Chapter 19 Section 2 The Economic Consequences of the "Xin Chou Treaty"
In 1914, after the end of the First World War, as a well-known currency expert, Keynes represented the British Treasury at the Versailles Peace Conference in Paris.The victorious countries did not realize that the urgent task should be to rebuild the European economy, but made Germany's war reparations the central issue of the peace conference.Britain does not want a powerful country to emerge on the European continent, and France also has lingering fears about the "Franco-Prussian War".Therefore, in order to prevent Germany from making a comeback, Britain and France jointly attempted to limit the recovery of the German economy in terms of foreign trade, finance, resources, and land.The then British Prime Minister Lloyd George once declared that "search the pockets of the Germans and find the money."As one of the victorious countries and the number one economic power in the world, President Wilson put forward the famous "Fourteen Points Plan" before the Versailles Peace Conference, which gave the world hope. Advocate, behave like "Wang Gu talks about him", and finally let it go.
Only Keynes went against the tradition and tried to persuade the victorious countries to reduce their demands for huge reparations to Germany at the Versailles Peace Conference, regardless of his low position, but no one paid any attention.He was deeply disappointed with the "Versailles Peace Treaty" signed, and just after the peace talks ended, he resigned from the British Treasury in a high-profile manner to express his strong dissatisfaction. Six years later, in 1920, Keynes spent three months writing the book "Economic Consequences of the Peace Treaty", which described what he believed to be the serious economic consequences of the "Versailles Peace Treaty", which won widespread attention from the world.Keynes moved from qualitative analysis to quantitative analysis. He said, "With regard to the amount of compensation, we must establish a primary criterion to a certain extent, and if possible, try to use some relevant statistical data, otherwise we can only rely on subjective assumptions. Come to work."In "Economic Consequences of the Peace Treaty", he analyzed with detailed data that the maximum amount of reparations that Germany can pay is about 10 billion U.S. dollars, but the final reparation amount determined by the Reparations Commission is as high as more than 30 billion U.S. dollars, which is the total amount of the German economy. twice as much.Keynes believed that this huge compensation cannot be realized. Although Germany can use some minerals and foreign exchange reserves as compensation in a short period of time, in the long run, compensation must be made by increasing exports, achieving a trade surplus, and obtaining foreign exchange surplus.
In the book "The Economic Consequences of the Peace Treaty", Keynes pointed out that it was very dangerous and immoral to suppress Germany's economic reconstruction with huge reparations.Keynes here shows an economist's sense of responsibility when he writes: "I cannot leave the question as if its fair treatment depended entirely on our oath or on economic facts to keep Germany in slavery for a generation. It is an abhorrent policy to lower the standard of living of millions of souls and deprive them of the happiness of an entire country, an entire people—even if it actually works, even if it enriches us by it, even if it It will not sow the seeds of the degeneration of European civilized life, and it is still abhorrent." Keynes made a world-shaking prediction, "Revenge will not be quelled. This war will destroy civilization and progress in our generation", He also pointed out that "the British and French authorities are taking the risk of using such a 'peace treaty' to continue to destroy the European order that was first started by the Germans. Once this peace treaty is put into practice, it will further destroy the fragile state that has been shaken and destroyed by the war." , a complex order which should have been reconstructed'.Unfortunately, Keynes was right. The wrong handling of the victorious countries can be said to have planted the seeds of the Second World War.
Why is this book so predictable?Keynes actually pioneered the analysis of the serious consequences of a country's debt crisis from the balance of payments accounts.First, Keynes concluded that the German current account could not generate a surplus.Second, Germany's foreign exchange reserves and foreign currency assets are not enough to repay the huge compensation.Since the reparation is in foreign currency, it will bring about an imbalance in the balance of payments account.Germany had to borrow foreign debt to repay the war reparations determined in the Treaty of Versailles, which led to a debt crisis.In order to expand exports, the exchange rate must be devalued, but Germany is within the international gold standard system and has no such policy option.The debt crisis has worsened the German economic situation and reduced fiscal revenue, which further aggravated the debt crisis, and the German economy has fallen into the abyss of the debt crisis.Keynes' analytical logic was precise, and later developments proved his predictions.
