Following the death of Mao in September 1976 and the
coup d'état against the radical
Gang of Four a month later, Chen became increasingly active in the country's political life. He and General
Wang Zhen petitioned Party chairman
Hua Guofeng to rehabilitate Deng Xiaoping at the March 1977 CCP CC Work Conference, but were turned down. After Deng was rehabilitated later that year, Chen led the attack on the Maoist era at the November–December 1978 CCP CC Work Conference, raising the sensitive "six issues": the purges of
Bo Yibo,
Tao Zhu,
Wang Heshou and
Peng Dehuai; the
1976 Tiananmen Incident; and,
Kang Sheng's errors. Chen raised the six issues in order to undermine Hua and his leftist supporters. Chen's intervention tipped the balance in favor of movement toward an open repudiation of the Cultural Revolution and Deng Xiaoping's promotion, in December 1978, to
de facto head of the regime. Chen laid the basis for Deng's
reform and opening up program. In July 1979, Chen Yun was named head (and Li Xiannian deputy head) of the new national Economic and Financial Commission staffed with his own allies and conservative economic planners. In April and July of that year he made further provocative statements in internal Party meetings, although their authenticity was denied (in an equivocal manner) by official spokesmen. In these Chen deplored China's lack of economic progress and the people's loss of confidence in the Party. In April he criticized the luxurious life of Party leaders (including himself), and said if he had known in the period before the liberation what the past ten-some years would be like (that is, the Cultural Revolution period), he would have defected to Chiang Kai-shek. He deplored Mao's dictatorial ways and implied, although not very strongly, that the Party should take a milder line against dissidents. If "Lin Biao and the Gang of Four; that is, the radical leftists" had been able to assure the people food and clothing, he said, they would not have been so easy to overthrow. In July, Chen developed these themes in another exposition (which also included some sarcastic observations on the late chairman's taste in literature). Chen said: "We say the old dynasties and the
KMT 'ruled' the country, but talk instead of the 'leadership' of the Communist Party. But the Party is in fact a ruling party, and if it wishes to keep its position it must also keep the support of the people. It should not float above the masses but should live among them as their servants. Both the welfare of the people and the Party's ruling position require that the Party shrink the distance between itself and the people." The old dynasties, Chen said, knew the value of a policy of yielding or retreating from untenable positions. The Party has to be able to step back from its past practices: in economy, culture, education, science, and ideology. Without compromising the basic principle of socialism, Chen believed that the Party must accommodate, for the time being, co-existence with aspects of capitalism. But all of this, Chen added, must be done carefully: otherwise China would be in danger of abandoning socialism and restoring capitalism. These pronouncements presaged the major reorientation of Chinese communism in the reform movement.
Role in the reform and opening up Though Deng Xiaoping is credited as the architect of modern China's reform and opening up, Chen Yun contributed much to the strategy adopted by Deng, and Chen was more directly involved in the details of its planning and construction. A key feature of the reform was to use the market to allocate resources, within the scope of an overall plan. The reforms of the early 1980s were, in effect, the implementation, finally, of the program Chen had outlined in the mid-1950s. Chen called this the "
birdcage economy". According to Chen, "the cage is the plan, and it may be large or small. But within the cage the bird [the economy] is free to fly as he wishes." In 1981 a rival "Financial and Economic Leading Group" was established under
Zhao Ziyang and staffed by a balanced mix of economic planners. In 1982 Chen Yun, who was 77 years old, stepped down from the Politburo and Central Committee and served as chairman of the new
Central Advisory Commission, an institution set up to provide a place for leadership of the founding generation to remain involved in public affairs. During the 1980s, Chen was very much involved in policy discussions. In the beginning and as one of the major architects for the
reform and opening up, he supported Deng and the liberal market reforms that had been so successful in agriculture to urban areas and the industrial sector. Moreover, he still posited for the state to retain an active role in market development and planning, a policy that would influence future generations of leadership, including Jiang Zemin, Hu Jintao, and Xi Jinping. He played an active role in the "
Anti-Spiritual Pollution Campaign" organised in late 1983, to help safeguard China's political status quo and domestic stability. Chen Yun was widely admired and respected for striking a balance between excessive laissez faire capitalism and retaining state leadership in guiding China's market economy. Deng and Chen's reforms and foresight helped make generations of Chinese become richer since the days of Mao's Cultural Revolution, as well as propel China into becoming one of the top economies in the world (number one by PPP and number two by nominal GDP). The government's first response to inflation was to issue bonuses to workers in state-owned enterprises, to help make up for the price increases. Chen Yun argued that, if there were to be such bonuses, they should be gauged to increased productivity. In practice, the bonuses were universal throughout the state sector and had the same economic effect as if the government had simply printed more money. Because Chinese farmers were not eligible for bonuses since they were not technically state employees, China's agricultural sector, which had prospered in the first stage of the reform, was especially damaged by inflation. Chen's theory had been that the market should supplement the plan. In the context of radical Maoism this made him seem like a social democratic proponent of
market socialism. It turned out, however, that Chen meant exactly what he had said. He was much less enthusiastic about the market than Deng Xiaoping and Deng's younger colleagues. Although in his "secret" pronouncements of 1979 Chen had shown an unusual personal disdain for Mao, he also indicated he shared the late chairman's worries that China would abandon socialism and revert to capitalism. Chen was skeptical regarding the
special economic zones (SEZ), viewing them as a non-socialist experiment. Chen viewed the development of a
socialist market economy as unscientific and unrealistic. During the 1980s Chen emerged as the main figure among the more hard-line opponents of reform. He supported the vigorous campaign in the early 1980s against the "three kinds of people", a general purge of all those who had been identified with radical factions during the Cultural Revolution. He made common cause with conservatives among other Party elders. During the reform era Chen refused to meet with foreigners. Chen never visited the new SEZs. In a memorial tribute to Li Xiannian, an old colleague from the economic system (and, like Chen, one of the few real proletarians among the first generation of Party leaders), Chen stated that he was not necessarily opposed to everything about the SEZs. While Chen became the moral leader of the conservative opposition to Deng Xiaoping, he did not challenge Deng's personal primacy as head of regime. Although Zhao Ziyang's promotion of political and economic reform made Zhao one of Chen's main political rivals, Chen was one of the Party elders active in the 1980s who Zhao respected most. In
Zhao's autobiography, Chen was one of the few elders who Zhao referred to regularly as a "comrade". Before implementing new policies, Zhao made a habit of visiting Chen, in order to solicit Chen's advice and attempt to gain Chen's approval. In the event that Zhao failed to gain Chen's approval, Zhao would then normally attempt to fall back on the favor of Deng Xiaoping in order to promote reforms.
Tiananmen Square protests In 1989, Chen, alongside Deng Xiaoping,
Li Peng, and others, was among the Party elders responsible for making the key decisions concerning the student-led
Tiananmen Square protests. There is no evidence that Chen indulged in diatribes against the students or actively advocated their violent repression. While Chen was opposed to the violent suppression of the students, he gave his support to the military once the action had begun. Chen agreed that Zhao Ziyang should be replaced as the formal head of the Party, and he endorsed Li Xiannian's nomination of
Jiang Zemin as the new Party General Secretary. == Retirement and death ==