The Origin of the Four Modernizations and the Current Strategy of President Xi Jinping

Chinese President Xi Jinping (Photo: AP)

On September 13, 1971, Lin Biao tried to flee to the USSR with all his family, aboard a Trident plane of civil aviation, which had left with little fuel and no active radio contact.

The crash of the aircraft in Mongolia, where both Lin and his whole family died, was caused by the order given directly by Mao to shoot down the plane.

What had happened, in political and not in personal terms?

The answer is simple: Lin Biao was very strongly opposed to the new agreement between China and the United States and hence had organized a military coup. For Lin Biao, all the room for US geopolitics was to be found in what the Third International’s forces traditionally defined as “imperialism.”

For Mao Zedong, imperialism was vital for both the USSR and the USA – and considering that he was far from the continent that was the prize for which of the two won the Cold War, namely Europe – he refused to make too many differences between the two.

As a man of Tao and Zen, Mao treated an evil with another evil.

However, Mao also knew that a new economic relationship with the United States was needed, after the long economic crisis and the factional instability within the Chinese regime. The Soviet Union could certainly not give it economic stability and hence the “Great Helmsman” turned to the distant enemy rather than to the near quasi-friend.

Nothing can be understood about China, including current China, if geopolitical choices are separated from economic, financial and industrial ones, which are subjected to the strategic “policy line” defined by the Party – a policy line that is cultural and always based on a very long term.

On September 29, 1972, the diplomatic relationship with Japan was resumed, along with those with the United States. An evident overlapping of different geopolitical lines, which – in the minds of the Chinese decision-makers – were similar also from the symbolic viewpoint.

In 1973, Deng Xiaoping reappeared in public, upon direct order by Mao Zedong.

Those were also the years of the late definitive success of the “policy line” of Zhou Enlai, who had successfully gone through the Great Cultural and Proletarian Revolution, which had partly overwhelmed him, and led the 10th CPC Congress.

That was the compromise which held the Party together, after Lin Biao’s elimination. An unstable agreement between the reformist “Right” (Zhou had spoken of “four modernizations” many years before, in 1965) and the Left, silenced by Mao, that had crossed the red line of the Cultural Revolution and the failed communization of rural areas.

In those years, also the Party’s Left lacked mass management of the people and the Party and had to agree with the other factions, while Mao mediated and also created “third wheels.”

Create something from nothing – one of the Thirty-Six Stratagems of the Chinese Art of War.

In 1973, just before the equilibrium between Zhou and the old CPC apparatus broke again, Deng Xiaoping was fully rehabilitated and also became a member of the Chinese regime’s deep axis, namely the Central Military Commission.

In 1975, Deng was elected vice-President of the Central Committee and member of the Politburo Standing Committee.

The connection between the reformists – if we can call them so – siding with Zhou Enlai, and the “center” of the Party’s apparatus – that regained its roles and posts by ousting the Armed Forces – prevailed once again.

Again in 1975, the National People’s Congress praised the “Four Modernizations” already proposed by Zhou and, in its final statement, hoped “that China would be turned into a modern and powerful socialist country in the approximately twenty years before the end of the century.”

Political transformation through the new economy, as well as preservation of the regime through political transformation itself.

We could call it “the Tao of geoeconomics.” Acceleration of industrialization and modernization, but without creating the disaster of rural masses, who were objectively unable of providing the startup capital for implementing any of the Four Modernizations. This was the real difference with the USSR of the 1930s.

That capital had to be produced in innovative companies and be attracted from outside.

At the time, however, the CPC was not yet firmly in the hands of any factions. In September 1975, the national Agriculture Conference saw the harsh clash between Deng Xiaoping and the old “Shanghai group” of the Cultural and Proletarian Revolution that, however, no longer controlled most of the Party.

Zhou Enlai died in January 1976 and shortly afterward, in Tiananmen Square, there were severe incidents, albeit with the constant presence of many wreaths reminding of Zhou.

Later there were also strikes and unrest, until the capture and trial of the “Gang of Four” in Shanghai. It had inspired the “Cultural Revolution” and was then directly accused by Hua Guofen – the man appointed by Mao to lead the transition – of having prepared a coup.

China’s transformation, however, began from rural areas: at the second Agriculture Conference in Dazhai, in December 1976 – where various cases of corruption and “social polarization” were described and stigmatized – the discussion focused on the First Modernization, namely that of rural areas.

When you regulate too much, a parallel and illegal market is created. This always happens.

Obviously, this also happens when total communization is applied to the economic cycle of rural areas.

Certainly, those were residues of Sovietism in the CPC’s doctrine, but also of the a-dialectical implementation of Marxism-Leninism in historical and social contexts in which the analysis of the founder of “scientific communism” had never focused.

In fact, when you read the works and correspondence that Marx dedicated to the Russian agricultural issue, you note that the author of “Capital” foresaw a direct socialist social transformation stemming from the maintenance of the social and community networks in traditional villages. It may seem strange, but it is so.