Sure enough, Germany had a current account deficit, and the debt crisis had brought the German economy to a standstill long before the U.S. stock market crashed in 1929. The Great Depression broke out in the United States in 1929, and then spread to Europe, becoming the "last straw" that overwhelmed the German economy.Germany was forced to abandon the gold standard, the mark depreciated sharply, Germany experienced unprecedented hyperinflation, and its economy collapsed.It is commendable that Keynes also suggested in "The Economic Consequences of the Peace Treaty" that the United States could lend a reconstruction loan to Europe, but unfortunately it was not adopted.After the Second World War, the United States implemented the "Marshall Plan" to help European economic reconstruction to a large extent absorbed the lessons of the "Treaty of Versailles" and accepted the suggestions of Keynes more than 20 years ago.Keynes made accurate predictions on the impact of the "Versailles Peace Treaty" on Germany and Europe, showing the powerful predictive power of economics, and contributed to the emergence of economics as a "distinguished science".
Today, 108 years after the signing of the "Xin Chou Treaty", I will do an "in hindsight" to examine the economic consequences of the "Xin Chou Treaty".I found that the economic consequences of the Treaty of Xin Chou for China and the economic consequences of the Treaty of Versailles for Germany were consistent from a macroeconomic point of view: the victorious countries ignored the current account deficits that the defeated countries had already run , the imposition of war reparations far exceeding the solvency has led to a long-term imbalance in the balance of payments and plunged the economies of the defeated countries into a debt crisis.But the difference between China and Germany is that the Chinese economy was far behind the German economy at that time.China has not started industrialization in the true sense, and its per capita income level is lower than the world average level at that time. Under the debt crisis, it has entered a state of abject poverty.Germany has completed industrialization, and its per capita income is much higher than the world average.Therefore, the suffering brought to the Chinese people by the Treaty of Xin Chou should be higher than that brought to the German people by the Treaty of Versailles.
In order to analyze the economic consequences of the "Xin Chou Treaty" in detail, we must first discuss the huge impact of the "Treaty of Shimonoseki" on the Qing government's finances. The Treaty of Shimonoseki was an unequal treaty signed in Shimonoseki, Japan on April 17, 1895, between the Qing government and the Japanese government after the Sino-Japanese War of 1895.The representative of the Qing government was Li Hongzhang, and the representative of the Japanese side was Ito Hirobumi. The "Treaty of Shimonoseki" stipulated that Japan received 230 million taels of war reparations (30 million taels of which were the cost of the Qing Dynasty's redemption of the Liaodong Peninsula), which was more than three times Japan's annual fiscal revenue in 1893.
In order to repay the huge indemnity against Japan, the Qing government borrowed three major foreign debts from 1895 to 1898: "Russian-French Loans", "British-German Loans" and "British-German Renewal Loans", totaling more than 350 million taels of silver in Kupingyin, which was 6.6 times the total foreign debt borrowed before the war.It can be seen from Table 2-4 that before 1901, the total fiscal revenue of the Qing government was 88.2 million taels of silver, while the fiscal expenditure was 101.12 million taels of silver, and the payment of principal and interest on foreign debts amounted to 24 million taels of silver, equivalent to the national farmland. Tax (land Ding money grain) income.According to calculations based on the structure of the three major foreign debts, the "Russian-French Loan", the "British-German Loan" and the "British-German Continuing Loan", the principal is 8.48 million taels of silver, and the interest is 13.24 million taels of silver, a total of 21.72 million taels of silver.It can be inferred that 21.72 million taels of the 24 million taels of silver paid by the Qing government to pay the principal and interest of foreign debts in 1901 were caused by the indemnity of the Treaty of Shimonoseki. In 1901, the fiscal deficit of the Qing government reached about 13 million taels of silver. The indemnity of the "Treaty of Shimonoseki" caused the Qing government to fall into a fiscal deficit, and brought a large fiscal surplus to Japan, which promoted its economic development and further expanded its military preparations for war.It is said that in 1896, Japan used the first indemnity, 56 million taels of silver to strengthen the army, 139 million taels of silver to strengthen the navy, another part was used to build the Korean railway, and part was used to occupy Taiwan, China.
