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Chen Yun: his life

Ezra F. Vogel
Published online: 22 Jan 2007.

To cite this article: Ezra F. Vogel (2005) Chen Yun: his life, Journal of Contemporary China, 14:45, 741-759, DOI:
10.1080/10670560500206827

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 Journal of Contemporary China (2005), 14(45), November, 741–759

Chen Yun: his life

EZRA F. VOGEL*
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Chen Yun, one year younger than Deng Xiaoping, was born 100 years ago. For several
decades beginning in 1931 when he joined the Central Committee at 26, he was ranked
higher in the Party than Deng. Although known as an ‘economist’, Chen played a much
broader role, in organization work, high-level Party discipline, urban administration, and
basic Party policy. He was the key person to link China and Russia following the Zunyi
Conference. He was head of the Organization Department from 1937 to 1943. He pioneered
the liberation of urban areas as the leader in Harbin and later in Shenyang. He led the fight
to get inflation under control during 1949 –1952 and led the organization of the first five
year plan. He was one of the most vocal against the leap forward and one of the most
instrumental in guiding readjustment afterwards. On many occasions he withdrew from
leadership and nourished his health. After 1978, he was the only person who spoke to Deng
as an equal. Chen Yun was cautious, believing that progress would come from steady small
steps rather than wild leaps. He believed in markets, but felt they should be bounded by
plans and in 1978 –1981 he helped guide the retrenchment policy that put the economy on a
solid base before it began rapid growth.

After 1978, when Deng was elevated to be the representative of the nucleus of the
Chinese Communist Party and China undertook reform and opening, there was a
difference between the public image of Deng as the single pre-eminent decision-
maker and the reality of the informal power structure within Zhongnanhai. Once Hua
Guofeng stepped aside, to the public and to foreigners as well, there was no confusion
about who was in charge. It was Deng Xiaoping. Within Zhongnanhai, in influence
within high level Party meetings, on issues relating to the economy, ideology, Party
organization, and basic Party policy, there was one and only one person who met
Deng Xiaoping as an equal—Chen Yun. In the 1980s, China published the collected
works of two high living officials, first Chen Yun and then Deng Xiaoping. Last year,
the Chinese celebrated the 100th anniversary of Deng’s birth with great fanfare on
TV, in newspapers, in book stores, and in historical museums. This year, in 2005, on

* Ezra F. Vogel has been professor at Harvard University since 1967 and is currently Henry Ford II Research
Professor of the Social Sciences. He has served as director of Harvard’s Fairbank Center (1972–1976, 1995–1999),
of the Asia Center (1997– 1999), of the US–Japan Program (1980–1987) and of Harvard’s undergraduate program in
East Asia Studies (1972– 1989). He has authored books on China and Japan and lectures frequently in Asia in Chinese
and Japanese. He was National Intelligence Officer for East Asia in Washington, DC in 1993–1995, director of the
American Assembly on China in 1997, and co-director of the Asia Foundation Task Force on Asian Policy in 2000.

ISSN 1067-0564 print/1469-9400 online/05/450741–19 q 2005 Taylor & Francis

DOI: 10.1080/10670560500206827
 EZRA F. VOGEL

the 100th anniversary of the birth of Chen Yun, plans are in place to celebrate his life
in the same way and on a comparable scale.1
In foreign affairs, Deng was the unquestioned leader. Chen Yun never met any
foreign officials except those from Communist countries. Chen Yun had never been a
regular member of the military and he did not challenge Deng’s authority on military
matters. Deng as the public representative of the Party had some room for flexibility
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in defining policy to outsiders even in areas of Chen Yun’s expertise. However, in the
1980s, on important issues relating to the economy, ideology, Party organization, and
basic Party policy, it was expected that Deng would seek the approval or at least the
acquiescence of Chen Yun.
Deng came from a well-to-do family in Sichuan and Chen Yun from a poor family
in a town near Shanghai. But they were products of the same era and shaped by the
same historical forces. Their careers had many similarities, and they met often. They
both left school within a year after 4 May 1919 and reached adulthood deeply
frustrated that Chinese leaders could not defend their country and their people against
capitalists and foreign imperialists. Shortly after Deng left school, he went to France
where he became a worker, learned more about capitalism and imperialism, and
joined the Communist Party. Shortly after Chen Yun left school, he went to Shanghai
as a worker where he learned about capitalism and imperialism, and joined the
Communist Party. Deng and Chen Yun first met each other in the Jiangxi Soviet in
the early 1930s and both took part in the long march. At critical junctures, they both
supported Chairman Mao.
Deng Xiaoping and Chen Yun were not intimate personal friends, but they were
comrades with similar views in pursuit of a common cause and from 1952 to 1966
their work constantly drew them together. In August 1953, when the Central Finance
and Economic Conference had trouble reaching a conclusion on fundamental issues,

1. The author has drawn particularly on the 3 volume series: Zhonggong Zhongyang wenxian yanjiushi
[Central Party Literature Research Center], ed., Chen Yun Nianpu, (CYNP) 1905–1995 [Chen Yun Chronological
Record ] (2000). The best biography, though brief, is by the compiler of CYNP and Chen Yun’s secretary from
1980 to 1985, Zhu Jiamu. Zhu Jiamu, Chi Aiping and Zhao Shigang, Chen Yun (Zhongyang Wenxian Chubanshe,
1999). See also Ye Yonglie, Chen Yun Quanzhuan [A Complete Biography of Chen Yun ] (Taipei: Zhouzhi
Wenhua Chuban, 1995). The best available work in English, written before new materials became available, is
David M. Bachman, Chen Yun and the Chinese Political System (Berkeley: Institute of East Asian Studies,
University of California, 1985). I have also drawn on a series of interviews especially with Zhu Jiamu and Chen
Yun’s two eldest children, Chen Weili and Chen Yuan. Unless otherwise specified, the details of Chen Yun’s
history are drawn from CYNP, the book by Zhu et al., and the interviews. Comparisons with Deng are drawn
from a variety of materials from my study of Deng and reform and opening. Texts of some of Chen Yun’s major
articles and speeches are contained in Selected Works of Chen Yun (Foreign Languages Press, 2001), 3 volumes
(first edition of vol. 1 was in 1984, of vol. 2 in 1995 and vol. 3 in 1997). The Chinese edition, Chen Yun Wenxian
was published by Renmin Chubanshe in 1984, 3 volumes, second edition in 1995. An early publication of
translations of some of Chen Yun’s articles is Nicholas R. Lardy and Kenneth Lieberthal, eds, Chen Yun’s
Strategy for China’s Development: A Non-Maoist Alternative (M.E. Sharpe, 1983).Chen Yun’s own account of his
history is far less detailed. Chen Yun Tan Chen Yun: Lishi Jishi (Dang Jianduwu Chubanshe, 2001). Accounts of
Chen Yun’s role in economic matters are Sun Yeli and Xiong Lianghua, Gongheguo Jingji Fengyunzhong de
Chen Yun [Chen Yun Amidst the Winds of the PRC Economy ] (Zhongyang Wenxian Chubanshe, 1996); an edited
collection, Chen Yun Yu Xinzhongguo Jingjie Jianshe (Chongyang Wenjian Chubanshe, 1991); Deng Liqun,
Xiang Chen Yun Tongzhi Xuexi Zuo Jingji Gongzuo [Learning from Chen Yun how to do Economic Work ] (1984;
available at Fairbank Center Library, Harvard). A full highly informative account of political issues surrounding
economic decisions is Bo Yibo, Ruogan Zhongda Juece yu Shijian de Huigu [Recollections of Some Important
Decisions and Events ], 2 vols (Renmin Chubanshe, 1997). The most useful new materials published on the

