request to import approximately $400 million of equipment. This was again approved by Mao and Zhou. On November 7th the same year, the State Development Planning Commission submitted the Request to Import Complete Sets of Equipment for the Chemical Industry, proposing the import of 22 complete sets of equipment valued at $600 million. In response, Zhou Enlai instructed the Commission to put forward a larger, more comprehensive import scheme. On 5 January 1973, the Commission submitted the Report and Request for Instructions for Increasing Equipment Imports and Expanding Economic Exchange; it suggested taking advantage of the economic crisis happening in the West at the time to import $4.3-billion’s worth of complete plants in the subsequent three to five years, including 13 large fertilizer plants, 4 large chemical fiber plants, 3 petrochemical plants, 43 coal mining plants, 3 large power plants and other large plants. This plan was again approved by Mao and Zhou. The total value of imports eventually amounted to $5.14 billion, as more new projects were added during the plan’s implementation. This was New China’s second wave of importing foreign resources, the first wave being receiving Soviet aid for 156 industrial projects. The implementation of these plans broke China’s self-imposed foreign trade restrictions, formulated earlier in the Cultural Revolution, and also laid the material groundwork for the rapid development of China’s economy in the 1980s through focusing on guaranteeing the supply of food, clothing, and other necessities for the people [45].

Notably, in a meeting with Rajiv Gandhi on December 21, 1988, Deng said, “There are two major issues in the world today: one is peace and the other is development…We should therefore regard the problem of development as one that concerns all mankind and study and solve it on that level. Only thus will we recognize that it is the responsibility not just of the developing countries but also of the developed countries” [39].

Mao stated that with regards to a world war, there could only be two possibilities: either war would be ended by revolution, or war would cause revolution [53].

Western countries were well aware that China’s modernization could bring great opportunities for them, and therefore had a positive attitude towards supporting China’s opening up. For example, in April 1978 when then Minister of Foreign Trade Li Qiang visited Germany, he was informed by the German Federal Minister for Economics that the Germany private sector could offer 4 billion Marks in loans, backed by the government, should China be willing to accept. During Deng Xiaoping’s state visit to Japan in 1978, the Japanese government also offered to lend to China.

The concept of “socialism’s primary stage” was proposed and summed up by Deng Xiaoping and first appeared in the Resolution on Certain Questions in the History of Our Party Since the Founding of the People’s Republic of China, adopted by the 6th Plenary Session of the 11th CPC Central Committee in June, 1981, which Deng co-chaired with Hu Yaobang. The Resolution summarized China’s history from the founding of the People’s Republic up to then. The Resolution stated for the first time that China’s socialism system is still in the primary stage, and that the system will have to undergo a long process of development before it can be perfected. This was a meaningful conclusion that greatly informed China’s understanding of its own circumstances [46].

This involved building the "Eurasian Land Bridge" to connect Anhui, Henan, Shanxi, Shaanxi, Ningxia, Gansu, Qinghai, Xinjiang, and other inland provinces with the eastern coast and western border; it also involved constructing the Beijing–Kowloon railway to connect central Hebei, western Shandong, eastern Hubei, southern Anhui and other areas along a north-south axis to the southern coast.

In the coastal regions, opening up was spearheaded by the Pearl River Delta, Yangtze River Delta, and Bohai Rim. Opening up efforts in the border regions were mostly concentrated in two clusters: Xinjiang-Inner Mongolia-Heilongjiang in the north (facilitating trade with CIS countries) and Yunnan-Guangxi in the south (facilitating trade with Myanmar, Laos, and Vietnam). Along the Yangtze, opening up had two strongholds: Chongqing and Pudong. The Three Gorges Dam project served as a good opportunity to open up many areas along the Yangtze. Railway adjacent regions that opened up were mostly along the Longhai Railway and Lanzhou-Xinjiang Railway; their purpose was to drive the economic growth of China’s north and northwest.

The imbalance was especially apparent when looking at foreign investment figures. At the end of 1999, the eastern part of China was home to 82.3% of all foreign-funded companies registered in China, 88.13% of aggregate contracted FDI, and 87.84% of aggregate foreign investment in actual use. In comparison, the figures for central China were 12.86, 8, and 8.94%; the figures for western China were 5.01, 3.87, and 3.22% [67].

The 3rd Plenary Session of the 16th CPC Central Committee proposed improving the socialist market economy. This means that China’s market economy, with its distinct characteristics, is out of infancy, that China is starting a new chapter in refining its economic system, and that China’s opening up efforts are entering a new phase.