ECONOMIC RESEARCH CENTERDISCUSSION PAPER

No.180“Development Policy and Slogan of Harmonious
Society” in Modern China
by

Mitsuyuki Kagami

December 2010

ECONOMIC RESEARCH CENTERGRADUATE SCHOOL OF ECONOMICSNAGOYA UNIVERSITY

“Development Policy and Slogan of Harmonious Society”
in Modern China
Mitsuyuki Kagami (Aichi University)
Intrduction
Today, it is predicted that China would keep growing rapidly with its high
GPD and leave the United States of America behind. Also, it is said that thiseconomic development would lead China to be one of the greatest economic
powers of the world by 2022. Without Chinese “Development Policy” whichbegan in the 1990’s, China’s economic growth cannot be talked. However, it isvery suspicious whether this “Development Policy” produces a fruitful future.
Chinese “Reform and Open-door” policy began when the 3rd Plenum of
11th Central Party Committee (Abbreviation: “the 3rd Plenum”) was held in theend of 1978. It was started with “Reform of Rural Society” in order to break
down “People’s Commune” and also to market mechanization of agriculture thatwas “full responsibility system for agrarian output quotas” ( bao chan dao hu 包产到户). The concept of “Development” was not used around that time.
Deng Xiao-ping ( 邓 小 平 ) who was the top leader of “Reform andOpen-door” policy, led the policy with his “Get Rich First Theory”, whichreferred “some areas must get rich before others”. Assuming that economic
disparity would emerge certainly, he has considered this economic gap as theinitial cost of “Development Policy”. Under this circumstance, it waspresupposed that economic disparity would be contracted as the economy would
continuously develop.
In October, 1984, a “Reform and Open-door” policy was expanded in 14
coastal cities. As Marketization Policy extended the coastal cities, Hainan
Island was designated as one of the special economic zones. Then “Hainan
Island Development” was said to be set out, and “Hainan Island Development
and Construction Corporation” was established. This was the rise of the curtainof “Development Policy” in China. However, right after that, in November, 1984,
leadership in Hainan Island abused its auto import privilege given to the zone
and it corruption in resale was uncovered. As a result, the “Development” wascriticized cold-heartedly and “Development Policy” was temporarily stopped.
In 1989, “Development Policy” resurfaced when a plan for the world’s
largest hydroelectric power station, the “Three Gorges Dam Development” plancame out. However, this plan was suspended due to the “Tiananmen Square
protests of 1989”.

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After the “Tiananmen Square protests”, in 1992, “Development Policy” went
into full swing, sparked by Deng Xiao-ping’s speech about his southern tour ofChina(南巡講話). In September of the following year, 1993, “China Three Gorges
Corporation” was formed with the State Council’s approval, and then, “Three
Gorges Dam Development” was again undertaken along with “Yangtze Basin
Development”. The word, “Development” has become a frequently used term.
Almost simultaneously, “Shanghai Pudong Development ”, located in Yangtze
delta, started moving into high gear.
The Yangtze River flows from east to west. Thus, “Development” along
Yangtze means that the economic growth developed mainly around the easternpart of coastal cities from north to south would also expand from east to west.
At that time, this “Development Policy” had an impact as “Horizontal T-shaped
Development”. In that way, starting from Pudong in Yangtze delta, along
Yangtze, the grand vision began to move to inland and west districts to extend“Reform and Open-door”.
Before that, “Reform and Open-door” policy based on Deng Xiao-ping’s“Get Rich First Theory” (先富論) brought the remarkable economic reverse ininland and west districts, emerging economical gaps between districts, unlike
the rapid growth along the east coast. Obviously, it also caused friction andinconsistency in Chinese society. From the late 1980's, numerous farmers
migrated from relatively poor areas to east coastal cities to seek jobs, whichbrought over working-force in the cities and led increase in unemployment. This,in turn, led to the formation of slums. As a result, crime rates went up steeply in
big cities such as Beijing (北京), Shanghai (上海), and Guangzhou (広州) andpublic security was shaken.
“Yangtze Basin Development” was crystallized as a policy to make amajor change for the Chinese economy to develop harmoniously, shrinking the
economic gaps between districts and softening the over flow of immigrating
manpower to coastal cities. It’s intention was to modify Deng Xiao-ping’s “GetRich First Theory” (先富論).
Then, has this full-scale “Development Policy” shrunk the economic
disparity and brought a well-balanced, harmonious economic growth?
It is true that China entered an age of high economic growth after Deng
Xiao-ping’s speech (南巡講話), and since 2003, China has marked an annual
growth rate of more than 10%. China is up to the present date. Although
China has achieved miraculous economic growth, it is suspicious to say that thedevelopment has brought a well-balanced society. The society broke up in
confusion with the increase in crime rate, farmers’ disputes, labor trouble and2resident’s conflicts.
We can contrast China from 1990’s with NIEs which marked the rapid
economic growth in the late 1970’s and also ASEAN which emerged around1980’s. Both NIEs and ASEAN employed the same kind of “Development Policy”
and they grew rapidly. These countries experienced their big cities’ becoming
slums and the inevitable social chaos that grew from residents conflicts. Going
through these social troubles, now they have relatively stable societies. Then,
how about China? This research analyzes China from the political economic
science view of points, focusing on “Development and Harmonious Society”.