742
 CHEN YUN: HIS LIFE

Mao asked Zhou Enlai to call on two people to join the meeting to break the deadlock,
Chen Yun and Deng Xiaoping.2 In December 1953, when Gao Gang’s ambitions
threatened to split the Party, two people together went to Mao to blow the whistle on
Gao Gang—Chen Yun and Deng Xiaoping.3 After the disasters of the Great Leap
Forward, both Chen Yun and Deng tried to resolve crises pragmatically without
alienating Mao Zedong. In the Cultural Revolution, when Liu Shaoqi and Deng
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Xiaoping were accused by the Gang of Four of being ‘Capitalist roaders’, Chen Yun
was criticized as the ‘chief commander of finance and economy of their revisionist
black headquarters’.4 In 1969 Mao sent Deng to rusticate in Jiangxi. In 1969 Mao sent
Chen Yun to rusticate in a different place, but also in Jiangxi. Both returned to
Beijing in the early 1970s.
Although Deng was one year older than Chen Yun, Chen Yun had seniority within
the Party. From 1931 when he became a member of the Central Committee until
1956, Chen Yun held higher positions than Deng and even after 1956 outranked Deng
in the official Party ranking. In 1935, at the famous Zunyi Conference so critical to
Mao’s rise to pre-eminence, Chen Yun participated not only as a member of the
Central Committee but as a member of its standing committee. Deng attended the
same meeting, as a note taker.

The rise of Chen Yun

How did Chen Yun rise so rapidly? What kind of contributions did he make during
his career? And what kind of role did he play in the reform and opening after
1978?
Chen Yun’s first big chance came in 1928 after the Sixth Party Congress met in
Moscow.5 It was too dangerous to meet in China while the Guomindang was
aggressively hunting down and slaughtering Communists. One of the key lessons
Comintern advisors drew from the Guomindang-Communist split of 1927 was that
intellectuals from bourgeois backgrounds had betrayed the revolution and were not a
reliable class element for building the Chinese Communist Party. People from rural
backgrounds could participate in the Chinese revolution but they needed a vanguard
of people from the working class. The Chinese Communists had virtually no such
person in their leadership core. Indeed China had little industry and in those days who
could afford an education besides those from the wrong class backgrounds, landlord
and bourgeois families?
Chen Yun was that rare combination, someone with a genuine worker background
with a high degree of knowledge and leadership potential. His parents had been poor
Footnote 1 continued
Centennial of Chen Yun’s birth are: Zhonggong Zhongyang Wenxian Yanjiushi, Chen Yun Wenji (The Collected
Works of Chen Yun). Zhongyang Wenxian Chubanshe, 2005 and Zhongyang Wenxian Yanjiushi Chen Yun
Zhuan (Biography of Chen Yun). Zhongyang Wenxian Chubanshe, 2005.
2. Bo Yibo, Ruogan Zhongda Juece yu Shijian de Huigu, vol. 1, p. 250.
3. CYNP, (19 December 1953). For an account of the Gao Gang issue see Frederick C. Teiwes, Politics at Mao’s
Court: Gao Gang and Party Factionalism in the Early 1950s (M.E. Sharpe, 1990).
4. ‘Chedi pipan chen Yun Lianluozhan’ [‘Liaison station to criticize thoroughly Chen Yun’], Jiefa pipan Chen
Yun fangeming xiuzhengzhuyi zuixing, daze baoxuan [Expose and Criticize Chen Yun’s Counterrevolutionary
Crimes: Collection of Large Character Posters ] (1967; available in Fairbank Center Library).
5. For background of the Sixth Party Congress see Tony Saich, The Rise to Power of the Chinese Communist
Party: Documents and Analysis (M. E. Sharpe, 1996), pp. 277 –507.

743
 EZRA F. VOGEL

farmers. His father died when he was two, and his mother died when he was four. His
maternal grandmother then raised him but she died when he was seven. He was then
raised by his maternal uncle and his wife, who had a small drinking shop in the town
of Liantang in Qingpu County. Qingpu County is now under Shanghai Municipal
Administration, but at the time, Liantang was a town of about 6,000, connected
directly by a small stream to Shanghai, some 60 kilometers away. Chen Yun’s town
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was close enough to feel keenly the changing economic conditions of Shanghai,
which were in turn related to Shanghai’s role in the world markets. Chen Yun’s elder
sister remained illiterate, but thanks to a customer in his uncle and aunt’s drinking
place who was impressed with Chen Yun’s abilities, Chen Yun was given free tuition
at an upper elementary school and graduated at the top of his class at 14.6
Chen Yun had no money to continue his education, but he was able to get a job as an
apprentice in the Commercial Press in Shanghai. For a brief period of time he engaged
in physical labor as a typesetter, but he was mostly a shop clerk and salesman. He took
part in labor union activities and became a union leader, thus being a bona fide
member of the working class. Chen Yun remained at the Press from 1919 to 1927
when the split with the Guomindang forced him underground. The Commercial Press
was a leading publisher of books by foreign as well as Chinese intellectuals, both in
translation and in the original. Chen Yun was able to take some evening classes at the
Press, and through his work in the labor unions he attended meetings with intellectuals
and heard them speak. Chen Yun respected education and read newspapers, literature,
and books about politics and history. The atmosphere at the Press provided
intellectual stimulation for his growing curiosity about how capitalists, Chinese and
foreign, grew rich while workers remained poor and often suffered cruel
mistreatment. In June 1925 amidst huge Shanghai demonstrations against British
police for killing Chinese people, Chen Yun became one of the founding members of
the Chinese Communist Party branch in the Commercial Press. Within a year after the
Sixth Party Congress in Moscow, Chen Yun at 24 was promoted to be a member of the
Standing Committee of the Jiangsu Provincial Committee.7
Chen Yun’s next big chance came in 1931, with the defection to the Guomindang of
Gu Shunzhang, chief of the Secret Service Section of the Communist Party Central
Committee. After he went underground in 1927, Chen Yun worked to build up the
Party organization, first in his native county and when that became too dangerous, in
other places in and around Shanghai. Gu Shunzhang, as head of the Secret Service
Section, had a wealth of information about where his fellow Communists were located,
and when he defected, the lives of all Communists in the region were at great risk.
A Communist who had secretly been planted in the Organization Department of the
Guomindang immediately got the news of Gu Shunzhang’s defection, and sent a
messenger to Shanghai. When word got to Chen Yun, immediately, under Zhou Enlai’s
direction, he began destroying files and alerting members to flee. Chen Yun, who had

6. In addition to CYNP and the book by Zhu jiamu, briefings by Ma Jiebei, deputy chief of museum and Li
Yonggui at Chen Yun Lishi Jinianguang [Chen Yun Revolutionary History Museum], Qingpu District (formerly
Qingpu County), Shanghai. The original drinking establishment of Chen Yun’s uncle and aunt is preserved as part of
this display. For an account of Chen Yun’s daily life see Li Mengwen, Shenghuozhong de Chen Yun (Jiefangjun
Chubanshe, 1999).
7. Ibid.

