China’s Astonishing Transformation: From Poverty to Prosperity
China has made an incredible journey. Just 40 years ago, it had a poverty rate of over 90%, but today, it’s one of the world’s most developed nations. Back in 1978, China only contributed 2% to the world’s economy, but now it’s a significant player, contributing more than 18% to global GDP. Their poverty rate is now less than 1%, and they’re the world’s second-largest economy. Some even see China as a superpower. How did all this happen? China is named after the Chinese word Qin which is pronounced as Chin. Qin was an old dynasty that ruled in China about 2000 years ago (221–206 BC) and unified China.
In Hindi, we refer to Chinese people as “chini” since the word “China,” which is associated with the illustrious Qin Dynasty, is where the word originates.
Another interesting fact is that refined white sugar, or “chini,” was introduced to India by a Chinese gentleman. Either they built a sugar mill from scratch or imported one from China. Prior to that, we typically use jaggery or unprocessed sugar.
Another fascinating fact is that Chinese people don’t refer to their nation as “China.” They use the term “Zhongguo,” which is Chinese for “middle kingdom.” This name pays homage to China’s illustrious 4,000-year past as the world’s geographical epicenter.
The eastern coast of China is home to a significant population. That is a result of the excellent farming land there. However, the Himalayan mountains and deserts in the west make it difficult for people to dwell there.
Up until the 19th century, China was a tremendously powerful and prosperous nation. Following it, some other nations, including Britain, abused China. Unlike in India, they did not completely invade China, but they did steal a lot of valuables. The Chinese people were extremely upset by this, and they refer to the period between 1839 and 1949 as the “Century of Humiliation.”
It all started in 1839 when the British East India Company began selling a drug called opium to China. Many Chinese people became addicted to opium, and it caused a lot of problems in Chinese society.
After that, there were conflicts and wars. Due to treaties, China was forced to cede to the British a large amount of land and ports. The Taiping Rebellion, a significant civil war that took place in China in 1850, resulted in numerous fatalities.
Then, around 40 years later in 1894, there was the first Sino-Japanese war. China was ruled by the Qing dynasty at that time.
Between 1937 and 1945, when the Japanese colonizers mistreated the Chinese people horribly, things got even worse for them.
In World War II, around 30 million Chinese were killed. In the midst of all these, a ray of hope was seen when China and the Allied forces finally won World War 2. Japan retreated but right after the end of World War II, a civil war broke out in China, a war between the Chinese communist party, and the nationalist party, KMT. It started in 1927, but when Japan invaded during World War 2, they stopped fighting temporarily. The civil war ended in 1949 with the victory of the Chinese communist party. The people of the nationalist party fled to a nearby island, which is now known as Taiwan. Mainland China was ruled by Mao Zedong.
This was the point where it can be said that China was formed as a country we now know. 1st Oct 1949, the People’s Republic of China was born. In 1958, Mao launched the Great Leap Forward campaign. Its aim was to bring economic and social transformation to the country. There were 2 main policies in this. First, to take the land from landowners and distribute it among the farmers (Land redistribution). Thereafter, collectivizing agriculture. Agriculture cooperatives were made so that more farmers could work on the same land. Ultimately, the ownership of the land was in the hands of the government. The second was industrialization. On the one hand, large industrial plants were built for steel production, and on the other hand, people were encouraged to make small-scale steel furnaces in their backyards to produce steel at a local level. The intention was noble, but the outcome turned out poorly. The small-scale steel furnaces that people had built in their gardens were producing low-quality steel. This led to the wastage of resources. Secondly, the farmers did not have any incentive to increase their production, because there was no profit sharing and no private ownership. The ownership of the land was ultimately in the hands of the government. So the crops that were being grown by the farmers, had to be handed over to the government. This led to a huge decline in productivity. Between 1958 and 1961, grain production fell by 15%. In just a few years, due to the bad weather and policies of Mao, the situation got so bad that the whole country was starving. The famine [GREAT CHINESE FAMINE(1959–1961)] was so terrible that around 20–40 million died in this famine in China. It is one of the deadliest famines in history.
