[Yaoyao Jiang] "Selected Works of Deng Xiaoping" Counterintuitive: Misunderstanding Xi Jinping, and Misreading Deng Xiaoping

This episode uses historical documents and original data to deduce a counter-intuitive conclusion: Xi Jinping has not deviated from Deng Xiaoping, but is Deng Xiaoping's best student. The article reviews Deng Xiaoping's political line from the Four Cardinal Principles to prioritizing stability over everything else, analyzes the economic costs of the scissors difference between agricultural and industrial wealth and the layoffs of state-owned enterprises, and points out that Xi Jinping's state-led system and

On December 30, 1986, the student protests of '86 continued to spread. Students from the University of Science and Technology of China, where Fang Lizhi served as vice president, as well as from Shanghai, Beijing, Wuhan, Nanjing, Changsha, Guangzhou, and Shenzhen, took to the streets one after another. Deng Xiaoping, 82 years old, summoned Hu Yaobang, Wan Li, Hu Qili, and other central leaders to his home for a meeting. This conversation was later included in 'Selected Works of Deng Xiaoping.' Deng Xiaoping made several consecutive statements at the meeting. 'Anyone who storms Tiananmen must be dealt with decisively.' 'From the central to the local levels, we have been weak on the ideological and theoretical front and have lost ground.' 'We have adopted a permissive attitude towards bourgeois liberalization.' 'The Four Cardinal Principles must be upheld; the people's democratic dictatorship must be upheld; opposing bourgeois liberalization must be pursued for at least another 20 years.' Seventeen days later, on January 16, 1987, Hu Yaobang resigned as General Secretary of the CCP Central Committee. Many later interpreted this event as a struggle between reformers and conservatives over policy. However, looking back at Deng Xiaoping's own remarks, it was Hu Yaobang who failed to take a clear stance on opposing bourgeois liberalization.

Next, on February 26, 1989, Deng Xiaoping met with visiting U.S. President George H.W. Bush in Beijing. Deng Xiaoping told Bush, 'The overriding issue for China is stability. Without a stable environment, nothing can be accomplished. Achievements already made will also be lost.' This was the first formal articulation of 'stability overrides everything.' Three months later, the June Fourth incident occurred. On December 24, 1990, Deng Xiaoping again set the tone: 'I have said more than once that stability overrides everything, and the people's democratic dictatorship cannot be abandoned.' Looking at these statements together, from the Four Cardinal Principles in 1979, to opposing bourgeois liberalization in 1986, to stability overrides everything in 1989, and then to the people's democratic dictatorship cannot be abandoned in 1990, they are essentially the same political line. It was only after the Jiang-Hu era that reform and opening up were continuously emphasized, while the other line was intentionally muted.

In 1992, Deng Xiaoping embarked on his Southern Tour. Today, when people mention the Southern Tour speeches, the first thing that comes to mind is 'development is the hard truth.' However, if one carefully reads the complete Southern Tour speeches, they will find that a part of Deng Xiaoping's speech did not enter the public consciousness. The part that was not mentioned was Deng Xiaoping's proposal that throughout the process of reform and opening up, one must always pay attention to adhering to the Four Cardinal Principles. 'At the Sixth Plenary Session of the 12th Central Committee, I proposed that opposing bourgeois liberalization must continue for another 20 years. It now appears that it will take more than 20 years. The rampant spread of bourgeois liberalization has extremely serious consequences.' He then went on to say that the reform proposed by some people should be renamed 'liberalization,' meaning 'capitalization.' Our concept of reform is different from theirs, and this issue will continue to be debated. It is evident that Deng Xiaoping's 'no debate' in his 1992 Southern Tour speeches referred to the specific forms and measures of reform such as securities, stock markets, and special economic zones. However, on fundamental issues of ideology, political direction, and whether it is socialist or capitalist, Deng Xiaoping never said there should be no debate. It is clear that a large part of the political statements in Deng's Southern Tour was deleted, leaving us with an incomplete Deng Xiaoping.

