STRATEGIC PROTECTIONISM: HOW MAO ZEDONG’S ISOLATIONIST POLICIES PRESERVED CHINA’S ECONOMIC SOVEREIGNTY FOR DENG XIAOPING’S GLOBAL INTEGRATION
- Hindu College Gazette Web Team
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1. Introduction
In 1949, when the People’s Republic of China was established, the nation’s economy lay in ruins after decades of internal strife, foreign invasion, and mismanagement. Predominantly agrarian, with over 80% of the population living in impoverished rural areas, China faced steep rents, widespread debt, and outdated farming methods that suppressed agricultural productivity. Industrial development was minimal and concentrated in war-torn coastal cities, much of it damaged during the Second Sino-Japanese War and the Chinese Civil War. Hyperinflation peaked in 1948–49 as the Nationalist Kuomintang government flooded the economy with currency to fund military efforts, rendering money nearly worthless. Infrastructure was fragmented, trade was obstructed, and urban centers grappled with food shortages, high unemployment, and widespread poverty. Decades of foreign economic domination, warlordism, and corruption had further eroded China’s sovereignty.
When the People's Republic of China was proclaimed on 1st October 1949 under the leadership of Mao Zedong, the new Communist regime took over a nation with a broken economy, significant social disparity, and an urgent need for rebuilding and reform. Mao Zedong’s economic strategies were driven by a profound skepticism towards foreign reliance and a belief that real national freedom depended on economic independence. His focus on the "Two Whatevers"—maintaining the socialist route and pursuing class struggle—stemmed from the conviction that economic independence was closely tied to political autonomy. Mao's model of central planning, exemplified by initiatives like the First Five-Year Plan (1953-1957) and the Great Leap Forward, focused on rapid industrialisation via centralised resource allocation and minimised foreign economic influence. His advocacy for the "Third Front" industrialisation strategy during the 1960s, which moved essential industries inland for defense reasons, illustrated the deep intertwining of national security issues with economic planning. Mao's vision, while frequently marked by economic inefficiency and social upheaval, established a framework of state authority, strategic prioritisation, and ideological vigilance that would persist beyond his leadership.
On the other hand, Deng Xiaoping’s ascension marked a rhetorical and strategic shift toward modernization, growth, and international engagement. His reform era, beginning in 1978, introduced market mechanisms, decentralised decision-making, and a gradual opening to foreign investment and trade. Policies such as the establishment of Special Economic Zones (SEZs), the collectivisation of agriculture, and the “Four Modernisations” in agriculture, industry, defense, and science and technology, were heralded as radical departures from Maoist orthodoxy (Wu, 1985). However, Deng’s reforms were meticulously controlled and ideologically framed as consistent with socialism with Chinese characteristics. Far from relinquishing state authority, Deng maintained strong central oversight over critical sectors, restricted the penetration of foreign capital into strategic areas, and embedded reform within the political monopoly of the Communist Party. This deliberate approach reflected a continuation of Mao’s fundamental concern: to modernise without compromising sovereignty. By retaining the central role of the state, tightly regulating foreign capital, and sequencing liberalisation, Deng ensured that globalization would serve national objectives rather than compromise them. In this light, Deng's reforms can be viewed as a nuanced adaptation of Mao's protectionist legacy—one that reinterpreted sovereignty and security through the lens of economic pragmatism rather than revolutionary dogma.
Rather than opposing forces, Mao and Deng represent two phases of a coherent state strategy centered on economic nationalism, adapted to vastly different geopolitical and developmental contexts. Their policy approaches, while distinct in methods and immediate goals, share a common thread: the subordination of economic engagement to the overarching imperatives of national security and political control.
This paper explores the interdependence of the economic doctrines followed by Mao Zedong and Deng Xiaoping, demonstrating how Mao’s legacy served not only as a historical backdrop but as a structural and ideological foundation for Deng’s controlled globalization. By analysing the institutional, ideological, and geopolitical underpinnings of economic policy across both eras through case studies, this study contributes to a deeper understanding of how China’s leadership has consistently instrumentalised the economy as a vehicle for sovereign statecraft. Overall, the paper’s aim is to establish the fact that this interdependence is the pillar behind China’s transformation from a backward feudal country to a modern, industrialist state.
2. Literature Review
Mao Zedong's protectionist measures are frequently viewed separately from Deng Xiaoping's reform phase in the literature on China's economic change. An increasing amount of research points to the necessity of re-evaluating Mao's isolationism as a tactical basis for economic sovereignty, paving the way for China's subsequent international integration under Deng's astute leadership. Examining the foundational literature on China's economic development reveals a common propensity to interpret Deng Xiaoping's reformist agenda and Mao Zedong's isolationist policies as distinct but related parts of a larger strategic continuum.
Maurice Meisner’s Mao’s China and After (1999) provides one of the most comprehensive overviews of the political and economic trajectory of the People’s Republic. While it effectively documents the ideological rigidity and autarkic stance of Mao's regime, it stops short of considering how these policies may have created structural conditions that supported Deng’s later reforms (Meisner, 1999). Ezra Vogel’s Deng Xiaoping and the Transformation of China (2011) similarly offers a rich biographical account of Deng’s pragmatism and reform-era strategies, but lacks a detailed exploration of the Maoist legacy as a preparatory phase for reform (Vogel, 2011). Narayan C. Sen’s China’s Economic Reform: Ideological Legitimacy and Deng Xiaoping Theory explores the ideological rationalization Deng used to legitimize economic liberalization within a Marxist framework, yet overlooks the institutional and sovereignty-preserving legacies Deng inherited from Mao (Sen, 2015). The comparative study by Butt and Sajid (2019) highlights the policy contrast between collectivism and liberalization, but treats Mao’s and Deng’s policies as binary opposites rather than stages in a continuous process. Similarly, Bending the Arc of Chinese History (Walder, 2022). explores how the chaos of the Cultural Revolution indirectly strengthened the mandate for reform, though it does not fully examine how Mao’s economic isolation bolstered China’s geopolitical autonomy.
These works, while seminal in their respective domains, reveal a conspicuous scholarly gap: few have examined how Mao’s strategic protectionism—through forced autarky, suppression of foreign influence, and self-reliance—helped preserve China's economic sovereignty, enabling Deng to re-enter the global economic system on relatively independent and advantageous terms. In an era marked by renewed global protectionism, supply chain decoupling, and geopolitical rivalry, this research is not only historically significant but also highly relevant. Understanding how China’s sovereignty was maintained under adverse conditions can offer valuable insights for contemporary developing economies seeking to balance national resilience with global integration.
