Minxin Pei: Remembering Deng in Our Era of Crony Compitalism

The writer is a professor of government at Claremont McKenna College.

In most societies, dating the start of reform is easy, but pinning down its demise is not. Such appears to be the case with post-Mao China. Few would dispute that reform began in 1978 when Deng Xiaoping returned to power. Fewer still would disagree that reform was re-energised 20 years ago when Deng, alarmed by the prospect of economic stagnation and regime collapse, made his historic tour of southern China and forced the Chinese Communist party to liberalise the economy and embrace capitalism unabashedly.

As China marks the 20th anniversary of Deng’s history-changing tour, the most ironic fact – and perhaps China’s worst-kept secret – is that pro-market economic reform in China has been dead for some time.

Evidence of the demise of economic reform is easy to spot. The Chinese state has reasserted its control over the economy. Big state-owned enterprises dominate nearly all the critical sectors, such as banking, finance, transport, energy, natural resources and heavy industry. The private sector, a victim of persistent official discrimination, is in full retreat. Critical prices, such as interest rates and land, are officially controlled and severely distorted. Foreign businesses, once welcomed with open arms, are getting squeezed with protectionist measures. The overall orientation of the Chinese economy has veered so much off the reformist path that foreign business leaders who have long been supportive of China are now voicing their bitter disappointments, some publicly. China’s main western trading partners do not need to read scholarly analysis to know that there is no pulse in its reform. All they need to do is to listen to their business community, check their trade statistics with China, and take a look at Chinese economic policy.

Dating the demise of Chinese reform is perhaps impossible, mainly because no single event in the past two decades marked its passing...