On January 5, 2013, two months after taking office, Xi Jinping gave a speech at a study session for newly appointed members and alternate members of the Central Committee on studying and implementing the spirit of the 18th National Congress. 'The historical period after reform and opening up cannot be negated by the historical period before reform and opening up, nor can the historical period before reform and opening up be negated by the historical period after reform and opening up.' These are the 'two negations.' Later, this statement was systematically explained by the Central Party History Research Department. The external reaction at the time was that Xi was going backward and would re-affirm the Cultural Revolution. However, Xi Jinping was merely restating the line that Deng Xiaoping had repeatedly emphasized from 1979 to 1992 but which no one in the Jiang-Hu era was willing to loudly proclaim. In his own words, this is 'not forgetting the original intention.'

At the 19th National Congress in 2017, Xi Jinping Thought was incorporated into the Party Constitution. This made him the first top leader since Mao Zedong to have his name enshrined in the Party Constitution during his lifetime. When Deng Xiaoping was alive, the Party Constitution referred to the 'Theory of Building Socialism with Chinese Characteristics.' However, it was not until the 15th National Congress in September 1997, six months after Deng Xiaoping's death, that 'Deng Xiaoping Theory' was formally written into the Party Constitution. Jiang Zemin's 'Three Represents' and Hu Jintao's 'Scientific Outlook on Development' also did not involve the people. Xi Jinping's move appears to be a disruption of the Deng era's tradition of not engaging in personality cults. However, looking back at Deng Xiaoping's 1979 speech, he stated that the fourth of the Four Cardinal Principles is adherence to Marxism-Leninism and Mao Zedong Thought. Deng Xiaoping himself set the precedent of retaining Mao Zedong Thought in the Party Constitution, which 40 years later became the basis for enshrining Xi Jinping Thought in the Party Constitution.

The Deng Xiaoping we remember is the one in the 1992 Southern Tour, smiling in a jacket on the streets of Shenzhen; the one who spoke of 'development is the hard truth'; the one who was collectively edited by the official propaganda machine of the Jiang-Hu era. The real Deng Xiaoping, from 1979 to 1992, was actually repeating the same sentence: 'The Four Cardinal Principles cannot be touched.' What Xi Jinping is doing is not going backward. What Xi Jinping is doing is restoring the volume of that part of Deng Xiaoping's message, which was intentionally muted by the official propaganda of the Jiang-Hu era, back to its original level.

After discussing Deng Xiaoping's political background, let's examine his economic foundation. Today, when Deng Xiaoping is mentioned, people from all walks of life in China, and even overseas Chinese elites, are most grateful to him for making the lives of Chinese people prosperous. Without Deng Xiaoping, there would be no life of material comfort today. However, the truth might be counter-intuitive. Deng's economic foundation was actually the sacrifice of a generation of farmers and the destruction of the lives of a generation of workers.

Let's start with a number. Between 1953 and 1985, over 32 years, the wealth transferred from Chinese farmers to the state through the price scissors between industrial and agricultural products was approximately 600 to 800 billion RMB. This figure was not calculated by overseas dissidents; it is a direct quote from an article publicly released on the official website of the National Development and Reform Commission of China in June 2021. The price controls on industrial and agricultural products and the unified purchase and sale of grain in rural areas created a price scissors, causing agriculture to contribute 600 to 800 billion RMB to industry before the reforms. More importantly, this figure is not an isolated piece of evidence. Research by Cai Fang and Lin Yifu in 2003 also estimated 600 to 800 billion RMB, Wen Tiejun's research in 2000 yielded a similar magnitude, and Chen Xiwen's research in 1999 also fell within the same range. Different scholars and different time periods have all converged on the same magnitude.

What does 800 billion RMB represent? According to data from the National Bureau of Statistics, China's GDP in 1985 was ¥909.9 billion. Over these 32 years, the wealth accumulated by extracting from farmers—by purchasing grain at below-market prices and selling fertilizers, pesticides, and farm tools at above-market prices—was almost equivalent to the entire nation's GDP in 1985. This was the real situation for Chinese farmers from 1949 to 1985. They did not fail to create wealth; the wealth they created was systematically transferred to cities by the state's price control system, becoming capital for urban industrialization, low wages and high benefits for urban workers, and the iron rice bowl.

