Odd Arne Westad on how China First Joined the Global Capitalist Economy

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1:26Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, now that I'm like a middle-aged old man, I don't know. I've been getting really into reading history lately. Is it Roman history? No, no. It's actually worse than Roman history. I've been reading a lot of 20th century history. And the problem, well, one problem, there's a bit of a diversion, but one problem with reading 20th century history is that I'm eventually going to have to get around to really learning what World War II is all about. And then I'm going to be a 50-year-old man reading World War II.

1:59You have to fulfill your destiny, Joe. I know. So I'm going to be a 50-year-old man in a few years reading World War II books and watching World War II documentaries. So yes, I've been reading a lot of 20th century history lately. You know how you know that you are really old? It's when you start reading 20th century history books and realize that you were like there and sort of participating in that time period. Well, it's so funny that you mentioned this because this is increasingly dawning on me when I read history. And again, slight sidetrack, but I mentioned before a couple of times, I lived in Malaysia for a year in 1989 and 1990.

2:33And I discovered in reading history recently that, I don't know if they call it the Malaysian Civil War, but the ultimate peace agreement between the Malaysian government and the Communist Party of Malaysia was signed in 1989 that ended that conflict. And so I was there. I had no idea. But reading his - Grade school Joe was living through history. I was. And it sort of reminds, I think this is an important thing that I've realized, reading more history, is that the modern world as we know it is so young. It's basically like the length of a person's life. Like depending on where you want to start it, like we're just getting started here.

3:06So the history we're going to be talking about specifically - We're being really vague here, aren't we? Is China. Yes. And I was thinking about this because the first time I went to China was in 1994. And it was completely different to how it is now. Like there were still rickshaws on the street. Friendship stores existed. Friendship stores still existed in the early 2000s when I was there. And I don't know. Do you know what a friendship store is? I can guess. So I don't know. It's like where foreigners were basically allowed to go and like purchase specific goods. They had a lot of like tourist tat and stuff like that.

3:40But if you went to a friendship store in Beijing in the early 2000s, it was basically like going to the East Block. It was like a full employment program where you would find a salesperson on the floor and you would say, I want this item. And then they would give you a little like token or receipt. And then you would take that to the cashier and pay. And then someone else would bring the item to you. So that was in the 2000s. And now when I think about Beijing, like it has changed. Completely like stuff that used to be one story neighborhoods full of bars like Stanley Tern is now like luxury shopping centers.

4:18Totally. So this is the other thing, too, which is that, you know, we talk a lot about China right now for obvious reasons. But I kind of feel that, like, if we're going to talk about today, there probably is some justification for, like, how we got here. And I have to admit, you know, my understanding is really very rudimentary and limited. Like, in my mind, it's basically like Mao died. Deng Xiaoping liberalized the economy. That was the economy plugged into global capitalism. Immediate sunflower seeds happened. Yeah. And then they allowed a business. And then they entered the WTO in here. And I would say I know basically four facts about the history of China.

4:56And those are, you know, 1978, WTO, now. So maybe that's just three. And so I actually think it's important to sort of deepen our understanding of how we got to the China that we are so deeply connected to today. I am in favor of you using the podcast as an excuse to read a bunch of history books. It's great. Right. It's otherwise manifest your middle age self. That's fine. We should do it. Well, it's better because if I have to read books, that means I'm not just scrolling Twitter all the time. So I have to prepare for episodes. Anyway, we are going to be speaking with one of the co-authors of the new book came out in October.

5:30The Great Transformation, China's Road from Revolution to Reform. And I would say it complexifies a bit the very rudimentary story of the last, I don't know, 40 plus years of China. It's more than just three specific dates. It complexifies that story. It sort of fleshes it out in a big way. The co-authors are Odd Arn Westad and Chen Jian. The first time on Odd Lots that we'll have a guest with the name Odd. Truly the perfect guest. So it's truly the perfect guest. So we're speaking with professor of history at Yale, Odd Arn Westad. Professor Westad, thank you so much for coming on the podcast.

6:07Thank you for having me on. You almost had to, right? We had to. It's really a shame that you haven't had me on before. I mean, you should do the opening of your podcast with me as your first guest. We had to wait for Joe to enter his history phase. That's right. But you should have been the first guest. So why this book? Because I imagine if I go on Amazon, there are probably hundreds of books that are some version of how China reformed, how China went from being this backwards economy to a dynamic capitalist economy. me. I know it's been written about in various forms numerous, numerous times.