（ １ ） From “Linear Development” to “Wider Development”: Expand thedevelopment from Yangtze Valley to throughout the country.
As mentioned earlier, the development of Yangtze Valley, “Horizontal
T-shaped Development”, has moved into high gear since 1993, but its model was“Linear Development”. It accelerated the development cities along the Yangtze
River, including Nanjing(南京), Wuhan (武漢), Chongqing (重慶), and Chengdu(成都); however, was not efficient for inland and west districts to grow. For thisreason, to achieve the new development from “Linear Development” to “Wider
Development”, “Development Policy” was set up. It was after that Deng
Xiao-ping, the top reformer of “Reform and Open-door” policy, died in February,
1997. In July, after the transfer of Hong Kong from the United Kingdom to thePeople's Republic of China happened, Jiang Zemin(江沢民) built the politicalfoundation the late 1990’s. During that time, “Development Policy” was juststarted to be handled. In 1999, Jiang Zemin stressed the significance of the wide
range “Development in West Areas” three times that year. “West” here meant
not only around the upper river basin of Yangtze, but also it included northwest
and southwest areas. The “West” referred a broad range of area.
In 1998, a massive plan for water conveyance began. The plan was totransmit the Yangtze water to drought areas in northwestern of China. The
plan, “South–North Water Transfer Project” was originally raised as a part of“Development Policy” and the substance of the plan had been examined until
the project was actually started in 1998.(郭開・梁季陽・張琢 ‘South–North Water
Transfer Project’, with concerns about planning “The Great West Route” “China
21” Vol.8, 2000.5, Fubaisha.)
The upper river basins of two major rivers in China, the Yellow Riverand the Yangtze River were in the west area. In the early 1990’s, desertification
became serious in the northwestern part around the upper river basin of the
Yellow River. This caused the river drought, “The Yellow River Shear Flow”,
and showed a serious problem, a lack of water. “Wider Development” for thewest had to come in to fulfill an enormous amount of water demand for both3

industrial and daily use, however, at that time, the Yellow River could not domeet the need. In order to solve the problem efficiently, a plan to construct big
canals to transfer the water of the Yangtze River to the northwestern drought
areas began.
Even with these water supply issues, in January, 2000, “ National
Development and Reform Commission” belonging to the State Council of thePeople's Republic of China, officially raised “the Great Western Development”
as a development strategy and it gained momentum. Along with this, in thefollowing year, 2001, the tenth five-year-plan was started. As a result, about 420
billion Chinese yuan (6.5 trillion Japanese yen) of development type fixed asset
investment (mainly for the infrastructure development) was used as theGovernment expenditure solely for “Development in West Areas” during the 5
years.
After that, from 2006 through 2010, about 800 billion Chinese yuan (12trillion Japanese yen) was disbursed as well. Adding private enterpriseinvestments to these public investments from the coastal cities, the net
development for the “Development in West Areas” spent this past ten years was
about 1.5 trillion Chinese yuan (about 20 trillion Japanese yen) .

