Under Mao, farmland was managed by central planners in the big cities, and land property belonged to the State, transforming independent farmers into public employees. Incentives for production were reduced or even counter-productive, since farmers were not allowed to decide what to plant, when or where.
The consequence of this system were dire. Mao's forced collectivization involved a major cultural change in traditional rural China, and failed catastrophically in 1957-60
15 million farmers death during the famines caused by the new system
Under Mao's shadow, Deng Xiaoping -his eventual (and unlikely) successor in 1978- look at Hong Kong and Macao as examples of the benefits of a different model, based on an open, trade-oriented economy and entrepreneurial culture.
Deng considered another major cultural change: in this case, taking China's coastal cities out of the centralized planning system, and letting them operate like entrepreneurial, export oriented hubs.
Deng expected that to spur China's growth out of poverty at a much faster pace, like Taiwan:
In 1979, Deng created new "Special Economic Zones", where private property and free trade and free enterprised would be allowed and encouraged to operate as a "buffer zone" between China's communist system and the global economy
Between 1979 and 2009, China 's GDP per habitant -which had been growing sluggishly from 400 to 700 dollars during 30 years of collectivist culture,- jumped in just 20 years from 700 to 4,000 dollars (at 1991 values) making the economy grow at a 10 % yearly pace.
Deng addressed cultural change with a different approach than Mao. Instead of forcing the change on all the country and replace the existing system at once as Mao did in 1949, Deng announced in the Fifth Congress of the Chinese Communist Party that China would embrace what he called "market communism", letting the market fix the prices freely and free trade allow faster export grow.
Deng summarized his pragmatic approach to change with the phrase " it doesn't matter what color is the cat, if it chaces mice"
Soon Deng's reforms unleashed a productive revolution that ended secular famines by empowering farmers
Towards the end of his life, in 1991, Deng travelled through the country educating people in the new culture, summarized in a simple phrase: "it is ok to prosper"
Thanks to his cultural change, 1,2000 million chinese live today in a U$S 4,000 dollar GDP per habitant , middle income country and 400 million joined the middle class
China is set now to become the world largest economy and the banker of the world.
Everything started with cultural change.
What lessons can we learn from Deng for our projects?