The "Xin Chou Treaty" signed on September 7, 1901 was a treaty signed between the Qing government and the United Kingdom, the United States, Japan, Russia, France, Germany, Italy, Austria-Hungary, Belgium, Spain and the Netherlands after the Eight-Power Allied Forces invaded Beijing. One of a series of unequal treaties.On behalf of China, it was Prince Qing Yikuang and Beiyang Minister Li Hongzhang who signed the "Xin Chou Treaty". On behalf of the big powers, it was the ambassadors of various countries to China. The most critical content of the "Xin Chou Treaty" is the sixth clause on the compensation for defeat.The article stipulates that "China will pay war compensation of 450 million taels of silver to all countries in total, payable in 39 years, with an annual interest of 4%, which will be paid by China's customs duties and salt tax."The total amount of compensation was about 333 million U.S. dollars at the time.The annual interest of the indemnity is 4% (4%), and it will be paid off in 39 years, that is, from 1902 to 1940. The total principal and interest is 982,238,150 taels of silver, about 727 million US dollars.
How was the total amount of compensation determined in the "Xin Chou Treaty"? On December 24, 1900, the big powers agreed to negotiate a peace with the Qing government, and formally signed the protocol on September 7, 1901, which lasted nine months, more than half a year for the negotiations on the Treaty of Versailles.Why did the great powers delay for so long?It was because the powers could not reach an agreement on the total amount of reparations.In order to determine the amount of compensation, each country appointed envoys from the United States, Germany, the Netherlands and Belgium to form a compensation investigation committee to study the total amount of compensation.The main task of the compensation investigation committee is to find out the payment ability of the Qing government.
In the study of China's ability to pay, Hurd, a controversial Qing government official with British nationality, played an important role.Hurd became the General Taxation Department of the Qing Customs at the age of 28, and served for 48 consecutive years.In the peace negotiation process after the Eight-Power Allied Forces invaded Beijing, Hurd participated in the peace talks between the Qing government and the Eight-Power Allied Forces and played an important role.First of all, he opposed the partition of China and the complete takeover of China's finances by using the Indian colonial model. He called on the big powers to end the war as soon as possible and "accept the compensation China is willing to bear."He believes that "the only feasible solution is to let the existing dynasty maintain its status quo, and when the Chinese people feel that its government orders are not enough, they will solve it by themselves."Secondly, it believes that "the peace negotiation conditions imposed on China should be practical, fair and reasonable".Hurd "try his best to persuade the embassies of various countries to accept the plan of amortizing the reparations in installments", so that "all debts will be allocated according to the method of living within their means", which can not only avoid China's financial crisis, but also eliminate the possibility of the foreign powers' direct financial control over China sex.
The Four Nations Indemnity Investigation Committee consulted Hurd about China's financial resources for compensation and the best repayment method, and Hurd provided a report on the financial situation of the Qing government (see Table 2-4).Hurd's compensation opinion can be said to be the most authoritative report, and it immediately set the final tone for the nine-month dispute over the total compensation.His opinions on indemnity and guarantee methods were considered by the peace representatives of various countries as the "best plan" to pay indemnity, and most of them were adopted by the big powers and directly written into the "Xin Chou Treaty".I suspect that the Qing negotiating delegation did not know as well about the financial situation as Hurd.According to historical records, Li Hongzhang and other members of the delegation did not seem to have argued for the total amount of compensation, otherwise, it would be easy to point out that China does not have the ability to repay.This may be the tragedy of the "lack of numerical management" in Chinese history pointed out by Huang Renyu.
During the indemnity negotiations, Hurd, as an employee of the Chinese government, tried his best to advise the Qing government, planned a settlement method, and devoted himself to "studying how to open up financial resources" for the Qing government. He was optimistic that the Qing government could pay the indemnity by increasing revenue. principal.He stated in the report that the issue of compensation discussed in paragraph 6 of the "Negotiation Outline" "is related to China's entry and exit year items, and we have to find out and try to deal with it early." "Incoming funds should be checked in detail for each province's land, lijin, salt tax, and regular taxes; for payments, the annual office expenses of each province should be checked out one by one, and a huge amount of about 30 million taels must be raised for repayment every year." In this case, Hurd mistakenly believed that the Qing government could repay the compensation without borrowing money.He suggested a repayment method, "The most wonderful thing is that China does not borrow foreign money, but only pays a certain amount of silver on an annual basis. In this way, it must be set at 50 years, and the principal is repaid with interest. The annual minimum is 20 million taels, and the maximum is 3,000 taels." Ten thousand taels".
