Deng's China Opens

After Mao's death in 1976, Deng Xiaoping steered China toward market reforms while keeping the Communist Party in charge. From 1978 farmers could sell surplus crops, and in 1980 Special Economic Zones such as Shenzhen welcomed foreign investment. After the 1989 Tiananmen crackdown, conservatives tried to slow reform, but in early 1992 the 87-year-old Deng made a 'Southern Tour' of Shenzhen and other cities, insisting that growth must continue. Later that year the party adopted the goal of a 'socialist market economy'.

The 1990s saw rapid industrialization, massive migration from villages to coastal factories, and the return of Hong Kong from Britain in 1997 under the 'one country, two systems' formula. In 2001 China joined the World Trade Organization, becoming the world's workshop. Hundreds of millions of people escaped extreme poverty. Yet the model also brought inequality, pollution and corruption, and it showed that market capitalism and one-party rule could coexist, contrary to many Western predictions.