3. Theoretical Framework and Methodology
This research operates at the intersection of political economy and historical institutionalism to analyze Mao Zedong’s economic isolationism as a strategic exercise in economic sovereignty—the state’s capacity to independently shape its economic policies without foreign interference (Cohen, 2008). Mao’s emphasis on self-reliance and protectionism, defined as the deliberate restriction of foreign economic influence through tariffs, capital controls, and institutional barriers (Chang, 2002), served as strategic tools to build autonomous industrial and institutional capacities amid Cold War pressures. Rather than being ideologically rigid, these policies constituted a long-term vision to insulate China from global market dependencies. The framework also incorporates the concept of controlled globalization—state-managed and phased integration into global markets (Rodrik, 2011)—which is instrumental in understanding how Deng Xiaoping later leveraged Mao’s institutional groundwork to guide China’s global reintegration on its own terms.
Methodologically, the study employs qualitative historical analysis through the lens of historical institutionalism and comparative political economy, conducting a diachronic review of two key policy periods: Mao’s era of autarky (1949–1976) and Deng’s era of reform (1978–1992). This allows for analysis of path dependency, institutional continuity, and strategic policy recalibration over time (Pierson, 2000). Drawing from primary sources, including speeches, CCP documents, and official media from both eras (MacFarquhar & Fairbank, 1991; Vogel, 2011)—the research uses an interpretive approach to synthesize diverse case studies into a coherent narrative. Triangulating textual, contextual, and theoretical data, the study seeks to illuminate how Mao’s isolationist economic policies laid the sovereign foundations for China’s later global ascent.
4. Mao’s Economic Vision: Protectionism as Sovereignty
Mao Zedong’s economic ideology was fundamentally oriented toward the preservation of China’s national sovereignty, encompassing both its material independence and ideological autonomy. Emerging from a protracted period characterised by imperial subjugation, internal fragmentation, and foreign domination, Mao articulated a developmental paradigm aimed at shielding the Chinese state from external coercion and preventing the reemergence of domestic capitalist forces. At the core of this paradigm was a distinctive form of strategic protectionism, conceived not merely as the imposition of trade barriers, but as the systematic insulation of China’s economic, technological, and institutional apparatuses from foreign influence and dependency.
This protectionist orientation was operationalised through a steadfast commitment to economic autarky, comprehensive central planning, and a deliberate exclusion from Western capitalist integration. Mao Zedong conceptualised economic self-sufficiency not merely as a developmental strategy, but as a fundamental precondition for maintaining the People’s Republic of China’s political autonomy and resisting external subjugation. He posited that the construction of a domestically sustained industrial base grounded in socialist principles and mobilised through mass participation was essential for asserting national sovereignty and ensuring ideological coherence (Naughton, 2007; Riskin, 1987). Consequently, a wide array of policy interventions—including radical land reform, collectivisation, and transformative campaigns such as the Great Leap Forward and the Cultural Revolution—were instituted with the express purpose of consolidating centralised authority and severing systemic reliance on foreign economic or institutional models. The following table shows the pivotal Chinese developments in the early 1950s.
Table 1: Pivotal moments in Chinese developments in the early 1950s
Source: Bramall, C. (2008)
Under Mao Zedong, protectionism evolved beyond a conventional economic doctrine to function as a mechanism of ideological sovereignty, intended to safeguard the Chinese state against the dual threats of imperialist encroachment and ideological revisionism. Although frequently associated with economic inefficiencies and policy miscalculations, Mao’s protectionist policies nonetheless established a durable institutional and ideological infrastructure. This foundation later enabled subsequent leadership—most notably under Deng Xiaoping—to pursue selective engagement with global markets from a position of relative strategic autonomy.
4.1. Autarky and Central Planning - The Crux of Mao’s Policies
From the early 1950s, Mao emphasised economic autarky—self-sufficiency in food, industrial goods, and especially military technology. Mao Zedong’s emphasis on autarky and central planning reflected a deeper commitment to economic sovereignty, rooted in both Marxist-Leninist doctrine and the historical imperative to overcome foreign subjugation. Drawing on the Soviet model of socialist development, Mao regarded centralised planning not simply as an economic tool, but as a mechanism to eradicate capitalist elements, enforce ideological purity, and ensure total state control over national development (Naughton, 2007; Riskin, 1987). The First Five-Year Plan (1953–1957) marked the institutionalisation of this model, directing substantial state investment toward heavy industries such as steel, coal, energy, and defense—sectors chosen for their strategic value in reducing reliance on global markets and enhancing self-sufficiency (Asian Development Bank, 2021; Shambaugh, 2008).
An especially salient example of Mao’s autarkic strategy is the Third Front Movement (1964–1971), a centrally orchestrated campaign aimed at constructing a robust industrial and military infrastructure in China’s interior regions. Initiated in the context of escalating geopolitical tensions—particularly with the United States and the Soviet Union—the movement reflected Mao’s directive to decentralize critical productive capacity and shift strategic industries away from the more vulnerable coastal zones. The initiative led to the development of over 1,100 major infrastructure projects, including industrial plants, transportation networks, and energy facilities, all strategically positioned to ensure operational continuity in the event of foreign invasion or economic blockade (Naughton, 1988). Despite its high fiscal cost and considerable inefficiencies, the Third Front exemplified Mao’s commitment to geographical and economic insulation as a means of fortifying national security and consolidating sovereign industrial autonomy.
Mao Zedong’s development strategy can be analytically positioned within the broader theoretical framework of developmental statism, particularly as articulated in postcolonial contexts where the imperatives of national sovereignty and self-reliance were often privileged over considerations of economic efficiency (Evans, 1995). Yet, Mao’s approach diverged notably from conventional developmental state models by repudiating not only Western capitalist paradigms but also Soviet-style socialism following the ideological rupture of the Sino-Soviet split in 1960. His articulation of what may be termed “sovereign developmental autarky” emphasized the necessity of endogenous industrialization, political centralization, and ideological self-determination as prerequisites for genuine national independence. While this framework entailed considerable economic inefficiencies and social costs, it laid the institutional and ideological groundwork for Deng Xiaoping’s subsequent reform agenda—facilitating a calibrated re-engagement with global markets without compromising the primacy of state sovereignty or political control.
4.2. The First Five-Year Plan (1953–1957) - Prioritising Heavy Industry and Socialist Structuring
Mao Zedong’s First Five-Year Plan (FFYP) was inaugurated in 1953 as the foundational blueprint for socialist industrialization in the newly established People’s Republic of China. Drawing heavily on Soviet models of centralised economic planning, the FFYP was designed to consolidate state control, reduce dependency on foreign capitalist economies, and establish a robust heavy industrial base. With extensive Soviet assistance including financial loans, technological transfers, and over 10,000 technical advisors, China launched 156 large-scale projects in metallurgy, machinery, mining, and power generation (Meisner, 1999). Key infrastructural advancements occurred in steel production, electrical power, and coal mining; steel output rose from 1.35 million tonnes in 1952 to over 5.2 million tonnes by 1957 (Brennan, 1959). The focus on heavy industry was ideologically motivated, based on Mao’s conviction that economic sovereignty required national command over foundational industrial inputs. This is observed in Table 2 below.