744
 CHEN YUN: HIS LIFE

already become a member of the Central Committee a few months before Gu’s
defection, proved to be not only reliable but cool-headed and effective in emergencies.
Shortly, at 26, he was named head of the Communist Party Secret Service.

Learning about the economy through experience: the Jiangxi Soviet

and the long march8
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By January 1933, as the Guomindang began strengthening its forces near Shanghai
and as more communists defected, operating in Shanghai was considered too risky.
Chen Yun and his co-workers were ordered to go to the Soviet base in the mountains
of Jiangxi Province. Chen Yun, as a former labor leader, was made secretary of the
All-China Labor Union. In a rural area with little manufacturing, there was little labor
union work, but the Communists did have a few small collective and private
enterprises. As a union leader at the Commercial Press, Chen Yun had helped
organize strikes, but in the base area, the production was run by the Communists and
they desperately needed the output. In Jiangxi, Chen Yun told labor union members
that they had a responsibility for increasing production. Workers there, he said,
should not ask for higher wages and, when production needs require it, work more
than eight hours a day.
Chen Yun, who as a salesman had learned about markets, was asked to devise a
way to import into the Jiangxi base badly needed salt and medicine. Although he had
helped develop the Jiangxi Soviet base currency, Chen Yun realized that to motivate
the overseas merchants to bring in these supplies, the base area had to pay them
according to outside market prices, not according to prices in their own currency. He
helped find products to sell to the outside to pay for the needed salt and medicine. By
the time they left the Jiangxi base, Mao considered Chen their leading person for
dealing with the economy.
In June 1934, little more than a year after Chen Yun arrived in Jiangxi, under
pressure from encirclement campaigns of the Guomindang, the Communists left their
base area to begin their long march that ended when they established their new base
in northern Shaanxi. In preparation for and during the march, Chen Yun’s
responsibility was procuring supplies for the troops. On the long march, he helped
acquire not only food, clothing, and ammunition, but also horses to carry supplies and
boats to cross rivers.

A bridge between Mao and Moscow, 1935– 1937

In the early 1930s Mao complained that they had suffered great losses because
international Comintern representatives (Li Da and Bo Gu) did not adequately
understand Chinese conditions. Mao’s struggle against them came to a head on the
long march at a critical meeting in Zunyi. At a meeting to plan the Zunyi Conference,
it was clear that if a regular meeting of the Central Committee were held, Mao would
lack the support to defeat Li Da and Bo Gu. Chen Yun, by then a member of the

8. Discussion of Chen Yun’s learning about economics draws particularly on interviews with Chen Yuan and
Chen Weili. Chen Weili accompanied her father to Jiangxi part of the time when he was sent there during the Cultural
Revolution and he reminisced with her about his earlier time in Jiangxi.

745
 EZRA F. VOGEL

Standing Committee of the Central Committee, along with Zhou Enlai and Zhang
Wentian, voted for an enlarged meeting. These three votes carried the day, paving the
way for Mao’s rise.9
Since the Zunyi Conference criticized people supported by the Comintern, after the
Conference it was important to explain the results to the Comintern to gain their
understanding and continued support. Comintern representatives had been in
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Shanghai. Since Chen Yun had proven reliable, worked with the underground there
and had a local accent so that he could disguise himself as a Shanghai merchant, he
was dispatched to Shanghai to explain to Comintern officials the results of the Zunyi
Conference. When he arrived in Shanghai, Chen Yun found that the Communist
organization there had been decimated. Following advice he was given by contacts
there, he left immediately on a Soviet boat to Vladivostock where he caught a train to
Moscow. In Moscow, he and Wang Ming reported to Soviet leaders, including Stalin.
Wang Ming, a favorite of the Soviets, had been in Moscow for some time and gave a
broad overview of the Chinese Communist movement. Chen Yun, who had been
intimately involved with the circumstances on the long march, gave a report that was
more concrete and that struck his listeners as clear and informative. Chen Yun’s
report helped lay the basis for the Comintern’s later acceptance of Mao Zedong as the
key Chinese Communist leader.
Chen Yun remained in Moscow for almost a year, using his time to study Marxism-
Leninism and the Soviet approach for dealing with the economy. After Moscow,
Chen Yun was assigned to Xinjiang where he was to be the liaison with the local
warlord Sheng Shicai in the hopes of establishing a supply route between the Soviet
Union and the newly established Chinese Communist base area in northern Shaanxi.
Warlords in Gansu proved too powerful for the Communists to maintain the supply
route. However, Chen Yun was assigned to remain in Xinjiang where for a year he
was the liaison with Sheng Shicai and the Soviets who trained rustic Chinese
Communists (remnants from the West Route Army and later others sent from
northern Shaanxi) to drive trucks, fly airplanes, or operate other ‘modern’ machinery
then new to them.

Head of the Central Party Organization Department, 1937 –1943

In December 1937, shortly after his arrival in Yan’an, by then the capital of their
northern Shaanxi base, Chen Yun at 32 was made head of the Party Central
Committee’s Organization Department with responsibility for selecting new Party
members, training them, and developing personnel records. Mao pressured Chen Yun
to distance himself from Wang Ming. Mao told Chen Yun that his problem was not
lack of experience as Chen Yun first explained apologetically, but lack of theory.
Chen Yun took a brief sick leave but dutifully studied Marxism-Leninism and the
works of Mao and remained in his position.
When the Communists arrived in Yan’an they had 30,000 Party members and
virtually no Party records and in 1945 when Chen Yun left this position, they had
9. For background of the Zunyi Conference see Saich, The Rise to Power of the Chinese Communist Party,
pp. 643 –649.

746
 CHEN YUN: HIS LIFE

over 1 million members. Officially Chen Yun remained as head of the Organization
Department until 1945, but from 1943 his primary responsibility was in economic
work.
Before a person was admitted to the Communist Party it was necessary to
clarify any doubtful issues in the person’s history, especially connections that
might lead that person or his family members to pass secret information to the
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Guomindang. Even the marriages of Party members had to be approved. Therefore

the Organization Department had to carry out extensive background checks on
everyone. The numbers were too great for Chen Yun to know all Party members
personally but he knew all the top officials and was especially familiar with cases
that required attention. He had the reputation of being sympathetic with Party
members. The essence of Organization Work, he said, was to ‘Understand the
People (liaojie), be magnanimous (qiliang), use them well (yong de hao), and
cherish them (aihu ren)’. Many young intellectuals came to Yan’an after patriotic
demonstrations against Japan that began on 9 December 1935 and still more after
the Japanese invaded China in 1937. Chen Yun, in line with Party policy, tried to
attract them to the Communist cause.
At the same time, in spite of the new unified front with the Guomindang, there
remained a danger that spies for the Guomindang would infiltrate the Communist
ranks. Kang Sheng, who was in charge of intelligence in Yan’an and was later
despised for attacking Party leaders during the Cultural Revolution, was interrogating
and attacking as spies many innocent people that Chen Yun was trying to cultivate.
Kang Sheng criticized Chen Yun for being insufficiently vigilant in looking out for
spies and Chen Yun, at a Politburo meeting on 22 October 1941, engaged in self-
criticism for his failures.10
In the rectification campaign that effectively began on 10 September 1941 Chen
Yun was assigned to work on rectification in the army, which would not require him
to criticize those whom he had helped cultivate in the Party. On 11 March 1943 at the
height of the rectification campaign, when many whom Chen Yun had cultivated
were under attack, a doctor who examined Chen Yun found him to be suffering from
general exhaustion and advised him to take a rest. The Party Secretariat granted him
three months rest and Mao, who felt more comfortable working with Peng Zhen than
with Chen Yun, later gave him permission to rest for a year. Although still
recuperating, officially Chen Yun remained head of the Organization Department
until 1945.