Although the big powers basically accepted Hurd's opinion, the total amount of compensation was determined jointly by the big powers after all.The total amount of reparations finalized by the powers was seriously wrong: first, the powers completely ignored the continuing impact of the Treaty of Shimonoseki on the Qing government’s finances. Herd’s report had clearly shown a fiscal deficit. A simple calculation of the structure of the three foreign debts borrowed in order to repay the indemnity of the Treaty of Shimonoseki: "Russian-French Loans", "British-German Loans" and "British-German Continuing Loans" shows that the Qing government's finances will remain in deficit for many years. There is no more ability to repay foreign debts; the second point, the number of compensation is calculated based on the population of China at that time was about 450 million people, each person was apportioned one tael of silver, on the one hand as a punishment for the Chinese people, on the other hand it is considered 1 The burden of taels of silver is not too much, but the taxation of the Qing government is based on land rather than head.The agricultural tax based on the head cannot be collected, and the land tax was already high at that time; the third point is that interest was not taken into account.When the actual interest on debt is higher than the actual economic growth rate, any economy will inevitably fall into a debt crisis.The annual interest rate on reparations is 4% (4%), and the real interest rate may be higher than 4%, while the real growth rate of the Chinese economy has been close to zero since 1840.According to the simplest debt calculation, China's debt is unsustainable.The reparations are made in silver, the main currency of the Chinese economy, which is equivalent to the continuous decline of the total amount of currency in circulation.
As shown in Figure 2-6, the Chinese economy ran a trade deficit for 70 years from 1864 to 1936. At the end of the 19th century, after the establishment of the gold standard in the international monetary system, the silver-to-gold ratio fell sharply. The Chinese currency, which uses silver as the main currency in circulation, automatically depreciated. Exports should increase and imports should decrease. This is a godsend opportunity to change the long-term trade deficit.Unfortunately, this current account reversal did not occur.In order to maintain the balance of international payments, only foreign direct investment and borrowing can be attracted, thus creating a capital account deficit, which is aggravated by foreign debts caused by war reparations.Therefore, the emergence of "twin deficits" in modern China inevitably led to high debts.
In 1902, the total amount of foreign debts undertaken by the Qing government due to the Treaty of Shimonoseki was about 283 million taels of silver, plus the foreign debt of 450 million taels of silver in the "Xin Chou Treaty", a total of 755 million taels of silver, equivalent to the Qing government's 1901 financial 8.6 times income. In 1901, the Ministry of Household Affairs of the Qing court expressed helplessly that "China's financial resources must never be overwhelmed."The Qing government used nearly half of its fiscal revenue to pay interest on foreign debts every year.Calculated according to the 4% annual interest rate of national debt at that time, the total debt of the Qing government at that time was almost 15 to 20 times its fiscal annual income.By 1905, the Qing government's annual debt repayment had accounted for 25.9% of total fiscal revenue and 31% of expenditure.According to the Qing government's debt structure and interest calculations, the foreign debt of the late Qing government will be shown in Figure 2-7. The "Treaty of Shimonoseki" indemnity is a long-term burden for the Qing government, and the "Xin Chou Treaty" indemnity will directly lead to a large fiscal deficit. This forced the Qing government to borrow abroad, and "deficit borrowing" showed explosive growth.Not counting other small amounts of foreign debts, the total foreign debts of the "Treaty of Shimonoseki" indemnity, the "Xin Chou Treaty" indemnity and "deficit loans" have risen sharply, and it is impossible to repay at all.Therefore, the Qing government was actually bankrupted by the debts of the "Xin Chou Treaty".Due to the long-standing trade deficit and capital account "twin deficit", coupled with the fatal blow of the "Xin Chou Treaty" indemnity, the Chinese economy has fallen into the abyss of a debt crisis that will never be restored.
The first to realize the seriousness of China's debt crisis was the United States. In 1901, when the U.S. envoy determined the total amount of compensation, he proposed that the total number of claims from various countries should not exceed 40 million pounds, or about 250 million taels of silver. On March 28, 1901, the U.S. Minister sent a letter to the missions of various countries, arguing that "the total amount of compensation requested by various countries from China should be as reasonable as possible, and must not exceed China's ability to pay."However, other powers did not accept the proposal of the United States. The attitude of the United States, just like at the Versailles Peace Conference later, did not insist on its own position in order to be consistent with other powers.Even if the big powers accept the US proposal, the compensation of 250 million taels of silver is beyond China's ability to pay. In 1904, Liang Cheng, the Qing ambassador to the United States, visited the US Secretary of State John Hay many times.