Table 2: Economic Aims Table Detailing Growth of Heavy Industry During the First Five Year Plan
Source: Brennan, 1959
Urban spatial governance during this period was restructured around the danwei (work unit) system, which became the dominant institutional mechanism linking individuals to the state. Danwei operated not only as employers but also as providers of housing, healthcare, food rations, and ideological oversight, effectively transforming urban China into a network of self-contained socio-political units (Bray, 2005). The danwei system ensured the state’s administrative reach over daily life, establishing what Gang (2012) describes as “socialist spatial hegemony” through the controlled production of both physical and ideological space. In Shanghai, for instance, spatial planning was tightly controlled to reflect socialist hierarchies, often marginalizing alternative or informal urban practices (Gang, 2012). This institutional embeddedness reinforced the political economy of the Plan by aligning industrial growth with state-dominated social organization.
Despite impressive industrial achievements, the Plan also exposed significant structural imbalances and socio-political tensions. Agriculture received comparatively little investment, growing at a modest 3.5% annually—insufficient to support rapid urbanization and rising food demands (Meisner, 1999; Spence, 1991). Furthermore, the acceleration of collectivization campaigns—leading to 93% of rural households being merged into agricultural producers’ cooperatives by 1957—disrupted traditional rural economies and laid the groundwork for later crises, including the Great Leap Forward famine (Wu, 1994). Discontent simmered beneath the surface, especially in rural regions where productivity stagnated and peasant autonomy declined. The ideological fervor that sustained the Plan’s implementation also fostered a culture of bureaucratic overreporting and repression, as dissent was increasingly framed as counterrevolutionary (Wu, 1994).
Despite impressive industrial achievements, the Plan also exposed significant structural imbalances and socio-political tensions. Agriculture received comparatively little investment, growing at a modest 3.5% annually, which was insufficient to support rapid urbanization and rising food demands (Meisner, 1999; Spence, 1991). Furthermore, the acceleration of collectivization campaigns leading to 93% of rural households being merged into agricultural producers’ cooperatives by 1957 disrupted traditional rural economies and laid the groundwork for later crises, including the Great Leap Forward famine (Wu, 1994). Discontent simmered beneath the surface, especially in rural regions where productivity stagnated and peasant autonomy declined. The ideological fervor that sustained the Plan’s implementation also fostered a culture of bureaucratic overreporting and repression, as dissent was increasingly framed as counterrevolutionary (Wu, 1994). However, the final blow to the Great Leap Forward was due to the Sparrowcide policy, part of the ‘Four Pests Campaign’,
In retrospect, the First Five-Year Plan succeeded in laying the industrial foundations of the Chinese command economy and in strengthening state capacity. However, it also entrenched systemic inefficiencies, spatial inequities, and ideological rigidity that would later manifest in the more disastrous economic campaigns of the late 1950s. The plan institutionalized a pattern of uneven development—favoring urban-industrial zones over rural sustenance—and contributed to the over-centralization that characterized much of Maoist-era governance.
4.3. The Great Leap Forward (1958–1962) - Autarkic Ambitions and Catastrophic Consequences
Mao Zedong’s Great Leap Forward (1958–1961) represents the apex of his autarkic economic vision. Conceived as a radical acceleration of China’s transformation from agrarian to industrial society, the campaign sought to amalgamate agricultural collectivization with an aggressive, decentralized push into heavy industry. Central to this initiative was the creation of People’s Communes, where vast rural units combined agricultural production with local industrial and infrastructural responsibilities (Meisner, 1999). By the end of 1958, approximately 24,000 communes, averaging 30,000 members each, had been formed from nearly 750,000 smaller collective farms. These entities, driven by both grassroots enthusiasm and top-down directives, aimed to dissolve private property and close the divide between manual and intellectual labour (Meisner, 1999).
A defining feature of the campaign was the proliferation of ‘backyard furnaces’, small-scale smelting units operated by rural laborers with the goal of dramatically increasing steel output. The campaign was ideologically underpinned by Mao’s belief in mass mobilization and voluntarist development, which prioritized political will and communal enthusiasm over technical expertise and economic rationality. However, local officials, under pressure to meet unrealistic production targets, routinely inflated output figures, leading to severe distortions in national economic planning and the over-requisitioning of agricultural produce (Dikötter, 2010).
The consequences of the Great Leap Forward were catastrophic. Misguided agronomic techniques, such as close planting and deep plowing, coupled with the diversion of labor from agriculture to industrial production, precipitated a collapse in food output. This, combined with excessive state grain procurement and adverse weather conditions, culminated in what is now widely regarded as one of the worst famines in recorded history. Scholarly estimates suggest that between 16 and 45 million people perished due to starvation, overwork, and state-enforced repression during the campaign (Peng, 1987; Ashton et al., 1984). The political ramifications were equally significant: Mao’s prestige suffered a temporary decline, and pragmatic leaders such as Liu Shaoqi and Deng Xiaoping implemented corrective measures by scaling back communal structures and reintroducing limited market mechanisms. Although intended as a leap toward socialist modernization, the campaign revealed the dangers of centralized planning divorced from empirical economic logic and set the stage for future recalibrations in Chinese development policy (Meisner, 1999; Bernstein, 1984).
4.4. Technological Self-Reliance and Defense Autonomy under Mao’s regime
Mao Zedong’s pursuit of technological self-reliance and defence autonomy emerged as a cornerstone of China’s quest for national sovereignty, particularly following the Sino–Soviet split of 1960. With Soviet technological assistance withdrawn, Mao launched an accelerated agenda for indigenous capacity-building in critical industries and military infrastructure. Meisner (1999) describes this period as the crystallisation of sovereign developmental autarky, in which self-derived industrial and technological capabilities were regarded as essential pillars of political independence and national security.
The Third Front Movement (1964–1971) stands out as the movement’s most illustrative and expansive project. Designed to fortify China's military-industrial base against foreign threats, especially possible U.S. or Soviet incursions, The initiative relocated over 1,100 industrial and defense installations to China's inland mountain regions. These included coal and steel plants, railways, energy generators, and weapons factories, staffed through relocations of both skilled professionals and millions of laborers (Meisner, 1999). Contemporary scholarship likens the Third Front to a militarized spatial-economic fortress, constructed deliberately in sites described as ‘close to mountains, dispersed, hidden’, to guarantee resilience against aerial bombardment and strategic siege (Kendall et al., 2024). Although the program incurred significant inefficiencies such as remote siting, high logistical costs, and low economies of scale underscored Mao’s conviction that technological insulation was central to defense sovereignty (Meisner, 1999; Bramall, 2008). Important milestones involve the development of the atomic bomb (1964), hydrogen bomb (1967), and satellite (1970).
