China: A Journey of 76 years from absolute poverty to Prosperity II
Dr. Syed Mehboob
Senior Business and Political Analyst
Deng Xiaoping was a visionary leader of China. He gave the right and deserving place to the neglected “Intellectual Class”. He restored the place of merit, rule of law, social justice, pragmatism, reforms, and openness, which proved very significant for China’s economic uplift and epic transformation. He gave due importance to education, science, and technology, and considered them as a productive force, and kept them in due priority in China’s economic plans. He restored the system of entrance exams. Learning foreign languages was made a state priority. He strictly prohibited the culture of vengeance and promoted the culture of tolerance and the original identity of China. Deng Xiaoping visited Japan in October 1978, followed by Singapore in November 1978. He realized that China lags behind other nations not only in technological level, but also in organizational and management skills. This was reflected in the low level of total factor productivity. However, these gaps could not be addressed overnight and required a dedicated effort under a holistic strategy that included the import of advanced technology and the transfer of plant prototypes and equipment. Rehabilitation of old factories, local innovation, accelerated joint research, and inviting foreign experts and managers to import accessory parts of technology, as well as sending delegations on study missions.
Within three years from July 1977 to June 1980, the state council sent three hundred sixty delegations, while the country’s science and technology, education, and trade departments sent four hundred seventy-two delegations. He proudly and rightly exclaimed that he had inflamed the masses everywhere from Jilin to Sichuan to Guangdong. He was in a hurry without losing sight of details.
Development is a state of mind and has to develop as a cluster for the transformation of society. The development paradigm promoted by Deng Xiaoping in China in 1978 was towards efficiency, productivity. China has a self-imposed “Egalitarian trap” in which poverty was adored ideologically and everybody ate rice from the same iron bowl irrespective of his/her contribution, enjoying lifelong jobs, and social security. The reforms were painful as they required a mindset change to earn his/her living, allowing everyone freedom to become rich which lawful means and hard work. Now society allowed intellectuals to change society.
China realized that modernization was courtesy of higher education, innovation, and reforms, not merely raising political slogans. The position of intellectuals has been elevated from the 9th stinking category of the past to the VIP category in the post-1978 era, as per China’s rich culture and traditions. Investment in higher education was made a key plank of the reforms and open-door policy to the outside world. The greatest ancient teachers, Confucius, Lao Tzu, and Buddha, were rehabilitated. Old slogans were replaced with “ Learn from the West, make foreign technology serve for China, education is key, science and technology is the frontline of progress, liberate youth mindset, a communist does not have to be poor, if you can not beat rich be one of them, only development makes sense, build the motherland, introduce and adopt reform and learn, China’s open door policy, is there to stay, achieve four points modernization, the masses will prevail, China welcomes foreign friends from all over the world.
Deng Xiaoping asked the people to acknowledge the gap between China and the developed world and ponder why they had fallen so far behind. He felt that North America, Western Europe, and Japan were confronted with economic recession and were keen to engage China too, in their own interest. Deng Xiaoping thought the situation was ideal to import western technology, invite and welcome foreign direct investment, acquire higher education, groom talents, develop skills, and learning from global management and best corporate practices. The third Plenum of the 11th Congress of the Communist Party adopted the policy of economic reforms and an open door to the world. Immediately thereafter, the Chinese government began deputing hundreds of missions abroad for learning global best practices in an international manner. Several dozen of these missions visited Pakistan, too. Pakistan was at that time one of the few windows to Western knowledge, corporate practices, and technology, as China was sanctioned by the Western world until 1978. Singapore’s late statesman and founder Lee Kuan Yew recalls in his memories Singapore From the Third World to First: Singapore’s story, that following the visit of the Chinese reformist leader Deng Xiaoping to the Island state in 1978, the Chinese government deputed more than one hundred fifty missions next year.” I had told Deng over dinner that there was nothing that Singapore had done and China could not do better. After Deng’s endorsement, several hundred delegations, most of them unofficial, came from China, armed with tape recorders, video cameras, and notebooks to learn from our experience. China under Deng was more open and willing to learn from the world than it had been for centuries.”
Several countries and regions helped China in the critical times of its epic transformation, while China’s reformist leadership decided for itself as to which individual country to approach, for what aspect of the implementation of economic reforms and opening up to create a socialist market economy. They sought Hong Kong and Singapore’s expertise in establishing special economic zones(SEZs). For the modernization of the steel and automobile industries, they looked to Japan. America’s GM CEO, Mr. Murphy, is known for introducing the concept of joint ventures to the Chinese in 1979. The British Monotype Corporation gifted the Chinese with their invention of the Chinese character “ Laser Prototype Setting equipment” in 1980, which carried a revolution in the printing industry, no less important than the “Gutenberg era” in Europe. Before that, China was severely constrained in using carbon and lead. Germans were chosen to assist in the modernization of machine machine-building industry. The Germans obliged the Chinese handsomely by introducing their Volkswagen automobiles as well as dozens of other high-tech sectors, including elevators/lifts, dreggers, tunneling technology, power engines, and Maglev railways.