Learning about the economy through experience: Northwest

(Shaanxi) Border Area, 1943– 1945
In December 1943, Mao assigned Chen Yun to be deputy head of the Finance and
Economic Office of the Northwest Border Region. The nominal head, He Long, was
10. For background on Kang Sheng see John Byron and Robert Pack, The Claws of the Dragon: Kang Sheng—The
Evil Genius Behind Mao—and His Legacy of Terror in People’s China (Simon and Schuster, 1992). The report of the
special case group, a major source for the study by Byron and Pack is Zhong Kan, Kang Sheng Ping Zhuan [A Critical
Biography of Kang Sheng ] (Hongqi Chubanshe, 1982). Despite later problems between them, Kang Sheng and Chen
Yun had worked closely in intelligence work in Shanghai. Later they were together in Moscow as students.

747
 EZRA F. VOGEL

busy with other activities and Chen Yun was in fact in charge. He established a
unified tax system, managed the budget, and created the first Communist Chinese
annual plans. The border region then suffered serious shortages because of the
Guomindang blockade. Cloth was in short supply, inflation was high, and black
markets flourished. Salt, the most promising export product, was also in short supply.
To prevent inflation, he rationed salt (with a policy called ‘Unified Purchase and Sale
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of Salt’) and provided more incentive for production by raising the price paid to the
salt producer. For the same reason he raised the price paid to farmers for raw cotton.
To increase cloth imports, Chen Yun arranged to pay the traveling merchants at
market prices in Guomindang legal currency. Merchants finding opportunities for
profit were happy to break the Guomindang blockade.

Building rural bases and liberating cities in the Northeast, 1945– 194811
When World War II ended, although the Guomindang and Communists entered into
negotiations that were to last a year, both also began immediately preparing for the
possibility of Civil War. The Communists could not yet challenge the much stronger
Guomindang forces in North China and East China. For the Communists the
battleground of choice was the Northeast. Since the Soviet Union rushed into the
Pacific War in its last days and occupied the Northeast, Chinese Communists could
expect some help from Soviet troops and supplies from nearby Communist allies in
the Soviet Union and North Korea. Furthermore, in the Northeast there were leftover
Japanese weapons and ammunition, industrial plants that could supply more goods,
and an agricultural surplus. If they first gained control in the Northeast, they could
supply their troops as they advanced elsewhere. In the weeks after the end of the war,
some nine of the 33 full members of the Central Committee, including Chen Yun,
Peng Zhen, Lin Biao, Zhang Wentian, Gao Gang, and Li Fuchun were dispatched to
the Northeast. First Peng Zhen and later Lin Biao were first Party secretaries but Chen
Yun was the highest ranked among them.12
Some 100,000 Communist troops also rushed into the Northeast, from the
Northwest, from Shandong, and from North China, before the Guomindang could
arrive. Some Party leaders hoped that with Russian cooperation, they could
immediately occupy the cities and major rail lines there and prevent the Guomindang
from entering the Northeast. Northeast Party Secretary Peng Zhen wanted to move
quickly and forcefully to block the Guomindang from entering the Northeast but
Deputy Party Secretary Chen Yun felt they were not yet prepared to fight the
Guomindang. Rather than suffer disasters they should move to northern Manchuria to
establish base areas to train their forces and build up supplies. Chen Yun had studied
the Yalta Agreement whereby the United States got the Soviet Union to agree that
when they left they would hand over the Northeast to the official Chinese
11. For a general history of the struggle in the Northeast see Steven I. Levine, Anvil of Victory: The Communist
Revolution in Manchuria, 1945–1948 (Columbia University Press, 1987). See also Odd Arne Westad, Decisive
Encounters: The Chinese Civil War, 1946–1950 (Stanford University Press, 2003) and Suzanne Pepper, Civil War in
China: The Political Struggle, 1945–1949 (University of California Press, 1978). For Chen Yun’s role in particular
see Xu Jianting, Chen Yun yu Dongbei de Jiefang (Zhongyang Wenxian Chubanshe, 1998).
12. For a fuller account of Peng Zhen’s role see Pitman B. Potter, From Leninist Discipline to Socialist Legalism:
Peng Zhen on Law and Political Authority in the PRC (Stanford University Press, 2003).

748
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government, namely the Guomindang. He was convinced the Soviets would be

cautious in dealing with the United States which had atomic weapons while the
Soviets did not. He believed the United States would quickly transport Guomindang
troops from their bases in Southwest China to North and East China. Lin Biao was
ordered by the Party Central to fight to block the Guomindang from entering the
Northeast and took heavy losses. It later became clear that Chen Yun’s cautions had
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been entirely justified and by the end of 1945 they followed the policies that Chen
Yun had advocated.
In the meantime, Chen Yun moved to northern Manchuria, away from
Guomindang forces, to Bin County, 50 kilometers east of Harbin. Chen Yun
believed that local bandit troops and the military forces that had worked with the
Japanese were not reliable allies. In his view it was better to carry out land reform,
giving land to the peasants who would then send their sons to fight in the Communist
armies to keep the land their families had been given. In the end, this strategy proved
correct as their recruiting efforts proved much more successful after land reform.
By late 1946 Guomindang forces had advanced throughout southern Manchuria
except for a mere five rustic mountainous counties where the Communists
struggled to hang on. If this base were lost, then the Guomindang could move
forward to attack Communist base areas in the north. Chen Yun volunteered to go
to the South Manchurian base area where he became the Party secretary. After
consulting with local officials, he helped persuade the troops of the importance of
their mission and he stayed, risking his life along with those of his comrades.
Despite heavy losses, the Communist troops fought valiantly and maintained their
base. Some consider this a critical turning point in the battle for the Northeast and
therefore for the country.

Urban takeover, 1946 –194813

From 1921 until 1946, the communists had occupied many rural areas and even
county capitals but until April 1946 they had not occupied a major city. When the
Soviets departed from the Northeast in the spring of 1946 the Guomindang quickly
took over the major cities in southern Manchuria, but in northern Manchuria, on 29
April 1946, the Communists were able to take over one major city, Harbin,
immediately after the Soviets left. Chen Yun was put in charge of the Military
Control Commission that took over the administration of Harbin. In addition to
military precautions, Chen Yun prepared for the task by assembling the takeover
team in Bin County some weeks before. He assigned specific officials to familiarize
themselves with the departments they would be responsible for. He consulted with
the Communist underground in Harbin and with a group of business people from
Harbin who had come to Bin County to appeal for a peaceful takeover. Chen Yun,
who had always respected the skills of technicians and managers, issued assurances
to officials in Harbin that if they cooperated and performed their jobs well, they
could remain. The occupation of Harbin went smoothly and urban services
13. In addition to sources in footnote 1, see Xu Yanhua et al., ed., Chengshi Jieguan Qinliji [An Intimate Record of
Urban Takeover ] (Zhongguo Wenshi Chubanshe, 1999), especially the articles by Liu Da on Harbin, pp. 1–18 and by
Qi Shoucheng on Shenyang, pp. 112 –120.

