There is no fundamental contradiction between socialism and a market economy

October 23, 1985

Henry Grunwald (Editor-in-chief of Time): The Chinese Communist Party has always told people to be selfless and serve the people. In the current economic reform you are telling people to become prosperous, but some cases of graft and corruption and abuse of power have cropped up. What measures are you going to take to solve these problems?

Deng Xiaoping: We shall solve them mainly by two means -- education and law. These problems cannot be solved overnight. Nor can they be tackled effectively with a few words by a few people. But we are confident that our Party and our country are capable of gradually reducing these negative phenomena and eventually eliminating them.

Grunwald: Are these phenomena indicative of a latent contradiction that is hard to resolve -- a contradiction between a market economy and the socialist system?

Deng: There is no fundamental contradiction between socialism and a market economy. The problem is how to develop the productive forces more effectively. We used to have a planned economy, but our experience over the years has proved that having a totally planned economy hampers the development of the productive forces to a certain extent. If we combine a planned economy with a market economy, we shall be in a better position to liberate the productive forces and speed up economic growth.

Since the Third Plenary Session of our Party's Eleventh Central Committee, we have consistently stressed the importance of upholding the Four Cardinal Principles, especially the principle of keeping to the socialist system. If we are to keep to the socialist system, it is essential for us to develop the productive forces. For a long time we failed to handle this question satisfactorily. In the final analysis, the superiority of socialism should be demonstrated in a greater development of the productive forces. The experience we have gained over the years shows that with the former economic structure we cannot develop the productive forces. That is why we have been drawing on some useful capitalist methods. It is clear now that the right approach is to open to the outside world, combine a planned economy with a market economy and introduce structural reforms. Does this run counter to the principles of socialism? No, because in the course of reform we shall make sure of two things: one is that the public sector of the economy is always predominant; the other is that in developing the economy we seek common prosperity, always trying to avoid polarization. The policies of using foreign funds and allowing the private sector to expand will not weaken the predominant position of the public sector, which is a basic feature of the economy as a whole. On the contrary, those policies are intended, in the last analysis, to develop the productive forces more vigorously and to strengthen the public sector. So long as the public sector plays a predominant role in China's economy, polarization can be avoided. Of course, some regions and some people may prosper before others do, and then they can help other regions and people to gradually do the same. I am convinced that the negative phenomena that can now be found in society will gradually decrease and eventually disappear as the economy grows, as our scientific, cultural and educational levels rise and as democracy and the legal system are strengthened.

In short, the overriding task in China today is to throw ourselves heart and soul into the modernization drive. While giving play to the advantages inherent in socialism, we are also employing some capitalist methods -- but only as methods of accelerating the growth of the productive forces. It is true that some negative things have appeared in the process, but what is more important is the gratifying progress we have been able to achieve by initiating these reforms and following this road. China has no alternative but to follow this road. It is the only road to prosperity.

Donald McHenry (Professor at the Institute of Diplomacy of Georgetown University and former U.S. representative to the United Nations): Are you satisfied with the changes in the present governing bodies and leaders? Do you believe they will continue the policy of reform?

Deng: I should like to call your attention to our recent Party Conference. Two important measures were adopted at that conference. First, after a review of the experience of the past seven years, we set an appropriate growth rate for the economy. We also adopted the Seventh Five-Year Plan [1986-1990], which was designed to create the necessary conditions for prolonged, stable development in this century and the next. Second, we made organizational changes to ensure the continuity of policy; that is, the average age of leading cadres began to be lowered, starting with the Central Committee and the central government organs.

The continuity of our policy depends mainly on two things. First, on whether the policy itself is right, and this is the most important factor. Why should we continue the policy if it is not right? If the policy is right and can promote the development of the productive forces in a socialist society and gradually raise the people's living standards, the policy itself ensures its continuity. Second, it depends on those who execute the policy. In both the central and local governments there should be energetic people who dare to blaze new trails. After the Third Plenary Session of the Eleventh Central Committee, we began to lower the average age of cadres. And of course, we have also been trying to make sure that they are more revolutionary, better educated and more professionally competent. It was the Twelfth National Party Congress in 1982 that decided to convene the recent Party Conference. As the average age of members of the Party's leading bodies was too high, it was decided that before the next congress [in 1987] a Party conference would be held at which that age could be lowered.

Karsten Prager (Editor of the international edition of Time): I should like to ask a personal question. In your long revolutionary career you have changed the destiny and orientation of the Chinese people over and over again. How do you wish them to remember you when you are gone?

Deng: I hope they will never give me too much prominence. What I have done represents the aspirations of the Chinese people and the Chinese Communists, that's all. And the Party's policies were worked out by the collective. Before the "cultural revolution" I was also one of the principal leaders of the Party, so I should also be held responsible for some of the mistakes made then. After all, no man on earth is without fault.

(Excerpt from an interview with a delegation, including senior American entrepreneurs, organized by Time Inc.)

(From Selected Works of Deng Xiaoping, Volume III <1982-1992>)