6:43Why did you and your co-author still feel at this point that this was an important story or collection of stories to tell? I think there are two reasons. The first one is quite personal in a way. I mean, it almost goes back to what you were talking about a minute ago. So I first came to China as an exchange student back in the late 1970s. And Shenzhen, of course, my co-author, lived there during that period. So this is in a way somewhat personal for us as well. We lived through parts of the time period that we are talking about in this book. And there is no better incentive, as you just touched upon, to go back to look at history again than trying to understand the period that you lived through.

7:20So that's the first reason. And the second reason is, of course, that we think we do it better than anyone else. We think we do it better than anyone else because we have more access to sources and more access to information about what actually happened during that time period. As you read the book, you can see how, at least when we do this as well as we can, we are able to get on the inside of many of the things that took place during that time period and show the complexities. I mean, show just how complex that period of very early Chinese reform and opening was, and in many ways how contingent the process was and how surprising it is in more than one sense that we ended up where we are today.

8:00So speaking of access, you mentioned this, I think, in the very beginning of the book, but you started researching this in 2010. And you said that the research process and the access you had kind of changed over the next, I guess, 13 or 14 years or so. Give us a little bit more detail, like as a researcher of Chinese history, how have things actually evolved for you? That's right. We started thinking about this and started researching it in the early 2010s. And of course, back then, we had much better access to sources, much better access to archives, to talk to people, to travel around the country, to have informal discussions with people who would be in the know than what is the case today.

8:42So China has really, since 2016, 17, they're about closed down in terms of access to historical sources of all kinds. So we were lucky. We started this process quite early on and had some good years in which we actually could collect material. Then we did something really silly. We put it aside for other projects, hoping that we would get even better access in a few years. That happens sometimes that you make the wrong call on these kinds of things. And instead, of course, it got much worse. So what we had to do was to go back to some of the material that we had gathered in that early time period before we switched to other projects that we then completed before we returned to this book, and then try to fill that in as best we could with other materials we could get now.

9:26But the level of access, the level of information is very different today from what you could get pulled up back then. So I want to get into some of the content of the book, obviously. And like I said in the intro, you know, I have this very cartoonish vision of history in my head where Mao dies, Deng Xiaoping becomes the new leader of the country after a little bit of tension and turmoil, and then China liberalizes. So one of the sort of eye-opening or sort of mind-expanding moments in the book, you talk about the Cultural Revolution and how even there, you know, we think of that as going, I guess, from 1966 to sometime in the 1970s.

10:05You argue that, A, the real intensity of it was two years where the sort of the youth of China rose up against the old cadres within the Communist Party. But even in that time, amid some of this incredible turmoil that the Communist Party was going through under Mao, some of the seeds of, I guess, capitalism were actually planted in that turmoil. Yeah, that's right. I mean, that, I think, is one of the contributions of this book. I mean, your summarized history of what happened is not wrong. Okay. It's just that it was really difficult, and as I said, very contingent in terms of the various things that were happening to get from one to the next of those stages.

10:46And one of the things that we do show in the book is how the Cultural Revolution, which was undertaken, of course, in order to solidify Mao Zedong's leadership and attack the old leaders in the Communist Party, who he regarded as being too backward to take China into his new communist paradise, had this Cultural Revolution had effects that were in no way foreseen. And part of them was in many ways, the destruction of old China. I mean, they got rid of many of the traditional ways of thinking and loyalties and much of the patriarchal approaches within families, all of this, because of these political campaigns that they undertook, directed almost against any kind of authority, except Mao Zedong's own authority.

11:32And in a strange kind of way, when you get into the 1970s. Mao is still alive, still ruling from Beijing. Things start to change in some places from the ground up. So this is turning to markets almost as a kind of revolutionary act out of desperation because people along the coast, in the south, in areas that have some experience with capitalism and with markets, they are worried that when this campaign ends, things are going to get even worse. And some of these people had been starving, you know, back during the Great Leap Forward in the late 50s and early 60s. So they start braiding, they start building up the opportunities that they can take for themselves in a little way.

12:16I mean, this is not a predominant act in China in the early 1970s, but it did seem something that is incredibly important for the future. and then comes into full flow after the party takes a step back, after Mao died, and opens up for these kinds of reforms happening on our country-wise. I apologize in advance for asking a hypothetical, but do you think the economic liberalization of the late 1970s, early 1980s would have been able to happen or would have happened in some form if China hadn't experienced the Cultural Revolution and all the, I guess, emotional trauma and political chaos that came with it?

