The People’s Republic of China is known from at least two things: its Government that uses tanks to run over its own citizens and at the same time its free market economy that enjoys a remarkable growth. A combinations that is very rare indeed.
How did it start? After the World War II the National Party (Kuomintang) led by Chiang Kai-shek lost the Civil War and as a result Mao Zedong, leader of the Communist Party, proclaimed the establishment of the People’s Republic of China. That was the year of 1949. Mao firmly believed in communism which was reflected in the death toll of so called ‘Great Leap Forward’ being 45 million lives. Under the Mao leadership China experienced starvation, mass executions and social disasters. Fortunately, he had died in 1976 which was an opportunity for Deng Xiaoping who seized power shortly after this date. He was the man who led the Government in Beijing to radical economic reforms and made China what we know today. Deng introduced the decollectivization of agriculture, opened up the country to foreign investment, permitted entrepreneurs to start-up businesses. Eventually, he also ordered privatization and the lifting of price controls, protectionist policies and regulations. From 1978 to 2010, unprecedented growth occurred, with the economy increasing by 9.5% a year. China’s economy became the second largest after the United States and is projected to become the world’s largest economy by 2025. He was also responsible for a series of first special economic zones for foreign investment that were relatively free of the bureaucratic regulations and interventions that hampered economic growth. As you see, the ‘special zone’ idea is not a new one after all. It has been and is now again a guinea pig on which the communist Government conducts its experiments with free market.
After Deng’s death, next leaders continued his economic policy and the number of state-owned enterprises decreased by 48 percent, In 2004 further reforms reduced tariffs, trade barriers and regulations, reformed the banking system, dismantled much of the Mao-era social welfare system.
Now China opens a Free Trade Zone in Shanghai. It is designed to promote commerce and foreign investments. The regulations will be limited and the governance is to be improved. It will also bring liberalisation into several sectors such as finances, shipping, commercial, culture. Moreover, Yuan, the Chinese currency, is supposed to be convertible unlike anywhere else in the country.
It seems that a communist state has a free market economy that could be envied by many capitalist states. It enjoys a constant growth, low taxes, simple regulations and friendly attitude from the Government’s administration. Marx and Lenin must be spinning in their graves (actually in Lenin’s case, spinning in his mausoleum). The communism has been maintained in terms of social rules and freedom (or lack thereof) whereas the economy has been freed. An experiment which is being conducted in the country with population over 1 billion people. No one can really predict what is at the end of the tunnel.
The Zone is believed to be a first step towards the further liberalisation of China. Some hope for more economic freedom, others for more freedom in general. It must be remembered that at the same time the economy is being freed, the Chinese society still lives in the totalitarian environment. China is the country which executes more people than any other state. Its Government uses torture and represses the opposition. What is more, it deprives people of the benefit of social pluralism and censors the Internet. China was involved in the Korean War (1950-53), also waged wars against and India (1962) and Vietnam (1979). It has been brutally occupying Tibet since 1950. The economic reforms cannot divert one’s attention from the political and social terror the Chinese people live under.