The end of the Cultural Revolution was followed by an economic reform, chaired by the politically rehabilitated Deng Xiaoping, from Sichuan Province, who had been persecuted in the Cultural Revolution because he had been the chief assistant to Liu Shaoqi, chairman of the People's Republic of China and chief target of Mao in his inner party struggle for power. Having been to France as a work-study student in the 1920s, Deng was more cosmopolitan than Mao and the persecutions in the Cultural Revolution steeled his resolution to adopt a more pragmatic policy that would enable China to grow economically just as other economically advanced countries in the world. Under him, China reopened itself to the outside world, and Chinese students began to be allowed to go and study in Europe, America, and other parts of the world. The college entrance examination was revived, and high school students were no longer sent to the countryside for reeducation, but were allowed to take the college entrance examinations. Education again became important.

Following educational reform came economic reform: starting from the 1980s, the Chinese farmers started a "household responsibility" system, which allowed them to contract land from their communes for up to fifty years, sell a certain amount of their produce to the state at a price fixed by the state, and sell produce excess of the quota on the free market; thus, a dual economic system was born---free market on a limited scale, along side the dominant state regulated market. This system was a huge success.

Industrially, China also started to implement greater self-responsibility of the factories, although they continued to be owned by the state. Throughout urban China, the state encouraged the establishment of private enterprises.

With the growth of material economy, however, also came more rampant corruption in China. 

While an often phenomenon in the U.S., corruption has been an endemic problem in developing countries. There have been debates why corruption seems to be a much more glaring problem outside the U.S., and several reasons help toward its explanation: the greater affluence of the U.S. in contrast to the wage differentials in the developing countries, where embezzlement of $1 million could net one the death penalty (or nothing, if one could get away with it), and the development of a healthy legal system (which many developing countries do not have). The much higher affluence in the U.S. compared with the developing countries not only helps explain why embezzlement of the same amount of money might not seem as big a deal here, but also why many do not embezzle--because they are paid such astronimcal sums of salaries and perks, e.g. some CEOs . Still, embezzlement, or corruption can occur in the U.S. on a grand scale--just look at the stock market in the past few years, how Enron, Lucent, Martha Stewart, and so many others have used insider trading or false reporting of profits to manipulate the stock market--it just shows a well developed legal system that effectively prosecutes such behavior is of paramount importance.

Compared with the U.S., corruption in China is characteristic of that of the developing countries. The failure of the republican Chinese government in early 20th century to develop an effective legal system, coupled by the Chinese Communists who totally despised everything introduced from the West, including the modern legal system, and the annihilation of authority that we see from almost every story in Chen Jo-hsi's collection of stories The Execution of Mayor Yin, led to almost a total collapse of the Chinese social order by the end of the Cultural Revolution, and a pervasive cynicism among the people against any authority and any policies of the party. Lawyers had low status in society in the late 1970s and early 1980s because no one believed law was independent from the decisions of the local party secretary or the directives of the central Party government. Another legacy of the Cultural Revolution was the fear of another similar political movement. Many parents encouraged their children to study science and technology so as to keept out of politics; many state officials, not knowing how long they would stay in their positions before another political movement swept them away, used their positions to maximize their personal profit. The dual economy made the latter possible. Therefore if the son of an industrial ministry worked for a private company, the latter would possibly have better access to certain raw materials, e.g. steel, coal, or faster delivery of goods, depending on the areas governed by the father. Many private companies were headed by sons and daughters of high Chinese officials. These officials who used their children or themselves directly participated in profiting from abusing their authority for private use was called "government profiteering." Since China started moving on a monetary economy since the 1980s, making money was no longer a shameful thing. Monetary corruption was on a steep rise, as reported from Perry Link, chap.2. It causes public resentment especially because many people's lives did not become much better off because of the economic reform, so that the gap between the rich and the poor in the urban areas has risen dramatically.

Although laws are more and more in place, corruption remains a pervasive phenomenon to the extent that almost every one gives bribes to someone else for something (Link, 47-49): better housing (e.g. a larger apartment, at which floor, facing where, even when it is purchased by oneself), better jobs, promotion and pay raises, license for business operation, etc. To some extent, this may have something to do with the change of the official verdict about money: to make money is glorious now (Link, 53)

Another source of corruption was the abuse of funds in state enterprises. In 1994 alone, dining and wining cost the state $18 billion in the state enterprises. Thus for some to end corruption China needed to end state ownership of any part of the economy. This was one of the reasons why the reformer prime minister Zhu Rongji pushed for China's joining the World Trade Organization--to push China into a full blown market economy as required by the WTO of its members.

Many Chinese therefore feel uncomfortably sandwiched between the choice of poverty but relatively little corruption in the Mao years and greater economic development but rampant corruption in the post-Mao years.

Government corruption, the job market, and student protest in 1989

Starting from 1987, official state policies stipulated that from then on college students were expected to find their own jobs. The iron rice bowl became a piece of crashable chinaware. Students search for jobs put them into direct experience with the inequality of the job market, where the children of senior Chinese cadres were often well placed in private companies because of their fathers' positions in the government. For the millions of Chinese college graduates who were suddenly snatched from their secure, privileged positions as college students and thrust into the job market for a Darwinian struggle, especially students who had been educated of social equality under Communism (however untrue that might be) they were furious and felt extremely unfairly treated. In the preceding 10 years, because of China's economic reform, and eagerness to attract foreign investments, the state loosened the ideological grip, therefore there were also very active political debates and intellectual dialogues going on, with many radical elements posting their opinions on a wall in downtown Beijing, called the "democracy wall," because of the heated discussions of democracy in these writings. The discontented students and the pro-democracy activists merged in 1989, forming a student movement against "government profiteering," asking for greater political transparency and a more democratically elected government. The students held hunger strikes and staged months of demonstrations on Tiananmen Square, the center of Beijing. The government felt things were getting out of their control. Even the press, thinking that the initial state dialogues with the students meant the government really was going to open up this time, openly reported on the student movement for days, something unprecedented in Communist Chinese history where the media was the mouthpiece of the state. Finally, on June 3, the government used regular troops to crush down on the remaining students on Tiananmen Square. Different reports of the dead students and Beijing residents ranged from hundreds to thousands. There was a thorough crackdown on the activists in this political movement after June 4. Most of them were identified from video clips and apprehended. Most top student leaders went into hiding and eventually made it to the U.S. or Europe.

China after 1989

The post 1989 Chinese resumed their political reserve--they knew once again they needed to keep their mouths shut about politics as they saw what could still happen to them. On the other hand, the state did not stop the open door policy and like other autocratic governments, it decided the best way to pacify the people was greater economic development--so that economically they would be better off and thank the government for it. People were encouraged to make money but not to comment on Communist Party policies. Many former political activists turned to money making. Political transparency stopped. Still, there was, to some extent, greater freedom of the press--not in the form of criticizing the party. Political issues could now be touched on in the form of tabloid news--e.g. so and so has how much money because of embezzlement, etc. Even so, there was certain news the media could not touch upon. And although individual party members could be exposed and condemned (see both chap.2 and chap.4 of Perry Link), the Communist party could not be questions or commented on and its senior leadership could not be touched by the media if they were still in power.