Psychological Shock and Value Reconstruction of Urban Residents in Early Reform and Opening-Up China

As the most significant turning point in contemporary Chinese history, reform and opening-up profoundly influenced the psychological state and values of urban residents. This paper focuses on the period from 1978 to 1992 to explore the psychological shock experienced by urban residents and their value reconstruction process during the dramatic social transformation in the early stage of reform and opening-up. The research finds that economic system reform shattered the stable expectations of the planned economy era, generating intense psychological conflicts and cognitive dissonance among urban residents between traditional collectivist values and emerging individual interest pursuits. This psychological shock manifested as anxiety about future uncertainty, identity crises, and confusion in moral judgment standards. On this basis, urban residents gradually completed the transformation from a single value orientation to coexisting multiple values. The legitimization of material pursuits, the awakening of individual rights consciousness, and the formation of competitive concepts became the core content of value reconstruction. This study reveals the internal mechanism of psychological adaptation and value change during social transition periods, providing a historical perspective for understanding the psychological characteristics of contemporary Chinese urban residents.

• Reform and Opening-Up
• Urban Residents
• Psychological Shock
• Value Reconstruction
• Social Transformation

1. Introduction

The Third Plenary Session of the 11th Central Committee of the Communist Party of China (CPC) in 1978 initiated the historical process of reform and opening-up. This great transformation not only reshaped China’s economic and social structure but also touched the psychological world and value system of urban residents at a deeper level. During the early stage of reform and opening-up, the transition from the planned economy system to the socialist market economy system broke the stable life expectations and thinking patterns that urban residents had formed over a long period. From the “iron rice bowl” to layoffs and diversion, from unified distribution to independent career selection, from collective interests above all to recognition of legitimate individual interests, these earth-shaking changes stirred up huge psychological waves in urban society. Domestic and foreign scholars’ research on this period has mostly focused on the effectiveness of economic reform, changes in social structure, and the logic of policy evolution, with relatively insufficient attention to the psychological reactions and value adaptation processes of urban residents at the micro level. In fact, any macro social transformation must ultimately be implemented in individual cognitive reconstruction and behavioral adjustment. As direct participants and stakeholders in reform and opening-up, urban residents’ psychological states and value orientations constitute an important dimension for understanding this great transformation. In recent years, with the deepening of historical sociology and cultural psychology research, scholars have begun to pay attention to individual psychological experiences and value changes during transition periods, believing that psychological shock is an inevitable product of rapid social change, while value reconstruction is an active response by individuals to adapt to new environments ([5]). This paper focuses on 1978-1992, the initial and accelerating stage of reform and opening-up, attempting to systematically examine the psychological impact, cognitive adjustment, and value reshaping processes experienced by urban residents during this period through historical documents, oral historical materials, and relevant research findings, revealing the interaction mechanism between macro social change and micro psychological adaptation, and providing a historical mirror for contemporary Chinese urban social psychology research.

2. Research Methods and Analytical Framework

This study employs a mixed-method approach combining historical document analysis and oral history. Primary sources include policy documents from the State Council Archives (n = 47), workplace bulletins from Shanghai and Beijing municipal archives (n = 83), and contemporary newspaper articles from People’s Daily (1978-1992). Oral histories were collected from 28 urban residents (aged 55-80 at interview time) selected through purposive sampling across three cities (Beijing, Shanghai, Guangzhou), representing workers, intellectuals, and early entrepreneurs. Data analysis followed thematic coding procedures, identifying recurring patterns of psychological response and value shifts. For analytical purposes, we operationally define “psychological shock” as cognitive and emotional disruptions resulting from rapid institutional change (following Festinger’s cognitive dissonance theory, 1957), and “value reconstruction” as the process whereby individuals reformulate normative frameworks to align with new socioeconomic realities (drawing on Inglehart’s value change theory, 1977).

3. Manifestations of Psychological Shock among Urban Residents in the Early Reform and Opening-Up Period

3.1. Wavering and Confusion of Traditional Values

Before reform and opening-up, Chinese urban residents formed a relatively unified value system under the long-term planned economy system and collectivist education. This system took collective interests above individual interests, obedience to organizational distribution, and the pursuit of spiritual satisfaction as core characteristics. The initiation of reform and opening-up broke the stability of this value system. The introduction of market mechanisms legitimized individual interests, and some people rapidly became wealthy through individual operations and contract management. This phenomenon triggered a strong value shock in urban society. Many urban residents fell into deep confusion: what was previously criticized as “individualism” and “profit-seeking” suddenly became acceptable and even encouraged, while the once-proud “selfless dedication” and “contentment with poverty” seemed no longer valued. This rapid reversal of value standards caused people to experience strong cognitive dissonance, and the original moral coordinate system began to waver, as the people-oriented urbanization approach fundamentally challenged traditional welfare distribution patterns ([1]).

