China
Fervor and Frenzy
Until 1978 the management of
China's economy ran the gamut from the bizarre to the
brutal. The communists knew nothing about economics. The
result was devastation: in 1959 hundreds of thousands of
peasants were instructed to build blast furnaces in their
backyards to increase steel production, at the expense of
food production. Between 1958 and 1962, 30 million peasants
are said to have starved to death; at the same time China
was claiming surreal increases in wheat production. A few
years later, the anarchy of the Great Proletarian Cultural
Revolution caused productivity to drop one-third. By one
estimate close to 1 million more died.
And then, nearly 20 years ago, Deng Xiaoping began to propel his country toward a market economy. "A cat, whether black or white, is a good one as long as it catches mice," he had famously declared decades earlier. In 1978 Deng brought private enterprise to the farms, and between 1978 and 1982 the income of peasants doubled from $65 to $135 a year. By 1984 peasants in Henan province were banding together to buy their own ultra-light aircraft for crop spraying. In trailblazing Shenzhen, billboards in the mid-'80s proclaimed, time is money and efficiency is life.
China may have been a late starter, but it currently draws more foreign direct investment - upwards of $40 billion last year - than any other developing economy. Foreign money and managerial expertise has prompted a flood of exports from the mainland. Toys and even Christmas decorations now command more than two-thirds of the U.S. market.
Still, China's - and all of Asia's - extraordinarily rapid transformation and occasional bouts of self-congratulation sometimes obscure the difficulties ahead. Large income disparities persist, as do huge gulfs between toiling peasants and technocratic élites. Even in East Asia, about 180 million people, half of them in China, live on less than $1 a day. Yet Asians cannot be blamed too much for optimism after decades of unmatched economic accomplishments on the back of historical calamity. Compared with the past, the future looms not as a problem, but as a stupendous economic opportunity. -Reported by Helen Chang/Singapore, John Colmey/Hong Kong, Jaime A. FlorCruz/Beijing, Robert Guest/Tokyo, Donald Shapiro/Taipei and Michael Shari/Jakarta