Another example of such a decision was the sparrow extermination. Mao's intention was to increase food production, so it was ordered that all the sparrows and all the birds should be killed because those birds ate the grains. They eat some crop grains from the fields, so the crops are affected by the birds. So many birds were killed, a few years later, people realized that the insects and pests were multiplying so rapidly, they were causing more damage to the crops. This worsened the food shortage because no birds were left to eat those insects. The entire ecological balance was disturbed, and the situation worsened so terribly that it led to a famine.
Mao was criticized for his policies by the Chinese public and by the communists party too, but Mao Zedong was not willing to admit his mistake. Another campaign, the Cultural Revolution was started in 1966. The real purpose of this campaign was to give control to Mao and suppress the opposition. A civilian army is formed by the students, the Red Guards. Red guards were loyal soldiers of Mao who had red armbands on their hands and they used to carry a small red book by Mao. Their job was to target those who were against Mao. Intellectuals, party officials, and all those who were not loyal to Mao’s ideology were targeted, and publicly humiliated, and often, violence against them was also seen. In the name of revolution, a fearful environment was created in the whole country. People were encouraged to spy on their neighbors, and family members, to find the traitors. Even some high-ranking officials like Lui Shaoqi and Deng Xiaoping were also targeted by the Red Guards. Schools and universities were shut down. As time passed, things became out of control. Red guards started fighting among themselves. Historical sites and cultural artifacts were destroyed. People's lives were turned upside down. This was the time when Tibetans were also tortured. Finally, Mao realized the cultural revolution created a crisis in the country. So in 1968, to regain control, the Red Guards system was abolished. In total, up to 50 million people died in China because of Mao’s policies. In 1976, Mao Zedong passed away due to poor health. And till then, there were no major improvements to China’s condition but Mao also achieved some positive things too, especially in terms of women’s equality and education. A nationwide public education system was launched during Mao’s rule. Campaigns were run by the government to end illiteracy. During Mao’s leadership, China’s literacy rate improved a lot. In 1978, compared to 1949, China had 3 times more primary and secondary schools. At the same time, a strong foundation was formed with the help of which China helped millions of people to get out of poverty.
The government made strategic investments in education, especially in the fields of sciences, technology, engineering, and mathematics (STEM). Mao’s opinion about women was that” women hold up half the sky”. In 1950, a new marriage law was passed according to which arranged marriages and forced marriages were made illegal across the country. Women were given the right to divorce and in many aspects, women were brought on equal footing. In 1976, a new leader came to power after Mao’s death in China and was a member of the Chinese communist party, Deng Xiaoping. He is known as the father of modern China because, during his leadership, the real transformation of China began. Deng Xiaoping was one of those who raised His voice against Mao during Mao’s time. His ideology was very different from Mao’s. Deng believed that the government had extremely tight control over the Chinese economy which was the reason for China's destruction over the preceding 50 years.
He introduced his policies of economic liberalization. His overall ideology is known as socialism with Chinese characteristics. First, to bring transformation in the agriculture system Deng introduced a household responsibility system. The ownership remained in the hands of the government of the village. However individual farmers and their families were given their land on long-term leases. Those farmers will have the right to decide which crops to grow, how to manage their business, and from where to earn profit. The Second, Bank asked farmers to sell a certain amount of their crops to the government. But after meeting that quota, they can sell the excess product wherever they want and earn extra profit. This motivated the farmers to innovate. Their productivity increased. Some similar land reforms were brought in India after Independence in states like Kerala and West Bengal, which are said to be major regions by states like Kerala has been to develop so much. In factories, the responsibility was shifted to the workers and managing workers. They enjoyed the freedom of selling the product and the salary they would draw, which developed a sense of ownership and accountability in workers.
