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to revive. In March, China established the State Administration of Foreign Exchange, responsible for overseeing all matters connected with foreign exchange transactions. China’s Enterprise Management Association was established in the same year, and CCTV set up its first advertising department, which, twenty years later, became China’s most powerful advertising agency. On May 1, 1979, the old-time Peking Duck restaurant named Quanjude reopened. In Shanghai, some former businessmen and a few Chinese residing overseas raised funds for an enterprise called the “Shanghai Municipal Industrial and Commercial Patriotic Construction Company.” Later, this was recognized as being the first privately-run enterprise in China. The first advertising company also appeared in Shanghai, the city that had formerly enjoyed more than one hundred years of commercial tradition. On March 15, 1979, the Shanghai-based Wenhui Bao published the first advertisement for the Swiss watch company RADO. On the same day, Shanghai Television ran its first television advertisement for RADO. The advertisement was broadcast in English with Chinese subtitles. Although few could understand it, within the next three days, more than seven hundred buyers inquired about the RADO watch in the department store of Huangpu District.

“Will China walk a capitalist road?” The Hong Kong economist Steven N.S. Cheung wrote presciently in 1979, “I predict that in time China will adopt an ownership structure that is akin to private ownership. I can state categorically that in the future, China will allow to a considerable degree ‘usage-rights’ and ‘transfer-rights’ for things such as labor, means of production, buildings, and even land.” In a footnote to this article, he added that even though in the future, China would allow the transfer of resources and private use rights, it would probably never describe its economic system as being “capitalist” or one that allowed “private ownership.” Ten years later, he became noted for the near-accuracy of his predictions. In around the year 2000, the expression, “privately held property” became a publicly recognized term in China. In 2004, the legal protection or legitimacy of the right to privately held assets was formally written into the Constitution of the People’s Republic of China.

China’s course of reform has experienced many twists and turns. Any largecountrywouldexpectsetbacksinthecourseofitsdevelopment;however, inChina,manyoftheconsequenceshavebeenunexpected.Wheneverreform hasencounteredproblems,allkindsofcontradictions,bothnewandold,have come to the fore, allowing history to make various “adjustments.” However, China’s overall economy has shown remarkable regenerative power.

The employees of a restaurant in Hangzhou on March 5, 1983, which was the twentieth anniversary of Mao Zedong’s campaign, “Study from Lei Feng.” The sign reads: “You are welcome to sample our food. Four taels of grain coupons and five jiao (half of one renminbi) per guest for fried rice with meat and vegetables, and dessert.”

Reform at Capital Steel

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Hong Kong scholar took note of the following vignettes when he visited Guangzhou in 1979—details that gave him pause to speculate about the future of China. Outside his hotel window, two women were assigned to sweep leaves from an area that measured a few hundred

square meters. This was their entire responsibility, all day, every day. He also noticed how it took three people to repair the plaster on a nearby wall. One held the bucket, another applied plaster, and a third person stood by to watch. Breakfast at the hotel was supposed to be served for exactly one hour in the morning; however, after half an hour, the staff stopped their duties and instead sat in a corner of the room, chatting.

Low efficiency had always been a problem at the state-owned enterprises in China since “everyone was the boss while at the same time nobody took responsibility.” While the planned economy “ruled all under the sky,” the state-owned enterprises safely snuggled into the swaddling clothes of the state and were unconcerned