Pakistan was particularly chosen to see how the market economy worked in practice and its experience in working with International Financial Institutions ( IFIs), particularly the World Bank. Several Chinese study missions were sent to Pakistan to study its flourishing textile sector, sports goods, and leather goods industry. Karachi Export Processing Zones ( KEPZ) banking, railway, and civil aviation sectors. Pakistan International Airlines (PIA) was one of the eight airlines operating three weekly flights to Beijing in 1980. PIA’s services to China began in 1964, becoming the first non-communist country airline to operate to China. In fact most Chinese leaders and senior officials preferred to use PIA for their travel to Europe, Africa, and other destinations. China had very few friends back then in Europe. These included the reclusive states of Albania, Yugoslavia, Romania, etc. Other Eastern block countries, such as Hungary, Poland, Czechoslovakia ( before splitting into the Czech Republic and Slovakia), German Democratic Republic ( GDR), followed the Soviet Union’s foreign policy alignments and priorities.
In the economic field, the initiatives were implemented Four Point Modernization Program, free enterprises, hiring/firing practices, incentives, and mobilization of overseas Chinese, incentives to foreigners, establishment of the household responsibility system, restrictions on rural urban migration, one child family, industrial townships, and the building of the special economic zones, etc. Economic reforms introducing market principles began in 1979 and were carried out in two stages. The first stage in the late 1970s and early 1980s involved the decollectivization of agriculture and permission for entrepreneurs to start businesses. However, most industry remained state-owned. The second stage of reforms in the late 1980s and 1990s involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. This envisaged adoption of structural transformation in the conditions of poor infrastructure and business environment. It was neither charity-driven nor IFI policy-driven. It utilized its limited resources to develop industries in which it had a comparative advantage by creating industrial parks, special economic zones with good infrastructure and business environment. This helped the inflow of technology and best practices. From the priority to heavy industries, the focus shifted to the development of light and consumer goods industries to meet domestic demand, build exportable goods, and generate surplus capital. China’s economic growth since the reforms began has been astonishingly rapid, exceeding East Asian Tigers. A credible estimate put China’s GDP growth from 1978 to 2013 for Thirty-five years at between 9.5 percent a year. The increase in total factor productivity (TFP) was the most important factor, with productivity accounting for 40.1 percent of the GDP increase, compared with a decline of 13.2 percent for the period 1957 to 1978, the height of centrally planned policies. For the period 1978 to 2005, for 27 years, GDP per capita increased from 2.7 percent to 15.7 percent of US GDP per capita. Per Capita income grew 6.6 percent per year, average wages rose sixfold between 1978 and 2005, while the absolute poverty declined from 41 percent of the population to 5 percent from 1978 to 2001.
China’s economic magic was the outcome of hard work, dedication, commitment, leadership’s sincerity, focus on higher-quality education, giving top priority to science and technology, and its famous Four Modernizations Programme. These four points were agriculture, industry, science, technology, and national defence. Deng’s first reforms began in agriculture.
By the 1970s, food supplies and production had become so difficult that
government officials were warning that China was about to repeat the
disaster of 1959, which lasted till 1961 and resulted in the deaths of 36 million.
Deng responded by decollectivizing agriculture and launching the Household
Responsibility System (HHRS), which divided the land of the people’s
communes into private plots. Farmers were able to keep the land output after
paying the quota to the state. They could sell the surplus at the market prices.
This move increased the living standards of hundreds of millions of farmers and stimulated rural industry. Agriculture Household Responsibility was introduced under which the peasants were allowed freedom to grow crops, vegetables, flowers, and sell them in the free market. After meeting the state quota, the farmers were permitted to establish small and medium enterprises (SMEs) for agro-based food products, toys, handicrafts, and home appliances initially under cooperatives. The reform introducing the “Household Responsibility System in agriculture generated surplus labour, which was absorbed in “Township Village Enterprises (TVEs). They were soft industrial enterprises which produced consumer and light Industrial products, initially for the home market and subsequently for export. Reforms were also implemented in the urban industry to increase productivity. The price liberalization or the adoption of a dual pricing mechanism by the building of Special Economic Zones( SEZs), Central Business Districts ( CBDs), learning and assimilating advanced technology, corporate knowledge, promotion of export culture, opening up to foreign investment, learning from global best practices, utilizing demographic advantage, enhancing vocational skills, leveraging with the China incorporated economies e.g Hong Kong, Taiwan, Singapore etc.