Institutional reforms complemented this spatial mobilization. Maoist leadership launched state-led programs such as the Twelve-Year Science Plan, which sought to cultivate indigenous expertise in critical technologies like nuclear physics, aerospace, electronics, and computing, laying the groundwork for projects such as ‘Two Bombs, One Satellite’. These initiatives were explicitly aimed at technological independence, achieved under the oversight of state science ministries and military science commissions (Bramall, 2008; Meisner, 1999). The prioritization of defense R&D revealed Marxist-Leninist influences but was adapted to reflect China’s acute strategic concerns. Despite inefficiencies and labor shortages, these efforts built enduring institutional capacities such as scientific institutes, research universities, and military-industrial complexes without Western assistance, which would later be pivotal to Deng Xiaoping’s modernization strategies.
Contemporary academic analysis frames these developments within the theoretical paradigm of national technological autonomy, illustrating how Maoist planning created both strengths and structural deficits. After the immediate defense rationale faded and China reopened its economy under Deng, many Third Front projects were restructured or privatized, yet the human capital and industrial networks established during Mao’s era continued to underpin China’s ascent in strategic industries (Tan et al., 2021 ; Tisdell, 2013). As Bramall (2008) notes, while Mao’s model was marred by ideological rigidity and logistical inefficiencies, it nonetheless preserved core strategic capacities that later enabled controlled engagement with global markets—consistent with a vision of techno-sovereignty.
5. Reforms Introduced by Deng Xiaoping - Opening Under Control
Following the deaths of the Chinese Premier Zhou Enlai and Chairman Mao Zedong, there were no signs of forging a new development path emerging in 1977. Before Mao’s death, Deng Xiaoping (like Zhou Enlai) believed that there was a need for economic and social reforms in China but his approach was rejected by the then leadership of the CCP. With his partial restoration to political power in 1977, Deng Xiaoping already displayed a positive new approach. Deng Xiaoping’s ‘Reform and Opening Up’ was a transformative set of economic and political reforms launched in 1978 that marked China’s transition from a centrally planned economy to a socialist market economy. Deng famously said: “It doesn’t matter whether a cat is black or white, as long as it catches mice.” This pragmatic view emphasized results over ideology. The goal was economic modernization through limited liberalization, without abandoning socialism or allowing political reform.
During 1978, Deng Xiaoping’s reform philosophy gained growing support in the CCP and its desirability was accepted in December 1978 at the Third Plenary Session of the Eleventh Central Committee. This session proved to be a turning point in the direction of China’s policies for its economic and social development. At this meeting decisions were taken to transform the systems and methods of China’s economic system - expanding economic co-operation with the other countries and adopting the world's advanced technologies and equipment. The importance of the four modernizations (modernising agriculture, industry,national defence, science and technology) was emphasised. Furthermore, it was stated that ‘The general task put forward by our Party for the new period reflects the demands of history and the people’s aspirations and represents their fundamental interests’. On the whole, Deng Xiaoping’s economic reforms were characterized by a carefully crafted strategic balancing act between opening China to foreign investment and maintaining firm state control over the economy.
5.1. Special Economic Zones - The First Stepping Stone
The Special Economic Zones (SEZs) were a foundational element of Deng Xiaoping’s economic reforms, designed to stimulate rapid economic growth by selectively opening parts of China to foreign investment and market-oriented policies. In August 1980, the four special economic zones of Shenzhen, Zhuhai and Shantou in the province of Guangdong and Xiamen in the province of Fujian were established. These zones were conceived as ‘laboratories’ for reform, where the government could test capitalist mechanisms in a controlled, limited environment without immediately affecting the broader socialist system. All of these areas were located in financially underdeveloped regions so any harm to the economy resulting from a potential collapse of the open-door policy. The SEZs had certain specific characteristics (Bohnet et al., 1993) such as:
i) economic development is determined primarily by foreign capital;
ii) economic activities are mainly carried out according to the principles of a market economy;
iii) foreign companies are allowed more leeway and their operating environment is more favourable than in other parts of China;
iv) governments in the special economic zones have the same administrative powers in matters of foreign trade as do the provincial governments.
The special economic zones were completely separated from the broader economy, including the types of economic activities involved. In product markets, this meant that the scope of operations for Chinese foreign firms set up in these regions was restricted to export-focused production and services. Simultaneously, the mandatory export of goods produced in the special economic zones was mandated. In the foreign exchange market, a separation was upheld due to a requirement for special economic zones to independently produce the foreign currency they required. Despite these limitations, Chinese special economic zones significantly helped in drawing foreign investments. These positive outcomes also indicated that the initial anxiety about failing with the open-door policy gradually diminished in importance.
In 1984, Shanghai, Tianjin, and twelve additional Chinese ports were formally designated as "open cities." In these open cities, beneficial environmental conditions were established for foreign investors, and city governments obtained significant authority in making decisions regarding foreign trade operations. After 1985, the open-door economic approach to the global community was progressively applied to China's interior. The most recent development was the inauguration of eleven provincial capitals in the interior of China. As a result, the geographical distinction between special economic zones and open cities compared to the domestic economy has mostly faded away. Table 3 outlines the chronological development of the Chinese open-door policy in the period since 1980.
Table 3: Time Chart of China’s Open Door Policy
Source: Bohnet et al., 1993
The restrictions on the freedom of action of Chinese-foreign companies in the open territories and special economic zones were gradually loosened as geographical separation was less strictly enforced. On the selling side, this was manifested by a gradual relaxation of the requirement to export and an ever-increasing opening of the Chinese domestic market to these companies' products. Additionally, this led to a gradual liberalization of foreign currency controls, allowing foreign-trade companies to use a significant portion of their earned foreign currencies as they see fit. The ongoing regional expansion of the open-door policy also made it easier for Chinese-foreign companies to access Chinese labour. Clearly, this initiative hints at Deng’s intent: a part of the economy state-owned with certain restrictions, while keeping the rest of it free to the world.
5.2. Joint Ventures and Partnerships - The Next Way Forward
A key component of Deng Xiaoping's economic reforms was joint ventures (JVs), which were a calculated way to draw in foreign investment and technology while preserving government control. A major change occurred in 1979 when China passed its first Joint Venture Law, which permitted international businesses to form alliances with Chinese companies, usually state-owned enterprises (SOEs). This agreement guaranteed that the Chinese government maintained control over important industries and promoted technology transfer even as foreign companies provided funds and expertise (Bhardwaj, 1992).
The introduction of the Sino-Foreign Equity Joint Venture Law in 1979 allowed foreign companies to invest in China by forming partnerships with domestic firms—usually state-owned enterprises (SOEs)—rather than establishing wholly owned subsidiaries. This structure was instrumental in ensuring that China retained a controlling stake or significant oversight in strategic industries, while simultaneously acquiring access to advanced technology, production methods, and international management practices. JVs were primarily concentrated in the newly created Special Economic Zones (SEZs), where foreign firms received incentives such as tax holidays, import/export privileges, and legal protections (Bohnet et al., 1993).
