Introduction

Napoleon Bonaparte is believed to have said, “Let China sleep; when she wakes she will shake the world.” Economists who have tracked China’s fast economic growth often quote Napoleon’s prediction. Regardless of whether Napoleon really said this or what he meant, China is certainly awake these days. And it is radically changing the world economy. Since 1980, China’s economy has grown faster than any other in the world.

Was China ever sleeping? What woke it up? It’s difficult to say. Historians and economists have many different answers to these questions. Compared to Europe and the United States, which were developing quickly in the 1800s, China’s economy did seem to be pretty sleepy for a few hundred years. The reasons for this are complicated, though, and we won’t really address them here. What we will talk about are China’s economic changes in the second half of the 1900s.

China experienced some growth during the time of the Communist leader Mao Zedong, who ruled from 1949 to 1976. China’s economy really grew in the decades after Mao’s death, though. Why? There are many different reasons, but there are a couple of common ones. First, the state of China became decentralized, meaning the power shifted away from a strong, central government. Second, the economy became increasingly privatized. Others point to various cultural reasons. Looking at the history of China’s economy since WWII might help us make sense of these changes.

China after World War II

In the mid-1900s, the Communist Party of China won a violent civil war. There began a new communist era under leader Mao Zedong. The country’s leaders set about modernizing and industrializing China. This modernity had to have a communist flavor, as opposed to capitalist values, though.

This transition took the shape of repurposing rural land, collectivizing agriculture, and spending money on businesses in cities. Land and resources were totally redistributed, or given to different people to create more equality. By the mid-1900s, some of these efforts had improved the quality of life for the average Chinese person. Poverty went down and literacy went up. Educational opportunities increased. Mao was not satisfied with the speed or equality of progress, though. Still, growth was uneven as cities gained wealth and rural China could not keep up.

In the late 1950s, Mao introduced a program called The Great Leap Forward. A major goal was industrializing the countryside. This called for small-scale industry in the countryside and more education.

The Great Leap Forward had some successes. Railroads, bridges, canals, power stations, and irrigation systems were improved. Ultimately though, the plan was a failure. In the rush to industrialize, communist leaders put forward projects that sometimes had greater costs than benefits. Combined with bad weather, these problems resulted in a very serious famine. In the early 1960s, about twenty million people died of hunger.

In the mid-1960s, Mao introduced yet another program. It was called the Great Proletarian Cultural Revolution. Mao believed that the slow economy was partly because of capitalist values in the Communist Party. The solution, for Mao, was to change the very culture of the country. In the late 1960s, the militant group known as the Red Guards was ordered to destroy the “Four Olds” of pre-communist China: Old Customs, Old Culture, Old Habits, and Old Ideas. As a result, much of China’s historical heritage was lost.

This hurt religious communities and ethnic minorities. Buddhist, Christian, and Muslim communities often came under attack. They were seen as either old or foreign. Places of worship and cemeteries for foreign people were destroyed. Ethnic minorities, including Mongolians, Uyghurs, Koreans, and Tibetans were abused or killed.

Changing directions

The Cultural Revolution asserted Mao’s extreme vision of communism. It strongly turned away from capitalist values. In the decades after Mao’s death, China moved in the opposite direction. Under the leader Deng Xiaoping during the 1980s, China underwent large economic changes.

Like Mao, Deng Xiaoping wanted to increase production and modernize the country. He did not dismiss the West, though. Deng Xiaoping’s approach was a lot more open to foreign influences. This meant that capitalist approaches also increasingly influenced the Chinese economy. Many Mao-era programs were undone. Some limits on religion were relaxed, and places of worship reopened.

Deng Xiaoping’s goal was to improve quality of life by the year 2000. Though he retired in 1989, his plan was ultimately a success. After the Maoist era, China was politically stable, and the economy took off. Poverty went down. The average Chinese person was healthier, with better overall nutrition, and a higher life expectancy. City centers were energized, with exports booming.

China and the global economy

Many of the goods we use today are labeled “Made in China.” This wasn’t always the case. Before the economic changes from the mid-1970s, China exported far fewer products around the world. As these changes took effect, China played a new role in the global economy. By the early 2000s, China had become the largest supplier of clothing, shoes, computer parts, and seafood. By 2010, China was the world’s second largest economy.

Because of this, China increasingly had better relations with Western countries. It also established important connections with other regions, most notably Africa. Chinese corporations play a huge role in Africa. They spend lots of money there on infrastructure, energy, and banking. The goal has been to support African building projects through low-interest loans. This is part of China’s Road and Belt Initiative to increase trade. Some say these projects have helped both China and Africa. Others say it is a new form of imperialism. If a project fails, the African nation is stuck paying the money back to China.

China has also joined global networks. Since the 1990s, China has joined the World Bank, the International Monetary Fund, and the World Trade Organization. China has begun to replace Japan as the leading global producer of goods.

All these changes might seem positive, but they bring new challenges as well. China experiences major problems like overcrowded cities, crime, and damage to the environment. As a result of privatization, social and economic inequality have also increased. Most of the country’s wealth belongs to a small group of people. Politicians and wealthy families continue to break many rules. Making the state and the military smaller meant that many lost their jobs. This contributed to massive migration, as over a hundred million Chinese left their homes in search of work.

So how do we understand these economic changes? It’s clear that opening up the economy played a huge role, for better or worse. Some might see this as China “waking up.” But it’s more true to describe this as a different path toward industrialization. Many experts present this as the East and West going separate ways. After an earlier “rise of the West,” was China’s fast growth part of the “rise of the East”? In the past few decades, East Asia’s share of world production has increased, while American and European shares have decreased. We can make guesses about what this means, but the truth is that there aren’t quick and easy answers. What’s clear is that China is now more than ever an important part of the global economy. Going forward, it will likely continue to have massive economic force.