However, to complete this wealth transfer, the price scissors alone were not enough. Another problem had to be solved: how to keep farmers on their land to continue providing this cost? The answer was the Hukou system. In January 1958, the

In 1995, the Fifth Plenary Session of the 14th Central Committee of the CCP proposed the policy of "grasping the large and releasing the small" for state-owned enterprises (SOEs), focusing on large SOEs that held the nation's lifeline while letting go of small and medium-sized ones. In March 1998, Zhu Rongji became Premier of the State Council and launched the "three-year plan to overcome difficulties for SOEs." Zhu Rongji's speech in May 1998 stated that the central government had decided to use about three years to help most large and medium-sized loss-making state-owned enterprises escape their predicament through reform, reorganization, transformation, and strengthened management. Laying off surplus personnel, diverting them, reducing staff, and increasing efficiency was a fundamental approach. The text in the document appears calm, but the events that transpired changed the fate of a generation of workers.

From 1998 to 2001, 7 to 9 million state-owned enterprise employees were laid off each year. By 2003, the cumulative number of laid-off SOE workers reached 28.18 million. If collective enterprises were included, the scale of the great layoff wave was about 30 to 70 million people. If calculated on a basis of three people per family, it directly affected over 200 million people nationwide. What was lost was not just jobs; laid-off workers lost the entire system of life under the danwei (work unit) system. Publicly funded healthcare disappeared, factory-run kindergartens closed, and canteens vanished. Their years of service were bought out. In the Northeast, one year of service was worth about ¥2,000, while in Jiangsu and Zhejiang, it was ¥800 to ¥1,000. A worker with 20 years of service received tens of thousands of yuan and was then pushed onto the streets.

In 1999, during the CCTV Spring Festival Gala, Huang Hong said in the skit "Daqi" (Cheering Up): "We workers must think for the country. If I don't get laid off, who will?" That year, it was an optimistic propaganda slogan. Twenty years later, it became the most painful footnote of that generation of workers.

Speaking of this, we must ask a core question: Was Zhu Rongji's SOE reform an extension of Deng Xiaoping's reform line, or a deviation from it? Zhu Rongji was personally selected by Deng Xiaoping as the executor after Deng's 1992 Southern Tour. In April 1991, Zhu Rongji became Vice Premier of the State Council, and in 1992, he entered the Politburo Standing Committee. From 1993 to 1995, Zhu Rongji concurrently served as Governor of the People's Bank of China, leading the fiscal contract system reform. In 1998, he became Premier. This upward trajectory was seamless after Deng's Southern Tour. In Deng Xiaoping's Southern Tour speeches, he repeatedly emphasized that development is the hard truth and that efforts should be concentrated on major undertakings. Zhu's "grasping the large and releasing the small" was in line with this thinking: focus on dozens of giant central SOEs and make them the nation's lifeline, while selling off, closing down, or merging small and medium-sized SOEs. As for what would happen to the tens of millions of workers after the sell-offs? Deng Xiaoping's original words were that some people would get rich first, and then they would lead others. But Deng Xiaoping did not say that a generation would be sacrificed between the first to get rich and those who followed.

Fast forward to Xi Jinping's new era. In October 2021, Xi Jinping published "Solidly Promoting Common Prosperity" in Qiushi magazine. One sentence was repeatedly quoted: "The government cannot guarantee everything. Even if future development levels are higher and financial resources are more abundant, we cannot pursue excessive guarantees by raising high targets, and we must resolutely prevent falling into the trap of welfare-ism and idleness." This sentence has been interpreted by many as Xi Jinping intending to suppress the private economy and return to the era of the "big pot of rice." However, this interpretation underestimates Xi's intentions. Xi's stance on not supporting idleness is completely consistent with Deng's "breaking the iron rice bowl." But more importantly, this direction has never been about the debate between welfare and idleness; it is about a more fundamental question: What is the role of people in this country?