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continued to operate. The news of this successful takeover was a great help to the
Communists as their advancing troops sought cooperation with local people
everywhere.
On 2 November 1948, not long after the tide of the battles turned in their favor, the
Communists took over Shenyang, the largest city in the Northeast. Again, the person
in charge of the takeover was Chen Yun. He drew on his experiences in Harbin, and
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again the transition went smoothly. After meetings to summarize the lessons from
urban occupation in the Northeast, Chen Yun and others drew conclusions that
became the guidelines for taking over other cities as their troops advanced throughout
the country.
In June 1948 when the Communists completed their conquest of most of the
Northeast, the Northeast Bureau began to draw up, under the direction of Chen Yun,
an overall regional economic plan. In addition to development of the regional
economy, the Bureau was responsible for supplying the troops as they moved south.
To ensure enough grain for the troops as well as for the local population, the
chairman of each Northeast province was given personal responsibility for the
production and distribution of grain within his province. Grain exports to the Soviet
Union were reduced. To help pay for the needed imports of military supplies and
machinery from the Soviet Union and Korea, Chen Yun and his planners focused on
the export of coal, lumber, and salt. They sought help from the Soviet Union for
reviving Anshan Steel Mill and other plants and got the Soviets to return some of the
Japanese machinery they had taken away. To keep factories running, Chen Yun and
others made good use of existing factory administrators and technical personnel as
long as they were faithful to the job and not counter-revolutionary. Although there
were large differences in income between rich and poor peasants, planners decided
that under wartime conditions they would avoid disrupting local communities as
they took over new areas. As a result of achieving a measure of stability in the
Northeast economy, in 1948 the Northeast succeeded in supplying substantial
quantities of grain, weapons, and basic daily necessities for their troops as they
moved south to take over China. Chen Yun also tried to lower expectations of the
population that livelihood would suddenly and dramatically improve after the
Communists took over.
In early 1949, during his last weeks in the Northeast, Chen Yun visited factories to
familiarize himself with industrial issues before being transferred to Beiping. He
arrived in Beiping just in time to attend the national Finance and Economy Work
Conference from 11 May to 2 June 1949. When the conference ended, it was
announced that a Finance and Economy Commission was to be formed, with Chen
Yun as head. Chen Yun’s job was to bring order to the national economy. In October
1950, after Ren Bishi died, Chen Yun became the fifth ranking Party leader, after
Mao, Liu, Zhou, and Zhu De.

Bringing order to the national economy, 1949– 1952

The issues Chen Yun confronted in 1949 when at 44 he took over responsibility for
the national economy were staggering: troops still needed supplies. Transport and
other infrastructure facilities had been damaged by fighting and by Guomindang

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sabotage. Factories lacked supplies and sometimes lacked income to pay workers.
A new tax system had to be established. Government expenses far exceeded income,
and some nine million troops and government employees were expecting to be paid.
Perhaps worst of all, the public was anxious about inflation that had soared out of
control as the Guomindang printed money to finance the cost of the war and shortages
grew more severe.
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Chen Yun felt keenly the awesome responsibility for the national economy when
errors could affect the lives of hundreds of millions who were barely at the
subsistence level. He wanted first to get accurate information and make careful
calculations. One of his favorite expressions was, ‘Don’t automatically accept what a
superior says, don’t automatically accept what a book says, accept only reality,
exchange views, compare, and before concluding go over the situation again and
again’. He examined issues like use of resources, plant location, and infrastructure
investment. He was painfully thorough and always sought to think of specific issues
in the broad national perspective. He got control of available foreign currency to
make certain it was used for priority projects. He developed a standardized system of
national revenue with predictable national income.
Chen Yun’s approach drew on the lessons that he had learned as his
responsibilities for the economy expanded from the small base in Jiangxi to the
larger base in the northwest and then to the larger industrialized economy in
the Northeast: (1) to control inflationary pressures, use market forces. When
goods are in short supply, rationing and price control may be necessary
temporarily but work to overcome supply bottlenecks and transport goods from
elsewhere or take goods out of storage and flood the market until prices decline;
(2) to meet budget needs while avoiding inflationary pressures, issue bonds to
soak up funds rather than print money; (3) to establish the viability of
Communist currency, tighten political controls over speculators and control
supply lines to insist that goods will be passed on only for payments in their
currency; (4) to give people confidence in the economy, get adequate sources of
revenue to balance the budget; and (5) price imported goods or goods destined
for export according to outside pricing. Mao Zedong lauded Chen Yun for their
success in getting control over the economy. He said that getting control over the
national economy from 1949 to 1952 was a victory comparable to that of
Huaihai, the decisive battle of the Civil War.14

The formation of the first five year plan, 1953– 195715

The fourth draft of the first five year plan was completed in mid-1953 under the
direction of Li Fuchun while Chen Yun was recuperating, but the first three drafts and
the fifth and final draft were under Chen Yun’s personal direction. Mao was impatient
with Chen Yun for being so slow and not announcing the plan until 1955, but Chen
14. This account draws heavily on interviews with his son Chen Yuan, head of the China Development Bank, on
17 and 23 October 2003.
15. For an account of the broader process in forming the five year plan and socialist transformation see Ezra
F. Vogel, Canton Under Communism: Programs and Politics in a Provincial Capital, 1949–1968 (Harvard
University Press, 1969), pp. 125–177.

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Yun wanted to make sure the needed resources were under control and that the plan
balanced the interests of various regions and various sectors.
One of the most basic issues was how to assure sufficient grain, then in short
supply, to the rapidly growing population in the cities. Chen Yun, who had studied
the scissors crisis in the Soviet Union when peasants did not have enough income to
cover their costs, was painfully aware of the strain on farmers caused by high
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procurement. But he was also concerned with extracting enough to meet the
demands for industrialization and basic construction to bring an end to China’s
poverty. On 2 October 1953, Chen Yun gave a comprehensive analysis of the grain
problem, dealing with issues like urban population projections, the area needed for
grain production, the impact on other crops like cotton that would in turn affect
textile production, and the risks of inflation with tight grain supplies. After his
detailed presentation, he concluded that while ‘unified purchase and sale of grain’
(including urban grain rationing) could lead to problems, to ensure grain supply in
the cities where industrial production would develop and to ensure stability in the
markets, there was no better solution. Chen’s proposal for ‘unified purchase and
sale’ was accepted, incorporating Deng Xiaoping’s suggestion that fall harvest
collections be postponed one month to put in place the system of compulsory
purchase.
Chen Yun believed that the best way to respond to complaints from local officials
about the amount of grain and revenue they were to pass on to the national
government and the failure of the national government to grant all the help they
requested was to give a comprehensive explanation of the overall needs of the
economy. Thus in each draft of the plan Chen Yun gave a comprehensive balanced
overview. By pointing out the difficult choices in a dispassionate well-rounded way,
he was able to gain the understanding of local officials and the various ministries
necessary for them to accept the plan. Despite shortages in a country far more
backward and with far less hope for foreign help than in 1978, China in the first five
year plan succeeded in feeding the people and in making progress in industrializing
and building infrastructure.
In 1955 Mao was personally in charge of agricultural collectivization and Chen
Yun was put in charge of socialist transformation of commerce and industry, the
organization of small enterprises into cooperatives and of large enterprises into state
enterprises. Chen Yun believed in socialist transformation for it had the potential of
permitting more rational control of resources for national development. But Mao
quickened the pace of socialist transformation, much to Chen’s consternation. How
could he make careful plans in such haste? In January 1956 when Mao was
celebrating the great victory of socialist transformation, Chen Yun directed that for
commerce and industry there were to be no changes in enterprises for six months.
They needed to make careful plans for reorganization. And in the summer of 1956, he
argued that too many independent enterprises had been collectivized, too many
enterprises had been amalgamated, and that to relieve problems in people’s
livelihood they needed to decentralize some of these enterprises where
collectivization and nationalization had gone too far.16