Figure 1

Figure 1. Multi-dimensional framework of psychological shock.

This rapid reversal of value standards caused people to experience strong cognitive dissonance, and the original moral coordinate system began to waver. Particularly for veteran workers who had worked within the unit system for many years, the behavioral guidelines they had followed—“listening to the Party, obeying organizational arrangements, and disregarding personal gains and losses”—suddenly lost certainty. Facing the opportunities and competition brought by the market economy, they felt both unadapted and had to re-examine their value beliefs ([6]). This psychological shock manifested in multiple interconnected dimensions, as illustrated inFigure 1, forming a complex web of anxiety encompassing employment security, social status, and future expectations.

3.2. Anxiety and Unease Brought by Social Transformation

Economic system reform in the early stage of reform and opening-up broke urban residents’ stable expectations of the future, generating widespread uncertainty anxiety. In the planned economy era, although urban residents’ lives were materially scarce, they had a high degree of predictability: jobs were uniformly distributed by the state, wages were paid according to grade, housing was provided by work units, and retirement was guaranteed. This “cradle to grave” security system gave people a strong sense of security. After reform and opening-up, reform measures such as enterprise contract systems, labor contract systems, and housing commercialization were successively introduced, breaking the original “iron rice bowl” and “big pot rice.” Urban residents began to face unprecedented risks such as unemployment, income fluctuations, and housing shortages ([15]). This uncertainty was particularly evident in the mid-to-late 1980s, when state-owned enterprise reform entered deep waters. Many enterprises began to implement optimal combinations and staff reduction for efficiency improvement, and some workers faced layoffs or furloughs. For urban residents accustomed to stable lives, this change brought a huge psychological impact. Negative emotions such as anxiety, panic, and confusion spread in urban society. People worried about becoming “victims” of reform and being unable to adapt to the new competitive environment. This anxiety to some extent affected the social psychological foundation of reform ([4]). One interviewed factory worker recalled: “In 1986, when our textile mill announced the first round of layoffs, I couldn’t sleep for months. My whole identity was tied to my work unit—without it, I didn’t know who I was. The guaranteed job that my parents envied had suddenly become uncertain” (Interview, Shanghai resident, 2020). This testimony vividly illustrates how institutional change penetrated individual psychological worlds.

3.3. Psychological Contradictions Amid Conflicts between Old and New Concepts

In the early stage of reform and opening-up, the fierce collision between old and new concepts plunged urban residents into deep psychological contradictions. On one hand, the development of the market economy and expansion of opening-up brought new ideological concepts. Individual values, competitive consciousness, and efficiency concepts were gradually accepted and recognized. Urban residents began to realize the importance of individual struggle and desired to improve their living conditions through their own efforts. On the other hand, the long-formed collectivist values and egalitarian thoughts remained deeply rooted. Many people still identified with the egalitarian concept that \“everyone should be the same\” deep in their hearts, feeling uncomfortable or even resistant to the widening wealth gap ([2]).

This conflict between old and new concepts was visible everywhere in daily life: some people criticized \“money-oriented\” attitudes while envying those who became wealthy through business; some insisted on \“not forgetting one’s roots\” while trying every means to seek better development opportunities for their children. This contradictory mentality was particularly evident in attitudes toward individual business owners and private entrepreneurs. People envied their material wealth while having doubts about their wealth acquisition methods, worrying that labels like \“exploitation\” and \“speculation\” might be reattached at any time. This psychological contradiction caused hesitation and wavering in behavior. Some people wanted to seize reform and opening-up opportunities while worrying about policy uncertainty. This \“wanting but fearing\” contradictory mentality became a typical portrayal of urban residents’ psychological state in the early stage of reform and opening-up ([14]).

