T

hirty years ago, in October 1978, China’s top leaders met in a series of secret working sessions to confront a mega-crisis: a negative rate of economic “growth,” a yawning gap in political legitimacy, a feisty Democracy Movement led by youth returning from forced exile in the countryside, and a southern border conflict with Vietnam with the threat of a supportive Soviet attack on the northern border. China’s international isolation and primitive military forces did not provide much deterrence.

The most senior veteran of the Chinese Revolution, Chen Yun, succinctly summed up the Party’s dilemma: “If Mao Zedong had died in 1956, he would have been a great national hero; if he had died in 1966, we could have avoided the Cultural Revolution; but he died in 1976, so what can we do about it?”

Behind this question lurked an implicit attack on the current leader Hua Guofeng, whose sudden rise to the top posts of Party, government and military occurred when Chairman Mao (allegedly) said on his deathbed, “With you in charge, I’m at ease.” Deng Xiaoping, who had been brought back to power as Hua’s deputy after Mao’s death and the arrest of his widow and her faction (the “gang of four”), chafed at the policy restrictions imposed by Hua’s insistence on “upholding everything Mao ever said or did.”

During that same October in 1978, my first visit to China left lasting memories of what China had been like in the Mao era …

• First was my arrival at the tiny and decrepit Beijing airport terminal. My plane, the only one on the tarmac, it taxied right up to the only door into the terminal, with a single overhead spotlight in the inky darkness. As I walked down the stairs from the plane, all I could see was a giant statue of Chairman Mao next to the entrance, with his arm raised in greeting.
• Next was a visit to Democracy Wall with a colleague from the U.S. Liaison Office (we still had no formal diplomatic relations). With his dark hair and average height, he fit right in wearing a blue Mao cap and jacket. But my blond head above the crowd caused quite a stir among those trying to read the wall posters.
• Later, traveling near Kunming with official car and driver (the only option for foreigners then), I caught glimpses of the countryside. As we slowly made our way through a crossroad filled with a dozen farmers and their produce (no other cars on the road), the driver whispered to me, “That’s a market, but it’s illegal.”

The famous Third Plenum in December 1978 announced the result of these secret deliberations -- a sharp right turn in politics and policies: Deng Xiaoping became paramount leader as head of the military with two protégées heading the Party and government; Hua’s ambitious Ten Year Plan and gargantuan state industrial projects were scaled way back; a more negative assessment of Mao’s legacy allowed the return to influence by his former political enemies. One of them, the founding president of the Central Party School, had been a central figure in my dissertation research. (Invited to meet him a few years later, I was the first American to visit the school.)

At the Third Plenum, Mao’s ideology of class struggle at home and abroad was repudiated in favor of putting economics first. Communes were abandoned for markets; Special Economic Zones along the coast brought funds from overseas Chinese; and China’s doors were opened to foreign investment, travel and education.

The centerpiece of Deng’s program was normalizing relations with the U.S. and its allies. For my small part in this historic turn of events, I wrote a memo to the Secretary of State that helped convince the White House that Deng Xiaoping was signaling his intent to complete then-secret negotiations. President Carter obtained Deng’s commitment to reopen churches and to seek gradual, peaceful reunification with Taiwan. In March 1979, just after Deng returned from Washington, D.C. where he enjoyed a barbecue in Zbig Brzezinski’s back yard, China attacked Vietnam across the border to “teach it a lesson,” while Moscow fumed in the face of this new proto-alliance.

Thus began the “China miracle:” thirty years of annual 10% growth lifting millions out of dire poverty; steady expansion of the market economy and the private sector; and growth of personal, social and religious freedoms -- despite political restrictions on freedom of the press and association. And American funds, technology, charity and education have played a huge, if unacknowledged, role in this miracle.

Is the miracle over? China already was facing serious economic challenges before the Olympics and before the global financial crisis, due to decline of rural income, stock market losses, sluggish demand, and a real estate bubble about to burst. The impact of the U.S. downturn on China’s exports will show up in spades next year. The growth rate may well slow to 8% (real growth perhaps 4%), considered the minimum to avoid a destabilizing recession. More and larger companies (as in the auto industry) will suffer losses, leaving workers without back pay or benefits or job prospects. Massive demonstrations will be harder to contain at the local level.

An interview with Premier Wen Jiabo during his U.S. visit in mid-October showed clearly that government leaders and staff (many trained in the U.S.) understand full well that our two economies rise or sink together. As in past times of economic stress, Beijing is signaling cooperation with Washington and Taipei, so as to focus on their domestic challenges. This year’s “Third Plenum” deliberately echoed that of 1978, announcing looser controls on land use to boost rural income. Wen’s interview referred to several other 2020 policy goals of Deng Xiaoping, including democratic politics. These signs of the remarkable longevity of Deng’s historic reform program are a timely reminder of how much China owes to his political courage and policy foresight. China badly needs another wise statesman to keep leading the way forward in the 21st century.

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