Deng Xiaoping said in 1988 that science and technology are the primary productive forces, while Xi Jinping said in 2023 that "mental productivity" is the primary productive force. One before, one after, separated by 35 years. The same logic: Development is the goal, and everything else is a tool. Environment is a tool, so China could sacrifice its ecology for 30 years to develop heavy industry. Morality is a tool, so China could have Sanlu milk powder, gutter oil, and toxic vaccines. Similarly, people are also tools. People as tools in the Deng era were called the "scissors difference." From 1953 to 1985, the state extracted 800 billion yuan from farmers, which became funds for industrialization. People as tools in the Zhu Rongji era were called "reducing staff and increasing efficiency." From 1998 to 2003, 28.18 million laid-off workers were pushed out, becoming the price of industrial upgrading. People as tools today are called "preventing the trap of welfare-ism." 300 million migrant workers will have to fend for themselves in retirement when they turn sixty, and hundreds of millions of retired workers are barely getting by on monthly pensions of a few hundred to two to three thousand yuan. The money saved from this is invested in the "Big Fund" (Phase I, II, III), in the expansion of production capacity for the "new three items," and in the "big chip" industry. Xi Jinping's "not supporting idleness" is not about saving a little on social security. Xi Jinping's "not supporting idleness" is about diverting funds that should be spent on people's livelihoods to undertake major tasks, to serve as capital for the national system, to subsidize the export of new energy vehicles, and to inject capital into the chip industry. This is the contemporary translation of Deng Xiaoping's "development is the primary productive force." Deng's words meant development first, everything else gives way. Xi's words mean "not supporting idleness" and concentrating on major undertakings. The language is different, but the logic is exactly the same.

And what role do Chinese people play in this logic? Are they fuel? Are they leeks? Are they the cost of low human rights competitive advantage? Are they raw material batteries that need to be constantly fed into the machine of the socialist market economy? From peasants in 1953 to workers in 1998 to migrant workers and retired workers in 2026, it's the same chain, the same ideological gene. Deng Xiaoping did not invent this chain, because this chain existed in Mao's era, but Deng industrialized, scaled up, and commercialized this chain. Xi Jinping did not invent this chain either; he just tightened the chain after the external dividend disappeared.

Speaking of this, there is one question that cannot be avoided. Has the life of ordinary Chinese people improved today? It certainly has. China today is much richer than China in 1978, and this is a fact. But this wealth is not evenly distributed. In 1985, the ratio of per capita disposable income between urban and rural residents was the historical low point since the reform and opening up, 1.92. In 2024, this figure rose to 2.34. Today, it has not narrowed, but has been widening. The proportion of Chinese residents' consumption to GDP is about 38%, while it is 70% in the United States, 65% in Japan, and over 55% in South Korea. The proportion of money earned by Chinese people that turns into consumption is only about half of theirs. A considerable part of the money earned by Chinese people is still paying for the country's investment, for infrastructure upgrades, for new energy exports, and for chip manufacturing. This is the essence of the economic model of the Deng Xiaoping era, and it is also the model that the Xi Jinping era continues to maintain. The consumption of ordinary people is always compressed, while the expansion of the country is always prioritized. We have discussed systems and logic above, but for many people, their real feelings do not come entirely from the system itself, but from their own life experiences. It's like a weather forecast: in addition to the actual temperature, there is also a perceived temperature. Today the temperature is twenty-eight degrees, but it might feel like thirty-two. So, we can analyze Deng Xiaoping and Xi Jinping by starting with documents, speeches, systems, and designs, but ordinary Chinese people often remember not these things, but whether their own lives have changed because of them. This is why, even today, many people still say, "I am against Xi, but not against Deng. Deng Xiaoping's path was correct, and it was later ruined by Xi Jinping." This is because, in the memory of many Chinese people, Deng Xiaoping's greatest legacy was to correct chaos and restore the college entrance examination, allowing some people to get rich first. These facts all truly happened and have indeed changed the fate of countless families. Because of this, if we are to discuss the relationship between Xi Jinping and Deng Xiaoping, we must return to these few events that are most likely to evoke emotional identification.

