When the Berlin Wall fell in 1989, it not only shook the foundations of the Communist empire in eastern Europe and the erstwhile Soviet Union. Its effect was also felt in faraway India and China, but in inverse ways.
The Wall’s fall was one of the earliest intimations of the collapse of the Soviet empire, which was one of a series of global events that pushed India to the brink of bankruptcy in 1991 and forced far-reaching economic reforms that economically liberated India, unleashed entrepreneurial forces and propelled it into a higher orbit of growth. “We were in a sense a part of a historic movement,” recalls Gurcharan Das, former CEO of Proctor & Gamble India and author of India Unbound. “You have to be cautious with history in ascribing single causes, but it’s true that the fall of the Berlin Wall played a part — in at least a negative sense — with the initiation of economic reforms in 1991.”
After the Wall fell, he adds, “much of the arrogance and confidence of the Left parties in India diminished,” which wore down their resistance to the reform process. “The steam had gone out of the Left parties.”
In China, on the other hand, the fall of the Wall served, however indirectly, to consolidate the Communist Party’s hold on power, which had been shaken barely six months earlier by the pro-democracy uprising at Beijing’s Tiananmen Square.
“In history, there’s no point in dwelling on what might have been,” says Gao Wenqian, senior policy advisor at the NGO Human Rights in China, who went into exile in the US after the Tiananmen Square crackdown. “Even so, I feel that Chinese political history would have been vastly different if the Tiananmen Square uprising had happened after the fall of the Berlin Wall.”
Gao recalls that after the Tiananmen Square uprising, “the illegitimacy of the Chinese Communist Party was exposed before the world”. And when the Wall fell, the Chinese government was rattled, “in the same way that when a rabbit dies, the fox grieves, knowing they share the same fate”.
But the Communist Party subsequently changed economic track, and gradually won over the West by opening itself up, “which enabled the Chinese government to get off lightly,” he adds.
Economically, the Wall’s fall “sent a strong message to China that big-bang reforms don’t work, only gradualism works,” says RBS economist Ben Simpfendorfer. “The chaos that
resulted from big-bang market reforms in the Soviet Union was very unappealing to China.”
Additionally, over the next decade, as eastern Europe was reintegrated into the global economy, “it provided China and other Asian exporters a large, new export market for cheap consumer goods.”
Gao, however, reckons that although China may have survived the crisis of 1989, its “crony capitalism” model is at the root of all of China’s social problems, “which are building up for an explosion”. To this day, he adds, “there is still a ‘Berlin Wall’ that’s waiting to fall in China. And Chinese pro-democracy activists are calling on the international community to help Chinese people push down that wall”.