4. Motivations and Mechanisms of Value Reconstruction

4.1. Impact of Economic System Reform

Economic system reform was the most direct and powerful external force driving urban residents’ value reconstruction. After 1978, China began to transition from a highly centralized planned economy system to a socialist market economy system. This transition fundamentally changed resource allocation methods and interest distribution patterns, producing a revolutionary impact on urban residents’ values. The introduction of market mechanisms broke the past egalitarian distribution method of “same pay regardless of work done.” New distribution principles such as distribution according to work and distribution according to production factors were gradually established. Individual income became directly linked to work performance, which made urban residents begin to re-recognize the value of labor and the significance of individual effort. The implementation of measures such as enterprise contract responsibility systems and shareholding system reforms enabled some people to accumulate wealth through legal operations. Their successful demonstration effect stimulated more urban residents’ desire for material pursuits ([13]).

Economic system reform also brought changes to employment systems. The promotion of new systems such as labor contracts, talent mobility, and two-way selection broke the past closed system of “units running society.” Urban residents began to realize the importance of individual ability and market competition, and concepts of independent career selection and self-development gradually formed. The economic base determines the superstructure. Profound changes in the economic system inevitably triggered corresponding adjustments in values. Driven by economic interests, urban residents began to re-examine the relationships between individuals and collectives, material and spiritual, and competition and cooperation. The authority of traditional values was challenged, and new value orientations gradually emerged in practice. Figure 2 presents the systematic framework of value reconstruction mechanisms, demonstrating how economic reform, ideological adjustment, social mobility, and opening-up policies converged to reshape urban residents’ value systems through multiple pathways and feedback loops.

Figure 2

Figure 2. Systematic framework of value reconstruction mechanisms.

4.2. Adjustment and Transformation of Ideology

In the early stage of reform and opening-up, the Communist Party of China (CPC) and the government made major adjustments in the ideological field, providing an important ideological foundation and policy space for urban residents’ value reconstruction. The 1978 discussion on the criterion of truth broke the situation of rigid thinking and established that practice is the sole criterion for testing truth, laying a theoretical foundation for emancipating the mind and reform and opening-up. Subsequently, the Party and state gradually adjusted their understanding of issues such as individual interests, commodity economy, and private economy. From initial cautious affirmation to explicit support, the loosening of ideology provided legitimacy for urban residents’ value adjustment ([8]). The 1982 Constitution explicitly protected citizens’ legal private property. The 13th Party Congress in 1987 proposed the theory of the primary stage of socialism. Deng Xiaoping’s southern tour speech in 1992 further clarified the debate over “socialist or capitalist orientation.” These major breakthroughs in ideology greatly emancipated urban residents’ thinking, enabling people to dare to break through the constraints of traditional concepts and courageously pursue reasonable individual interests.

The transformation of official ideology was also reflected in the promotion of advanced models. From the past singular emphasis on “spirit of dedication” to beginning to affirm “enrichment through labor” and “enrichment through science and technology,” from establishing labor models like “Iron Man Wang Jinxi” to commending “reform pioneers” and “entrepreneurial models,” this change in orientation conveyed a clear signal to society: individual struggle and the pursuit of wealth were not only permitted but worthy of encouragement. This ideological shift was accompanied by profound changes in urban governance structures, as the state adopted more flexible and market-responsive approaches while maintaining strategic control over development trajectories ([12]). This played an important guiding and shaping role in urban residents’ value reconstruction.

4.3. Impact of Accelerated Social Mobility

Reform and opening-up broke the relatively fixed social structure of the past and accelerated social mobility, which had a profound impact on urban residents’ value reconstruction. In the planned economy era, urban residents’ social status was mainly determined by family background, political identity, and work unit rank. The role of individual effort in changing social status was very limited. This “status fixation” social structure reinforced value orientations of being content with the status quo and obeying fate. After reform and opening-up, factors such as education, individual ability, and market competition played a significantly enhanced role in acquiring social status. A group of people achieved upward social mobility through studying, business, and entrepreneurship. Channels for class mobility were opened ([9]).

The possibility of this “vertical mobility” greatly stimulated urban residents’ ambition and motivation to advance. People began to believe that individual struggle could change destiny. Modern value concepts such as competitive consciousness, achievement motivation, and self-actualization needs were strengthened. The implementation of opening-up policies also promoted “horizontal mobility.” A large number of urban residents had opportunities to access foreign advanced technology, management experience, and lifestyles. This cross-cultural exchange and comparison enabled people to broaden their horizons and update their concepts. Traditional “small farmer consciousness” and “closed mentality” were impacted. Modern consciousness such as openness, inclusiveness, and innovation gradually formed. As shown inFigure 3, urban residents showed differentiation trends across multiple value dimensions. Accelerated social mobility also changed the nature of interpersonal relationships. The past “acquaintance society” based on work units began to transform into a “contract society” linked by markets. People’s scope of interaction expanded and interaction methods diversified. This change in social relationship networks prompted urban residents to rethink relationships between individuals and others, and between individuals and society. Traditional personal relationship society values were gradually supplemented by modern rule of law concepts and contract spirit ([15]).

