Deng traveled to Shenzhen, a southern Chinese city, in January 1992 in an effort to win back his power in China amid heavy political infighting between his opponents.
Although revealing some important historical information, the articles nonetheless followed the CCP’s official history framework and made significant alterations to and omissions of the historical background. They are, in fact, CCP newly fabricated brainwashing pieces.
1980s Infighting Between CCP Oligarchs
In the early 1980s, not long after the Chinese Communist regime’s first-generation leader Mao Zedong’s died in 1976, two oligarchs forced Mao’s successor Hua Guofeng to step down and took over his power. The two oligarchs—Deng Xiaoping and Chen Yun—had different policies and strengths.Deng and his supporters had control of the Chinese military, which is what the CCP calls “the barrel of the gun,” and their policies focused more on economic reform.
Chen and his faction were deeply rooted in the CCP’s human resources, propaganda, and various economic departments under the State Council, a top government body similar to cabinets in western countries. Chen and his people insisted that the CCP must not give up the planned economy.
The two factions kept fighting and were the root cause of the CCP’s policy scales and political scales swinging widely during the 1980s.
Zhao Ziyang, then premier, found it difficult to make a breakthrough in China’s economic policies without breaking the balance between the two factions. However, he managed to work some cases using good networking among the CCP top echelons.
The following is one example of how Zhao managed to get his plans approved by both of the oligarchs.
Zhao launched an urban economic reform in Sept. 1984. To make it politically and ideologically legitimate in the regime, he had Ma Hong, the deputy Secretary-General of the State Council at that time, draft a report titled “Socialist Planned Economy Is a Planned Commodity Economy Based on Public Ownership,” which actually meant “planned economy is commodity economy” after deleting all the attributes.
Zhao first obtained Deng’s support of his urban economic reform plans; then intended to use the report to test the attitude of Chen Yun about the plans, as Chen had been against the market economy. As Chen had established a personal relationship of trust and appreciation with Ma when they worked in Yan’an in the early years, Chen did not reject the urban economic reform suggestions in Ma’s report.
Deng Xiaoping Messed Up Zhao’s Urban Economic Reform Plan
Zhao became General Secretary of the CCP in 1987. However, few knew that he, the top leader of the CCP, had great difficulty rolling out his plan for urban economic reform.First, Zhao could not expect any help from Li Peng, a premier who had no understanding of the macroeconomy.
Also, Zhao faced covert resistance from planned economy bureaucrats represented by Chen Yun.
Third, Deng, who was chairman of the CCP’s central military committee, wanted to influence and interfere in the economic work of the government.
In May 1988, Deng interfered in the economic sector and asked the CCP’s Politburo to examine whether the planned price system could be changed to a market pricing system within three to five years. He told them “not to fear any risk” and to “solve the pricing issues once and for all.” His price reform changed Zhao’s overall economic reform, and his reckless practice was later known as “breaking through the pass of pricing.”
The CCP had been implementing a planned economy since it stepped into power. The communist regime had tight control of all resources and their prices. Even the price of a box of matches had to be determined by the government.
Zhao planned to reform the highly centralized pricing system in a gradual and systematic way, taking into consideration other reforms such as wages and state-owned companies, as part of a comprehensive economic reform. But Deng wanted to change the pricing system quickly, which could lead to significant price increases, and cause possible panic buying and an unstable society.
Therefore, the CCP Politburo standing committee held a discussion on the issue and reached a consensus on eight points, which were basically opposite to Deng’s thinking, and supported limited adjustments to certain prices.
Had the opinion not been disclosed, it would not have triggered panic among the Chinese people.
Deng, however, turned to the outside world to exert pressure on Zhao and other Politburo members, forcing them to accept his thinking. In his meetings with foreign guests between May 19 and June 3 in 1988, he told his foreign guests that the Chinese government had decided to implement pricing reforms.
As chairman of the military, he was not in a position to talk about China’s economic policies. Nonetheless, he imitated his predecessor Mao Zedong, who used to pressure the CCP Politburo to follow his intentions by deliberately disclosing information to foreigners.
I was director of the research office of the Research Institute of China Economic System Reform at the time. The top state body overseeing China’s reform, the National Development and Reform Commission, was holding a panel discussion at Jingxin Hotel when Deng announced to foreign visitors that China was going to “break the pass of prices.”
My colleagues and I were against Deng’s radical and reckless pricing system reform, as we thought it was not a good idea. However, all the other panelists supported Deng’s pricing policies. The Jingxi Hotel panel deleted my suggestions from all the meeting materials.
The Chinese propaganda organs massively reported on Deng’s price reforms, triggering a psychological panic in the public, followed by a fierce nationwide bank run and panic buying. Prices rose rapidly, and the economic situation became very serious.
Chen’s Faction Contributed to the Failure of Deng’s Price Reform
Chen had a very helpful aide, Yao Yilin, who was a vice-premier in charge of economic work at that time. Though they both opposed Deng’s price reforms, they did not negate Deng openly. Instead, Chen and Yao created a lot of publicity with great fanfare—they held various sessions and panels on Deng’s price reform and solicited opinions from academics on the price-wage reform proposal. But these superficial measures were meant to fool Deng, who was known to not attend to details.When Chen was certain of Deng’s failure, he stepped in to say that the price reforms must be stopped immediately. He also asked for rectification of the reform, and had the planned economic governance authorities take back control of China’s economic activities.
Deng had to accept Chen’s opinion. In Sept. 1988, the CCP central government announced that price reform was to be abandoned. Prices in China fell under reimplementation of strict controls.
In this confrontation with Chen, Deng suffered significant political setbacks and had to allow Chen to have more say in China’s economic decisions. But Deng blamed Zhao for the failure of the price reforms.
Zhao, the scapegoat for Deng’s failure, could not defend himself in the political turbulence. However, media reports that had boasted about Deng’s price reform could prove Zhao’s innocence.
In 1989, as Zhao opposed Deng’s ordering the military suppression of Tiananmen Square student protests, Deng removed him from the CCP’s general secretary position and replaced him with Jiang Zemin.
Chen and his faction reached their prime after Deng failed in his reckless and hasty price reforms in 1988. Deng’s order to crack down on student protests with military troops made him politically unfavorable. Jiang Zemin, though promoted by Deng, now followed Chen.
Deng wanted to win back his power by resorting to economic reform, which was the opposite of Chen’s planned economy and a weapon for him to use against Chen. As Shenzhen was one of the earliest Chinese cities opened to the world, it was symbolic of China’s opening up and reform. Hence, Deng decided to travel there, and it is in this city that he issued his well-known warning to his political opponents: “Whoever is against reform must step down.”