These Joint Ventures were particularly prevalent in Special Economic Zones (SEZs), where they operated under favorable policies designed to encourage foreign investment. The upward development in international trade was primarily due to the open-door policy's tools, which include the five special economic zones, the fourteen open coastal cities, and the Chinese-foreign joint ventures, the number of which has increased after 1992 (Bohnet et al., 1993). Table 4 outlines the quantitative significance of these instruments on China’s foreign trade in 1992.
Table 4: Effects of the Open Door Policy on Foreign Trade in 1992
Source: Bohnet et al., 1993
From 1980, when the first joint venture was set up in China, until the end of 1992, China authorized a total of approx. 84,000 companies which were either exclusively foreign-owned or some form of joint or cooperative venture between Chinese and foreign interests (Bohnet et al., 1993). Regionally speaking, Chinese-foreign joint enterprises were still mostly located in the eastern coastline region and southeast China. Meanwhile, there were over 5,000 of these joint ventures in each province of Shandong, Guangdong, Jiangsu, and Fujian. However, there were only a few hundred in the western provinces thus far. This demonstrates unequivocally the impact of the open-door policy's initial implementation in only slowly moving inland from coastal areas.
This paradigm enabled a two-way trade, as Huang (2003) has pointed out - international companies gained access to one of the biggest rising markets in the world, while China acquired vital industrial know-how. Additionally, these projects were made to minimise the possibility of foreign domination over important industries like energy, banking, and telecommunications while coordinating foreign investment with China's larger economic objectives, such as industrial upgrading and export growth. Joint ventures essentially functioned as state-supervised entry points for globalization, combining sovereignty and openness, which was a hallmark of Deng's ‘socialism with Chinese characteristics’.
The structure of JVs mandated that foreign entities collaborate with Chinese partners, fostering an environment where technological and managerial knowledge could be absorbed domestically. This approach not only accelerated China's industrial development but also safeguarded its economic sovereignty by preventing complete foreign dominance in critical industries. The Joint Venture model was instrumental in sectors such as manufacturing and technology, where foreign partners provided advanced know-how, and Chinese partners contributed local market knowledge and labor. This symbiotic relationship not only accelerated China's industrial modernization but also ensured that the gains from foreign investment were aligned with national development goals.
By the mid-1980s, the success of joint ventures had become evident, with numerous such partnerships established across various industries, laying the foundation for China's rapid economic growth in subsequent decades (Zhang, 2000). China was able to quickly upgrade its sectors while making sure that the advantages of growth matched the interests of the country by utilising international collaborations. Deng's practical approach to economic reform is best illustrated by this concept of managed openness, which strikes a balance between the need to preserve state control over the economy and the inflow of foreign investment.
5.3. Opening Up to Foreign Investment
Recognizing that modernisation required access to foreign capital, technology, and expertise, Deng allowed foreign businesses to enter China through tightly controlled mechanisms such as Special Economic Zones (SEZs) and joint ventures. These zones offered tax incentives and regulatory flexibility but were geographically and functionally limited to prevent systemic disruption. Foreign firms were required to partner with Chinese entities, ensuring technology transfer and Chinese oversight. At the same time, the state retained control over critical sectors like energy, telecommunications, banking, and heavy industry through state-owned enterprises (SOEs) and centralized planning. The financial system remained insulated, with strict capital controls and limited foreign access to protect China from external shocks. This dual approach allowed China to harness the benefits of globalisation—rapid growth, export expansion, and industrial modernisation—while preventing foreign dominance and preserving the Communist Party’s political authority. Deng’s model of “opening under control” remains a cornerstone of China’s development strategy.
Trade and commerce between the People's Republic of China and the rest of the world increased sharply in the wake of the Chinese open-door policy. In terms of foreign trade volume, China moved up in the world ranking from 34th place in 1978 to 11th place in 1992. Its main foreign trading partners in 1992 were Hong Kong, Japan, USA, Taiwan, Germany and Russia. 12 China exported goods the same year to the value of US$ 85 billion, corresponding to more than 20% of its gross national product. Imports over the same period accounted for US$ 80.6 billion ( Fig. 1).
Fig. 1: Development of Foreign Trade and of Foreign Trade Dependence in China (PRC), 1979-1992
Sources: Bohnet, A., Hong, Z., & Müller, F. (1993)
The rise in imports and exports since 1979 has been, on average, in excess of 15% per year. These figures make it clear that foreign trade in the meantime not only makes a significant contribution to the performance of the Chinese economy, but that China has gradually become a factor to be reckoned with in international trade.
5.4. Balancing State-Ownership with Free Market Mechanisms - The Complete Overview to a Dual-Track Approach
Deng Xiaoping's economic reforms represented a practical change in China's development path, establishing what is referred to as the dual-track system—a strategic combination of state control and market forces. This hybrid model, frequently referred to as ‘socialism with Chinese characteristics’, maintained political control and strategic sectors within state-owned enterprises (SOEs) while progressively liberalizing non-strategic economic areas to boost productivity, draw foreign investment, and connect with global markets.
Rather than abandoning the socialist framework entirely, Deng retained key industries such as energy, banking, and heavy manufacturing under state control to ensure economic sovereignty, and prevent foreign domination of critical infrastructure (Naughton, 2007). At the same time, market reforms introduced in agricultural decollectivization (the household responsibility system), township and village enterprises, and the creation of Special Economic Zones (SEZs) in coastal provinces allowed for controlled globalization and experimental capitalism within a politically centralized system. This dual structure enabled the Chinese Communist Party (CCP) to avoid the economic shock and institutional disarray seen in other post-socialist economies, particularly the Soviet Union, by maintaining political centralization while fostering economic decentralization (Vogel, 2011).
As noted by the Stanford Center on China’s Economy and Institutions, state ownership has not diminished uniformly but has evolved, with SOEs remaining significant in sectors such as finance, energy, and telecommunications—though increasingly subject to market discipline and competition pressures (Allen et al., 2022). According to the China-US Focus analysis, Deng’s reforms did not seek to abolish socialism but to modernize it, making room for ‘socialist market economy’ dynamics that preserved the CCP’s institutional control while leveraging the allocative efficiency of the market (Fan et al., 2022). This approach led to significant unemployment and social challenges, which were mitigated by China's rapid economic growth and the establishment of basic social safety nets. Simultaneously, larger SOEs in strategic sectors underwent corporatization, adopting modern corporate governance structures to improve profitability and competitiveness (Fan et al., 2022). The share of SOEs in gross industrial output decreased from 50% in 1998 to 25% in 2011 (Vogel, 2011). The number of central government-owned SOEs reduced from 196 in 2003 to 115 by March 2013 (Fan et al., 2011). However, numerous smaller SOEs remain under local government ownership, often benefiting from preferential policies that can distort market competition (Vogel, 2011).