12:57It wouldn't have happened when it happened. That's for sure. That's not even a hypothetical. I mean, I think if China had continued basically along the Soviet model of development, which is what it took up after the People's Republic was put in place in the late 1940s, Soviet-style everything, right? Banning, centralization, the whole lot. I don't think the kind of reform that we saw in the late 70s and early 1980s would have happened, because there wouldn't have been any fundamental reason to undertake it. I mean, China would probably have chugged along in the same kind of way as the Soviet Union did until some point when that model started breaking down.

13:34Now, I'm not saying that the Cultural Revolution was a necessary condition for these changes to take place, but the period of Cultural Revolution activism did in many ways prepare the ground for the timing of this and when it was to happen. Also because, you know, China at the end of the Cultural Revolution was a disorder. You know, when I first arrived there in 1979, this was a dirt poor and terrorized country. You know, poorer in terms of income per capita than most African countries. And things were getting worse, not better. So that kind of desperation at all levels of Chinese society fitted into these changes.

14:13Something had to be done. And going back to the Soviet model of development that had existed early on, when you get into the 1980s, does not seem as a viable composition.

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15:32Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast. What does it mean when you talk about history being contingent? You used that word a couple of times, and I actually don't know if I fully understand what that means. But when you're telling these stories or this story and you're keeping in mind the contingency in history, can you talk a little bit more about this idea? So you'll have seen from the book that we go in and out from the micro to the macro level of telling history. And if you look at the night when the coup against the radicals, the so-called Gang of War, within the party took place, which we described in some detail, what happens from hour to hour.

16:18Right. This was the moment in which the left faction, after Mao dies, was arrested and allowed for a sort of more moderate path to emerge. That's right. And it was, in effect, a military coup. It was undertaken by the military and the security forces against the people who Mao himself had put in charge of the party, including his widower, who was most prominent of all, Jiang Qing. Now, that night, the following few days, things could have ended up very differently. When Shanghai, the biggest city in China by far, was still under control of the radicals, there were military units that supported the radical approach to politics.

16:58this could have ended up very differently from what it did. And as we describe in the book, some of the plotters, some of the coup makers themselves in those days that followed the coup itself were completely surprised by how little resistance there had been from the left and how little chaos there had been on the streets. So that's what I mean with it being contingent. I mean, this is something that obviously connects to the larger picture that we see today, going back to your sort of three-level version of what happened, right, in China. But it didn't seem that obvious at the time. And it could have gone in very different directions from what we are seeing today.

17:38How important was the fraying of the relationship between China and the Soviet Union in the sort of 1960s, early 1970s to spurring or catalyzing that opening up? Because it does feel like the sudden emergence of the Soviet Union as an external enemy, it feels like that led China in some respects to open up to the U.S. and some other countries. This is a sort of trajectory that I think is really important to get right. Because what Mao and his group of leaders did in the late 1960s was to turn to the United States as an ally, a pseudo-ally, security ally, against the Soviet Union because they were so deadly afraid that there would be a war with the Soviets, a war that China certainly would have lost, given the state that the Chinese communists themselves had put China into during the Cultural Revolution.

18:34So what Mao did was to turn to the enemy far away, the United States, to help back him against an enemy much closer to home, the Soviet Union, which they had this falling out with, mainly for ideological reasons. From Mao's perspective, this was always intended to be a strictly security oriented judo alliance. It was directed against the Soviet Union. Mao, to the end of his days, was puzzled that the United States would support the real communists, meaning him, against the fake communists, meaning the Soviet Union. But as long as they were willing to do that, he was certainly willing to reap the benefits.

19:14But he never intended that this would have any effect in terms of the increasingly radical communist direction that he was taking for China internally, domestically. So that's when what happens in 1976, after Mao's death, becomes so significant. Because the people who then took over, they told, aha, we have this relationship between the United States. They are supporting us for their own reasons in the Cold War against the Soviet Union. We can now also make use of this to supercharge Chinese reform, right? If it hadn't been for that relationship, strictly security-oriented, that already existed between China and the United States, I doubt that that would be possible.

19:57So it's very important for the longer-term U.S.-China relationship to think about that origin and how this actually got started. Very different from the way most people think about it, where the security element and the reform element are sort of conflated into one. It's also just hard in 2024 to imagine that various communist states would not be natural allies. And of course, China, after the Vietnam War, China also went to war against Vietnam. The fact that they're so concerned about the Soviet invasion, it's just sort of this fascinating dimension that I don't think fits neatly into our heads.