During Mao’s leadership, there was a lot of centralized planning. A person sitting on top decides everything. But during the time of Deng, there was decentralization. More freedom was given in the economic sense. Because of all these policy measures millions of people started coming out of poverty and people’s lives started changing between 1978 — 1984. On average, agriculture output in China increased at a rate of 7.4%. Grain production in China doubled between the late 1970s and mid-1980s. The next big step was to bring about a revolution in education. To focus on educating people in 1986, a compulsory education law was introduced by the government. For nine years, free and compulsory education for every child in China. After the law was passed the government started spending more on people's education consistently. In 1980, the money spent by the government on education was approximately 2% of the GDP in China and it kept increasing. By 2010 it reached 4.1% of GDP.
China focused on teaching practical skills that are needed in the job, which led to amazing improvement in the literacy rate in China. In 1982 it was 65% and in 2012 it Crossed 95%. According to 2021 data, China spent 5.59% of GDP on its health.
Another smart move by China’s leader, Deng Xiaoping, was to establish Township and Village Enterprises (TVEs). These are a bit like cooperatives in India but with a twist. In India, cooperatives are typically owned by the workers themselves. However, TVEs are owned by the local townships and villages. Both models aim to boost economic growth in rural areas and improve people’s lives.
In India, we have seen cooperatives, mostly indigo agriculture and dairy sectors like Amul. But TVEs have been seen in almost every industry in China, including textile, electronics, and manufacturing. In fact, a big example is Huawei Technologies. This company started a TVE in the area of Shenzhen, but today it has become a global leader in telecommunication equipment.
Another good example of this is the study of Wenzhou, China. Here some local people established small factories to make shoes. The shoe industry in Wenzhou grew slowly and became a significant part of China’s exports. This industry started booming in the early 1990s.
TVEs provided jobs to around 100 million people in China and improved living standards. TVEs helped reduce the gap between rural and urban areas' income. In the 1990s, roughly 20% of China’s industrial production came from TVEs. In 1980 Deng set up a special economic zone in China in which tax incentives were given, the bureaucratic process were made easier, and fewer regulation were imposed so that foreign investment could flow into the country. Foreign companies started investing in the country, as the labor was cheap and the people were skilled. Because of TVEs, Shenzhen began the first special economic zone in China. This city used to be a small fishing village but in a few years, it became a major international industrial metropolis. In 1980, Shenzhen's GDP was $3 billion. By 2020 it reached $20 billion.
To encourage foreign companies to come to the country, an open-door policy was developed. This is called economic liberalization. It was done in China in 1978. In India, economic liberalization was seen later in 1991. Because of this, many multinational companies like Nike, Apple, and Volkswagen set up their manufacturing facilities in China in 1980. China's FDI was 0.06 billion dollars. In 2021, it exceeded 333 dollars billion dollars. Apart from all this, the government was also focused on infrastructure development. Railway lines were built along with good public transport in cities.
Along with this, the government made scientific research a priority. The Deng introduced a crash training program for more than 800,000 Chinese researchers. Priority areas were made energy production, computers, optics, space technology, physics, and genetics. These science research centers were given heavy funding by the government. The money spent on research and development was gradually increased by the government, and in 2020 it crossed $500 billion. A big example of this is Zhangjiang Hi-Tech Park in Beijing. Built-in 1988, it is a hub of technology and innovation. Many high-tech companies, research institutions, and universities are situated here. In 1990, India and China were almost on the same line. But their change was so remarkable that today China's GDP per capita is more than three times that of India’s. Deng Xiaoping said that development is a gradual process that should be undertaken after thorough evaluation. It should be tested at every step, and the policy should be adjusted as needed.
Economically, Deng ideology favored freedom, But politically, he was still a dictator. It was during his reign in 1989, the Tenant Square Massacre took place, in Tiananmen Square. One thing that was ignored in all these policies was the environment. The rise of China from poverty to prosperity is proof of the effectiveness of steady, practical reforms and investments in technology and education. However, it also serves as a reminder of the significance of establishing a balance between economic prosperity, political freedom, and environmental sustainability.