By institutionalising market dynamics without relinquishing the commanding heights of the economy, Deng crafted a model that allowed for sustained growth without sacrificing the economic sovereignty Mao had zealously preserved. This balancing act underscores the continuity between Mao’s isolationist groundwork and Deng’s reformist pragmatism, showing how strategic protectionism evolved into strategic engagement. On the whole, this approach enabled gradual integration into the global economy without requiring wholesale privatization, marking a strategic departure from Mao-era autarky while building on the self-reliant foundation previously laid.
6. Mao’s Legacy in Deng’s Globalization Strategy
After Japan’s invasion of China, China went from being the world’s largest economy to one of the poorest nations From 1949 to 1976, under Mao’s leadership, the Chinese government focused on improving the quality of life for its population, which increased from 542 to 937 million people. From 1952 to 1977, the average annual industrial output growth rate was 11.3 percent (Riskin, 1987). In terms of productive capacity and technological development (Meisner, 1986). China went from not being able to manufacture a car domestically in 1949 to launching its first satellite into outer space in 1970. By the 1970s, it became clear that China’s economy required an infusion of technology and capital, and that it needed to break its isolation from the world market.
Deng Xiaoping’s economic reforms after 1978 are often hailed as a radical departure from Mao Zedong’s legacy. However, a more nuanced reading suggests that Deng’s globalisation strategy was not a break but a strategic reinterpretation of Maoist developmentalism. Deng inherited core Maoist imperatives such as sovereignty, ideological independence, and state control over capital flows, and reframed them within the logic of a selectively open global economy. This adaptation reveals a distinctive form of state developmentalism grounded in both historical continuity and institutional flexibility (Bramall, 2009; Huang, 2008).
From the standpoint of political economy, Deng’s reforms aligned with what Evans (1995) termed “embedded autonomy”: a mode of governance in which the state remains insulated from external pressures while actively guiding economic transformation. The creation of Special Economic Zones (SEZs) epitomized this hybrid model—zones of liberalized trade and investment governed under strict Party oversight. Here, Deng retooled Mao’s suspicion of foreign influence into a pragmatic openness, designed not to assimilate into global norms but to leverage foreign capital for domestic modernisation (Naughton, 2007).
Importantly, this model was enabled by institutional and social foundations laid during the Maoist period. Mao’s policies, including land reform, mass education, public health campaigns, and collectivized agriculture, fostered an egalitarian base that enhanced social mobility and human capital (Meisner, 1999; Riskin, 1987). Scholars such as Sen (1999) argue that such investments in basic capabilities—literacy, health, and food security—are essential prerequisites for inclusive economic growth. The equalized rural structure created by Mao made it possible for later reforms to mobilize a vast pool of surplus labor into export-driven manufacturing without the extreme inequalities that plagued other developing economies (Lin, 1992).
The transformative success of Deng’s strategy is most evident in the area of poverty reduction. Between 1981 and 2010, over 680 million people were lifted out of extreme poverty in China, accounting for over 70% of global poverty reduction during that period (World Bank, 2016; Ravallion, 2009). While market liberalisation played a role, it was the synergy between Maoist egalitarianism and Dengist pragmatism that made such progress possible. Deng’s reforms targeted productivity gains in agriculture through the Household Responsibility System, allowing rural households to retain surpluses. This generated early growth and reduced poverty without dismantling the collectivist social safety nets that Mao had institutionalized (Fan et al., 2001).
From a personal point of view, this demonstrates Deng’s brilliance not in rejecting Maoism, but in functionalising its legacy. Mao’s idea of zìlì gēngshēng (self-reliance) was retained, but no longer equated with autarky. Instead, it evolved into a form of sovereign globalisation—where China accessed global capital and technology without compromising the authority of the Communist Party. As Huang (2008) notes, Deng's reforms were never about convergence with the West; they were about “opening the window just enough to let the flies in, but not the wind.”
This synthesis continues under Xi Jinping. The Targeted Poverty Alleviation Campaign, culminating in the eradication of extreme rural poverty by 2021, follows the same hybrid model—using technocratic tools like big data, cadre accountability, and infrastructure investment, but under a centralised command economy (Gao, 2020). The Dual Circulation Strategy, “Made in China 2025,” and rural revitalisation programs are deeply rooted in Maoist ideals of autonomy and resilience, albeit adapted to a 21st-century technological and geopolitical environment (Lardy, 2019; Economy, 2018).
However, the strategy is not without contradictions. As economic integration deepens, political insulation becomes more difficult to maintain. The Dengist equilibrium—between growth, control, and legitimacy—is harder to sustain without continuous upward mobility. Xi’s intensified reliance on nationalism, surveillance, and ideological education mirrors Maoist governance, but lacks the social momentum of Deng’s economic expansion. Whether the model can evolve beyond the developmental state into an innovation-driven economy without losing political control remains an open question.
Nonetheless, the arc from Mao to Deng underscores a central insight: poverty eradication in China was not merely a triumph of markets, but a strategic hybridization of revolutionary equity and reformist efficiency. This long historical trajectory, grounded in sovereignty-first developmentalism, continues to define China’s global economic behavior.
7. Relevant Case Studies - To Showcase the Reflection of Mao’s ideals in Deng’s Globalisation Strategy and Contemporary Initiatives
This section will examine concrete case studies to reveal the continuity of Maoist ideological principles within Deng Xiaoping’s reformist agenda and subsequent contemporary policies. To understand the trajectory of China’s transformation from isolation to global integration, we shall explore a set of emblematic policy initiatives and industrial developments that demonstrate how Mao’s vision of economic sovereignty, self-reliance, and centralized governance continued to shape China's engagement with the global economy.
7.1. Telecom and Defence Industries - Sovereignty via Techno-Nationalism
China’s telecom and defense sectors serve as prime examples of sovereignty through techno-nationalism. Building on Mao-era self-reliance, Deng-era policies like the 863 Program promoted indigenous innovation while limiting foreign dependence. Firms such as Huawei emerged under state guidance, reinforcing national control over strategic technologies and ensuring global competitiveness without compromising core sovereign and security interests.
7.1.a. The 863 Program (1986)
In March 1986, four prominent Chinese scientists proposed the 863 Program to Deng Xiaoping, aiming to reduce China's dependence on foreign technologies by advancing domestic capabilities in strategic sectors such as defense, biotechnology, aerospace, and computing. Deng approved the program within two days, allocating significant funding to support research and development initiatives.
The 863 Program was designed not merely as a developmental tool but as a sovereignty-enhancing mechanism. It allowed China to strategically decouple from Western technology dependencies while still participating in global trade. This aligns with the notion of ‘structural power’, in which the ability to develop independent technological capabilities reinforces a nation’s capacity to set its own terms of economic interaction. Deng Xiaoping’s reforms did not compromise on sovereignty; rather, initiatives like 863 operationalized Maoist principles of self-strengthening in a globalizing context.