China is heading for the number one position; the world's future depends on it. China is unstoppable. China is already the world’s leader in Gross value of industrial output, mining and ore processing, iron, steel, aluminum, and other metals, coal, and machine building, armaments, textile and apparel, petroleum and cement, chemicals, fertilizers, consumer products, including footwear, toys, and electronics, food processing, transportation equipment, including automobiles, rail cars, and locomotives, metro lines, ships, aircrafts, telecommunication equipment, commercial space launch vehicles, satellites, Industrial production, growth rate etc. Chinese multinationals are the largest job creators globally, and Chinese corporate giants are shaping the world’s industries. Some of these are:-
• CRR is the world’s largest train manufacturer of Bombardier
• Chem China is the second largest, behind Monsanto
• CNNC is competing with Washington and Area groups
• Jinko, Trina, Chint, and Gold Wind dominate the global solar and wind market
• COMAC is competing with Boeing and Airbus
• COFCO is a global player in the grain market
• DJI is the world’s top drone market
• Huawei, Xiaomi, and Oppo share a third of the global market
• Heir is the world’s largest home appliances maker with ten percent market share
• CATL is competing with Japan’s Panasonic for the electric car battery
One of the brilliant policy initiatives adopted by the reformist leadership in 1979 was the serious drive to bring in advanced technology and prototype plants and machinery from the West. European nations and Japan to modernize China’s depilated Soviet era machine and equipment.
Top 10 Global Manufacturing Output (2024)
Rank Country Amount US$ billion % share in global production
1 China 4,660 27.7
2 USA 2,910 17.3
3 Japan 867 5.15
4 Germany 830 4.93
5 India 490 2.91
6 South Korea 416 2.47
7 Mexico 364 2.16
8 Italy 345 2.05
9 France 298 1.77
10 Uk 292 1.73
China was at least a generation or 25 years behind the developed countries in science and technology, modern corporate practices, and marketing skills. Deng Xiaoping was wholeheartedly committed to Science and technology modernization. He advocated a change in attitude away from a narrow understanding of self-reliance and self-righteousness, and self-praise to openness in thinking, with readiness to learn from the achievements and successes, and best practices of other nations. He quoted China’s Qing Dynasty scholar Wei Yuan (1794-1857) who advised the Chinese to learn what the foreigners are good at, beat them. China opened it at the right time in 1979, coinciding with the depression era of recession in the USA, Western Europe, and China, which happened to be just searching and waiting for an opportunity to export to China. 1978 was the year that witnessed the signing of 1,230 contracts by China with mostly Japan and Western European nations for the importation of technology. The state council had set up a special group to organize, manage, and implement the import of the technology for accelerating China’s four-point modernization programme. Almost 90% of these related 22 projects are in steel making. Chemicals, coal, and metals processing. Shortage of funds was a hindrance, resulting in the cancellation of US$2.6 billion of 30-plus projects. Deng Xiaoping was, however, not deterred by setbacks. A way out was found through what is known as the THREE PLUS ONE thread mechanism, i.e., export processing, joint ventures, and compensation trading to avoid the pressure on meager foreign exchange resources. This policy enabled China to import advanced technology, promote exports, earn foreign exchange, and provide employment.
Massive investment was made in domestic research and development organizations to accommodate the returning scholars. Initially, eighty percent of students and experts preferred to stay abroad for a few years, but gradually the number of returnees to serve their country exceeded, and in 2020 it reached 80%. According to unofficial estimates, China assimilated 16,000 packages of technology and equipment, machinery amounting to US$12 billion from 1980 to 1984.
CHINA’s Economic Indicators
Area Sq. Km : 9, 596,961
Population : 1,408 million
GDP (PPP) : US$ 40,710 billion (2025)
GDP ( Nominal) : US$ 19,232 billion ( 2025)
GDP per Capita PPP : US$28,978
GDP per Capita Nominal: 13,687
GDP growth
Year % Growth
2024 5.00
2025 4.00
2026 ( est) 4.00
Exports US$ billion : 3,577 (2024)
Imports US$ billion : 2,586 ( 2024)
The Chinese journey towards development and prosperity is a lesson for all developing countries in general and Pakistan in particular. Since China is our very close friend, we must learn from it and get rid of corrupt, inefficient bureaucracy and utilize our resources for the promotion of science and technology and human resource development, especially our youth, who are 60% of our population, and they can turn our country into a dignified and developed nation. Currently, there are 30,000 Pakistani students who are getting higher education in China, out of them 8,000 are doing Ph.d. China is going to train 10,000 Pakistani youth in the agriculture sector. If we really learned a lesson from China, then it is sure that OUR FUTURE IS VERY BRIGHT INSHA ALLAH.
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