Negative impacts

• 1. 'Three Rural Issues'

  • 'Three Rural' referred to agriculture, rural areas and peasants.
  • Peasants generally enjoyed higher standards of living in the early years of Reform and Opening-up.
  • However, the rural economy deteriorated when the government shifted the focus of reform from rural to urban areas in the mid-1980s.
• 1. 'Three Rural Issues'

  • The 'Three Rural Issues' began to rise.
  • Peasants had low income and there was a growing disparity between the urban and rural areas.
  • In 1998, the average income of urban residents reached 5425 RMB, whereas the average income of villagers was only 2160 RMB.
• 1. 'Three Rural Issues'

  • The rural economy was backward.
  • It lacked basic infrastructure, such as water supply, electricity and transportation.
  • Insufficient government investments also led to slow agricultural development.
• 2. Hyperinflation

  • The fast economic growth of China was accompanied by a high inflation rate.
  • The government kept increasing investment on infrastructure projects.
  • To reduce the huge deficits, the government issued banknotes in large amounts.
  • Hyperinflation resulted.
  • The inflation rate, which was only 6% in 1980, had increased to 17%-18% for two consecutive years after 1988.
  • The medical, educational and housing expenses continued to rise and became a burden, which was called the 'new three mountains', on residents.
• 3. Serious unemployment

  • As the government started to open up the market, the state-owned enterprises lost their monopoly and faced fierce competition.
  • The reform of state-owned enterprises was not as successful as expected, and they continued to suffer losses.
  • Therefore, many workers were laid off, resulting in massive unemployment.
  • Starting from the mid-1980s, the unemployment rate rose each year from 2% in 1985 to 3% in 1997.
• 4. Increasing trade disputes with foreign countries

  • Since the 1990s, Chinese products had become more competitive in the market.
  • Many countries had a trade deficit with China.
  • They looked for different means to reduce imports from China.
  • They set tariffs to protect local industries.
• 5. Gender imbalance

  • The one-child policy led to the problem of gender imbalance.
  • Due to the cultural norm of preferring boys to girls, many parents chose to keep boys and give up girls.
  • This led to serious gender imbalance.
  • In some regions such as Hunan and Guangxi, the male to female ratio was over 125:100.
• 6. Magnifying polarization

  • Deng suggested letting some regions and people prosper before others, such that they could help other regions and people to achieve common prosperity.
  • However, the plan was not effective.
  • Major economic developments were carried out in the coastal regions.
  • In contrast, the central and western regions of China were left behind.
• 6. Magnifying polarization

  • In 1991, the GDP per capita in the coastal regions was 2242 RMB.
  • The GDP per capita in the inland regions was only 1228 RMB.
  • Many people in the inland regions were living under the poverty line.
• 7. Inadequate educational resources

  • According to the statistics in 1995, 145 million people in China were illiterate or semi-illiterate.
  • They made up 12% of the total population.
  • Inadequate spending on education development was the reason leading to the problem of illiteracy in China.
  • For instance, China's educational expenditure only accounted for 2.65% of the national income.
• 8. Social problems caused by urbanization

  • Since the introduction of Reform and Opening-up, China had experienced rapid urbanization, which led to a series of social problems.
  • Job opportunities in the cities attracted a lot of peasants to work there.
  • The flow of migrant workers soared by 140% to 24 million between 1978 and 1988.
• 8. Social problems caused by urbanization

  • However, the infrastructure and facilities could not meet the population growth.
  • The urban living environment was poor.
  • Problems such as illegal construction and traffic congestion were serious.
  • Besides, more and more factories were established, and emitted sewage and polluted air.
  • Pollution was serious.
• 9. No democratic reform in sight

  • The relaxed atmosphere under Reform and Opening-up encouraged the liberation of thoughts.
  • People put forward their demand for political reforms, and intellectuals advocated the idea of democracy.
  • For instance, in 1986, 100,000 students launched demonstrations to demand democratic reforms.
  • Student movements in larger scale even broke out across the country in 1989.
• 9. No democratic reform in sight

  • However, the CPC insisted on one party rulership to continue socialist modernization.
  • It rejected the Western form of democracy.
  • In terms of political modernization, China lagged behind Western countries in the degree of democratization.
• 10. Serious corruption

  • With so much more money to fight over, official corruption reached new heights.
  • Some party cadres took advantage of the 'double-track pricing system'.
  • They bought raw materials or goods at a price set by the government, which was lower.
  • Then, they sold them at a high price in the market, and gained from the price differences.
  • In 1987, 150,000 CPC members were accused of engaging in corruption.