20:38You know, I also read your co-author's book. He recently wrote a great biography of Joe and Lai. And it occurs to me, like reading that book and the new book, obviously, I think Mao is associated ideologically with the left faction and the CCP and the Gang of Four, et cetera. But he always seemed to keep a couple of, I don't know if the word is liberals, but to some extent liberals around. So Joe, he never got purged, even though it didn't seem like Mao particularly liked him for much of his life. Token liberals. Token liberals. And Deng Xiaoping got purged multiple times, but never lost his membership of the Communist Party and always seemed to find his way back, even during the Mao era.

21:18Why was it that despite his ideological predilections towards the left, that in these important roles, he couldn't bring himself to purge some of these perhaps more reformist-minded characters? Because he needed to have things done. I mean, Mao wasn't just an ideologue, which was the most important aspect of him, I think, when you look at his historical role. He was also the leader of a country. And he needed to get certain things to work within the country or within the party. And for that, having seen time and again that his ideological allies were not particularly good at this, they were good at reciting Marx and Lenin, but they were not particularly good at running things, he needed people like Zhou Enlai, he needed people like Deng Xiaoping to get things done.

22:05But as Chen Jian's great Joe and Lloyd biography shows very clearly, there were limits to how far he would go in working with people like Joe or Da. He was willing to work with them as long as they served his purposes. And if there was any sense that they actually tried to have a direct political influence above or different from his, they would get into trouble. So I'm not sure if talking liberals here is the right term. I mean, liberals in terms of their thinking about politics, these people served, as long as he was alive, served his German, and they served him at his leisure. So if he got a suspicion with them, as with so many other people, that they were not serving his radical interests, he would act against them.

22:50You mentioned earlier that your book brings together the macro and the micro. And in terms of the micro, it reminded me a lot of secondhand time, which is an oral history of the end of the Soviet Union. And there are lots of stories in there about individual experiences and entrepreneurs who suddenly are starting their businesses in the post-communist period and things like that. I've been trying to get Joe to read this book for a long time. I'll read it. It's amazing. But can you talk to us a little bit more about the individual stories that you heard from this particular period in Chinese history?

23:30So there are many stories. And both Chen Jian and I are the kind of historians who are storytellers. We like to tell these stories. We like to focus on individuals and their experiences. And that's, of course, what sets this period apart. It's such an incredibly dramatic era. I mean, first the Cultural Revolution and its demise. and then this period of almost unbelievable change, which I remember very well myself. I mean, from one day to the next, things that had been seen as being true forever were no longer true, right? And things changed so very quickly. And entrepreneurs who had a few weeks earlier had been put in prison for their activities, but suddenly held up as heroes of economic development, right?

24:11That was China during this time period. And it's wonderfully fertile ground for historians who like to tell stories. So we tell some of these, maybe some of the most fascinating ones that we came across are the ones of these early entrepreneurs. I mean, people who get started even before the political changes in Beijing have taken place. Very often coming out of collective enterprises of some sort, people's communes or whatever you have, and finding that they were pretty good at doing what they were set to do. We have one example in there, which is one little tractor repair shop that turned out to be incredibly good at repairing tractors in Guangdong province in the south of China, and then started gradually to get payment in kind, a kind of bartering system, their services against a little bit of steel or a little bit of machinery or some silk and whatever, right?

25:06which they could then trade. Well, for a while, they could actually smuggle it into Hong Kong and trade it there by the mid-1970s. These folks have a Hong Kong bank account, right? Well before anything has happened in Beijing in terms of reform. So if these guys had been caught, they would probably have been shot, right, for smuggling and currency. When the reform really gets started in 1978, they have a leg up, right? And they can do things that no one else can do. And now they're heroes. So this is the origins of one of the biggest companies in China today. So these are the kinds of stories that we like to tell.

25:42I mean, at the political level as well, I mean, one of the most fascinating people that we came across is Hua Wokong, the guy who became somewhat unwillingly most hand-picked successor. And he was actually quite a decent leader in many ways, not very imaginative, not of the kind of dynamism that Dong had, But still probably someone who was a necessary figure, you know, in order to facilitate that transition that happened in the late 90s. Yeah, I get the impression, too, reading about him, that obviously he was in a difficult position having to uphold Mao's legacy. He was pushed aside eventually more or less by Deng Xiaoping, but also sort of went gradually and didn't put up a huge fight that probably saved a lot of turmoil.