How China became a Superpower? | Case Study | Dhruv Rathee
Hello, friends! Today, China is one of the most powerful countries in the world. But can you imagine that only 40 years ago, the poverty rate in this country was over 90%? Poverty and starvation had made the country miserable. But in the next 30 years, we saw such a huge transformation that the poor, starving country reached thus far. In 1978, China's contribution to the global GDP was only 2%.
Today, China contributes more than 18% to the global GDP. Their poverty rate is less than 1% and China is the second-largest economy in the world. In many ways, it can be considered a superpower country.
But how was this possible? What was the magic they used? Come, in this video, let's do a detailed case study on China. "China was emerging from its cultural revolution as one of the world's poorest nations." "1978, Deng Xiaoping, had an idea, one that would turn Communist China on its head." "Since then, China has made enormous strides in various fields." "So how did one of the world's poorest countries become a global superpower in just 4 decades?" China is named after the Chinese word, Qin. It is written as Q-I-N but pronounced as Chin.
Qin was the name of an old dynasty which ruled China 2000 years ago and unified China. This is why we refer to Chinese people as Chini in Hindi. What came from Chin is Chini. And another interesting fact here about the actual ‘Chini’, the Hindi name for white refined sugar. It is believed that refined white sugar was brought to India by a Chinese man. A Chinese man either opened a sugar mill or somehow sugar came from the Chinese route.
Before that, we used unrefined sugar and jaggery. Because a Chini person brought sugar, we started calling the sugar Chini. Another interesting fact here is that Chinese people do not refer to their country as China. They use the name Zhongguo. for their country. It means the Middle Kingdom.
It symbolizes China's 4000 years old history. How China used to be the centre of the world. It was in the middle. You can see on the map, China is the world's 4th largest country.
It borders India. But most of the Chinese population actually lives quite far from India, on the East Coast. This is because the fertile land on which agriculture is possible is mostly situated in that area. In the West, there are the Himalayan mountains and deserts. Because of its size, China used to be a very successful and powerful kingdom till the 19th century. And after that, it was affected by colonialism.
Although the British could not fully occupy China, as they did on the Indian subcontinent, but still, China was looted in different ways. This is the reason why the period from 1839 to 1949 is remembered as the Century of Humiliation by the Chinese. It starts in 1839 when the British East India Company began exporting opium to China. Opium is a drug to which many Chinese people got heavily addicted and the entire Chinese society was destroyed.
After this, many treaties were forced upon China, per which, China had to hand over significant portions of land and its ports to the British. Then, in 1850, there was a terrible civil war in China called the Taiping Rebellion. Millions of people were killed. Fast forward 40 years, and you see the first Sino-Japanese War in 1894.
China and Japan went to war over territory. I won't go into the details, but the Qing Dynasty was ruling China at that time. Don't confuse it with the Qin dynasty, the root of the name 'China'. That Qin dynasty is 2,000 years old.
This was the Q-I-N-G dynasty. The other was the Q-I-N dynasty. Same pronunciation.
From 1937 to 1945, Chinese people had to endure even more terrible torture. This time, by the hands of Japanese colonisers. In the World War 2 video, I explained how China was a part of the Allied Powers. It was fighting against Japan. In World War 2, around 30 million Chinese were killed. In the midst of all this, a ray of hope was seen when China and the Allied Forces finally won World War II.
Japan retreated But right after the end of WWII, a civil war broke out in China. A war between the Chinese Communist Party and the Nationalist Party, KMT. It started in 1927, but when Japan invaded during World War II, they had stopped fighting temporarily. The civil war ended in 1949 with the victory of the Chinese Communist Party.
The people of the Nationalist Party fled to a nearby island, which is now called Taiwan. And the mainland China was ruled by Mao Zedong. This was the point where it can be said that China was formed as the country we now know. 1st October 1949, People's Republic of China was born. "The leader of the Communists, and the hero of the revolution, is Mao Zedong." In 1958, Mao launched the Great Leap Forward Campaign.
Its aim was to bring economic and social transformation to the country. There were two main policies in this. First, to take the land from the landowners and distribute it among the farmers.
Land redistribution. Thereafter, collectivizing agriculture. Agricultural cooperatives were made so that more farmers could work on the same land. But ultimately, the ownership of the land was in the hands of the government. Second, industrialization.
On the one hand, large industrial plants were built for steel production. And on the other hand, telling people to make small-scale steel furnaces in their backyards to produce steel at a local level. The intention was good. To develop the country economically.
But the result was very bad. The small-scale steel furnaces that people had built in their gardens were producing low-quality steel. This led to the resources being wasted. Secondly, the farmers did not have any incentive to increase their production because there was no profit sharing and no private ownership. The ownership of the land was ultimately in the hands of the government.