First, let's talk about correcting chaos, not settling accounts. Chinese people over forty years old today, their parents' generation have mostly benefited directly or indirectly from Deng's correction of chaos. Their fathers might have been labeled as rightists during the Cultural Revolution, rehabilitated in 1978 with back pay and restored titles, and their family's life finally returned to normal. Or their parents were among the first batch of university students after the restoration of the college entrance examination in 1977, admitted from villages, factories, or the production corps, thus changing the fate of the entire family. These experiences and feelings are real. However, the question that is truly worth asking is: what did the correction of chaos actually correct? It did not release. In June 1981, the Sixth Plenary Session of the 11th Central Committee of the CCP passed the Resolution on Certain Questions in the History of Our Party Since the Founding of the People's Republic of China. This is the core document of Deng Xiaoping's counter-argument. The resolution clearly pointed out that the Cultural Revolution was a turmoil wantonly initiated by the leader of the Party and utilized by counter-revolutionary cliques, bringing serious disaster to the Party, the state, and the people of all nationalities. Reading this, one might think that Deng Xiaoping completely negated the Cultural Revolution. However, the same resolution contains other statements. The first statement: the responsibility for the Cultural Revolution is mainly attributed to Lin Biao and the Jiang Qing counter-revolutionary clique. The assessment of Mao Zedong himself: the resolution's original words are that his merits are primary, and his errors are secondary, which is commonly known as the 70-30 split. The second statement: the resolution clearly states that Mao Zedong Thought is the guiding ideology of our Party. The third statement: the resolution did not amend the Party Constitution, and Mao Zedong Thought remains in the Party Constitution. The portrait of Chairman Mao on Tiananmen Gate Tower remains, and the Mausoleum of Chairman Mao remains. These three things mean that what Deng Xiaoping did was not to settle accounts, but to seal the parts of the Cultural Revolution machine. Continued revolution, class struggle, purging two-faced people, and re-education of educated youth were not dismantled; they were just stopped and labeled as temporarily unused. The machine remained in place, and whoever held the key could revive it. This is the true structure of Deng's correction of chaos. It rehabilitated a large number of wrongly accused cases, which is a fact, but it did not settle accounts with the entire system that caused these wrongly accused cases, which is also a fact.

Next, let's look at what Xi Jinping has done. On January 5, 2013, two months after taking office, Xi Jinping said something at a seminar for newly elected Central Committee members and alternate members on studying and implementing the spirit of the 18th National Congress. We have quoted this statement before: history after the Reform and Opening Up cannot negate history before the Reform and Opening Up, nor can the historical period before the Reform and Opening Up negate the historical period after the Reform and Opening Up. If the 1981 resolution was Deng Xiaoping stopping the Cultural Revolution machine, then the two "cannots negate" in 2013 were Xi Jinping restarting it. The time interval was 32 years. Everyone has seen what happened in the subsequent 10 years. The label "two-faced person" was used against Wang Shiwei during the Yan'an Rectification in 1942, who was labeled a "two-faced element" and a "Trotskyist." In 1947, during the CCP's retreat in Xin County, Shanxi, he was apprehended by train police. Contemporary judgments using this label, including the verdicts in the cases of Zhou Yongkang, Sun Zhengcai, and Ling, show that the term "72-faced person" returned after 70 years, with the exact same wording.

