In 1978, the People’s Republic of China was one of the poorest countries in the world. Its economy had been devastated by the convulsions of the Maoist era — the Great Leap Forward of the late 1950s, which caused a famine that killed between 15 and 55 million people depending on the estimate, and the Cultural Revolution of 1966 to 1976, which systematically destroyed the educated class, the institutional fabric, and the economic infrastructure that any modern state requires. The population of nearly a billion people had a per capita income comparable to sub-Saharan Africa. The country was diplomatically isolated, technologically backward, and governed by an ideological apparatus that had proved catastrophically incompetent at the task of economic development.
Forty years later, China was the world’s second-largest economy, the largest manufacturer, the largest trading nation, and a military and technological power whose capacities no other country could ignore. It had lifted several hundred million people out of extreme poverty — the largest single improvement in human material welfare in history — and had built infrastructure on a scale and at a speed that had no parallel in the modern era. The transformation was without precedent in the history of economic development, and its causes, consequences, and long-term implications are among the defining questions of the twenty-first century.
Deng Xiaoping and the Great Turn
The architect of China’s transformation was Deng Xiaoping, who consolidated power after Mao’s death in 1976 and launched the policy of “reform and opening up” at the Third Plenary Session of the Eleventh Central Committee in December 1978. Deng was not a liberal. He was a pragmatist who had survived multiple purges by the Maoist faction of the Party and who had concluded that the revolution’s survival depended on its economic performance. His guiding formulation was famously unideological: “It doesn’t matter whether the cat is black or white, as long as it catches mice.” What mattered was whether a policy produced growth. The question of whether it was compatible with socialist doctrine was secondary.
The reforms began in agriculture. The collective farming system that had been imposed across rural China — the system whose failure had produced the Great Leap famine — was dismantled in favour of the household responsibility system, which returned land management to individual families while leaving nominal ownership with the collective. Farmers could sell their surplus produce on the market once they had met their quota for the state. Agricultural productivity rose dramatically almost immediately. The contrast with the collective period was sufficiently stark that it constituted, for the rural population that was the large majority of China’s people, empirical proof of a basic economic proposition: that people work harder and more efficiently when the results of their labour accrue to them.
The second phase of reform was the establishment of Special Economic Zones on China’s southeastern coast — Shenzhen, Zhuhai, Shantou, Xiamen — where foreign investment was permitted, labour laws were more flexible, and market mechanisms were allowed to operate in ways prohibited elsewhere in the country. The SEZs were experiments, bounded and controlled, whose success could be studied before replication. Shenzhen, a fishing village of 30,000 people in 1979, had become a city of 10 million by the early 2000s, a physical demonstration of what market mechanisms combined with a disciplined and inexpensive labour force could achieve when the barriers to foreign investment were removed.
Tiananmen: The Choice
The economic liberalisation of the 1980s created pressures that the political system was not designed to accommodate. A generation of university students and urban intellectuals, educated in institutions that had been rebuilt after the Cultural Revolution, drew connections between economic reform and political liberalisation that the Party leadership either could not or would not draw. The inflation produced by the economic reforms of the late 1980s, combined with the corruption that accompanied the partial marketisation of an economy still run by Party cadres, generated widespread discontent that found expression in the demonstrations that gathered in Tiananmen Square in Beijing in the spring of 1989.
The protests drew hundreds of thousands of participants in Beijing and millions more in cities across China. The students erected a Goddess of Democracy in the square, reminiscent of the Statue of Liberty, and transmitted their demands for political reform to an international media presence that had gathered in Beijing for the state visit of Soviet leader Mikhail Gorbachev. The parallel with the democratic movements sweeping Eastern Europe was not lost on either the protesters or the Party leadership.
On 3 and 4 June 1989, the People’s Liberation Army cleared the square by force. The death toll was never officially established; estimates by international observers and the Chinese Red Cross, subsequently suppressed, suggested several hundred to over a thousand deaths in Beijing, with further deaths in other cities where the crackdown was enforced. The image of a single man standing before a column of tanks on the Avenue of Eternal Peace — the “Tank Man,” photographed by multiple photographers before he was pulled from the scene — became one of the most reproduced photographs of the twentieth century and the defining image of the event for international audiences.
Tiananmen was the Chinese Communist Party’s explicit choice of economic modernisation over political liberalisation. The Party had looked at Gorbachev’s Soviet Union, where political openness had preceded economic reform, and drawn the conclusion that this sequencing was fatal to the Communist Party’s survival. China would do it the other way around: economic growth first, indefinite deferral of political reform. For three decades, the bargain held. The Party delivered growth; the population accepted the absence of political rights. Whether the bargain would survive the middle-income transition — the point at which economic growth slows and educated urban populations begin to demand more from their government than material improvement — remained the central question of Chinese politics.
The Workshop of the World
The 1990s and 2000s were the decades of China’s integration into the global economy as its primary manufacturing base. Hundreds of millions of rural migrants moved from the countryside to the coastal factory cities — the largest internal migration in human history — and worked for wages that were a fraction of those paid in the developed world, producing the goods that filled the shops of Europe and North America. China’s entry into the World Trade Organization in 2001, after fifteen years of negotiations, locked this integration into a framework of international trade rules and eliminated the remaining barriers to the flow of goods and investment between China and the global economy.