16. Selected Works of Chen Yun, vol. 2, pp. 13– 26.

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Chen Yun and the Great Leap Forward, 1958 – 1962

As Mao began to push for accelerating growth, Chen Yun continued to warn against
rash advances and to stress the need for balanced growth. He said that in making
policy, 90% of the time should be spent in research, in getting reliable information,
and 10% in making decisions. Mao talked of catching England industrially in 15
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years. Chen Yun had said it would take 50 years to catch up with the most developed
countries. In January 1957, after he was made head of a five person small group
directly under the Politburo for economic work, Chen Yun said the scale of
construction should be within the national capacity and that if expanded beyond
capacity it would be difficult to pull back. The result would be economic chaos. In
November 1957, as Mao was criticizing those who opposed rash advances, Chen Yun
was given permission to take leave because of his health problems. In 1958 he
returned to work part time, still citing health problems. In January and February 1958,
Mao again criticized Chen Yun for opposing rash advances and Chen Yun was made
to engage in self criticism and he was removed from his position. Under pressure, he
had to mouth words that, while literally true, had consequences that went against his
basic instincts. He said that by mobilizing the masses they could expand irrigation,
open new land, improve farmland, create forests, and make investment that did not
require budget allocations.
In considering adjustments from the first five year plan to the second five year
plan, Chen Yun advocated that they must balance income and expenditures, balance
borrowing and repayment, and supplies and needs of materials. Since the
government had gone into the red, it should control capital construction. Chen Yun
also advocated that there should be decentralization of authority to the regions,
giving regions leeway in retaining and spending more of their income.17 Chen Yun
wanted decentralization done with careful deliberation and preparation. Mao
suddenly announced decentralization with no preparation, went much further than
Chen Yun would have done, and gave notice that anyone who opposed the Great
Leap Forward and People’s Communes could be labeled a rightist. By this time
Chen Yun had removed from his position.
By November 1958, the production disasters revealed in agricultural harvests and
steel output were so widespread that even Mao had to back down and allow some
corrections. In December 1958, Chen Yun met with engineers to discuss problems of
quality. He repeated one of his most favorite expressions, that they should advance
‘carefully and prudently’. Mao was known to be suspicious, and to avoid any possible
misunderstanding, Chen Yun sent Mao a tape recording of this speech.
In August 1958 Mao, knowing that they had only met 35% of the 1958 annual steel
quota in the first half of the year, personally phoned Chen Yun and assigned him
responsibility for meeting the 1958 steel quotas, which Chen Yun considered
unrealistically high. Chen Yun was placed in the awkward position of having to
implement the decentralization of power to local areas that would create ‘backyard
steel furnaces’ that would waste needed supplies and produce steel of such low

17. CYNP, vol. II, (27 January 1957). For a discussion of Chen Yun’s advocacy of decentralization, see also
Frederick C. Teiwes with Warren Sun, China’s Road to Disaster: Mao Central Politicians, and Provincial Leaders in
the Unfolding of the Great Leap Forward, 1955–1959 (M.E. Sharpe, 1959).

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quality that it was unusable. In January 1959 Mao, aware that they had wasted
resources in making useless steel, asked Chen Yun his views about whether in 1959
they could produce 20 million tons of steel, and Chen Yun replied that it would be
difficult to meet that target. In April Mao praised Chen Yun for being brave when
other officials were afraid to speak out. Mao said that at the Wuchang Plenum in
December 1958, Chen Yun had advised against publicizing the steel quotas since
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there were still problems but that no one had reported this to him. In April 1959 Mao
again asked Chen Yun, who was still on sick leave, how much steel they could
produce that year, and Chen Yun said he would study the issue and make a
recommendation. After intensive study and consultations with specialists compressed
into a few weeks, Chen Yun announced in a meeting on 11 May that they could
produce 13 million tons in 1959. At a Politburo meeting in June, Mao reluctantly
accepted Chen Yun’s conclusion. At the end of the year they had produced 13.87
million tons of steel.
In June 1959 as Mao revived his great leap, Chen Yun reported heart difficulties
and wrote to Mao asking for three months leave. Chen Yun was absent from the
Lushan Plenum in August 1959 at which Peng Dehuai criticized the Great Leap
Forward. Chen Yun remained out recuperating until mid-1960, but in the summer
of 1960 he began visiting rural areas to investigate rural production. He said that it
was dangerous if cadres were afraid to speak out about problems. Chen Yun did
take part in the Ninth Plenum in January 1961 when the mood was more restrained,
reflected in the new slogan, ‘Readjustment, consolidation, filling out, and raising
standards’. One newly drafted document, the ‘60 Articles on Agriculture’,
decentralized commune organization, making the production team the basic
accounting unit. In the summer of 1961 when there were huge food shortages,
Chen Yun, after visiting his home county of Qingpu, wrote a letter to Mao
reporting his observations. Mao invited Chen Yun for a discussion. Chen Yun
proposed that more land be devoted to private plots, that not only piglets but sows
should be given to individual households, and that instead of double cropping,
peasants should produce one crop of rice and one of soybeans.
At the 7,000 cadres meeting in January 1962, Liu Shaoqi and others publicly
criticized great leap policies. Mao asked at the conference, ‘Why is it that only Chen
Yun can solve economic problems?’ Mao three times asked Chen Yun to speak at the
meeting, but Chen Yun, aware that if he spoke at this huge gathering he would have to
disagree with Mao’s policies, declined, saying he had not completed his research.
A few weeks later at a much smaller conference in the Western Pavilion (Xilou) of
Zhongnanhai from 21 to 23 February 1962, Chen Yun gave a very comprehensive
analysis of the economic problems, much more detailed than any discussion at the
7,000 cadres meetings. Liu Shaoqi, hearing him at Xilou, asked him to present his
views to the State Council. On 26 February Chen Yun made his presentation to 200
top Party and government leaders. He said there is not enough grain to eat. Crops,
farm animals, fertilizer, and agricultural tools are all in worse shape than before.
Investment in capital construction exceeded the nation’s capacity. He went on to
suggest concrete proposals. It is rare to clap at such meetings, but there was sustained
applause for over one minute. Colleagues were relieved that Chen Yun detailed what
they sensed but were afraid to say and they appreciated his constructive proposals.