Let's look at Deng Xiaoping's second supposed achievement: the restoration of the Gaokao (National College Entrance Examination). Among Chinese people over forty years old, many families are direct beneficiaries of the Gaokao's restoration. Their parents entered university through an exam, changing the fate of their entire families. This gratitude is real, but what did the restoration of the Gaokao truly restore? The admission rate for the first Gaokao in 1977 was 4.8%, less than 5%. This figure shows that from its inception, the Gaokao was not a system for educational equity; it was a national-level talent screening mechanism. After the Cultural Revolution ended, the Reform and Opening Up required technocrats, engineers, and researchers. The state had to identify and select this group of people scattered in villages, factories, and the production corps in the shortest possible time and send them to universities, with the exam serving as the selection tool, not a promise of universal education. An exam that changed the destiny of 4.8% of people simultaneously meant that 95.2% were tragically eliminated. The former would remember Deng Xiaoping, while no one would speak for the latter. The gratitude many people feel towards Deng Xiaoping today comes from these 4.8%, the beneficiaries. What Deng restored was never educational equity, but the state's ability to allocate talent. This was extremely effective for the state, and it was misunderstood as being fair to everyone.

Deng Xiaoping's third achievement: the hidden doors left in property rights design. Our most basic gratitude towards Deng Xiaoping is actually the saying, "Let some people get rich first." Every family has its own house, car, and money. Those who went into business in the 1980s, those who resold medicines in the 1990s, those who speculated in real estate in the 2000s, and those who caught the wave of internet entrepreneurship in the 2010s, along with their children, constitute the main body of the emerging middle class. Their stories are about earning money through their own abilities under Deng's promise of getting rich first, buying houses, some sending their children abroad, and some immigrating themselves, while others stayed in the country to continue developing. For them, Deng Xiaoping is a benefactor. However, there is a crucial detail in this promise of getting rich first that we have overlooked. In March 2004, the Second Session of the Tenth National People's Congress passed a constitutional amendment, revising Article 13 to state: "The lawful private property of citizens is inviolable. The state protects by law the citizen's right of lawful private property ownership and inheritance." Seeing the words "lawful private property is inviolable," people might think that the Reform and Opening Up had reached a point where China finally had property rights protection and could confidently make money. However, there are two words in this sentence that are easily overlooked in Chinese but are nuclear-level in a legal context: "lawful property" is protected. "The lawful private property of citizens is inviolable." Does the legal meaning of this sentence imply that your property is inviolable, or that your *lawful* property is inviolable? And what constitutes lawful property is decided by the Party. These two words transform property protection from an absolute right into a revocable right. The Party can take it back at any time by deeming your property unlawful. In 2004, that constitutional amendment added "lawful private property is inviolable," but it did not touch Article 6 of the Constitution, which states: "The socialist economic system of the People's Republic of China is the socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working masses." Article 6 is the bottom line that Deng Xiaoping himself drew. Throughout the 40 years of Reform and Opening Up, the core principle of "public ownership as the mainstay" has never changed. This is the truth behind Deng Xiaoping's reform of property rights design: Deng did not provide genuine property protection for the private economy; he provided property rights that were lent to you for a period of time.

