After Mao’s death in 1976, Deng abandoned the Maoist economic model and decided to open China up to free market economic reforms and Western style capitalism – all carefully controlled by the state still. He also introduced the ‘One Child’ policy. The domestic social, political, and most notably, economic systems would undergo significant changes during Deng’s time as leader. The goals of Deng’s reforms were summarized by the Four Modernizations, those of agriculture, industry, science and technology and the military. The strategy for achieving these aims of becoming a modern, industrial nation was the socialist market economy.
For agriculture, it changed for the better. Deng first took steps to repair the damage done to farm production during the Great Leap Forward. In place of the communes he established the contract responsibility system. Under this arrangement, the government rented land to individual farm families, who then decided for themselves what to produce. The families contracted with the government simply to provide a certain amount of crops at a set price. Once the contract was fulfilled, the families were free to sell any extra crops at markets for whatever prices they could get. This chance to make more money by growing more crops greatly increased China’s farm production. Since the introduction of the contract responsibility system, Chinese farmers produced about 8 percent more each year than they did in the previous year. And many farmers have benefited greatly from the new plan. Under the contract responsibility system, families still did not own the land. The long-term leases awarded by the government, however, helped to develop an “owner” attitude among the farmers. As a result, many families have made improvements to the land.
As for the economy, Deng attracted foreign companies to a series of Special Economic Zones, where foreign investment and market liberalization were encouraged. Which meant that China needed Western technology and investment, and that it could open the door to foreign businesses who wanted to set up in China.
The reforms centered on improving labor productivity as well. New material incentives and bonus systems were introduced. Rural markets selling peasants’ homegrown products and the surplus products of communes were revived. Not only did rural markets increase agricultural output, they stimulated industrial development as well. With peasants able to sell surplus agricultural yields on the open market, domestic consumption stimulated industrialization as well and also created political support for more difficult economic reforms.
Another change for China was it’s industry, the four modernizations affected the industry positively. It provided electricity in the rural areas, industrial automation, a new economic outlook, and greatly enhanced defense strength. His program for industry had two goals. First, he wanted people to spend more money on consumer goods. Therefore, he changed the focus from heavy industry to light industry, the production of small consumer goods such as clothing, appliances, and bicycles. He also wanted factories to step up production. So he gave more decision-making power to individual factory managers. And he started a system of rewards for managers and workers who found ways to make factories produce more.
All in all, these changes brought good results, and changed China for the better and is the China that is here today. Deng’s leadership really helped modernize China.