So, whatever crop was being grown by the farmers, had to be handed over to the government. This led to a huge decline in productivity. Between 1958 and 1961, the grain production fell by 15%. In just a few years, due to bad weather and some other “masterstroke” policies of the Mao regime, the situation got so bad that the whole country was starving. The famine was so terrible that around 20-40 million people died in this famine in China.
It is known as one of the deadliest famines in history. To put it bluntly, Mao Zedong was a dictator. And because there is no checks and balances system for dictators, as there is in a democracy, dictators often have a habit of imposing their wills without thinking or testing. Several such decisions by Mao made China worse. Another example of such decisions was the Sparrow Extermination. Mao's intention was to increase food production.
So, it was ordered that all the sparrows, and all the birds should be killed because those birds ate the grains. They eat some crop grains from the fields. So, the crops are affected by the crops, so all the birds in the country were to be exterminated. When this campaign was run, and sparrows were killed, a few years later, people realised that the insects and pests were multiplying so rapidly they were causing more damage to the crops. This worsened the food shortage. Later, a scientist found that if all the birds are killed, then no one would be left to eat those insects.
The birds used to eat the insects which kept the insect population in control. The entire ecological balance was disturbed. And the situation worsened so terribly that it led to a famine. After such a big failure, Mao was criticized by the Chinese public and by the Communist Party too. But Mao Zedong was not willing to admit his mistake. Another campaign was started.
Cultural Revolution in 1966. The name suggests that it was meant to bring a revolution of culture in the country but the real purpose was to give control to Mao and suppress the opposition. Propaganda and PR machinery were used extensively here. To show off his power, Mao swam in the Yangtze River.
There is a famous photo of him. A civilian army is formed by the students the Red Guards. Red Guards were loyal soldiers of Mao who had red armbands on their hands and they used to carry a small red book by Mao. Their job was to target those who were against Mao.
Intellectuals, party officials, all those who were not loyal to Mao's ideology, were targeted, publicly humiliated and often, violence against them was also seen. There were people in the Communist Party who were criticizing the Cultural Revolution, criticizing Mao, and they were also targeted by the Red Guards. Liu Shaoqi and Deng Xiaoping were some of the high-ranking party officials, targeted by the Red Guards. In the name of this revolution, a fear environment was created in the whole country.
People were encouraged to spy on their neighbours, family members, to find the traitors, a traitor was someone who was against Mao's ideology, people had to find them and report about them. Schools and universities were shut down. Students were told to go to the farms and learn the condition of the farmers.
To experience the hardships of rural life. As time passed, things became out of control. Red Guards started fighting among themselves. Historical sites and cultural artifacts were destroyed. People's lives were turned upside down.
This was the time when Tibetans were also tortured. I have told you the story in the Dalai Lama video. If you haven't seen it, I will put the link in the description below. Finally, Mao realized the Cultural Revolution created a crisis in the country. It was dividing the country.
So, in 1968, to regain control, the Red Guards system was abolished. The estimates vary a lot depending upon the source, but it is said that hundreds of thousands to 2 million people lost their lives because of the Cultural Revolution. In total, it is said that up to 50 million people died in China because of Mao's policies. In 1976, Mao Zedong passed away due to poor health. And till then, there were no major improvements to China's condition.
But it is not that there were only failures and bad things during Mao's reign. There were some positive achievements too. Especially in terms of women's equality and education. A nationwide public education system was launched during Mao's rule.
Campaigns were run by the government to end illiteracy. And during Mao's leadership, China's literacy rate improved a lot. In 1978, compared to 1949, China had 3 times more primary and secondary schools. At the same time, a strong foundation was formed with the help of which China helped millions of people to get out of poverty. Moving forward, as you will see in the story, his government made strategic investments in education, in the fields of science, technology, engineering, and mathematics, which are called STEM fields.
With the help of this, a talent pool was created in the country, which led the country's technological progress. Today, software development and data science have become an X-factor, which can transform your life. And if you want to advance your career in this field, then today's sponsor Scaler.com will be very helpful to you.
Scaler is an online tech academy that offers courses in fields like software development, data science and machine learning. They bring in subject experts from top tech companies to guide and teach students. On Scaler, you can get 3 hours of daily learning from an instructor. You can get one-on-one mentorship and 80 plus real-world case studies. The learners who have completed their course, on average, Scaler claims that their salary has seen a 126% hike. And around 93.5% of learners have been placed
in top tech companies like Google, Facebook, Flipkart, Myntra, Amazon, Apple, and Zomato. They also offer free masterclasses, webinars and workshops which cover a wide range of topics. From beginner-friendly topics to advanced concepts. Everything for everyone. So if you think that you can take your career to the next level with the help of Scaler, you can check out their website. You can find the link in the description below.