It is not enough to just talk about legal provisions; we need to look at specific cases. On October 20, 2020, Jack Ma gave a speech at the Shanghai Bund Financial Summit, criticizing the pawnshop mentality of China's financial regulation. On October 26, Ant Group announced its IPO pricing, with a fundraising scale of ¥230 billion, set to be the largest IPO in global history. On November 2, the central bank, the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC), and the State Administration of Foreign Exchange (SAFE) jointly summoned Ant Group for a meeting. On the evening of November 3, the Shanghai Stock Exchange announced its decision to suspend the listing of Ant Group's STAR Market IPO. With less than thirty-six hours left before the originally scheduled listing on November 5, Alibaba's US stock plummeted by 8%, with a market value evaporation of ¥440 billion. The word "legal" vanished, taking with it two trillion in market value. Ant is not an isolated case. On June 30, 2021, Didi listed on the New York Stock Exchange with an issue price of $14 and a valuation of approximately $67 billion. Seven days later, the Cyberspace Administration of China (CAC) announced that Didi Chuxing's app had serious problems with the illegal collection and use of personal information, demanding its removal from app stores, citing national data security risks. The timing of Didi's listing is worth remembering: June 30, 2021, was the day before the 100th anniversary of the founding of the CCP. Didi was the tech company that rushed to list in the US the day before the centenary, and four days later, it was halted in the name of national security. The third case: On July 24, 2021, the General Office of the CCP Central Committee and the General Office of the State Council issued an opinion on further reducing the burden of homework and off-campus training for students in compulsory education, commonly known as the "double reduction" policy. A sentence in the document stated that existing subject-based training institutions would be uniformly registered as non-profit organizations and would not be allowed to list and raise funds. The day before the document leaked, New Oriental's Hong Kong stock plummeted by 40.61%, marking the largest single-day drop since its listing. When the US market opened that evening, Gaotu (formerly GSX Techedu) fell by 70.76%, Koolearn Technology fell by 63.26%, and New Oriental fell by 54.2%. The market value of the three major education and training giants evaporated by more than $112.5 billion, or about ¥730 billion RMB, cumulatively over a weekend. Yesterday, it was a completely legal business model; today, it is illegal with a single document. Looking back, we are grateful for Deng Xiaoping's phrase, "Let some people get rich first." However, Deng Xiaoping's "getting rich first" was never a promise of property rights, but a license that could be revoked. The events of the past four years, from 2020 to 2024, from Jack Ma's disappearance, Didi's ¥8 billion fine, to New Oriental's collapse, are not because Xi Jinping changed anything. It is because the time Deng Xiaoping lent to the private economy has expired. The word "legal" has always been a hidden door in Deng's reform of property rights design. What Xi Jinping has done is not to violate Deng's design, but to activate the design that Deng Xiaoping had already prepared.

At this point, there is only one last question that must be answered: If what Deng Xiaoping left behind was truly a market economy, truly "development is the hard truth," and truly allowing entrepreneurs and the private economy to play the leading role, then why can Xi Jinping continue to build chips on a large scale today? Why can he continue to burn money with the state-led system? Why can he continue to concentrate resources in the directions desired by the state, rather than letting the market decide? The answer is that what Deng Xiaoping left behind was never the four words "market economy." Deng left behind a machine of the state-led system that could be restarted at any time by the supreme leader. Many people believe that the state-led system is something new from the Xi Jinping era. In fact, Deng Xiaoping not only did not abandon this system, but personally repackaged it for the era of reform and opening up. In September 1988, Deng Xiaoping put forward the now well-known phrase, "Science and technology are the primary productive forces." However, pay attention to the wording: Deng said "science and technology," not "market"; he said "technological progress," not "entrepreneurial spirit." In Deng's logic of development, the core determinant of national competitiveness has always been technology, and technology ultimately requires state power to organize and concentrate resources to achieve breakthroughs. This is a manifestation of the same logic at different historical stages, similar to Xi's concept of "core productive forces."

In 1980, Shenzhen became a special economic zone. In 1990, the central government decided to develop Pudong. In 1992, the central government officially decided on the Three Gorges Project. These three events have one thing in common: all were planned by the central government, not formed naturally by the market. The Three Gorges Project is particularly illustrative. In his 1992 Southern Tour Speech, Deng Xiaoping clearly stated, "There has been much debate about the Three Gorges Project. When I went to the United States, I saw that all the places where hydropower stations could be built had already been built. This can increase national strength and wealth! I am firmly in favor of it. What is decided must be done decisively." This is the core of the state-led system: when something is decided, it must be done even if there is controversy, even if there is opposition. Even if heavyweight scientists in academia oppose it, it must still be done. This method was not invented by Deng Xiaoping either; his most successful practice occurred precisely during the Mao Zedong era. The "two bombs, one satellite" project is a typical example: hundreds of thousands of people concentrated their efforts, with billions of yuan invested, and in a situation where the country was blockaded by both the Soviet Union and the West, they succeeded in creating an atomic bomb, a hydrogen bomb, and a satellite. After Deng Xiaoping came to power in 1978, he did not negate the "two bombs, one satellite" model but expanded it from the military industry to infrastructure, and even to the economic field. The Shenzhen Special Economic Zone, the Pudong development, the Three Gorges Project, and the Qinghai-Tibet Railway are all replicas of the "two bombs, one satellite" model. During the Jiang Zemin and Hu Jintao era, the state-led system was further extended to high-speed rail, expressways, and ultra-high-voltage power grids. The tools were left by Deng Xiaoping. By the time Xi Jinping came to power, this machine was not only not dismantled but was operated at an unprecedented power level.

