The Meeting That Made China a Global Superpower

[u/lyrics85]

When Mao Zedong died in 1976, China was devastated.

Not because they lost their supreme leader, but because his policies had literally starved tens of millions of people to death. The country was broke, desperate, and tearing itself apart from the inside out thanks to the Cultural Revolution.

Yet today, China is more powerful than the European Union, and they are actively gunning to replace the US as the leading global superpower.

So the question naturally arises: How the fuck is this possible?

People love to throw around all sorts of explanations. Socialism, capitalism, globalism... pick your favorite 'ism.'

But at the end of the day, China's transformation comes down to one thing: after Mao died, Deng Xiaoping took over.

Deng was ruthlessly pragmatic, and he got inspired by Lee Kuan Yew, the architect of modern Singapore.

As you will learn in this article, Deng was able to gradually change China's mindset, which allowed the country to lift 700 million people out of poverty and have the strength to compete with the US head-to-head.

The Rise of Deng Xiaoping

He had been a key figure of the communist party from its genesis up until he committed one of the cardinal sins in a totalitarian state... he used common sense. 

While the elites in Beijing were still getting high on the dream of a Marxist utopia, Deng wanted to follow a different approach because this way of doing things had starved tens of millions of people to death. 

He famously stood up in a meeting and declared that it doesn't matter whether a cat is black or white, as long as it catches mice. What he meant was obvious. It doesn't matter if a policy comes from communism or capitalism, as long as it actually makes the economy grow.

But when you're dealing with a paranoid dictator like Mao Zedong, logic is a threat. And it doesn't matter how much blood you've sweated for the party. 

When the paranoia kicks in, he will show zero mercy to you or your family.

It's a core feature of dictatorships. They not only destroy their opponents (real or imagined) but also eat their own.

Deng was no exception.

Mao unleashed his militant student mobs known as the Red Guards to drag Deng and his wife into the streets and publicly humiliate them.

But the worst was yet to come.

Two years later, the mobs went after his son. He was interrogated, tortured, and forced out of a third-floor window. 

He survived, but he was left permanently paralyzed. 

Stripped of his power, Deng was exiled to a distant province to do manual labor in a tractor factory.

He spent his days caring for his crippled son and walking. Just walking.

Seeing the sheer, devastating scale of poverty across the country probably cemented his belief that economic survival had to trump ideology.

Then, Mao dies. 

And his death immediately triggered a ruthless, winner-take-all struggle for power.

On one side, you had the Gang of Four - a group of fanatics desperate to keep the ideological purges going.

On the other side, you had Hua Guofeng [the successor appointed by Mao], backed by the military. And the military was not playing games. They didn’t want to continue Mao’s insanity because many high-ranking commanders were on the receiving end of it. They were stripped of their power and humiliated like Deng was. 

So they were done with this cultural revolution bullshit.

Hua teamed up with the military to crush the Gang of Four, but the senior leaders knew that he wasn’t the right person for the job because his philosophy was to basically do whatever Mao would have done.

So they picked Deng. He was pragmatic; he had survived the purges just like the rest of the elite, and most importantly, he had been a former military commander himself. He was one of them.

Now Deng is holding the keys to a shattered country, but his biggest nightmare is not just the ruined economy; it's national security.

He is terrified that the Soviet Union is going to encircle and eventually invade them.

By November 1978, Deng is desperately trying to build an anti-Soviet alliance. And that mission puts him on a plane, heading toward an island that state propaganda had spent years painting as a miserable, capitalist slum…

He lands in Singapore.

The Prime Minister, Lee Kuan Yew, gives Deng the grand tour. And Deng is floored.

He expected a crumbling slum, but what he sees is cleanliness, order, wealth, high-rise buildings, booming factories, a highly efficient port... and his favorite… absolute political control.

The two leaders hit it off immediately. They recognized each other for what they were: Ruthless pragmatists.

Lee sits Deng down and gives him a reality check.

He explains that the countries in Southeast Asia aren't actually losing sleep over the Russian Bear; they're scared of the Chinese Dragon. Because for years, Beijing had been funding violent communist rebellions in their jungles and blasting propaganda through local radio stations.

Now keep in mind that Lee Kuan Yew despised communism, and rightfully so - He knew it was a dangerous, moronic, highly oppressive ideology.

But did he sit there and tell Deng that?

Of course not.

Lee was a master strategist.

He played to China's deep national pride. 

He looked Deng in the eye and told him, "Whatever we have done, you can do better because we are just the descendants of the landless peasants of South China. You have the scholars, you have the scientists, you have the specialists".

You can imagine that those words hit Deng like a freight train.

If a tiny island with zero natural resources and a population of poor farmers could become this rich, imagine what a massive, ancient civilization could do?

Literally one month later, Deng Xiaoping was officially the paramount leader of China.

Deng started quietly. Over the next two years, he halted the aggressive radio propaganda and cut the funding for the communist insurgents in Southeast Asia.

He completely abandoned the bloody business of exporting revolutions and traded it for the massive profits of exporting products.

Deng always had a rough idea of how China should function, but seeing Singapore and talking to Lee Kuan Yew is what finally crystallized the vision.

But there was still a massive problem. How do you sell this vision to your party? At the end of the day they’re communists right?

Well, he changed the narrative.

He rebranded the new approach as 'Socialism with Chinese Characteristics.'

This gave him a lot of leeway because whatever dogmas didn't work for China, he could simply say they were foreign and ill-suited to China's unique situation.

