Deng Xiaoping inspired Western countries to expect China to change through two arrangements: “one country, two systems” and the “socialist market economy.”
However, the enforcement of the Hong Kong National Security Law under Xi Jinping destroyed the foundations of that trust.
This article examines Japan’s official development assistance to China, China’s accession to the WTO, investment by Japanese, American, and European companies, China’s emergence as the “factory of the world,” and the increasingly unavoidable decoupling of China from the international community.

July 14, 2020
The following is based on an article by Sankei Shimbun editorial writer Masumi Kawasaki titled “The End of the Deng Xiaoping Magic,” published on July 14, 2020.
Despite strong international criticism, China forced through the enforcement of the Hong Kong National Security Law in order to strengthen its control over Hong Kong.
The law effectively broke the promise that “one country, two systems” would be maintained for fifty years after Hong Kong’s return to China, until 2047.
It also marked the end of the expectation of change that Deng Xiaoping had created among Western countries.
【Opening Quotation】
Private companies from Japan, the United States, Europe, and elsewhere entered China in the belief that it would now comply with international rules, and in a remarkably short period of time they built China into the “factory of the world.”
【English Translation】
“This finally marks the end of the Deng Xiaoping magic.”
A former Japanese Foreign Ministry official who had been involved in Japan-China diplomacy for many years expressed this view.
He was referring to China’s enforcement of the Hong Kong National Security Law, which strengthened its control over Hong Kong despite criticism from the international community.
Deng Xiaoping was once China’s paramount leader.
His “magic” can be understood through two key concepts.
The first was “one country, two systems,” agreed upon with British Prime Minister Margaret Thatcher in 1984 during negotiations over Hong Kong’s return to China.
The second was the “socialist market economy,” which he emphasized in 1992 in order to accelerate once again the policy of reform and opening.
Under “one country, two systems,” Hong Kong was permitted to retain democratic institutions, including freedom of speech, even after its return to China.
Under the “socialist market economy,” China introduced a system in which prices moved according to supply and demand.
Both arrangements were inherently contradictory for communist China.
Deng Xiaoping, however, incorporated these opposing elements through a dialectical approach and presented new solutions that led Western societies to expect China to change.
After the political turmoil of the Cultural Revolution came to an end, it was Deng Xiaoping who turned China toward the policy of reform and opening, giving priority to economic growth at a crucial meeting at the end of 1978.
It was not only Japan.
During the 1980s and 1990s, Western countries also seriously believed that economic development would lead the Chinese Communist Party government to mature.
They expected China to cooperate with the international community and eventually move toward democratization.
The Japanese government provided China with official development assistance totaling nearly four trillion yen.
China joined the World Trade Organization in 2001.
Private companies from Japan, the United States, Europe, and elsewhere entered China in the belief that WTO membership would cause it to comply with international rules.
They built China into the “factory of the world” in a remarkably short period of time.
In 2010, China overtook Japan in gross domestic product and became the world’s second-largest economy.
It is impossible to know how far Deng Xiaoping, who might be described as the architect of China’s national revival, foresaw this expansion.
Apart from the expansion of its economy, however, China repeatedly betrayed the expectations of the international community.
The continued use of authoritarian rule within China is obvious, even without citing the repression of the Uyghur people.
Deng Xiaoping himself was, of course, also a leader of the Chinese Communist Party who used military force to suppress students and citizens demanding democratization during the Tiananmen Square protests of 1989.
Deng died at the age of ninety-two in February 1997, without living to see Hong Kong’s return to China in July of that year.
Xi Jinping, General Secretary of the Chinese Communist Party and President of China, is said to model his rule more closely on the era of Mao Zedong than on that of Deng Xiaoping.
By unilaterally applying a law enacted by China to Hong Kong, Xi Jinping destroyed Deng Xiaoping’s “one country, two systems” arrangement with his own hands.
The enforcement of the Hong Kong National Security Law also meant that confidence in the “socialist market economy” had collapsed.
China’s economic growth was possible because Deng Xiaoping had promised institutional transparency and cooperation with the international community.
Within China, there was also an implicit understanding that the people would accept one-party rule by the Chinese Communist Party in return for economic growth, expanded employment, and greater personal prosperity.
Hong Kong’s “one country, two systems” framework was supposed to be guaranteed for fifty years after the handover, until 2047.
That promise was effectively discarded.
Who can trust a country that unilaterally overturns even its international commitments?
From this point onward, which governments and which private companies will continue to place their trust in China?
The international community cannot be expected to permit China to maintain its self-righteous position indefinitely.
Under these circumstances, it appears unavoidable that the decoupling, or separation, of China from the international community will proceed rapidly.