A lot happened in China in 1978, the year conventionally used as the starting point for the reform era. One of the many fascinating events of that year was the five-week journey of a group of Chinese officials, led by Vice Premier Gu Mu, to France, Germany, Switzerland, Belgium, and Denmark. Today, when such visits are a regular occurrence, it is hard to comprehend the significance of this trip, and just how much it must have blown the minds of the Chinese officials. Gu and other officials saw first hand, and for the first time, just how advanced Western technology was and how high living standards were in these countries.

Ezra Vogel, in chapter 7 of his Deng Xiaoping and the Transformation of China, compares the overseas trips that Chinese leaders made in 1978 to the Iwakura Mission of 1871-73, which helped inspire Japan’s modernization. Gu Mu’s authorized memoirs also discuss this trip, and in the book he actually reproduces a large section of the subsequent report he wrote for the Party leadership (I picked up a copy of the English translation of his memoirs at the Foreign Languages Bookstore in Beijing).

His report made a big impression, and is usually credited with helping inspire the high-level decisions made soon after to open China up to foreign trade and develop science and technology. But Gu’s report also discusses several other issues, and I was particularly interested in the part where he argues for decentralizing authority on economic matters to local governments. This was inspired by what he saw in Europe: for instance, Gu remarks on his meeting with the governor of the German state of Bavaria, who offered him a handshake agreement for a $5 billion loan over dinner.

Decentralization would become one of the most distinctive features of China’s reform era, and local governments’ freedom to pursue economic growth is usually given a lot of credit for China’s subsequent success. So it’s worth reading Gu’s arguments in full:

On the improvement of the economic management system. The key to this question is how, under the uniform planning of the central authority, to allow local governments to accomplish more. Chairman Mao once said, one of the important reasons why the economy of European countries had developed so fast was that their countries were comparatively small. The central and local governments had division of power and could handle affairs flexibly. What we saw during our visit bears this out.

For example, in West Germany, the local governments at the state level enjoy relatively wide power. Many affairs can be handled once decided by a state government. This is beneficial to economic growth. Rhineland State only has a population of 3.6 million and it has a revenue of 10 billion DM (about 8 billion renminbi) for the state government to handle. Apart from administrative expenditure, this revenue is used in developing agriculture, local transport, education, urban construction, environmental protection and so on. Industrial construction is invested by capitalists and not included.

We have provinces and municipalities that are larger than some European countries, but their authority in managing the economy is very limited and hence they lack initiative. In planning, finance and managing materials, provinces and municipalities have not become real actors. The local governments do not have much power. For many affairs they have to come to Beijing. Often to address a single problem they have to go to several departments and wait several months without a result. This state of superstructure makes our socialist state machine seem inflexible and poorly adapted to the development of economic foundations.

If this problem is not solved and if we do not give full play to the initiative of local governments under the uniform planning of the central authority, our economy will lack vigor and there will be no high-speed economic development worth talking about.

This is a useful reminder that decentralization is not an immutable feature of the Chinese system, or something that happened automatically just because China is a very large country. Clearly Gu saw that in the 1970s the Chinese system was too centralized to be efficient, and that it needed to be more decentralized. (Jae-Ho Chung’s book Centrifugal Empire: Central-Local Relations in China also argues that the Maoist emphasis on local autonomy in the 1970s was largely rhetorical, with most localities compelled to follow the same political campaigns and economic priorities.)

It’s fascinating to learn that one of the most distinctive features of China’s economic model was, at least in part, inspired by the example of Europe. This history seems particularly relevant now, given that China’s current leadership is often focused on the problems decentralization has created, and looking for ways to push the pendulum back the other way (see this post from 2017 on the recent shift away from decentralization and its potential implications).

A friend recommended I read Rana Mitter’s Modern China: A Very Short Introduction, and being a big fan of the Very Short Introduction series I was happy to do so. I’m glad I did: although the book surveys some fairly familiar material, it also puts forth some interesting historical ideas. What I found most useful is Mitter’s suggestion that our interpretations of modern Chinese history usually fall into one of three categories (the following are my terms not his):

Traditionalist. This is the view that “China has not essentially changed” despite the upheavals of the 20th century: that Mao and Deng were “new emperors” (as one book put it), that China is fundamentally Confucian and still on the same trajectory as in the rest of its supposed 5,000 years of history. This interpretation is quite common in popular discussions of China, and is implicitly invoked every time someone calls it “The Middle Kingdom” or talks about how Chinese foreign policy is still taking tips from Sun Tzu’s Art of War.

Socialist. This is the view that 1949 is the dividing line in Chinese history, and that the Communist victory in the civil war changed everything. Mitter associates this view mostly with romantic leftists of the 1960s, who were sympathetic to the Chinese revolution and willing to give Mao the benefit of the doubt. But there is a more contemporary version that also has a lot of currency, which emphasizes the present-day continuities with state socialism: how China remains politically authoritarian and how state-owned enterprises still play a major role in the economy.

Nationalist. This is Mitter’s own view: that the true dividing line in Chinese history is 1911, when the Qing dynasty was overthrown, not 1949. Since then Chinese politics has a “mass politics where there was a social contract between government and citizen” in which nationalism provides the major source of legitimacy. Both the Nationalists and the Communists sought national sovereignty, a strong state and economic development: Mitter sees both parties as engaged in “one long modernizing project.”

The standard academic thing to do would be to admit the obvious point that all three views have elements of truth and call for a nuanced combination: clearly some elements of Chinese traditional culture are still relevant, clearly it matters that the Communists and not the Nationalists have been in power since 1949, and clearly nationalism is a central issue in Chinese politics. So it’s nice that Mitter does not do this, and plants his flag firmly in the last camp. One of the more interesting passages in the book is his assertion that:

The Communist Party of today has essentially created the state sought by the progressive wing of the Nationalists in the 1930s rather than the dominant, radical Communists of the 1960s. One can imagine Chiang Kai-shek’s ghost wandering round China today nodding in approval, while Mao’s ghost follows behind him , moaning at the destruction of his vision.

There’s definitely something to this, but ultimately I’m not sure that I buy it. As regular readers will recognize, the legacy of Chinese socialism has been one of the major themes of this blog since I started writing it. So it’s probably no surprise that, if forced to choose among those three views of Chinese history, I might have to choose door #2, the socialist one.

These days it seems like it is not China’s similarities to other modern nations and economies that are most salient, but its differences. And if you interrogate the source of those differences, a lot of the time the answer is socialism and not Chinese traditional culture.