A related plan to “the Great Western Development”, called “TheEurasian Land-Bridge Plan” was started around 2000. “The EurasianLand-Bridge Plan”, called “The Eurasian Continent Bridge Construction Plan
(欧亜大陸橋建設計画)” in Chinese, was originally raised as an international
cooperation project in 1992. It started as a plan to lay optical cable from
Shanghai in the Eurasian Continent going through Xinjiang, central Asia,
Turkey, and the Balkans to Frankfurt in Germany. After that, when Mr.
Ryutaro Hashimoto served as the Prime Minister of Japan from 1996 to 1997,
the Japanese government was supportive about this global project and started
to cooperate. “The Eurasian Land-Bridge Plan” has gained importance as a verysignificant construction plan to connect the Eurasian Continent with goodcommunication and transportation. Xinjiang, Qinghai, Gansu, and Ningxia,
located in the northwest of China, were in the center of the geopolitical andwere very important development areas with abundant resource reserves suchas oil, natural gas and rare metal.
About the same time, another cooperation project, “Yunnan
Development and River Mekong Integrated Development(Asia Land Bridge
Area Project, 亜細亜陸橋帯)” also came up. Its focus was not on the “West”, but

4rather on the southwest, including Thailand in the lower Mekong River andIndochina. Thus, a policy was necessary to narrow the economic gaps between
the rich and poor between districts by achieving the integrated development
throughout the country, not only areas along the Yangtze River and in the west,
but also other areas, North China, North-East, North-West, and the South
China area. It was the idea of “Harmonious Society” which was brought up to
meet the need.
The concept of “Harmonious Society” was first brought up when theregime transition occurred from Jiang Zemin and Zhu Rongji’s to Hu Jintao and
Wen Jiabao’s administration at the 16th Party Congress held in October, 2002.
At that time, Hu Jintao’s report brought up “Democratization” as the mostimportant issue because “Harmonious Society” and “Democratization”
complement each other both politically and economically. At the 3rd Plenum of
16th Central Party Committee (the 3rd Plenum) held in October, 2003, thenecessity of “Democratization” was stressed while the importance of the conceptof “Harmonious Society” was reconfirmed.
After the 3rd Plenum, in December of the same year, Hu Angang (Centerfor China Study Tsinghua University) noted about the concept of “Harmonious
Society” that, “The Great Western Development is a transition from Deng
Xiao-ping’s ‘some areas must get rich before others’ theory, and the ‘Get Rich
Together’ theory (「従“先富論”到“共同富裕論”」『南風窓』, electronic version,
December 2, 2003)”. At the 4th Plenum of 16th Central Party Committee held in
September, 2004, the realization of “Harmonious Society” was important toenhance the administrative ability of the Party.
While “ The Great Western Development”, was linked to narrowing the
economic gaps between districts, has been focused to achieve “Harmonious
Society” and “Get Rich Together Society”, Development Research Center of theState Council divided China into “Four Main Economic Plates” and “Eight Main
Integrated Economic Districts” for the national development along with theeleventh five-year-plan starting the following year. As a result, “Development
Policy” for all of China was accelerated, having modified the previous policy
focused on the development of coastal cities.

（２）Vast Public Spending and Demands of “Harmonious Society”
After Deng Xiao-ping’s speech about his southern tour of China, as“Development Policy” started to move, the destruction of forest ecology andpollution caused by the big scale “development” increased, and forced
emigration was seen in many places in order to secure land for the development.