The consequences for the global economy were as significant as any event since the Industrial Revolution. The vast supply of cheap Chinese labour fundamentally altered the price level of manufactured goods across the world, contributing to the low inflation that allowed Western central banks to keep interest rates low through the 1990s and 2000s. It also contributed to the deindustrialisation of the American Midwest and the British North, as manufacturing that could be done more cheaply in China was relocated there. The political consequences of that deindustrialisation — the communities left without economic purpose, the white working-class anger that would feed into Brexit and the election of Donald Trump — were not apparent in the years of growth, but they accumulated through them.
For China itself, the growth was real and its material consequences for ordinary people were transformative. Life expectancy rose from 67 in 1980 to 77 in 2020. Infant mortality fell from 53 per thousand live births in 1980 to 7 in 2020. The proportion of the population living on less than $1.90 a day — the World Bank’s extreme poverty line — fell from approximately 88 per cent in 1981 to under 1 per cent by 2015. These numbers represent hundreds of millions of human lives lived in better material conditions than would otherwise have been possible. They are the most significant achievement of the Chinese development model, and they deserve to be weighed honestly against its costs.
The Beijing Olympics and the Statement of Arrival
The Beijing Olympics of August 2008 were the Chinese Communist Party’s statement to the world that China had returned to the status of great power after what the Party described as the “century of humiliation” — the period from the Opium Wars of the 1840s through the Japanese occupation of the 1930s and 1940s in which China had been subjected to foreign domination and territorial dismemberment. The opening ceremony, choreographed by the film director Zhang Yimou, was a spectacle of coordinated human performance on a scale that was explicitly intended to communicate the organisational capacity and cultural depth of Chinese civilisation. The games proceeded without the disruptions that critics had predicted; China topped the gold medal table.
The financial crisis that struck the global economy in September 2008, just weeks after the closing ceremony, demonstrated the degree to which China had become central to the global economic order. The Chinese government’s response — a stimulus package of $586 billion, far larger as a proportion of GDP than anything undertaken in the West — played a significant role in stabilising the global economy and accelerating China’s recovery relative to the developed world. The crisis appeared to confirm what many in China had been arguing: that the Western model of liberal market capitalism, deregulated and financialised, was inherently unstable, and that China’s state-led variant might be more durable.
Xi Jinping and the Turn
Xi Jinping became General Secretary of the Chinese Communist Party in November 2012 and President of the People’s Republic in March 2013. His consolidation of power over the following years represented the most significant shift in Chinese political life since Deng: a reversal of the collective leadership norms and term limits that Deng had established as safeguards against another Mao, and a reassertion of one-person rule backed by an anti-corruption campaign that served simultaneously as a genuine effort to address a real problem and as a tool for removing political rivals.
Xi’s vision of China’s place in the world was more assertive than his predecessors’. The Belt and Road Initiative, announced in 2013, was an infrastructure and investment programme on a global scale — roads, railways, ports, and power plants across Asia, Africa, the Middle East, and Europe, financed by Chinese state loans and built largely by Chinese companies — that extended Chinese economic and political influence across regions that had been marginal to Chinese foreign policy. The South China Sea disputes — China’s assertion of sovereignty over almost the entire sea and its construction of artificial islands with military installations — brought China into direct confrontation with the Philippines, Vietnam, and the United States in ways that the previous generation of Chinese leadership had avoided.
The suppression of the democracy movement in Hong Kong, which escalated through 2019 and 2020, and the mass detention of Uyghur Muslims in Xinjiang — in camps that the Chinese government described as vocational training centres and that human rights organisations described as concentration camps — demonstrated that the limits of what the Party would tolerate internally had not expanded with China’s wealth and global integration. They also made increasingly difficult the argument that economic engagement with China would eventually produce political liberalisation — an argument that had been the intellectual foundation of Western China policy for three decades.
The New Rivalry
The relationship between China and the United States had been managed, through the period of China’s rise, by a combination of economic interdependence and strategic ambiguity — the United States remaining committed to the security of Taiwan without formally recognising Taiwanese independence, China remaining committed to eventual reunification without specifying a timeline or method. By the late 2010s, the ambiguity was becoming harder to sustain. The Trump administration imposed tariffs on Chinese goods and began restricting Chinese access to American semiconductor technology. The Biden administration continued these restrictions and added new ones. The language of the relationship shifted from “strategic competition” to something that felt, in the words of several observers, structurally more similar to the Cold War than any post-war relationship had.
Whether the comparison holds depends on what one emphasises. The Cold War between the United States and the Soviet Union was conducted between two economies that were largely separate; the US-China relationship is conducted between two economies whose integration — in supply chains, financial markets, technology development, and university research — is as deep as any between major powers in history. The Soviet Union never approached the United States in economic scale; China’s economy will plausibly exceed America’s in absolute size within the decade. The Soviet challenge to the West was primarily military; the Chinese challenge is simultaneously economic, technological, political, and military.
What the rise of China means for the international order that the United States constructed after 1945 — the system of multilateral institutions, open trade, and American security guarantees that provided the framework for the longest period of great-power peace in modern history — is the central question of international politics in the twenty-first century. China has benefited from that order more than any other country; it has also chafed against its rules and norms more aggressively than any other major beneficiary. The resolution of that tension — whether through accommodation, competition, or confrontation — will determine more about the character of the coming century than any other single factor.
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