You can also choose an easy EMI option of 2 years with zero interest. And you can judge for yourself by signing up for their free live class. And now let's get back to the topic of the video. Mao's opinion about women was that "Women hold up half the sky." In 1950, a new marriage law was passed according to which arranged marriages and forced marriages were made illegal across the country. Women were given the right to divorce and in many other aspects, women were brought on equal footing.
But if we come back to the time of 1976, a new leader comes to power after Mao's death in China, in the Chinese Communist Party, Deng Xiaoping. He is also called the father of modern China because during his leadership, the real transformation of China begins. Deng Xiaoping was one of those who raised his voice against Mao during Mao's time. Because of this, during the Cultural Revolution, he was forced to resign from all his positions. It was obvious that Deng Xiaoping's ideology was very different from Mao's ideology.
Deng believed that the government had extremely tight control over the Chinese economy. Which was the cause of the destruction of China over the preceding 50 years. He wanted to free the economy. That's why he introduced his policies of Economic Liberalization. There are many aspects to this which we will discuss one by one. But his overall ideology is today known as Socialism with Chinese Characteristics.
First, to bring transformation in the agriculture system, Deng introduced a household responsibility system. When Mao launched his Great Leap Forward campaign, private farming was completely abolished. No individual was allowed to own land. All ownership was in the hands of the government at the local level. Deng did not change this ownership structure. The ownership remained in the hands of the government of the village.
But individual farmers and their families were given the land on long-term leases. Those farmers will have the right to decide which crops to grow, how to manage their business and from where to earn profit. So, the farmers got more freedom to grow crops of their choosing.
Second, Deng said that all farmers will have to sell a certain amount of their crops to the government. But after meeting that quota, they can sell the excess produce wherever they want, and earn extra profit. So, this motivated the farmers to innovate.
Their productivity increased. Some similar land reforms were brought in India after Independence in states like Kerala and West Bengal which are said to be major reasons why states like Kerala have been able to develop so much. Although, the specifics of these reforms were different.
We can discuss them in another video. But Deng Xiaoping used the same idea on factories. Factory Manager Responsibility System was introduced.
Before this, during Mao's leadership, the responsibility to manage the industrial factories in China were given to the members of the Communists Party. There was a lot of political interference. But under Deng's leadership, the responsibility was shifted to the workers and managers working in the factories. They allowed them more freedom to decide what they want to produce, their production target, the prices at which they will sell the products, and the salaries they would draw. Once again, the workers working in the factory got an incentive to work harder. Imagine it for yourself, there is a factory that manufactures shoes, for example.
Now, the workers and managers working in the factory have the right to decide the number of shoes to be produced, materials to be used, the selling prices of the shoes, and the salaries paid to them. The workers developed a sense of ownership and accountability. It was their factory and they could make it successful if they wanted to. During Mao's leadership, there was a lot of centralised planning. A person sitting on top dictating everything. How everything should be running.
The government decided everything. Everything that happened or did not happen. But during the time of Deng, there was decentralization.
More freedom was given in the economic sense. Because of all these policy measures, millions of people started coming out of poverty and people's lives started changing. Between 1978 and 1984, on average, agriculture output in China increased at the rate of 7.4%.
The grain production in China doubled between the late 1970s and mid-1980s. The next big step was to bring about a revolution in education. To focus on educating people. Because of this, in 1986, a compulsory education law was introduced by the government. For 9 years, free and compulsory education for every child in China. Compare this to India.
The Right to Education Act was introduced in India after so many years. In 2009. On top of that, there was no standstill in China after the law was passed. The government started spending more on people's education consistently. In 1980, the money spent by the government on education was approximately 2% of GDP in China.
And it kept increasing. By 2010, it reached 4.1% of GDP. Compare it with India. According to the latest figure in India, our government has spent 2.9% of the Indian GDP on education.
Not only that, China has also focused on technical and vocational education. People were taught the skills that are actually needed in jobs. Friends, if you have seen my Singapore video, you might be thinking that these actions sound familiar. Because it is, friends.
All the developed countries have focused heavily on education. And they are developed because education was given such a big priority. Because of all these measures, we saw an amazing improvement in the literacy rate in China. In 1982, it was at 65% and in 2012, it crossed 95%. For comparison, India's total literacy rate is still at 77%.
Similarly, spending money on healthcare is another big indicator. In 2021, China spent 5.59% of GDP on its health. And India, according to the 2020 data, spent around 2.96%. The next development strategy of Deng Xiaoping was Township and Village Enterprises, also known as TVEs.