The Ministry of Science and Technology (MOST), the Chinese Academy of Sciences (CAS), and the military-industrial complex provided the backbone of the program. These institutions were not dismantled during the reform era but repurposed for high-tech development, demonstrating what is described as ‘path dependency’ in institutional evolution as in North (1990). The 863 Program exemplifies what Peter Evans calls ‘embedded autonomy’ (Evans, 1995), a state structure that is autonomous from private interests but embedded in dense networks of technical and scientific expertise. These bureaucracies, shaped during the Maoist era (e.g., the Ministry of Electronics Industry), were repurposed to drive high-tech modernization under Deng (Zhi et al., 2017).
Rather than relying on market forces or foreign MNCs to drive innovation, China adopted a developmental state approach akin to those seen in Japan and South Korea—but with greater centralization. While East Asian counterparts like South Korea pursued export-led strategies often facilitated by foreign technology transfer, China was more cautious. It permitted selective joint ventures and tech licensing but relied heavily on domestic capabilities and long-term state planning. In contrast to Latin American countries that adopted neoliberal reforms under IMF guidance, China’s state-directed innovation preserved core strategic sectors. The comparative advantage of the 863 Program lay in its ability to integrate learning from abroad while maintaining the state as the dominant actor, echoing the Maoist distrust of foreign dominance but executed through Deng’s reformist pragmatism. This techno-nationalist strategy reflects a hybrid model: open to global knowledge flows but resistant to dependence.
7.1.b. Huawei's Emergence (1987)
Founded in 1987 by Ren Zhengfei, a former military engineer, Huawei began as a small enterprise aiming to produce domestically manufactured telecom switches, reducing China's reliance on foreign technology. At the time, China relied heavily on foreign suppliers like Alcatel and Motorola. However, throughout the 1990s, the Chinese government implemented protectionist measures to support indigenous companies like Huawei, including restricting 100% foreign owned telecom ventures, mandating joint ventures and prioritising domestic procurement in state contracts.
This strategy stemmed directly from the Maoist ethos of technological self-reliance , which had been reinforced in the 1960s after the Soviet Union abruptly withdrew its technical experts from China. That incident led to intensified domestic innovation efforts and a long-standing wariness of foreign technological dependency (Vogel, 2011). On the whole, Maoist autarky had already emphasized national control over key industries, laying the ideological and practical groundwork for this approach. Deng’s reforms shifted the methods and not the ultimate goals of national independence in core technologies. Rather than opening strategic sectors indiscriminately to foreign players, China promoted domestic firms to reduce vulnerability in national security-related industries (Segal, 2003).
Contrasting China’s approach with other developing nations reveals the uniqueness of its path. While many postcolonial states relied on import substitution without building global firms, China’s techno-nationalism strategically combined protectionism with outward competitiveness. Huawei, for instance, leveraged government support not to dominate the domestic market alone, but to eventually challenge global incumbents like Cisco and Ericsson. The policy avoided both free-market liberalism and Soviet-style planning, creating a ‘developmental state’ model closer to that of Japan or South Korea, but with greater political centralization (Woo-Cumings, 1999).
7.2. Foreign Policy Rhetoric: Isolation vs. Strategic Engagement
Mao’s foreign policy rhetoric emphasized revolutionary isolation and ideological purity, depicting the West as imperialist adversaries. In contrast, Deng Xiaoping promoted strategic engagement, prioritizing economic modernization through selective openness. This shift preserved national sovereignty while pragmatically leveraging globalization, reflecting a recalibrated, realist interpretation of Maoist self-reliance in foreign affairs.
7.2.a. Sino-Soviet Split and Withdrawal of Soviet Experts (1960)
The Sino-Soviet Split (1956–1966) was a critical assertion of China’s economic sovereignty, institutional independence, and distinct developmental path. Initially forged through the Sino-Soviet Treaty of Friendship, Alliance and Mutual Assistance (1950), the alliance promised China economic and technological support from the Soviet Union, particularly in heavy industry and defense. Mao became more disenchanted with the Soviet model, particularly after Khrushchev’s 1956 speech on de-Stalinization, which Mao viewed as ideological revisionism (Radchenko, 2009). This divide resulted in the departure of Soviet technical advisors from China in 1960, essentially ending bilateral economic collaboration and forcing China to seek independent progress.
From the perspective of economic independence, the Sino-Soviet Split marked a critical juncture that reinforced China’s resolve to pursue an independent developmental course. Maoist leaders considered dependence on Soviet technology and planning as a challenge to China's ability to independently develop its own socialist economy. The abrupt Soviet exit compelled China to pursue industrialization domestically, notably via initiatives such as the Third Front (Sanxian Jianshe), which moved essential industries to the nation's interior to guarantee strategic independence. This voluntary seclusion was not solely ideological; it was presented as a sovereign imperative to protect China from foreign, yet socialist dependence (Lüthi, 2008).
Initially structured according to Soviet principles where ministries managed production and planning, the exit of Soviet advisors compelled China to develop new institutional approaches. The consequent centralization of economic governance around the Communist Party and the PLA (People’s Liberation Army) demonstrated a robust institutional structure that could withstand external shocks. This change illustrates what historical institutionalists term as ‘critical juncture’ behaviour (Thelen, 1999), where an external shock (here, the Soviet withdrawal) results in enduring institutional restructuring. Mao’s reaction to the crisis via heightened mass mobilization and ideological indoctrination (e.g., the Great Leap Forward) might have economically flopped, but it strengthened state dominance over institutional frameworks and policy trajectory.
From a comparative political economy perspective, the Sino-Soviet split positions China’s development path in contrast to both Soviet centralized planning and the export-oriented strategies of U.S.-aligned East Asian economies. While the USSR promoted a technocratic model dependent on hierarchical planning and bloc-based trade (COMECON), China emphasized mass mobilization, ideological purity, and localized self-reliance. In contrast to South Korea or Taiwan—which received extensive U.S. aid and pursued integration into Western markets—China’s model during and after the split remained inward-looking. Unlike liberal market economies, China’s development strategy was rooted in state-centric, autarkic policies designed to preserve ideological and economic autonomy.
7.2.b. Deng Xiaoping’s Visits to Japan and Singapore (1978)
Deng Xiaoping’s 1978 visits to Japan and Singapore marked a pivotal recalibration of China’s developmental trajectory, signifying a shift from Maoist isolationism toward a strategy of selective global integration while preserving economic sovereignty. These trips, occurring just months before the Third Plenum of the 11th Central Committee, underscored Deng’s recognition that economic modernization could not occur in autarky. In Japan, Deng toured industrial and technological hubs, expressing admiration for Japanese postwar recovery and technological prowess—an implicit contrast to China’s stagnating heavy industries (Vogel, 2011). In Singapore, Deng’s meeting with Prime Minister Lee Kuan Yew exposed him to a model of state-led capitalism underpinned by centralized political authority, clean governance, and export-led growth.