During the conversation, John Hai said that "the compensation is too much". In 1909, the United States decided to reduce most of the indemnity it received, and voluntarily returned part of the indemnity, and used it to establish "Tsinghua Academy", which was a preparatory school for studying in the United States, which was the predecessor of Tsinghua University.Subsequently, Britain, Japan, and France followed suit.However, it was too late, and the Chinese economy entered the abyss of economic collapse under the influence of the debt crisis. After the indemnity of the "Xin Chou Treaty", the financial crisis of the Qing government intensified, and the central government apportioned the local governments. The local governments were already in financial difficulties, so taxes were increased, and miscellaneous taxes were rampant, which increased the burden on the Chinese people. In 1902, Zhou Shumo, the censor of the Qing Dynasty, angrily pointed out the evil consequences of the "Xin Chou Treaty" indemnity: "The imperial court had to blame the provinces, and the provinces had to take from the people. Take care."
The economic consequences of the international debt crisis are standardized: more and more debt, high real interest rates, and a deepening recession.The Latin American debt crisis originated in the 1970s and broke out in the early 1980s. It was only in the mid-1990s that the Brady bond was issued to get out of the predicament, and it was "lost for 10 years". The main economic consequences of the debt crisis caused by the "twin deficits" and the boxer indemnity are twofold: on the one hand, the excessively high real interest rate has hit the development of industry and commerce, enterprises cannot make profits, entrepreneurship cannot be cultivated, and finally the economy collapses , causing China to enter long-term turmoil; on the other hand, the Chinese people do not have access to the most basic public education and health conditions, human capital investment is almost blank, and the "double high" birth rate and death rate are still at the "high level" of the millennium. Equilibrium, or even worse.Due to China's debt crisis, it is impossible for education programs to receive sufficient financial support.
After the Boxer indemnity, the Qing government’s financial investment in education was constrained. Although it formulated a multi-channel financing policy for education, it was just a drop in the bucket for the popularization of new education in a country with 400 million people.In the fiscal budget of the Qing government in 1911, education expenditure accounted for less than 1% of the total fiscal expenditure, and the proportion that could actually be used for education may be lower than this proportion. From 1929 to 1936, the Nanjing National Government's investment in education accounted for 2% to 3% of the total fiscal expenditure, which was a significant improvement compared with the late Qing government and the Beiyang government.However, China's modern fiscal revenue did not exceed 5% of GDP. In 1936, the national government revenue reached 8.8% of GDP.Compared with the total economic output, education expenditure is still too low.As a result, there is not enough money for basic education, resulting in a very low level of national education in China.By 1949, the per capita education was less than one year, and the country was basically illiterate, which was basically the same as that of India in the same period.In sharp contrast to this, Japan vigorously improved the educational quality of its citizens during the Meiji Restoration. In July 1871, the Meiji government established the Ministry of Education and Culture to comprehensively implement education reform, focusing on the implementation of compulsory education in primary and secondary schools.At the end of the Meiji period, the national education expenditure accounted for 3% of the total national income. With the accumulation of human capital, the birth rate began to decline gradually, and the per capita income rose rapidly.
The economic and social consequences of the Boxer indemnity are extremely evil, and it is necessary for future generations of China to repay the inherently unequal debt.Now, we have to doubt the true intentions of the big powers. There may be an attempt no less than that of Britain and France to restore long-term suppression of the German economy through the "Versailles Peace Treaty." In 1911, before the outbreak of the Revolution of 1911, the Qing government was in extreme financial difficulties.After the outbreak of the Revolution of 1911, the four major foreign banks that undertook debts all refused to continue to borrow money from the Qing government.
After the collapse of the Qing government, the Yuan Shikai government, the Beiyang government and even the Kuomintang government not only did not take the opportunity to abolish the unequal treaties, but continued to recognize the unequal treaties imposed on China by the big powers and continued to pay Boxer indemnity.After World War I, China was the victor, so it stopped paying reparations to the defeated Germany and Austria-Hungary. After the "October Revolution", the former Soviet government also announced in 1920 that it would abandon Boxer indemnities.China's boxer indemnity payment was terminated when Japan invaded China in an all-round way in 1938. The actual total indemnity paid was about 650 million taels of silver, equivalent to about 1 billion silver dollars.In addition to the Boxer indemnity, the Yuan Shikai government and the Beiyang government borrowed heavily at the same time. From 1912 to 1915, the foreign debt of Yuan Shikai's government was as high as 519 million taels of silver in Kupingyin. From 1916 to 1919, the foreign debt of the Beiyang government was also more than 280 million taels of silver. "Relying on foreign debts to spend the years" is a true portrayal of Yuan Shikai's government and the Beiyang government.
