Red entrance gate opening to the forbidden city in Beijing - China. Photo: iStock
The red gate opening to Beijing's Forbidden City. Photo: iStock

December 18 is the 40th anniversary of China opening its doors to the world and launching a historic reform program that would transform the country. This monumental shift was a result of the third Plenary Session of the 11th Central Committee of the Communist Party of China (CPC), which was held from December 18-22, 1978.

Over the past 40 years, China’s economic progress has been extraordinary. Its gross domestic product (GDP) has grown miraculously at an average annual rate of 9.3%, and its GDP share of the world’s total economy has jumped from 1.8% to 15% today. China has been the world’s second-largest economy for years, after the United States.

Meanwhile, China has achieved self-sufficiency in food production and has successfully lifted 800 million people out of extreme poverty, one of the great miracles in human history. Today, China’s foreign exchange reserves, manufacturing capacity and international trade volumes are all number one in the world.

However, China still has many problems, such as massive corruption, serious environmental pollution, serious income inequality, as well as a flawed social security system, a property bubble, and unfair distribution of education and healthcare resources.

Politically, China has been criticized for being an authoritarian state where human rights are not fully respected and the media is heavily censored. While China has become much more open in many areas compared to 40 years ago, its political system is not the liberal democracy the West expected it to become.

Deng Xiaoping, the chief architect of China’s reform and opening-up, initially steered the country onto the Socialist Road with Chinese Characteristics. It was guided by the Four Cardinal Principles, namely upholding the socialist path, the people’s democratic dictatorship, the leadership of the CPC, and Mao Zedong Thought and Marxism-Leninism. Forty years later, maybe only the principle of upholding the leadership of the CPC is really relevant.

China is now in a new “era of Xi,” where “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” is the supreme doctrine. This March, China amended its constitution to eliminate the presidential term limit; explicitly incorporate “the leadership of the CPC is the defining feature of socialism with Chinese characteristics”; and officially make achieving “the great rejuvenation of the Chinese nation” the ultimate national goal. In the updated constitution, “persevering in reform and opening to the outside world” was retained.

China has always been resilient and pragmatic, especially when facing crises

Apparently, China will continue its reform and opening-up. China’s top leaders have repeatedly promised that “China will never close its open doors to the outside world,” but China’s internal desire and momentum to implement further reforms and opening-up has been significantly weakening due to resistance from vested interests. After 40 years, China’s reform and opening-up are standing at a crossroads again. Both people inside and outside of China are wondering where the country’s future reforms and opening-up will head next. Left or right?

Coincidentally, China is now facing another big crisis – the trade war and a potential “new Cold War” with the United States led by President Donald Trump. In Chinese, crisis (wei ji) means both “danger” and “opportunity.” Can China turn danger into opportunity in this crisis? Optimistically speaking, yes, based on historical experience.

In fact, over the past 40 years, China’s reforms and opening-up have been largely driven by big crises, nearly every 10 years. It was the painful lessons from the catastrophic 10-year “Cultural Revolution” that ended in 1976 that fostered the initial reform and opening-up. It was the Tiananmen Square Protests of 1989 that accelerated the substantive progress of reform and opening-up. It was the Asian financial crisis in the late 1990s that drove China to make its economy more market-oriented. It was the 2008 global financial crisis that pressured China to transform and upgrade its economy more quickly. China has always been resilient and pragmatic, especially when facing crises.

So far, Trump’s trade war has indeed caused much trouble for China. However, looking at it positively, the trade war has also forced China to open up further and implement deeper reforms. During the recent G20 summit, President Xi repeatedly emphasized, “China will make efforts to open, even more, its doors to the exterior world and we will make efforts to streamline access to markets in the areas of investment and protect intellectual property.”

To secure a permanent truce in the trade war, China promised significant concessions during the Xi-Trump meeting. It seems that China was defeated, but do not forget that China also made significant concessions for its entry to the World Trade Organizations (WTO) in 2001. China did suffer losses in the initial years as a new member of the WTO, but it gained more in subsequent years. Therefore, in the long run, the short-term pain from the ongoing trade war will likely prove to beneficial for China, allowing it to deepen its reforms and open up further so as to achieve its ultimate “Chinese Dream.”

After 40 years of reforms and opening-up, China is now displaying the so-called “Four Confidences,” namely its chosen path, guiding theories, political system, and culture. In the future, China will probably be more open to the world but do not expect that it will become another West. China is China, the ancient but young “Middle Kingdom.”

Sun Xi

Sun Xi, a China-born alumnus of the Lee Kuan Yew School of Public Policy at the National University of Singapore, is an independent commentary writer based in Singapore. He is also founder and CEO of ESGuru, a Singapore-based consultancy firm specializing in environmental, social and governance issues.