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In early 1962, after continuing investigations on agriculture, Chen Yun began to

discuss with Mao’s secretary Tian Jiaying and the head of Rural Work Deng Zihui the
possibility of passing responsibility for grain production down to the household.
Chen Yun returned to Beijing on 24 June 1962, but before broaching the idea with
Mao, he first discussed it with the other members of the Standing Committee of the
Politburo—Zhou Enlai, Liu Shaoqi, Deng Xiaoping, and Lin Biao. Zhou was
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cautious and said he would support it if Mao agreed. The others all supported the idea.
Chen Yun then went to Mao. Mao did not give his views at the time, but a few days
later Mao said that Chen Yun as a Standing member of the Politburo was not wrong in
coming to him, but then launched into a furious attack on Chen Yun, Deng Zihui, and
Tian Jiaying for supporting a revisionist proposal that would break up the collective
rural economy. After hearing Mao’s reaction, Chen Yun wrote to Mao asking
permission because of illness to be absent from the Beidaihe meeting, and Mao gave
permission. At the Beidaihe meeting and at the Tenth Plenum in September 1962,
Mao forcefully pushed the theme of class struggle and launched the socialist
education campaign.
Bo Yibo, in describing Chen Yun’s role in the Great Leap Forward, said that Chen
Yun’s prudent, precise realistic approach with careful investigation of facts was out
of keeping with the leftist Great Leap Forward that pushed for quick results. Those in
power disregarded his views and cut him off, but as the saying goes, ‘When the
country is in chaos, one seeks a good general; when the family is poor, one seeks a
wise wife’. When the country was in trouble, they again went to Chen Yun. He did
not bear grudges, believed in the Party and the welfare of the people and went to work
to resolve the problems the best he could.18
Chen Yun appeared to be a good judge of Mao’s mood, sensing when and how it
was possible to speak out and when there was no choice but to withdraw temporarily.
Because Chen Yun had an unequaled reputation for managing economic work,
because he expressed his views to Mao privately, and because he did not have
personal political ambitions, he was able to speak out more boldly than others about
problems in the Great Leap Forward and to suggest solutions that had a chance to be
implemented.
In the Cultural Revolution, Mao attacked Liu Shaoqi, Deng Xiaoping and others
who were a threat to his power. Chen Yun was pushed aside, but unlike Liu and Deng,
was allowed to remain on the Central Committee even when rusticated to the
countryside.

Reform and opening, 1978– 1992

By December 1978, two years after Mao’s death and the arrest of the gang of four, a
consensus was reached among top Party leaders to launch a policy of reform and
further opening under the leadership of Deng Xiaoping. The consensus jelled at a
Party work conference that Hua Guofeng had called to discuss economic plans for the
following year. On 12 November, the third day of the conference, in the Northeast
China subgroup meeting, Chen Yun in a carefully crafted brief speech said that to
18. Bo Yibo, Ruogan Zhongda Juece yu Shijian de Huigu, vol. 2, pp. 1086– 1087.

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rally whole-hearted support for economic plans, they must first deal with unresolved
political issues. They must redress the cases of important fellow leaders who had
been wrongly accused and should expel Kang Sheng posthumously from the Party for
ruining the careers and lives of so many good officials. Chen Yun’s speech
galvanized the entire conference for it expressed what so many firmly believed but
had been too cautious to say publicly. The work conference was extended to last 35
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days in what participants said was the fullest and most heart-felt expression of views
among Party leaders since the early 1940s. Chen Yun said it brought the same kind of
unity for the new era that the rectification in Yan’an had brought in preparation for
taking over the country in 1949. Near the end of the conference Hua Guofeng issued a
self-criticism for rigidly pursuing the wishes of Chairman Mao, and Deng gave the
keynote speech urging people to liberate their thinking, seek truth from facts, and
push forward.19
At the Third Plenum that followed immediately and ratified the new direction laid
out at the work conference, Deng Xiaoping, aged 74, sat on the podium with Chen
Yun, aged 73. The old revolutionaries were now partners in launching reform and
opening. Chen Yun in March 1977 had supported Deng Xiaoping’s return to work.
Deng at the Third Plenum in turn supported Chen Yun’s return as a member of the
Politburo Standing Committee, head of the Party’s Discipline and Inspection
Committee, and pre-eminent leader in economic matters. Chen firmly supported
Deng for the top leadership position. Chen realized that Deng had a distinguished
military service and experience in foreign relations which he lacked. But even more
important he realized that Deng enjoyed power and was prepared to provide the
forceful leadership that China needed. Chen Yun preferred to work behind the scenes,
thinking through in painstaking detail what was needed for the nation as a whole.
Deng Xiaoping and Chen Yun agreed on fundamentals. China should concentrate
on the four modernizations (agriculture, industry, science, and the military) and do
what was necessary to make the policy succeed, even if it departed from Mao’s
views. As Deng put it, it did not matter if the cat was black or white; it was a good cat
if it caught the mouse. Markets should be expanded and socialist planning should be
more flexible. Higher intellectuals should be treated with respect and given improved
working conditions for their active participation was needed for modernization. The
Party should continue reversing verdicts against cadres falsely accused during the
Cultural Revolution. Cadres should be selected and promoted on the basis of ability,
as measured by examinations, not by their class background. Only the Communist
Party could provide the leadership to guide the country through difficult transitions.
In the first three years after launching reform and opening Deng and Chen Yun,
despite their differences in temperament, were basically on the same wave length. In
December 1978 Chen Yun said that the ten year economic plans proposed by Hua
Guofeng were drawn up too hastily, were too ambitious and needed to be revised.
Deng Xiaoping had played a role in making those plans, yet Deng yielded to Chen
Yun. He wanted a solid economic foundation for the new era and knew Chen Yun’s
record on economic matters. Although he did not accept all of Chen Yun’s criticisms
19. For an account of the Work Conference and the Third Plenum, including Chen Yun’s address, see Yu
Guangyuan, Deng Xiaoping Shakes the World: An Eyewitness Account of China’s Party Work Conference and the
Third Plenum (November–December 1978), ed. by Ezra F. Vogel and Steven I. Levine (Eastbridge, 2004).

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of market-oriented reforms,20 he did accept Chen Yun’s proposals for scaling back
targets, making careful plans within their capacity, and undertaking three years
of readjustment.21
As Deng and Chen Yun moved forward on reform and opening, they worked in
uncharted territory and faced an endless array of concrete issues. How much leeway
should be given to foreign capitalists so that China would profit from their
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investments while preventing them from exploiting China as imperialists had done in
the past? How much could be left to the markets and the pursuit of private profit
without squandering scarce resources and destroying the public good and public
morality?
On specific issues, viewpoints in Zhongnanhai tended to polarize between those
who wanted to move further and faster and those who preferred to proceed more
cautiously. Deng became the magnet for those who wanted to proceed boldly and
quickly in making reforms and moving toward markets. Chen Yun became the
magnet for those who wanted to proceed cautiously and slowly and were reluctant to
give up the framework of socialist planning.
As Deng Xiaoping and Chen Yun ‘groped for stones while crossing the river’,
Chen Yun, like a good corporate chief financial officer, wanted to make sure that each
stone had a solid foundation and was not slippery before taking the step. Before
making decisions, he wanted to collect relevant facts and consider carefully, over and
over again, the consequences of any decision. Could he assure that the needed funds,
supplies, and infrastructure were all in place? Deng Xiaoping, like a bold company
president, less bogged down by the details, was impatient and readier to forge ahead.
After 1982, the successes of the readjustment policies presented new choices that
caused the views of Deng and Chen Yun to diverge more sharply.22 They had
managed to ease Hua Guofeng from positions of power. They had launched
agriculture reform, the ‘contracting down to the household’ that gave incentives to
individual farm families that brought greatly increased grain production. They had
made progress in relieving transport and production bottlenecks and the economy had
begun to make solid progress. On all this Deng and Chen were united. When Zhao
Ziyang became prime minister in 1980 he had listened to Chen Yun on economic
matters but by 1982, with the advice of economics specialists, he had gained more
confidence that the economy could begin to grow faster and that markets could be
opened much further. Deng, with Zhao at his right hand, moved ahead boldly. Chen
Yun, who had seen what capitalists did in Shanghai in the 1920s, who had guided
China during periods of great shortages and inflation, who had seen how much

