"To get rich is glorious," Deng Xiaoping once declared, setting the stage for China's dramatic transformation. Seventy-five years later, the nation celebrates one of the most extraordinary episodes of social and economic change in history.
More than seven decades ago, few could have predicted that a nation, once largely agrarian and struggling to find its place on the world stage, would evolve into an economic behemoth.
China’s transformation from an isolated, diplomatically quarantined state in the 1970s to the world’s second-largest economy today is one of the most remarkable developments in modern history, a novelty that has dodged the mighty trend of neoliberalism.
As the Cold War came to a close, analysts pondered how far Western ideals would permeate, contemplating what some famously termed “the end of history”. However, the conversation shifted with the onset of the 2008 financial crisis.
The “miracle” and China's sweeping reforms have ushered in an era of unprecedented growth, lifting hundreds of millions out of poverty and reshaping the contours of global economic power.
In October 2014, the International Monetary Fund announced that China had overtaken the United States as the world's largest economy in terms of purchasing power parity—a title the US had held since 1873, when it eclipsed Great Britain.
In 2020, Chinese President Xi Jinping announced a victory over poverty.
In 1950, the total volume of China's foreign trade was $1.13 billion, and by the 70th anniversary of the PRC, it had already reached $4.6 trillion, increasing more than 4,000 times. From a resource-based country, China has turned into a country selling high technologies.
Over the years, China has attracted more than $2.1 trillion of foreign investment and reached a breakthrough in foreign investment that started from scratch.
Defying Western categories
The meteoric rise against all odds has been steadily generating curiosity.
In his book, Daniel Bell argues that the West traditionally divides the political world into two categories: "good" democracies and "bad" authoritarian regimes. However, China’s political system doesn’t fit neatly into either.
It also confounds many commentators by blending aspects of capitalism and socialism in a way that challenges conventional wisdom.
For instance, of the 124 Chinese companies that made the Fortune Global 500 list this year, 92 are state-owned. Yet, despite this strong state role, private companies now account for more than 60 per cent of China’s national output, 70 per cent of its wealth, and 80 per cent of urban employment. Just 30 years ago, the situation was reversed.
Nevertheless, China resists being categorised as purely capitalist.
A 2019 United Nations Sustainable Development Report also highlighted China’s deviation from traditional Western economic models. "The Post-Keynesian approach challenges economic orthodoxy and supports sustainability transitions in the current political and economic context of Western and similarly structured nations," it stated.
Developments in China, it argued, serve as a reminder that alternative economic theories are already functioning effectively in the world.
Keyu Jin, celebrated author of The New China Playbook: Beyond Socialism and Capitalism, notes that China has forged an economic model tailored to its unique national conditions and culture.
This model, which many Western economists failed to predict, has consistently defied predictions of collapse. “China continues to challenge conventional wisdom,” Jin writes, “far from employing an invisible hand to manage the economy, the state has intervened regularly, sometimes clumsily, but always decisively.”
Jin further highlights that China has lifted a large portion of its population into the middle class, while 20 million private firms have emerged in a span of just three decades. In 2019, China became home to the world's largest number of unicorn companies—private firms valued at over $1 billion—an achievement many would have deemed impossible a generation ago.
Moreover, over the past decades, China’s political system has evolved into what scholars describe as “political meritocracy”.
The China Wave by Zhang Weiwei offers a detailed analysis of this theory, arguing that China’s unique governance model—a civilisational state—has allowed it to avoid the pitfalls of Western political models.
Zhang suggests that if China were to fully adopt Western political systems, it would lose the very strengths that have allowed it to thrive and would risk disintegration.
China’s political model also differs from traditional socialism in its pragmatic use of market forces, while also diverging from the core tenets of capitalism.
The Chinese Communist Party (CPC) has employed the hybrid system to guide economic growth, emphasising a “democracy with Chinese characteristics” that aligns with its own governance structures.
Zhang Weiwei challenges Chinese intellectuals who advocate for Western models to “emancipate their minds” and move beyond what he calls the “numb Western discourse.”
He stresses that China’s remarkable economic rise, fuelled by its developmental state model, has proven the efficacy of its unique system. Today, China is not only the world’s fastest-growing major economy but also the largest trading nation.
After Deng
Deng Xiaoping, the architect of China's modernisation, famously declared, “Economic development is the priority” (fa zhan cai shi ying dao li).
It has been 40 years since Deng Xiaoping made a bold departure from Maoist ideology and its version of socialism, setting China on a transformative path. The result?
Spectacular growth fuelled by market expansion has reshaped urban China into a predominantly middle-class society, lifting hundreds of millions of rural residents out of poverty along the way.
Despite these monumental changes, China has consistently asserted its identity as a socialist nation. Since 1992, it has referred to itself as a “socialist market economy”.
Similarly, President Xi Jinping sees no contradiction in deepening market reforms while simultaneously imposing stricter controls on political freedoms. To him, this encapsulates the essence of the China model, which he views as superior to Western liberal democratic capitalism.
It is pertinent to mention that when it comes to China’s Dengist policies of opening up and reform, Samir Amin's theory of delinking rings true, particularly in light of his later remarks about the potential upsides of partial relinking following a socialist rupture.
A side-by-side comparison of Indonesia and China paints a telling picture. Under US pressure, Suharto’s regime in Indonesia carried out brutal massacres of millions of communists, effectively dismantling the Indonesian Communist Party to pave the way for foreign direct investment.
The irony is rich, however, as US firms ended up pouring significantly more capital into China after Deng took the reins. This indicates that even Western investors, when faced with options, recognize the modernisation benefits that Chinese-style socialism has to offer.
One might argue that had socialism triumphed in Indonesia during the mid-1960s, the nation would still be trailing China by about 15 years in terms of development.
However, experts note that this perspective does not capture the full picture of growth trends. Currently, Indonesia's growth hovers around 5%, while Vietnam—despite facing ideological hurdles and a history marked by war—has been experiencing its own version of China’s economic miracle, boasting growth rates of 6-7% for several years.
‘Feeling the stones’
Interestingly, in the post-Deng era, the phrase "yu shi ju jin" has gained popularity among CCP leaders, stressing the need for the party to remain adaptable and flexible in response to the evolving governance landscape.
Rather than adhering to a fixed reform blueprint, China’s approach is often described as “crossing the river by feeling the stones” – a process of partial reform that intertwines economic liberalisation with political conservatism.
For decades, China has been navigating this metaphorical river and all current indicators suggest a trend toward a stronger and more effective governance system.
As Zhang Weiwei notes, although China lacks a definitive roadmap for democracy, it possesses a “compass” guiding its direction. The compass aims to establish (1) an effective mechanism for selecting competent individuals across all levels of the state, (2) robust systems for democratic oversight, and (3) comprehensive mechanisms for extensive social consultation.
A Harvard-vetted study appears to lend credence to this view, revealing that 95% of Chinese citizens are satisfied with their government, a figure that is striking given the collapse of other authoritarian regimes in recent decades.