5Because of this, protests by farmers, laborers and residents whose property wasdamaged have greatly increased in various places in China. According to thestatistics in 1994, about 10,000 of these conflicts occurred, and the total numberof people who joined in disputes reached 7.3 million. This number increased
rapidly with the determination of “Development Policy” in 2000, and thetransition from “Linear Development” to “Wider Development” started. The
statistics in 2003 showed that the increase in the number of disputes up to
about 60,000, and 30.7 million people have joined in total. These numbers are
the ones officially opened to public. Adding the non-public numbers, thenumbers of conflicts and people who joined will go up greatly. Obviously, it issaid that the acceleration of “Development Policy” and the aggravation of socialinconsistency have some cross-correlation.
It is not only that. The acceleration of “Development Policy” started
noticeably before the 2008 Beijing Olympics, achieving 1.2 trillion Chinese yuan(about 18 trillion Japanese yen) in development investments. The development
included public infrastructure related to the Olympics. Additionally, security
spending required due to Tibetan unrest occurred in March, 2008 and thedisaster assistance and revival construction from 2008 Sichuan earthquake also
hurt the national finances. According to the National Development and Reform
Commission’s estimation in October of the same year, government expenditure
for Tibetan unrest and Sichuan earthquake was about 1 trillion Chinese yuan(about 15 trillion Japanese yen). Moreover, to deal with the global financial
crisis led by Lehman's fall in September, 2008, China tried to maintain its 8%
growth rate. Thus, about 4 trillion Chinese yuan (about 60 trillion Japaneseyen) went to domestic-demand expansion policies set by the 3rd Plenum of 17thCentral Party Committee (the 3rd Plenum) in October, 2008. Around that time,
6.2 trillion Chinese yuan (about 93 trillion Japanese yen) was spent in total.
Obviously, such a large scale fiscal action is not played out only
domestically. In fact, its purpose was to gain worldwide leadership while China
strived to lead the world economy, maintaining rapid domestic growth during
this world crisis when the developed countries such as America and Japan are
in the failed state.
The fundamental issue was that such a large fiscal action was notpracticed just by the central leadership and the central government. It was
obvious and significant to assign tasks to the related departments of the StateCouncil and the local governments. For the east coastal governments especially,
it was impossible to avoid tasks such as the transfer of financial and tax
revenue sources. As a result, some departments of the State Council and the
local governments’ authority to give permission on task ordering and accepting
orders became bloated and the concession network expanded. Because of this,some departments and sections of the State Council and local governments havepretended to obey but secretly betrayed the central leadership. Problems

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concerning the bribery and corruption of power abuse have become worse.
The 3rd The Plenum held in October 2008, mentioned earlier was notofficially reported, but it explained these issues well. Hu Jintao reported theconditions, titling, “Face inside and outside challenges by being aware of fearand crisis”. The report pointed out about the current situation as bellow.
（１）The belief in socialism of 70 million members of the party has beenswaying and weakening.
（２）Sectarianism, localism, king of the mountain principles, and concession
leading conspirators have been formed.
（３）In some departments and sections of the State Council and the local
governments, the superficial obedience toward the central leadershiphas grown thick.
（４）The bribery and corruption of power abuse by bureaucrats in somedepartments of the State Council and the local governments is becoming more
obvious.
（５）The conflicts between the departments in State Council and the local
governments, especially such as public safety, judicial, prosecutor
departments and the public are also becoming more common.
The issue (1), called a crisis of belief or faith, has become more serious since
the late 1970’s, around the termination of the Cultural Revolution. Thisphenomenon started 35 years ago and since the beginning of 21st century it has
gotten more severe.
When the increase in public spending and decentralization of thetransfer of financial and tax revenue sources are demanded at the same time,the maintenance of unity of the nation by the Parties is a key factor. If theeconomical controls do not work efficiently, clamping or centralization of
authority in politics and ideology is required. However, after the dismissal ofDeng Xiao-ping, the central leadership that practices collective leadershipsystem cannot handle the ideological centralization of authority practiced
during Mao's days. For this reason, political controls were needed instead of
economic controls. As a result, this gives too much power to public safety andprosecutor departments, leading to heavy security controls over protests by
farmers, laborers and residents. The conflict between the public safety
department and the public increases and the situation gets more serious asmentioned in Hu Jintao’s report. Hu Jintao strongly emphasizes the realizationof “Harmonious Society” as well as “Being aware of fear and crisis” because thepolitical controls seek more conciliatory and harmonious solutions rather than
the aggravation of social conflicts and inconsistency.

（３）Conclusions： Theoretical Reflection
In China, “Self-examination” and “theoretical” study about the concept

