reduce the risk of a “two-front war” with the Soviet Union and the United States. This was no mere theoretical matter, for Russian and Chinese military forces had already clashed on the border along the Amur and Ussuri rivers.
The Chinese had a second set of reasons as well. The most virulent phase of the Cultural Revolution was over. Vice Premier Deng Xiaoping and others were trying to get the country working again. They knew that self-reliance could not work. China needed access to international technology and equipment to modernize the economy and restore economic growth. But a very big obstacle stood in the way: How to pay for such imports?
“Petroleum export–led growth”—that was Deng’s answer. “To import, we must export,” he said in 1975. “The first to my mind is oil.” The country must “export as much oil as we can. We may obtain in return many good things.”
By this time, Deng was already becoming the manager-in-chief of the new strategy of opening toward the world. A stalwart communist since his student and worker days in France after World War I, he had emerged as one of the top leaders after the communists came to power. He then became one of the foremost targets of the Cultural Revolution and of his leftist rivals. His family had suffered much; his son had been pushed out of an upper-floor window and left paralyzed. Deng himself had spent those years variously working in a tractor repair shop and by himself, in solitary confinement. He had spent many hours pacing his courtyard, asking himself what had gone so wrong under Mao and how China’s economy could be restored. In some ways, he had always been a pragmatist. (Even while organizing underground communist activities in France after World War I, he had also started and run a successful Chinese restaurant.) The traumas of the Cultural Revolution—national and personal—only reinforced his pragmatism and realism. His fundamental mottos were about being practical—“crossing the river by touching the stones”—and the most famous maxim of all: that he didn’t care whether a cat was black or white so long as it caught mice.10
Following Mao’s death and after a brief struggle with the radical “Gang of Four,” Deng secured his position as paramount leader. He could now initiate the great transformation that would lead to China’s integration with the global economy—which the 11th Congress of the Communist Party, in 1978, would proclaim as the historic policy of “reform and opening.”
The oil industry was central to the opening. By that time, China—no longer “poor in oil”—was producing petroleum in excess of its own needs and could start exporting it. There was a waiting market nearby—Japan—which wanted to reduce its reliance on the Middle East and, at the same time, develop export markets in China for its own manufactures. Buying Chinese oil would help on both counts.
As the door began to open to the outside world, the Chinese oil industry discovered, to its shock, how wide was the technology gap that separated it from the international industry. But now, bolstered by its oil-export earnings, it could buy from abroad the drilling rigs, seismic capabilities, and other equipment that would lift its technical abilities.
While Mao’s death and Deng’s ascension were critical to the opening of China, those events did not put an end to the turmoil. Inflation, corruption, and inequality emboldened opponents of reform. So did the bloody 1989 confrontation with students in Tiananmen Square. In the aftermath, amid the indecision of the leadership, the efforts to continue market reform stagnated. Seeking to jump-start the faltering reforms, Deng, in January 1992, launched his last great campaign—the nanxun, or “southern journey.” This trip showcased the booming Special Economic Zone of Shenzhen, which was becoming a manufacturing center for exports, and sought, fundamentally, to erase the stigma from making money. His message was that “the only thing that mattered is developing the economy.” It was during this tour that Deng also made a stunning revelation—he had never actually read the bible of communism, Karl Marx’s Das Kapital. He never had the time, he said. He had been too busy.11
WORKSHOP OF THE WORLD
In the years after Deng’s “southern journey,” China consolidated its course of reform and moved toward integration with the global economy. The 1990s was a decade of a new, much more interconnected economy. On January 1, 1995, the World Trade Organization was established to bring down barriers and facilitate global trade and investment. World trade was growing much faster than the global economy itself.