In order to change the long-standing "twin deficits" of the Chinese economy, three necessary conditions must be met: First, abandon the silver standard.Only relying on fluctuations in the gold-silver ratio in the international foreign exchange market cannot change China's trade deficit. It is necessary to establish a domestic paper currency system; the second is to restructure foreign debts under the capital account.China's economic growth is basically zero, and it is simply unable to repay a large number of foreign debts, including sky-high reparations brought about by unequal treaties; third, fiscal discipline must be maintained.The silver standard was a hard constraint on government finances.After abandoning the silver standard, the government has no such constraint on spending money.Fiscal deficits will lead to high inflation, and the sharp depreciation of domestic banknotes in the exchange rate market may trigger a currency crisis.
On November 4, 1935, the Nanjing National Government announced the reform of legal currency, issuing national credit legal currency to replace the silver standard silver dollar.This currency reform led by Song Ziwen was very successful. It ended China’s silver standard for nearly 500 years, created conditions for China to change its trade deficit, and completely freed China’s economy from the risk of deflation, providing a good space for enterprise development. .The fiat currency was initially pegged to the British pound and could be exchanged in designated banks indefinitely. After 1936, the French currency was pegged to the British pound and the US dollar at the same time.
However, the Nanjing National Government could not control the fiscal deficit. Before the Anti-Japanese War in 1937, the total circulation of French currency did not exceed 1.4 billion yuan. After the victory of the Anti-Japanese War in August 1945, the total denomination reached 556.9 billion yuan, an increase of about 400 times compared with that before the war.It should be said that the issuance of legal currency played an important role in China's victory in the War of Resistance, but it also showed that the national government lacked fiscal discipline. From 1946 to 1948, the national government's fiscal deficit accounted for more than 60% of fiscal revenue. After 1946, the total denomination value of legal tender rose from 556.9 billion yuan in August 1945 to 663,694.4 billion yuan in August 1948, an increase of more than 1,200 times in three years, causing hyperinflation in the Chinese economy, and prices rose by 14,000 yuan times.Under the premise of financial dishonesty, the reform of the gold-dollar coupons hastily launched by the Nanjing Nationalist Government on August 9, 1948 was bound to fail.Since 1940, due to insufficient foreign exchange reserves, the Nanjing National Government had to cancel unlimited foreign exchange transactions, and the legal currency depreciated.
The Nanjing National Government was also unable to resolve the debt crisis under the capital account.From 1901 to 1948, China fell into a debt crisis from which it could not extricate itself.To get rid of the debt crisis, only debt restructuring.When it is impossible for the debt-holding country to voluntarily give up or substantially reduce its debt, only the debtor country unilaterally refuses to recognize all the debts of unequal treaties.From the late Qing government, which "measured China's material resources, and united with the country," to the Nanjing Nationalist government, neither had the courage and ability to lift China's economy out of the abyss of debt crisis, nor did it have the ability to increase China's human capital level on a large scale and break the millennium "High Level Dynamic Equalization".Therefore, from the late Qing government to the Nanjing Nationalist government, they basically failed in solving China's modern economic problems.
In 1949, the establishment of the People's Republic of China enabled the Chinese economy to effectively maintain fiscal discipline, establish a stable renminbi, solve the "twin deficit" problem that had plagued China's economic growth for a long time, and completely get rid of the debt crisis since 1901. In 1949, the founding of the People's Republic of China was a major event in the long history of China's economy from 1 AD to 1948. It liberated the productive forces and enabled the Chinese economy to get rid of the millennium stagnation, get out of the century-old sinking, and enter a new stage of growth. At the same time, China It also came out of the miserable state of an illiterate country and quickly raised the per capita level of education. Mao Zedong’s 1956 statement that “the purpose of the socialist revolution is to liberate the productive forces” and Deng Xiaoping’s 1992 statement that “the revolution is to liberate the productive forces” are both incisive and profound summaries of China’s modern economic history.
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