22 July 1977: Deng Xiaoping returns to power, sets the stage for modern China

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CWA # 1774

This Week in History

22 July 1977: Deng Xiaoping returns to power, sets the stage for modern China

R Preetha
27 July 2025

What happened on 22 July 1977?
The return of Deng Xioping
On 22 July 1977, Deng Xiaoping was restored to key positions in the Chinese Communist Party (CCP), including Vice Premier of the State Council, Vice-Chairman of the Central Committee, Vice-Chairman of the Military Commission, and Chief of the General Staff of the People’s Liberation Army. The restoration followed his purges during the Cultural Revolution and again in 1976. Deng returned following Mao Zedong’s death and the arrest of the Gang of Four. This event, nearly half a century ago, marked a pivotal shift in Chinese history, steering the nation in the aftermath of the Cultural Revolution toward economic modernization and global integration.

What led to 22 July 1977?
The end of Mao, Fall of the Gang of Four and the Support of Hua Guofeng
A Long March veteran and an early supporter of Mao Zedong, Deng rose through the CCP as a pragmatic administrator, serving as finance minister in 1953 and party secretary general by 1956. His support for Mao’s “socialist transformation” through collectivization and Soviet-style industrialization reflected loyalty, however, his practical approach did not sit well with Maoist ideology, especially during the Great Leap Forward (1958–1961). The campaign aimed at rapid industrialization through rural communes, led to mass famine, with estimates of 30 million deaths due to starvation and related crises (LSE, 2017). Working with Liu Shaoqi and Zhou Enlai, Deng mitigated the damage by relaxing targets, reducing food requisitions, and allowing private plots. Military budgets were cut to provide space for consumption and productive investment. Deng urged reform with his much-quoted line "it doesn’t matter if the cat is yellow or black as long as it catches the mouse.”

Deng was marked as “capitalist roader,” leading to his purge during the Cultural Revolution (1966–1976). A second purge in 1976, after Zhou Enlai’s death, saw Deng sidelined again. His rehabilitation in 1977, after Mao’s death and the Gang of Four’s fall, was supported by allies like Hua Guofeng, Mao’s immediate successor who embraced the idea of opening China. Many scholars note that Deng’s return can be attributed to his reputation as a capable administrator to address China’s economic stagnation.

What after 22 July 1977?
Four Modernizations, and the Making of modern China
Under Mao Zedong, private property was outlawed, and Soviet-style central planning controlled the economy; essentially meaning the state monopolized the market. The Great Leap Forward, launched in the second five-year plan, devastated agriculture and led to mass famine; with resources forcefully shifted from farming to heavy industry. Post-Mao China was thus facing economic stagnation, widespread poverty, and a sharp decline in public confidence after the Cultural Revolution. In 1970, China’s real GDP stood at only USD 232 billion (Cato Institute, 2023).

By 1978, Deng had consolidated power and launched the “Four Modernisations,” a reform agenda targeting agriculture, industry, defense, and science, setting China on a path toward economic transformation and global integration. Deng believed that in order to develop economically China must learn from the world's most modern practices in science, technology, and management; and was thus pushing on an open door. The late 1970s saw a shifting international landscape; with the US and China moving toward normalization of relations, providing Deng an opportunity to integrate China into the global economy. The success of export-led growth in East Asian economies offered a model for China; his visits to Japan and the US in 1979 exposed him to advanced technologies and market-oriented systems, reinforcing his belief in reform and opening up.

Deng prioritised building up the science base by sending Chinese students abroad; top Chinese officials were sent overseas to examine opportunities for economic collaborations with the west, notably the Gu Mu delegation in 1978. In the following months, decisions were taken to approve overseas borrowing, and establish an export based textile industry. A special economic zone (SEZ) was agreed for Shenzhen. China then carefully experimented in liberalisation, it began with Guangdong accepting foreign investment and SEZs to boost exports, initially linked to Hong Kong then gradually extending to Fujian, Shanghai, and eventually 14 coastal cities. These zones emerged significant for China’s industrialization and integration into the global economy. They became centres for contract manufacturing by the late 1990s; with Shenzhen becoming crucial for China’s booming tech hardware sector.

In parallel, rural reforms based on de-collectivisation were introduced. Households were allowed to produce for their own consumption and sell them. The creation of township and village enterprises (TVEs) became an important component of the emerging private sector in the 1980s. Deng’s reforms had an immediate and significant impact. For instance, grain production which stood at 300 million tons in 1977 grew to 400 million in 1984. The TVEs employment grew from 28 million in 1978 to 106 million in 1992. In 1978 China’s exports stood 1 per cent of world trade (10 billion), but had grown to USD 25 billion by 1985.

Since China began to open up in 1978, GDP growth averaged at nearly 9 per cent annually, and almost 800 million people lifted themselves out of poverty (World Bank, 2024). China was thus transitioning from central planning under Mao Zedong to market-led development under Deng Xiaoping. His reforms decentralized the economy, drove rapid economic growth, and improved living standards. In 1989, Deng’s leadership was tested with the Tiananmen Square demonstrations. He resigned from his last official Party post in 1989 but remained influential until his death in 1997; having set the stage for China to emerge as a global economic power.

About the author
R Preetha is pursuing post-graduation at the Department of International Studies, Stella Maris College, Chennai

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This Week in History

This Week in History

22 July 1977: Deng Xiaoping returns to power, sets the stage for modern China

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