How an 87-year-old retired leader forced China back onto the path of economic reform
In short: In early 1992, Deng Xiaoping embarked on a clandestine southern tour to rescue his stalled reform program. Despite holding no formal government office, his bold rhetoric and pressure on military leaders effectively neutralized conservative hardliners, saved China's nascent stock markets, and set the country on a trajectory of rapid growth.
By 1992, China’s reform and opening-up program had effectively stalled. Following the 1989 Tiananmen Square protests, conservative CCP leaders like Chen Yun argued that market-oriented reforms threatened the Party's survival, citing the recent collapse of the Soviet Union as a cautionary tale. With Beijing’s media and central apparatus under the control of rivals, 87-year-old Deng Xiaoping bypassed the capital to build support among provincial officials and military leaders in cities like Shenzhen, Zhuhai, and Shanghai.
Deng’s tour was a masterclass in political maneuvering. In Zhuhai, he warned military leaders that officials who failed to support reform should be removed, a move interpreted as a quasi-coup that forced General Secretary Jiang Zemin to eventually align with his agenda. Deng famously argued that development was the 'overriding importance,' dismissing ideological debates over whether market mechanisms were inherently capitalist. He insisted that China should 'bravely absorb' global achievements, specifically pointing to Singapore as a model for governance.
The tour’s impact was immediate and profound. It provided the necessary political cover to legitimize the Shanghai and Shenzhen stock exchanges, which had been established in 1990 but faced an uncertain future. By 1993, China’s economic growth reached approximately 13%, and foreign direct investment surged to US$25 billion. Yet, the legacy remains complex. While the tour accelerated GDP growth and legalized private ownership, it failed to address systemic corruption or the widening economic disparity between prosperous coastal regions and the underdeveloped interior—a structural inequality that continues to challenge the CCP today.
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