The most telling example is semiconductors. In September 2014, Xi Jinping, who had been General Secretary for only two years, established the National Integrated Circuit Industry Investment Fund. The first phase had a scale of 138.7 billion yuan, commonly known as the "Big Fund." In October 2019, the second phase of the Big Fund was established with a scale of 204.1 billion yuan. In May 2024, the third phase was established with a scale of 344 billion yuan, totaling 686.8 billion yuan across all three phases. The logic behind this investment is identical to that of the "Two Bombs, One Satellite" project in the 1960s, the Shenzhen Special Economic Zone in the 1980s, and the Three Gorges Dam project in the 1990s. If something is deemed important, it will be pursued regardless of controversy or cost. The difference is that the Mao era created the atomic bomb, the Deng era created Shenzhen, and the Xi Jinping era is creating new "three new things" in chips: electric vehicles, lithium batteries, and solar energy. These three industrial chains have achieved a leading global position over the past decade, not as a result of market competition, but through subsidies, industrial policies, and state credit. In September 2023, during an inspection tour in Heilongjiang, Xi Jinping first proposed the concept of "mental productivity." It became a frequent term in central government documents in 2024. "Mental productivity" is essentially a modern version of Deng Xiaoping's "science and technology are the primary productive forces," using a "whole-nation system" to break through core technologies and state power to lead industrial upgrading. The question remains: if Deng left behind a market economy, why can Xi Jinping still do this today? The reason is that what Deng left behind was never a development model entirely determined by the market, but a system that combines market efficiency with state direction. The market can decide how to make money, but where major industries should invest and where state resources should be concentrated has always been decided by the Party.

In the first 30 years of reform and opening up, China needed foreign investment, exports, and Western markets, so the market aspect appeared more prominent, while the state aspect receded into the background. However, in the Xi Jinping era, the external environment has changed. Chips, artificial intelligence, and new energy are increasingly seen as national competitiveness. The market can solve efficiency issues, but it cannot solve whether the nation should invest and where to invest. Thus, the "whole-nation system" that has always existed has re-emerged. Consequently, there is a large amount of idle chip capacity. The productivity is not because Xi Jinping has redesigned an economic model, but because Deng Xiaoping's original system has once again become the protagonist in the new environment. Some might ask, what about Deng's era? What are thirty years in the grand scheme of things? I prefer to see it as a special period rather than a new system. That period had Deng Xiaoping's personal political prestige, the economic dividends brought by reform and opening up and globalization, and the long-term openness of Western markets, capital, and technology to China. These three forces temporarily suppressed one aspect of the system. However, when these three forces disappear one after another, what remains is the true underlying nature of the system.

So, has Xi Jinping changed China? If we look at the phenomena, yes. However, if we talk about the system, it's not that Xi Jinping hasn't redesigned a Chinese model; he has simply reactivated the structure left by Deng Xiaoping, which had never been fully utilized, to its maximum capacity. Having said this, the title of this episode should now be clear: Why is Xi Jinping Deng Xiaoping's good son? Because he inherited Deng Xiaoping's political framework and the institutional boundaries he set. He did not overthrow Deng, but continued to drive the car along the track Deng had laid out. Today, many still believe that if Xi Jinping steps down, China will return to the era of reform and opening up. But if the real problem is not Xi Jinping, but the system that nurtured Xi Jinping, then will there be any fundamental difference if someone else takes his place? This may be the real question this episode aims to discuss. That's all for this episode.

I am contemplating the logic of this episode. We will meet again next time.