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By Ronald Coase

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This new approach was to form a core component of economic reform in the decades to come. It differed from the “Leap Outward” policy pursued under Hua which was to import western technology and improve China’s domestic industrial capacity so that China could produce a whole range of modern capital and consumer goods. But this conventional contrast between export promotion and import substitution tends to overshadow rather than highlight a critical difference. Under the “Leap Outward” policy, imported western technology was confined to a few selected state-owned enterprises; under trade promotion, modern science and technology as embodied in imported capital and consumer goods was available to virtually the whole of society.

Several Chinese delegations China in Transition 33 visited Yugoslavia in 1978, including Hua Gofeng himself in August of that year. In April, a delegation of the Chinese Communist Party headed by Li Yimeng, Yu Guanyuan, and Qiao Shi visited Yugoslavia to learn how its economy was managed. 46 Soon after the visit, the Chinese Communist Party resumed its official relations with the League of Communists of Yugoslavia, officially recognizing Yugoslavia as a variant of socialism. In 1979 and 1980, visits were also paid to Poland, Hungary, and other Eastern European socialist countries.

He believed that to protect Mao’s reputation would assure political continuity and thus bolster his political legitimacy. The extremists on his side proclaimed that all Mao’s words and policies had to be strictly followed, which, paradoxically, would have undermined and contradicted Hua’s own policy changes. Opposed to this approach were the vast majority of Party veterans, who had suffered during the Cultural Revolution and were eager to repudiate it. But by and large even this group was not ready, either psychologically or politically, to completely refute Mao’s legacy.

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How China Became Capitalist by Ronald Coase


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