December 1978 was a political, economic and social turning point for China. As the balance of power within the top leadership shifted, a search for new policies began that deepened into what came to be called “reform and opening” and culminated decades later in a multistranded transition to a market-based economy. This new policy orientation was accompanied by a shift in development strategy that permitted China to take advantage of its factor endowments and structural conditions and dramatically accelerate economic growth. Thus 1978 marks not only the beginning of “reform,” but also the start of the Chinese “economic miracle,” a remarkable thirty-two-year period, through 2010, during which GDP grew at an annual rate of 10 percent. Chinese economic structure and Chinese society were utterly transformed. An extraordinary distance separates the vibrant upper-middle-income, predominantly market-based, economy that is China today from the troubled, isolated low-income country that was China at the end of the Cultural Revolution. This chapter builds its narrative around the systemic and structural changes that transformed China, especially in the thirty years between 1978 and 2008.

The experiences of the hundreds of cities throughout China where Communist Party leaders exercised relative restraint during the protests, blockades, and strikes offer countless alternative paths and show how unnecessary it was for the PLA to open fire in Beijing on June 3 and 4. Student leaders thought that bloodshed in Beijing would spark a nationwide uprising. Enraged protesters did shut down traffic and tried to organize strikes, but failed to bring about regime change. One alternative path in 1989 was 1911-style provincial declarations of independence. But in 1989, local leaders were not inclined to turn against the Party to which they owed their careers and political futures.