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of “Development” has not been commonly investigated until today. As alreadymentioned, When “development” became a part of the concept of policy in the
1990’s, differences between this concept of “development” and the concept of“development” in the 1980’s were not “theoretically” discussed at all because
Deng Xiao-ping’s speech did not mention the concept of “development.” He justsaid, “Development is the most undeniable logic”.
Deng Xiao-ping’s words came from “Declaration on the Right ofDevelopment” proclaimed by the United Nations in 1986. It stated that "every
human person and all peoples are entitled to participate in … development, inwhich all human rights…”. Inspired by this, “White Paper on Human Rights”,
was officially published by the Chinese government in 1991, and emphasized
the “right to development” as well as the “right to exist”.
In this regard, generally, the “right to development” has been
understood as a countries’ socioeconomic right.
As already seen in detail, Deng Xiao-ping’s speech genuinely sparked“Development Policy” in China. Thus, “Development” referred to “undeniable
logic”, and was the sign for the beginning of the “Development Policy.”
Since then, the concept of “to grow” and “to develop” have been mixed up
and often used as synonyms. As a result, from Deng Xiao-ping’s speech,“Development is the most undeniable logic” caused a misinterpretation of thefacts. Because of this, “to develop”, as well as “to grow”, is affirmed as “humanrights”.
Originally, the concept of “to grow” and “to develop” are translations of
the English word development. As a verb, “grow” is used as an intransitive verb,
while “develop” is used as a transitive verb. In English, the verb, developfunction both as intransitive and transitive, and translated as, “to grow” and “todevelop”. Of course, English does not have such a distinction. These translations
were done first in Japan after World War II, and around 1960 when
“Development Assistance” was to be talked about in the world, the distinction
became remarkable.
In order to distinguish them, it was important for the transitive verb,“develop” to accompany a subject, a person who develops and an object, a person
who is developed. The object “which is developed” cannot show its identity indevelopment process, and then, it is forced to depend the subject “who develops”.
That is a problem. On the other hand, the intransitive verb, “grow” obviously
has no need to have an object, so it does not cause the “dependency” problem.
For these, as Deng Xiao-ping stated, “development”, the “undeniable logic”,
was understood as a basic “human right” in the world.
As explained earlier, around 1960, the English transitive verb, develop,
was started to refer to “Economic Assistance” for the poor countries and areas
and to be translated “develop” in Japanese. To examine the true meaning, it isnecessary to go over the international situation from the mid 1950’s.

8After World War II, Asian-African Nations(AA), that were under colonial
rules, became independent from the western powers and started to become
members of the United Nations. Also, at the same time, emerging independent
nations in AA were forced to choose to join either the east or the west because of
the East-West standoff known as the Cold War.
Then, in April, 1955, the first Asian-African Conference also known as
the Bandung Conference took place in Bandung, Indonesia. At the conference,
AA emerging independent nations declared not to take part in either the East orWest and to be “Non-Aligned”. Since then, AA independent nations are known
as “third-world” nations.
However, around 1959, the initiative nations, China and India started tohave friction, causing border disputes. AA third-world’s “Non-Aligned” wasshaken. In 1960, while tensions between China and India were high, 17 nationsin Africa became independent and joined the United Nations. The west nations
led by America assisted AA third-world for “development” and prevented thesecountries from turning red (Communization or socialization), presenting a planto get the third-world nations into the West. This idea took off, taking
advantage of the “United Nations Development Decade (attention: The word,‘development’ was used)” by John F. Kennedy at the 16th United Nations
General Assembly held in September 1961. A similar idea was seen in the“Marshall Plan” employed by the United States soon after World War II as an
emergency aid for Greece and Turkey to prevent their turning red.
“Development Assistance” was a policy that embodied the Cold War Theory withthe leadership of G. Kennan who was the U.S. ambassador to Moscow.
One of the features of the “United Nations Development Decade” is that
“Development Assistance” is provided from the west developed countries to thethird-world poor countries. Obviously, the third-world emerging nations were
included in the countries to receive development assistance; however, they did
not meet the conditions to be bearers. “Development” focused on large scale
infrastructure development such as building dams and harbors, and thedevelopment fund and development facilitation agencies (enterprises to accept
orders) were provided by the west developed countries. As a result, hardships
and inconsistency explosively came up just like G. Myrdal pointed out as“underdevelopment” problems in his book, “Asian Drama (officially published in1968), in 1963. AA the third-world nations have specificity in their histories andstructures. The discriminatory international trading system and the gaps
between developed and undeveloped countries (the gaps between the south andthe north) existed for a long time since when they were under the controls of thedeveloped nations. These gaps have been on-going even since their politicalindependence. The “Development” assistance downplays cumulative effects (the9negative legacy). The criticisms said that “Development” assistance could
expand gaps between the south and the north and it made it hard for an
undeveloped country to escape from poverty.
Yoichi Itagaki expressed the negative legacy, mentioned by Myrdal, as
the historical colonial system (“Nationalism in Asia and Economic
Development” Toyo Keizai Inc., 1962). The problems in cumulative negative
legacy can possibly be solved if “Development” is promoted under the controls of
the third-world nations. However, in reality, “Development Assistance” did not
make these nations independent.
Myrdal’s argument criticized the Kennedy administration’s economic
brain, the “take off” theory reported by W.W. Rostow in 1960. Rostow theory
typically emphasized the universal law mechanism in the economic“development”, expressing that “development” can be achieved by going throughseveral phases in terms of time. From this point of view, the gaps between thesouth and north “development” were caused by time wise gaps, and thecountries experiencing the slower “development” would achieve the “take off”
phase at some point. The fact that there were some existing historical andstructural gaps between the side that “developed” the development and the side
to be “developed” were definitely ignored. Rostow and Myrdal’s theories weredistinct. Rostow stressed the universal status of “development” while Myrdal
focused on historical and structural specificity of “development”. However, thebig “trap” was that they both used the English word, develop. The word which
had two meanings was mixed-used without understanding the distinct
meanings. This confusion can be clearly seen in translations of “to grow” and “todevelop”.
Around the same time, the issue, “underdevelopment” was brought up
by Andre Gunder Frank and Samir Amin who were critical on “Development
Assistance”. This grew “Dependency Theory” in early 1970 and “Peripheral
Theory” by I. Wallerstein and others later in 1970. In other words, in“Development Assistance”, the third-world countries which are “developed” areactually forced to “depend” on the west industrialized capitalist nations whichdevelop the third-countries. As a result, the third-world nations are structurally
marginalized.
In the field of international economy theory, “Dependency Theory” and“Peripheral Theory” have been generalized as common sense since the late1970’s. However, China has been fully ignoring “Dependency Theory” and“Peripheral Theory” and trying to enforce large scale “Development Assistance”
towards underdeveloped areas inside the country. Why is this?
This was influenced by the big changes in the global economy since thelate 1970’s soon after Frank, Amin and Wallerstein’s theories got a lot of
attention. Particularly, the third-world countries and areas such as Hong Kong,
Taiwan, Korea and Singapore that were underdeveloped and receiving