This system operates only with a non-industrialized state that is scarcely widespread in the territory. Otherwise, the problem is that of capitalism in rural areas to generate the surplus of urban and industrial investments.

Even in the Second Volume of “Capital,” Marx’s model is essentially this one.

It is precisely on the agricultural issue that the stability and success of many communist regimes are defined and, not surprisingly, the first of Zhou’s and later Deng’s Four Modernizations was that of agriculture.

The topic characterized all Party’s organizations, but it was in late December 1978 that the Third Plenary Session of the 11th CPC Central Committee decided to decentralize the economy – another factor strongly different from the Leninist tradition – and even to liberalize it, in addition to a process of ideological revision, namely Gaige Kaifang that roughly means “reform and opening.”

That was also related to the request for opening international trade based on the criterion of “mutual benefit” and equality between the various countries.

Hence, also from the ideological viewpoint, Deng became the Supreme Leader of the Party – as well as of the State apparatus – and announced the Open Door policy.

An extremely important fact was also the separation of the Bank of China from the People’s Bank of China, so as to serve as a single state body for foreign exchanges.

That was the start of the “Long March” toward the Four Modernizations, with an unusually united Party, and currently towards “Socialism with Chinese characteristics,” as well as – at a geopolitical level – President Xi Jinping’s New Silk Road.

In January 1980, the “four freedoms” – of work, people, goods and capital – were abolished. The new planning needed to manage all aspects of productive forces.

That was explained by a covert war of the Chinese economy against the penetration of foreign capital and joint ventures, which in fact were immediately regulated by specific legislation enacted the previous year.

The great British operation of economic control over the South-Chinese coasts was resumed from Hong Kong, but the Chinese government eliminated the possibility of such an action by Great Britain (and by the USA, at least partly).

Hence, the Party’s unity had to be reflected in a new context and, to some extents, in the whole society, so as to prevent the liberalized Chinese economy from taking the Party and Socialism away. A new rationale for the CPC’s Leninist unity.

The new Act on contract law was enacted in March 1981, and in 1982, the new civil procedure law was enacted as well, and became effective on October 1, 1982.

In September 1983, at the 12th CPC Congress, there were three groups within the Party: the nostalgic Maoists, a small and narrow majority for Deng Xiaoping; the Orthodox group that still wanted a nationally planned economy, as in USSR – hence probably the heirs to Lin Biao; and, finally, the real reformists.

Deng won with a clear, but not overwhelming majority.

Everyone was waiting for the Four Modernizations to fail, so as to go back to the old routine of the Plan.

As also happened in the USSR, it was often fully imaginary compared to the actual reality of the things done and produced.

It was in 1983 that the Third Front strategy was implemented, i.e., Mao’s directive – drawn up as early as 1962 – according to which the national strategic industries had to be moved from the coasts – militarily and politically difficult to defend – to the internal areas. Without said Mao’s directive, the New Silk Road could not be understood even currently.

Hence, 14 open coastal cities that were declared so in 1984, but with a new law on profits that served as mainstay of modernizations: companies were asked to pay a certain share of profits to the government, but they could withhold some profits if they matched and exceeded the requirements of the contract with the State.

In 1985, a new regulation also involved government bonds. The seventh Five-Year Plan began, underlining a “scale” approach, in which the coastal areas – gradually freed from traditional strategic companies – were driving the economic development, which later spread like wildfire even in the internal areas.

It was the Hong Kong model that Deng Xiaoping’s executives copied and adapted.

For a short lapse of time, Chinese analysts and Party planners also looked to the Singapore model, with the (single) Party of Lee Kuan Yew.

It is by no mere coincidence that Shenzen was close to the former British colony, and often the Chinese attracted and favored the companies of the British area towards the new Chinese coastal areas also characterized by free-market economy.

Advanced and high-tech services in coastal areas, and lower value-added, but still inevitable, productions in internal regions.

A new dualism, where rural overpopulation had to be gradually absorbed by inland strategic companies.

A double geopolitical status of inland areas which, in many cases, is repeated also in the current Belt and Road Initiative.

In 1986, the “open-ended” contracts for the manpower working in State-owned companies came to an end.

In October 1987, the 13th CPC Congress was held, in which – for the first time – there was talk about the “commodity economy,” i.e., a two-tier mechanism, in which the market is matched and also “corrected” by the old national planning.

A sort of re-edition, for internal use, of the formula “one country, two systems” implemented by China with the agreements for Macao and Hong Kong.

In 1988, however, the 7th National People’s Congress officially legitimized the private initiative (not the mere ownership) and enabled private individuals to buy state-owned companies.

The term “People’s ownership” was also deleted, while individuals and groups, even non-Chinese ones, could buy land with a system similar to that of the British real estate leasing.