Figure 3

Figure 3. Trend of value diversification (1978-1992).

5. Main Manifestations of Urban Residents’ Value Reconstruction

5.1. Prominence of Material Pursuits and Individual Interests

The most significant manifestation of urban residents’ value reconstruction in the early stage of reform and opening-up was the prominence of material pursuits and individual interest consciousness. In the planned economy era, official ideology emphasized “spirit first” and “public over private.” Material desires and individual interest pursuits were criticized as “bourgeois thought,” and urban residents dared not express their yearning for material wealth in public. After reform and opening-up, with the advancement of economic system reform and ideological adjustment, pursuing improvement in material life and maximization of individual interests gradually became socially recognized legitimate behavior. The policy orientation of “letting some people get rich first” clearly conveyed an encouraging signal for wealth accumulation. Urban residents began to openly discuss topics such as income, housing, and consumption. This policy created a new innovation ecosystem in cities, where the concentration of resources and talents fostered entrepreneurial activities and technological advancement, fundamentally reshaping urban economic landscapes ([11]). The emergence of new terms like “ten-thousand-yuan household” and “wealthy person” reflected society’s new attitude toward wealth ([10]). The 1984 State Council Document No. 4 explicitly stated: “We should encourage some people and regions to prosper first through hard work,” marking official endorsement of wealth accumulation. This policy shift provided institutional legitimacy for individual material pursuits that had been ideologically suppressed for decades. In value orientation, materialism gradually occupied an important position. People increasingly valued economic factors in career selection, mate selection, and social interaction.

This value transformation was particularly evident between generations: while the older generation of urban residents began to accept the legitimacy of material pursuits, they still retained identification with “hardship and plain living” in their hearts; the younger generation growing up after reform and opening-up more directly expressed pursuit of material enjoyment. They regarded personal consumption as a legitimate right, with significantly decreased identification with the “spirit of dedication” and “collective interests”. This generational difference in values often caused conflicts within families, but the overall trend was that material pursuits and individual interest consciousness increasingly became important components of urban residents’ value systems. This marked the transformation of Chinese urban society from “survival-oriented” values to “development-oriented” values.

5.2. Formation of Diversified Value Orientations

Reform and opening-up broke the past single, unified value pattern. Urban residents’ value orientations showed increasingly obvious diversification characteristics. In the planned economy era, the state shaped relatively consistent values among urban residents through powerful ideological control and tight management of the unit system. People had a high degree of homogeneity in ideals and beliefs, life pursuits, and moral standards. After reform and opening-up, with the diversification of economic ownership, flexibility of employment forms, and diversification of information channels, the social environment in which urban residents lived underwent fundamental changes. Different social groups formed different value judgments based on their respective interest positions and life experiences ([13]).

Different groups such as workers within the system, individual business owners, private entrepreneurs, intellectuals, and laid-off workers showed obvious value differences in their attitudes toward the market economy, wealth gaps, and social equity. The widening income gap between urban and rural residents further complicated this value differentiation, as economic reforms created new forms of inequality that challenged traditional egalitarian beliefs ([3]). This value diversification was also manifested in the complexity of individual internal value orientations. The same person might simultaneously hold seemingly contradictory values such as tradition and modernity, collectivism and individualism, material pursuit and spiritual pursuit, activating different value tendencies in different situations ([8]). The formation of value diversification was an inevitable phenomenon during social transition periods. It reflected the transformation of Chinese urban society from a “holistic society” to a “differentiated society.” Although this diversification brought certain value conflicts and social friction in the initial stage, in the long run, it provided an ideological foundation for urban society’s vitality and innovation.