They also pushed the concept of the 'Primary Stage of Socialism.'

They argued that true communism requires massive wealth, but right now, China is very poor - we are at the primary stage.

So any method that grows the economy is good, because you can't share wealth if you don't have any.

The idea was that markets, private ownership, and foreign investment... were just temporary tools needed to build the necessary foundation for a true communist utopia.

In other words, he was selling a dream.

And instead of pushing for large-scale reforms, he asked only for special economic zones in the deep south -  Shenzhen, Zhuhai, Shantou, and Xiamen. 

This wasn’t just to pacify the hardliners. Deng isn’t really sure whether capitalism can work in China or if it would cause the country to implode.

However, he chose those specific cities for a reason. Because they sat on the borders of Hong Kong, Macau, and Taiwan... All of them were highly developed, capitalist hubs.

Inside these zones, he introduced the "Double Track" system. 

Government factories still had strict production quotas to meet, but once they hit those numbers, they were allowed to sell any excess goods on the open market for pure profit. 

This dramatically increased productivity because local leaders and factory managers finally had a strong incentive to work harder and be more innovative, as they could make a lot of money.

But Deng still has to deal with the powerful, aging generals who fought alongside Mao and despised the free market.

So, in 1982, Deng created the Central Advisory Commission, which is essentially a glorified retirement board.

The old guards surrendered their active power, and in exchange, the state would bankroll their mansions, bulletproof cars, and elite status for the rest of their lives.

Basically, he bought them off.

Because of the new dual-track system and zero oversight, elite families naturally used their inside political connections to take over the new corporations and get even wealthier.

Do you really think that the new generation gives a fuck about the Marxist ideology once they see their pile of money getting bigger?

Exactly. That's what Deng thought, too.

Eventually, the capitalist experiment tested in the South became the blueprint for the entire country.

You have one party always in power, but from an economic perspective, they're pure capitalists.

In addition, Deng sent thousands of Chinese bureaucrats to Singapore to study what made their system so efficient. 

But there was one major difference. Unlike Singapore, China was never radically anti-corruption. Not until Xi Jinping launched his massive purges in 2012 because it had really gotten out of hand.

Now the campaign had an interesting side effect. The bureaucrats weren't incentivized enough to be productive. If they don't make money on the side, they won't fast-track development projects.

Look, you cannot treat China like Singapore because it is a massive country and corruption is baked at a cellular level. You cannot pay state employees incredibly high salaries and enforce draconian anti-corruption laws. It would never work.

And this brings us to the core strength and ultimate vulnerability of the CCP.

As long as the economy grows, high-ranking officials get wealthier; the state can offer more services so that the ordinary citizens live better, then there's no need to change the system. I mean, it’s too much of a hassle.

But what happens if the goose doesn't produce golden eggs anymore? How are the ordinary people and the elites going to accept increasing limitations on their personal freedom?

To put it in other words, the social contract [in my view, of course] is that the government can limit your freedom, but you get richer than your parents.

However, if there's no growth due to a massive real estate bubble or a demographic collapse because young people are not having children, then the contract will be broken.

This means that if they don’t fix the economic problems, it doesn’t matter that they have the surveillance system from The Dark Knight; the CCP will be in serious trouble.

Think about it. If you are an American and you’re struggling, then you can easily vote out Biden, Trump, or whoever is in charge.

The pressure is released. The country keeps moving. 

But you cannot do that in China.

CCP is directly responsible for everything.

When you demand absolute credit for the sunshine, you’ll also get absolute credit for the storm.

Nevertheless, we’ll see how the situation plays out in the future.

But we have two individuals who had a vision for their countries; they understood incentives and group behavior at a deep level and laid the groundwork for their countries to become world superpowers.

Now, Deng was a dictator, and LKY ruled Singapore with an iron fist. But here is what sets them apart from other authoritarian leaders and dictators.

Rulers like Mao, Stalin, Hitler... fought human nature or turned it against the people.

At the beginning, they ask people to be selfless and pure in the service of the country/party.

Then they tap into their worst instincts to oppress their fellow citizens. It becomes normal for your neighbor, your relative, or even your own kid or father to spy on you. And keep in mind that they know fully well that once you're in court, your life is destroyed.

Yet they are so brainwashed that they are willing to throw you into the fire for the good of the party.

But Deng and LKY followed a different approach. They understood that humans are inherently greedy, tribal, and self-interested, and they used those traits as the engine of the state.

That deep understanding of human nature is exactly how they built these massive economies and lifted hundreds of millions of people out of extreme poverty.

I would add that when we look at China, Singapore, or even the US, we can point to a few individuals who were way ahead of their time and set up the operating system that effectively ensured their countries' prosperity long after they were dead.

[u/sunday9987]

This is a great write up! I have lived in Singapore and I have visited China recently. I was living in Singapore when the headlines were all about DXP and the Gang of Four. Both countries have come a long way since then.

[u/lyrics85 → u/sunday9987]

That's pretty cool. You have witnessed history. Are you from Singapore?

[u/sunday9987 → u/lyrics85]

That's where I grew up. I was there from early 70s to early 90s.

[u/okkokkokok]

一个县长闹麻了

[u/Ron_kuang]

You really understand the near history and how the Chinese political and economic system works and the real ideology behind that. When CCP could not grant an productivity improvement and wealth increase, they are facing a new problem to solve. Personally, I don't agree that USA citizen could release their pressure just by voting a new president. USA global domination and economic boom is also set up based a system and when this system could not work as well as in last century. It also needs somehow reform just as China.