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“Development Assistance” from the developed countries and internationalorganizations have entered the Rostow’s “take off” phase in the economic growthsince later 1970’s. These countries and areas have started to be called “Newly
Industrializing Economies (NIEs), and are experiencing rapid economic
developments. Later in the 1980’s, most of the ASEAN countries including
Thailand, Indonesia, Malaysia and the Philippines which were once
underdeveloped and getting “Development Assistance” achieved the “take off”
phase just like NIEs (Economic Planning Agency of Japan, “The Asian economy
1997”).
These achievements obviously reinforced the idea that “Development
Assistance” implemented by economic growth with some inconsistency can beseen on the process of it. This idea has become influential, and was proposed by
Kaname Akamatsu (Hitotsubashi University) before the war in the mid 1930’s.
After the war in the mid 1960’s, it was proposed with some modifications as“The Flying Geese Paradigm Development Theory”. This idea grabbed the
spotlight again, proposed by Akamatsu’s followers, Kiyoshi Kojima and Toshio
Watanabe, and became internationally influential in the 1980’s while ASEAN
gathered strength. With the influence of “The Flying Geese Paradigm
Development Theory”, China tried to adopt this theory.
On the other hand, the United Nations Conference on Environment andDevelopment (UNCED) known as the Earth Summit that took place in Rio deJaneiro, Brazil, in 1992 strongly warned that “Development” destroys“Environment”.
Since China’s “Development Policy” after the 1990’s inevitably caused“dependency” and “marginalization” in extensive regions even before the entire
country achieved development because China’s economy is larger than NIEs or
ASEAN’s. It is clear that the environmental destruction and the damage tofarmers, laborers, and residents will be great. It is possible that this Chinese
domestic problem will grow into a worldwide issue. Then, the destruction andthe sacrifice may be unrecoverable.
In conclusion, China’s “Development Policy” is a serious issue incountries all over the world, including Japan.

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