5.3. Awakening of Modernization Consciousness

Another important manifestation of urban residents’ value reconstruction in the early stage of reform and opening-up was the awakening of modernization consciousness, including the formation and strengthening of a series of modern value orientations such as efficiency concepts, competitive consciousness, rule of law concepts, and civic consciousness. In the planned economy era, due to the lack of market competition and incentive mechanisms, urban residents’ work efficiency was generally low. Phenomena like “slacking off at work” and “big pot rice” were serious, and time concepts and efficiency consciousness were weak. After reform and opening-up, the introduction of the market economy made the concept that “time is money, efficiency is life” deeply rooted in people’s hearts. Urban residents began to value work efficiency and pursue economic benefits. This enhanced efficiency consciousness greatly improved social productivity ([9]).

Figure 4

Figure 4. Phased adaptation model of urban residents during the reform period.

The awakening of competitive consciousness was another important aspect of modernization consciousness. The essence of the market economy is competitive economy. Reform and opening-up broke the past egalitarian pattern of “eating from the big pot” and introduced competitive mechanisms into various fields such as employment, distribution, and promotion. Urban residents gradually realized that only by continuously improving themselves in competition could they remain invincible. The psychological process from initial resistance to gradual acceptance to active participation in competition reflected urban residents’ transformation into modern market subjects ([15]). As shown inFigure 4, modernization consciousness showed a differentiated distribution among different age groups. The enhancement of rule of law concepts and civic consciousness was also an important change during this period. With the advancement of legal system construction and the awakening of citizen rights consciousness, urban residents began to use legal means to safeguard their own rights and interests. Consciousness of supervising government behavior was enhanced, and desires for political participation increased. This transformation from “subject consciousness” to “civic consciousness” marked the modernization of urban residents’ political values. The awakening of modernization consciousness was also reflected in changes in lifestyles and consumption concepts. Urban residents began to pursue quality of life and value leisure and entertainment. Consumption concepts transformed from “thrift and saving” to “moderate consumption.” These changes together constituted a vivid picture of urban residents’ value modernization in the early stage of reform and opening-up ([7]).

6. Limitations

Several limitations warrant acknowledgment. First, oral history data may suffer from recall bias, as interviewees retrospectively interpret experiences through current perspectives. Second, our sources predominantly reflect urban experiences in coastal cities; inland and smaller urban centers may exhibit different patterns. Third, this study’s qualitative approach illuminates processes but cannot quantify the prevalence of specific psychological responses across the urban population. Fourth, the 14-year timeframe obscures sub-period variations and regional heterogeneity in reform implementation. Future research employing contemporaneous survey data and broader geographic sampling would complement these findings.

7. Conclusion

The psychological shock and value reconstruction experienced by Chinese urban residents in the early stage of reform and opening-up was a profound social psychological transformation whose impact continues to this day. During this period, under the multiple impacts of economic system transition, ideological adjustment, and social structure change, urban residents experienced a difficult process from the wavering of traditional values to the generation of new values. Psychological shock manifested as anxiety about the future, confusion in identity recognition, and fierce conflicts between old and new concepts. Although these negative emotions brought suffering to individuals, they also became the internal driving force for value reconstruction. Value reconstruction manifested as the legitimization of material pursuits, diversification of value orientations, and awakening of modernization consciousness. These changes marked the historical transformation of Chinese urban society from tradition to modernity, from closure to openness, from singularity to plurality.

These findings resonate with transition experiences documented in post-Soviet and Eastern European contexts, where rapid marketization similarly generated cognitive dissonance and value pluralism. However, China’s case exhibits distinctive features: the Communist Party maintained ideological control while selectively liberalizing economic thought, creating a “bounded” value transformation absent in Soviet bloc transitions. Additionally, gradual reform allowed psychological adaptation to proceed incrementally, potentially reducing the social trauma observed in shock-therapy transitions. This comparison suggests that state-managed ideological adjustment may mitigate the psychological costs of marketization, though at the expense of value liberalization.

Looking back at this history, we can see that value change was not simply “Westernization” or “loss of tradition” but rather rational choices and cultural adaptations made by urban residents based on their own interests and life experiences under specific historical conditions. Although this process was full of twists and difficulties, it was generally positive and progressive. It laid a social psychological foundation for deepening reform and opening-up and accumulated valuable spiritual wealth for the prosperity and development of contemporary Chinese urban society. Standing at a new historical starting point, deeply understanding the psychological shock and value reconstruction of urban residents in the early stage of reform and opening-up not only helps us more comprehensively understand the historical process of China’s social transformation but also provides beneficial enlightenment for addressing current social psychological issues.

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