From the standpoint of economic sovereignty, these visits reaffirmed Deng’s belief in adapting foreign models without compromising China's political autonomy—a strategic learning process rather than wholesale emulation. By refusing full dependency on any one model or power bloc, Deng protected China’s right to determine its own development path, continuing Mao’s emphasis on policy independence while reorienting its implementation.
Institutionally, the visits catalyzed a shift from ideologically driven planning to pragmatically governed reform institutions. Soon after, China established Special Economic Zones (SEZs), drawing from Singapore’s urban-industrial planning and Japan’s tech-oriented infrastructure investment, while maintaining tight central oversight—a hallmark of path-dependent institutional adaptation (Zweig, 2002). This institutional evolution illustrates historical institutionalism’s principle that critical junctures such as high-level state visits, can produce enduring policy legacies within an existing authoritarian framework.
In comparative political economy terms, Deng’s observations confirmed the viability of what Hall and Soskice (2001) describe as hybrid systems—blending elements of liberal market economies (Japan’s export competitiveness) and coordinated political control (Singapore’s authoritarian efficiency). Rather than joining existing blocs like the Soviet COMECON or adopting full neoliberalism, China carved a third path: a party-controlled market economy with strong state capacity. These state visits, therefore, were not mere diplomatic gestures but ideational blueprints for a new developmental model that would guide China’s rise while honoring Maoist legacies of sovereignty and institutional primacy.
8. Contemporary Implications: The Mao-Deng Legacy and China's Strategic Posture Under Xi Jinping
The foundational economic strategies introduced by Mao Zedong and recalibrated by Deng Xiaoping continue to significantly shape China’s global economic posture under Xi Jinping. Mao’s focus on economic sovereignty through autarky and Deng’s adoption of pragmatic dual-track reforms provide the ideological and structural basis for Xi’s current policies emphasizing technological self-sufficiency and strategic protectionism. This historical continuity is most apparent in the reemergence of economic nationalism and the ongoing push to minimize reliance on foreign technologies. A prominent manifestation of this continuity is the Made in China 2025 initiative, launched in 2015, which aims to position China as a global leader in high-tech industries such as robotics, semiconductors, and artificial intelligence (Sornoza-Parrales et al., 2018). Despite global scrutiny and escalating trade tensions, the initiative has driven substantial progress in sectors like electric vehicles and rail systems, though challenges persist in areas like aviation and semiconductors. In response to growing geopolitical frictions, especially with the United States, China has adopted the dual circulation strategy, which prioritizes internal consumption and self-reliance while maintaining engagement with international markets (Thompson, 2020; Sornoza-Parrales et al., 2018). This approach reflects the enduring principles of avoiding overdependence, safeguarding economic independence, and asserting sovereign development—tenets that also guided the Mao-Deng transition.
Modern debates over economic decoupling—particularly the imposition of restrictions on Chinese tech companies and export controls on critical resources—have further incentivized China to enhance domestic capacity. This has spurred greater investment in homegrown innovation ecosystems and a strategic shift toward reducing reliance on foreign technology, particularly in sectors such as high-end semiconductors and essential software infrastructure (He et al., 2018). Under Xi, China has rapidly advanced in frontier technologies like artificial intelligence, green energy, and quantum computing, reflecting a deliberate pivot toward techno-nationalism. The sustained prominence of state-owned enterprises (SOEs) in strategic industries—despite decades of market reforms—demonstrates the enduring role of state-centric economic governance (He et al., 2018). While private enterprise has grown, SOEs remain vital in sectors considered essential for national development, including energy, infrastructure, and telecommunications (Fan et al., 2022; Allen et al., 2022). This hybrid model, where market mechanisms coexist with state-directed planning, continues to embody Deng’s dual-track pragmatism. Ultimately, Xi Jinping’s leadership represents a synthesis of Mao’s ideological sovereignty, Deng’s reform-oriented flexibility, and a modern vision of technological resilience. In the context of global realignments and intensifying U.S.-China competition, this strategic legacy remains central to China’s economic and geopolitical trajectory.
9. Conclusion
Mao Zedong’s economic policies, though often criticised for their inefficiencies and ideological rigidity, played a foundational role in preserving China’s economic sovereignty, which later enabled Deng Xiaoping to pursue global integration from a position of relative autonomy. Mao’s insistence on autarky, central planning, and ideological insulation from the capitalist world—manifested in policies such as the Great Leap Forward, the Third Front Movement, and the drive for technological self-reliance—was grounded in a strategic vision of national independence shaped by China’s traumatic encounters with imperialism and dependency.
Though these policies generated severe economic and human costs, they also fostered a resilient institutional architecture, nurtured a cadre of technically skilled professionals, and safeguarded critical sectors from foreign domination. In effect, Mao’s developmental autarky constructed the structural and ideological boundaries within which Deng Xiaoping could later liberalise, reform, and selectively globalize the Chinese economy without ceding political control. Deng’s reforms thus represented not a rejection of Maoist thought but a pragmatic reapplication of its core principle—sovereignty—as a flexible instrument of modernisation.
Through the lens of political economy and developmental theory, this historical trajectory illustrates the complex interplay between protectionism and globalization. It challenges linear narratives of liberal convergence by demonstrating how a sovereign developmentalist state can resist external dependency while strategically engaging with global capitalism. In today’s context—where China once again emphasizes technological self-reliance and economic security—Mao’s legacy continues to inform the strategic calculus of the Chinese state. Ultimately, the Mao-Deng continuum reveals how isolationist policies, when rooted in long-term strategic thinking, can paradoxically lay the groundwork for successful and sovereign global integration.
By Oishee Roy and Souvik Bose
Oishee Roy has stepped into the third year of her undergraduate degree in Economics from St. Xavier’s College (Autonomous), Kolkata. She finds happiness in researching, debating and expressing her opinions regarding issues related but are not limited to domains of public policy, gender economics, political economy, international trade, environmental economics, global politics and relevant macroeconomic implications across countries and society as a whole. Her unrequited love for writing and research motivates her to keep contributing to the world of academia. When complex econometric models make her lazy afternoons stressful, she sits down on her armchair with a cup of coffee in hand, switches from Keynes to Kafka and plans her next trip to the mountains while watching the world outside her window slowly fleeting by.
Souvik Bose is a third-year undergraduate student at KIIT (Deemed to be) University, pursuing his Bachelor’s of Technology in Computer Science and Systems Engineering. He finds interest in delving into areas of machine learning, deep learning and computer vision. While he sees himself developing as a computer geek, he also exercises his interests in regional and world history, political ideologies, geopolitics and current events around the world. A communist at heart, he finds himself deeply in love with Bengali language as well literature. His love for both Indian as well as international languages drives him to explore Mandarin, Arabic, Persian as well as Urdu. His ability to think and analyse — critically as well as logically — enables him to understand the structural complexities and developmental outcomes concerning society, politics as well as the economy as a whole.
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