Assess the reasons why the policies of Deng Xiaoping led to a period of crisis in 1987-89. How successfully did Deng deal with the crisis?

Deng Xiaoping was a leader of the People’s Republic of China. The tenure of his leadership was from 1978 to 1989. He led China by introducing market economy reforms. He is called the “Architect of Modern China”.

Previous condition

Prior to the reform period, the economy of China was dominated by state ownership and central planning. Per capita GDP growth of China per year between 1950 to 1973 was an average of 2.9%. In early 1970, the economy faced a period of stagnation. After the death of Mao Zedong, the Communist Party took possession and started introducing market-oriented reforms for the recovery of the failing economy.

Reforms

The Chinese economic reform was started by the reformist of the communist party which was led by Deng Xiaoping during the period of transition when China was focused on eliminating chaos and returning to normal. The market reform was carried out in two stages.

• De-collectivization of agriculture between 1970 and 1980. More foreign investment was welcomed. Permission was granted for entrepreneurs to start businesses.
• The second phase was started in 1980 and ended in 1990. This phase witnessed privatization and contracting out of much state-owned industry. Price controlling in 1985, protectionist policies and regulations.

Reforms of Deng Xiaoping

• Four Modernization goals were taken by Deng Xiaoping to strengthen the fields of agriculture, industry, defense, science, and technology in China.
• Three steps to economic development i.e. doubling the 1980 GNP and ensuring enough food and clothing to the people, quadruple the 1980 GNP by the 20th century, increasing the per capita GNP to the level of the medium-developed countries.

Apart from that improving the relations with other countries, shifted China’s economic development strategy to its desire goal.