This is quite similar to the cooperative model of India in many ways. Cooperatives are usually owned in India by the workers working in the cooperatives. but on the other hand, the ownership of TVEs, are held by townships and villages. Both have the same purpose to bring economic growth in rural areas and to improve people's living standards. In India, we have seen cooperatives mostly in the agricultural and dairy sectors, like Amul, but TVEs have been seen in almost every sector in China. Textiles, electronics, manufacturing, services.
In fact, a big example of TVE is Huawei Technologies. This company started as a TVE in the area of Shenzhen. But today, it has become a global leader in telecommunications equipment. Another good example of this is the city of Wenzhou, China. Here, some local people established small factories to make shoes.
Slowly it expanded and became so big that today, the shoe industry of Wenzhou is a major export sector in China. The shoes made here are not only sold in China but are also sold outside of China. By the early 1990s, TVE was employing around 100 million people in China. People's living standards started to increase. Usually, there is an income gap in rural and urban areas.
But here, this income gap reduced because of TVE's. About 20% of China's total industrial output was from TVE's in the 1990s. Millions of jobs were generated because of this. But this could only happen when people were already educated and skilled to do all this.
In 1980, Deng set up special economic zones in China, in which tax incentives were given, the bureaucratic process was made easier, fewer regulations were imposed so that foreign investment could flow into the country. Many times, when people tell the story of China's development, they mention this point first. But I am mentioning this point later because to reach this point, China had to take many other steps, to make this possible, to bring in foreign investment successfully. When foreign companies invest in the country, they need skilled people. If people are not educated and skilled, no one will invest money.
Here, the labour was cheap, people were skilled, only a little bureaucracy, and people already had the experience required because of TVEs. Shenzhen became the first Special Economic Zone in China. This city used to be a small fishing village but in a few years, it became a major international metropolis. In 1980, Shenzhen's GDP was 0.3 billion dollars. By 2020, it reached 420 billion dollars. To encourage foreign companies to come to the country, an open-door policy was made.
China's economy was open to the world. This is called economic liberalization. It was done in China in 1978. And in India, Economic liberalization was seen later, in 1991.
"We are in a phase of restructuring our economy. ...that our country is unable to launch a certain industrial revolution, a certain agricultural revolution, ...that our country is unable to integrate itself into the world economy, in a manner in which we can take advantage of the opportunities offered by the new global economy." Because of this, many multinational companies like Nike, Apple, Volkswagen set up their manufacturing facilities in China. In 1980, China's FDI was $0.06 billion. In 2021, it exceeded $333 billion. Apart from all this, the government also focused on infrastructure development.
Railway lines were built, good public transport in cities. And along with this, the government made scientific research a priority. The Deng introduced a crash training program for more than 800,000 Chinese researchers. Priority areas were made.
Energy production, computers, optics, space technology, physics, and genetics. These science research centers were given heavy funding by the government. The money spent on research and development was gradually increased by the government and in 2020, it crossed $500 billion. A big example of this is the Zhongguancun Science Park in Beijing built in 1988.
It is a hub of technology and innovation. Many high-tech companies, research institutions, and universities are situated here. In 1990, India and China were almost on the same line. In fact, if you look at GDP per capita, India's GDP per capita was more than China's. $1,202 vs. $983 for China.
But their change was so remarkable that today, China's GDP per capita is more than three times that of India's. According to the 2020 figures, India's is $6,454 and China is at $17,312. With regard to these revolutionary policies Deng Xiaoping said that he took the approach of "crossing the river by feeling the stones". That we cross the river by evaluating at each and every stone Every decision that was taken was taken in a pragmatic and practical manner. After a lot of thought. It is not that a dictator had an abrupt idea of what could be done to change the country, And without any further thought or consultations with advisors, the Dictator imposed his decision.
We learn from Deng Xiaoping that how bringing reforms is a gradual process that should be undertaken after thorough evaluations. It should be tested at every step and the policies should be adjusted as needed. It is not that Deng Xiaoping was a perfect hero in our story.
Or that he did not do anything wrong. Economically, his ideology did favour freedom but politically, he was still a dictator. It was during his reign that in 1989, the Tiananmen Square massacre took place.
One thing that was ignored in all these policies was the environment. What effect did it have on the ecology? And the authoritarianism that continued during Deng Xiaoping's reign resulted in the present-day conditions under Xi Jinping's rule. Had Deng Xiaoping wanted, he could have transitioned China into a democracy. But he didn't.
For this reason, today, a dictator emerged who again runs his own will and imposes decisions without thinking twice. This is the reason why during the pandemic in 2020, China saw many scary lockdowns. Restrictions are being imposed on people's freedom once again.
For now, if you liked this video, you will also like the Singapore video in which I have explained how Singapore became the number one country in Asia. You can click here to watch it. And I'll see you in the next video. Thank you very much!