n a visit to China in the summer of 1988, I encountered a widespread sense of drift and despair. The official inflation rate at 18.5 percent, and the actual rate was probably higher. State statistics said that 21 percent of urban workers had suffered a decline in living standards. In big cities, residents needed to routinely pay bribes if they wanted phone lines, electricity service, mail deliveries, or medical attention. Intellectuals were criticizing China’s political leaders, its political system, and even its national culture and national character. “Nineteen-eighty-eight ushered in a season of discontent that is perhaps unique in China’s post-revolutionary history,” I wrote in an article published later that year.
Such a dark mood was surprising at the end of a decade of what the official propaganda apparatus called “reform and opening”—Chinese leader Deng Xiaoping’s ambitious campaign to restructure China’s economic system and open the country to global markets after the stagnation and autarky of the Mao Zedong years. Not an expert in economics, Deng relied on China’s premier, Zhao Ziyang, to figure out how to reform the economy. Zhao contracted agricultural land to farming families to manage as they saw best; authorized villages and townships to set up small-scale, effectively private enterprises; and opened special economic zones such as Shenzhen and other production bases where investors from Hong Kong, Taiwan, and other market economies could set up factories to import raw materials and export products free of tariffs. These and other reforms achieved remarkable success. From 1978 to 1988, China’s GDP more than doubled.