20. Joseph Fewsmith, ed., ‘Criticism of reform, 1981–1982’, Chinese Economic Studies, (Spring 1993).
21. For an account of the economic problems that caused Chen Yun to scale back plans see Barry Naughton,
Growing Out of the Plan: Chinese Economic Reform, 1978– 1993 (Cambridge University Press, 1995).
22. For the economic issues that arose at this time see Joseph Fewsmith, Dilemmas of Reform in China: Political
Conflict and Economic Debate (M.E. Sharpe, 1994). For accounts of politics during this era see Carol Lee Hamrin and
Suisheng Zhao, eds, Decision-Making in Deng’s China: Perspectives from Insiders (M.E. Sharpe, 1995); Jonathan
Unger, ed., The Nature of Chinese Politics: From Mao to Jiang (M.E. Sharpe, 2002); Roderick MacFarquhar, ed., The
Politics of China: The Eras of Mao and Deng (Cambridge University Press, 1993); Richard Baum, Burying Mao:
Chinese Politics in the Age of Deng Xiaoping (Princeton University Press, 1994). For an account from the perspective
of a staff member under Hu Yaobang see Ruan Ming, Deng Xiaoping: Chronicle of an Empire (Westview, 1992).
Some parts of Ruan Ming’s account of Chen Yun’s role are not substantiated by other sources.

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damage could be done with excessive exuberance, believed that in the long run the
economy would grow faster if they proceeded cautiously.
Deng and Chen Yun did not engage in an all-out ‘you live, I die’ warfare as in the
days of Mao and his perceived rivals. Chen Yun did not criticize Deng publicly nor
did Deng criticize Chen publicly. In the United States, government spokesmen
regularly report that there are no differences between the White House, State
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Department, and the Defense Department while their respective staffs are engaged in
constant struggle. In China, the media reported unity while the staffs of Deng
Xiaoping and Chen Yun were in almost constant tugs of war over wording of
announcements and concrete policies. Though Chen Yun did not attack Deng
directly, he and his allies criticized Deng’s proxies, Hu Yaobang and later Zhao
Ziyang. Chen Yun and his allies did not challenge Deng in military matters or on
foreign policy. But they did challenge him on economic and ideological matters and
on basic Party policy.
Already in 1979 when special economic zones were being set up, Chen Yun kept
stressing that they were experimental. He never opposed them publicly, but he was
one of the few high leaders who never visited them and he gave voice to cases of
corruption as a way of constraining those experiments.23 In 1984 Deng greatly
expanded many of the freedoms given to special economic zones to 14 more coastal
urban areas. Chen Yun could not agree with the expansion to those areas. One of his
associates reminded people of the evils of the treaty ports. When the economy began
to overheat, Chen Yun issued warnings which Deng chose to ignore or tone down. In
1979 and 1986 Deng began to consider more political reforms. Chen Yun said
nothing to support political reform.
Chen Yun agreed with Deng that as the economy grew and shortages declined,
prices gradually move toward market levels. Both realized that decontrol of prices
could run the risk that the public, long accustomed to stable prices and still living at
close to subsistence levels, might panic. In the summer of 1988, Deng boldly
announced price decontrol of a large number of goods, a move Chen Yun did not
support. The public panicked and began withdrawing money from banks to buy
goods before inflation took off. Deng was quickly forced to back down, but people
continued to feel uneasy.
In the spring of 1989, after Hu Yaobang died, students who sympathized with him
and agreed with his aim of expanding freedoms, took to the streets. When Gorbachev
visited China, leaders were reluctant to clamp down too tightly in the presence of
Soviet visitors. The student demonstrations had widespread support from ordinary
city dwellers who feared that their livelihoods would be endangered by the inflation.
And migrants to the city were demonstrating because the new austerity programs to
bring inflation under control led to layoffs and reduced job prospects. Zhao Ziyang
did not stop the demonstrations.
Despite the intense competition between Chen Yun and Deng Xiaoping between
1982 and 1989, when the demonstrations in June threatened to shake the basic
political base of power, Chen Yun and Deng Xiaoping stood firmly together to defend

23. For an account of these special economic zones and how officials in charge of them viewed Chen Yun see Ezra
F. Vogel, One Step Ahead in China: Guangdong under Reform (Harvard University Press, 1989).

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the Party and the government. Chen Yun firmly supported Deng’s efforts to bring
order in and around Tiananmen and he accepted Deng’s choice of Jiang Zemin as the
new leader and of Hu Jintao as the heir apparent.
Within a few months following June 1989, order was restored, and the concerns of
Chen Yun and Deng again began to diverge. Chen had departed from the front line in
late 1987 and Deng in late 1989, but they remained deeply concerned with basic
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policies. Deng was worried about the loss of momentum after the Tiananmen crisis
and wanted to push forward more rapidly. In early 1992, Deng took his southern
journey to mobilize support for moving forward more quickly. Chen Yun could not
support the lunge forward.
It is easy to draw historical conclusions after events but leaders have to act at the
time. It seems clear now that Chinese consumers, accustomed to stable prices since
1952 and concerned about the dangers of inflation, were not ready in 1988 for the
extent of Deng Xiaoping’s removal of price controls. It is too early to make
judgments about the speed with which China can absorb political reform, but China
may not have been ready in 1986 for the political reforms Deng was willing to
consider and Chen Yun was not.
Despite the problems caused by rapid growth in the 1990s, it now appears that
Deng’s bold move in his southern tour ended the period of gloom following the
Tiananmen Incident of 4 June 1989 and promoted a new spurt of growth that, despite
Chen Yun’s worries about overheating, was in balance beneficial.
In the late 1980s, Chen Yun’s statement that the economy was like a ‘bird in a
cage’, that would die if held tightly and fly away of not controlled, became for
advocates of further market opening the symbol of despicable economic
conservatism. Chen Yun was far more flexible and his contributions to Chinese
growth were far greater than free market economists generally acknowledge. Yet it is
true that if Chen Yun rather than Deng had been the representative of the Party
nucleus, he would not have been as bold in pushing the country forward. As the
in-house worrier, Chen Yun helped put the economy on a solid basis after 1978. The
world now acknowledges the enormous success of China’s policy of reform and
opening. Inside policy circles in Beijing, Chen Yun is greatly admired for his
successes in guiding the economy, his dedication to the Party, his courage in speaking
the truth, his loyalty to friends, and the modesty of his family’s life style. Historians
may yet conclude that the restraints provided by the loyal opposition of Chen Yun, as
frustrating as they were for those who wanted to move boldly forward, made in
balance a valuable contribution to the success of reform and opening.

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