Profits, wherever made, had to be reinvested in the company that originated them, before requesting any financing from the People’s Bank.

The Special Economic Zones, modeled again on the Hong Kong system, became five.

Hence, innovation on the coasts and strategic companies in the central regions – mainly public ones, which still remained almost completely public.

In April 1989, Jiang Zemin rose to power.

Student demonstrations also began in Tiananmen Square, where, year after year, the various anti-regime organizations gathered: Falun Gong, the networks of many illegal parties, unrecognized union organizations and many “spontaneous” groups.

And some old “Red Guards.”

Zhao Ziyang, the Party leader already defenestrated by Jiang Zemin, was in fact at the center of “spontaneous” organizations.

The various Autonomous Federations of Workers – spread by location and not by industry – were legally created.

Gorbachev’s visit took place in May 1989.

That was the key moment of a long series of doctrinal, practical, cultural and historical differences that – from the very beginning – divided the two great Eastern heirs to the Marxist-Leninist Third International.

What really mattered to the Chinese leadership was that the Russian crisis did not overwhelm the Chinese Communists: that was the meaning of the declaration signed by Gorbachev, which regarded the “peaceful coexistence” of the two communist regimes.

The leader of the Soviet Party was made fun of – not even so elegantly – not because he had reformed the Soviet economic system in a way that the Chinese deemed wrong but for one reason only: he had relinquished the Party’s role in the reformist process, which the CPSU had to lead and guide for China, from the very beginning.

An “economicist” mistake, as the CPC’s ideologues said – yet another proof of the Marxist roughness of the “Northern enemy,” as Deng Xiaoping called Russia.

Sarcastic sniggers on the lips of Chinese leaders. Then Gorbachev explained again his perestrojka and glas’nost, but the Chinese leaders, whose power was based on Party’s bayonets, kept on not taking him seriously.

Days before the arrival of the Soviet leader, at least one million people had gathered in Tiananmen Square.

The problems that the Chinese leadership had to solve in a short lapse of time were radical: the “hard” wing that was previously a minority prevailed and managed to convince Jiang Zemin.

The Party and its authority – the basis of any transformation, even the most radical one – were re-established without much talk. It was impossible to think about an heir to the “Long March” that dissolved the Party within “society.”

On May 19, the CPC decided to follow the hard line and the military forces reached the areas near the Square, from the outskirts of Beijing.

A few hours later, the Square was completely cleared, but that was done the hard way.

Shortly afterward, at the 4th CPC Plenum, Jiang Zemin – also following the experience of Tiananmen Square – returned to one of his old theories and developed the “Three Represents” model, i.e., the idea that the CPC’s power was based on its “vast representation” of the Chinese productive forces, of the cultural and technological avant-gardes and of the wide strata of population.

In other words, the Chinese society – and its economy, in particular – was reformed by bringing the elites together, part of whom was in Tiananmen Square, but also the large crowds still organized by the Party.

A Confucian middle way that was particularly successful.

Hence, Zhao Ziyang definitively lost the game within the Party that was also inside the Tiananmen Square insurgency.

Once the crisis was over, Deng Xiaoping left also the last very strong power in Jiang’s hands: the leadership of the Central Military Commission.

Shortly afterward – and there was nothing more symbolic than that event – the Stock Exchange of Shanghai reopened. A reopening that had been expected since the 1930s.

Later, also the Shenzhen Securities Exchange opened. In both of them, any securities – including those issued by the State – were traded, but there was only one deep logic: to acquire productive capital to generate strong and self-sustained development of the coasts and of the high value-added industries that had to compete on the world free market, without granting protection and aid that would go to the detriment of the deep productive structures of the internal regions.

In 1992, Deng’s journey to southern borders had a clear route, although the CPC’s leadership had always had some doubts about the “free economic zones.” The core of the issue was that the GDP had to be increased in the lapse of time between the 1990s and the beginning of the Third Millennium.

It had to be rapidly increased from 6% to 10%.

Without that “quantitative” assessment – to use the old communist jargon – there could be no “qualitative” transformation of Chinese society.

Everything had to be done soon. Well, but soon. That was the characteristic of Deng Xiaoping’s years – extraordinary years, in some respects.

In a short lapse of time, the Party developed the concepts of “Socialism with Chinese characteristics” and of “Market Socialism,” which are so important also in President Xi Jinping’s current policy line.

There were also other changes that, in a few years, led to the current Socialism with Chinese characteristics, as advocated by President Xi Jinping. However, everything could be done from a legal viewpoint began in those years.

The transformation process of the Chinese economy is long, powerful and complex, but – unlike what is often said in the West – it is never a mere market mechanism or a naive adaptation of the Party or the state to the absolute Western rules of globalization.

As early as the 1990s, China has decided to govern market globalization and not just being a part of it. It wants to lead the process so as to be – now that the end of the century about which Deng thought has long been over – the axis of globalization and the center of the new global hegemonies.