In its early years, for historic, political and geographic reasons, the New Democracy was economically heavily dependent on the Soviet Union and its East European allies who gave very real support in the form of US$300 million in credit over five years at 1% interest, 12,300 technical experts to work in China, and taking some 14,000 Chinese students and 38,000 apprentices for training. Volumes of technical information that would have cost billions of US$ on the world market were freely given, and joint design teams worked on all major and important projects.
Those at the work face across many different Government Ministries exerted huge pressure for a comprehensive, planned, state-controlled economy as the best and most rational way forward for China to overcome her mind-boggling problems. An important goal for the First Five Year Plan (1st FYP) was to expand and integrate the separate economies that had developed in China largely due to the Sino-Japanese War: the heavy industries of Manchuria, the light industries, textiles and consumer goods of the coastal regions, and the huge agrarian areas of inland China. For the latter a special effort was needed to repair canals and drainage systems destroyed by the Imperial Japanese and KMT armies.[1]
After the outbreak of the Korean War, the new regime’s economic and military dependence on the Soviet Union deepened. Over 1952-53 the Soviet Union continued to work closely with the PRC especially in detailing the final drafts of the 1st FYP, which had a Russian-style emphasis on heavy industry. The increased control over society and the economy required to wage the Korean War successfully had created a dynamic which inevitably led first to the Party agreeing a “general line for transition to socialism” in June 1953, and then to its public pronouncement.
The signing of the Korean Armistice in 1953 meant a big reduction in military expenditure and the release of resources for accelerated economic expansion. A State Planning Commission determined production targets and material allocation. The distribution of key commodities was controlled according to a central plan, not market forces. Products were distributed to achieve state planning objectives, not private profit.
The introduction of the 1st FYP eliminated the contradiction between the declared and actual policies of the CCP, it extended state control to all significant areas of the economy and meant the co-ordination of the different sectors within an overall plan. As part of the “high tide of socialist transformation”, joint private-state enterprises were, in essence, nationalised, private retailers were merged into co-operative teams, and private markets in rural areas were banned. It is from the launch of the 1st FYP in October 1953, that revolutionary Marxists date the bureaucratically-deformed workers’ state in China.
The private sector of the Chinese economy was marginalised, eliminated as a significant source of production or employment, and by the end of 1956 all private industry had been nationalised or absorbed into joint enterprises. Importantly, by the end of 1956, foreign trade was fully under state control.[2]
In 1954, Zhou Enlai declared that the 1st FYP was not only to “free the productive forces of our country from the oppression of imperialism, feudalism, bureaucratic capitalism … and the shackles of capitalism” but also to remove “the limitations of small-scale production.”[3] The 1st FYP emulated the Soviet model with high rates of investment in capital intensive, large-scale industrial projects to lay the primary foundations for China’s socialist industrialisation, with agriculture providing the major source of funds.
Surprisingly, the 1st FYP was not formally approved by the National People’s Congress until 30 July 1955. This was followed in September 1955 by the publication of a report on the fulfilment of the annual plan for 1954.[4] The two-year delay in publication was due to the unexpectedly poor performance of agriculture and the need to come to a decision on how to deal with it.
In terms of overall economic growth, the 1st FYP was a stunning success. Despite the best efforts of imperialism to sabotage the plan, wages rose by a third in real terms, life expectancy rose from about 36 years in 1949 to 57 years in 1957, the proportion of children attending primary school doubled to 50%, the quality and quantity of urban housing improved significantly, and the rights of women were extended and protected in law, exemplified by the abolition of the binding of women’s feet. Famine appeared to be a thing of the past.[5]
Discussions began on the tasks to be undertaken in the 2nd FYP. Mao argued for an increase in the rate at which the state was acquiring privately-owned small-scale handicraft establishments and an even higher rate of industrial development. There followed a coded exchange of views in the press (e.g. People’s Daily) in which the State Planning Commission countered Mao by arguing for a 2nd FYP which avoided excessive investment in heavy industry and attempted a more balanced development including light industry and agriculture. The Chairman of the State Planning Commission, Kao Kang, committed suicide in August 1954 after having been purged, apparently for daring to voice his opposition to Mao. However, Kang must have had considerable support on the CC because the debate was not resolved until Mao by-passed the CC and launched the Great Leap Forward (GLF) in the spring of 1958.[6]
In September 1956, at its Eighth Party Congress, in a report given by Liu Shaoqi, the CCP declared the People’s Republic of China to be a proletarian dictatorship. There had been esoteric discussions by CCP theoreticians on ‘bourgeois rights’: whether distribution on the basis of to each according to his work was a socialist or capitalist principle. The very same topic had been discussed in the Soviet Union when in 1936, the draft of a new Soviet Constitution had been published, see Section 3.6, above. In Russia the formula had been intended to justify the extraction of the maximum labour from the workers and peasants while preserving privileges and luxuries for the Party tops. The Chinese Stalinists came to the same conclusion as their predecessors, and for the same reasons, convincing themselves that this undoubted capitalist principle was socialist, and the CCP declared China a workers’ state.[7]
One reason the CCP had delayed declaring the PRC a proletarian dictatorship was to avoid embarrassing itself. One of Mao’s supposed original and major contributions to Marxism had been the theory of the New Democracy which would last for decades and flow painlessly through to socialism. Instead, it had lasted just four years, and was consigned to the dustbin of history under the watchful eye of the PLA and an aggressive mass movement. The changes in CCP policy clearly showed that under the pressure of objective events it had been forced to take “practical measures” that when carried out, left China “standing with one foot in socialism.”[8]
12.2.1 The Peasants and the Five Year Plan
During preparatory discussions of the 1st FYP it was soon realised that the necessary investment to expand heavy industry would require an increase in agricultural production, prevention of hoarding of raw materials and an end to leakages into private consumption. There was also the need to take control of foodstuffs to ensure an adequate supply of food to the towns to feed the huge influx of peasants who would be the new industrial workers. In 1949 the city population had been 49 million, by 1956 it was nearly 100 million, and by 1961 had reached 130 million. This would necessitate urban rationing of grain and a state monopoly of trade in agricultural commodities.
As the need for agricultural produce increased, the relatively well-off farmers (the major producers of food) began to flex their political muscles, demanding greater economic autonomy. But the government was now looking in a different direction and responded by replacing the all-inclusive Village Associations with committees of selected poor and middle peasants, a reversal of the processes carried out in the liberated areas, particularly in south China, in 1947-48.[9]
It was understood by all Party tops that the 1st FYP would require wide-ranging changes for the peasantry but differences were emerging on what they should be. The division had first surfaced in July 1951 when the Party leadership in Shanxi proposed an accelerated pace towards co-operatives. This was openly criticised by Liu Shaoqi at Party meetings where Liu emphasised the “four big freedoms”: freedom for peasants to engage in trade, to hire labour, to rent land, and to make loans and charge interest. Mao had the more radical approach and by January 1953 was proposing the elimination of private ownership of the land as part of the general move against bourgeois property. However, Liu supported by Zhou Enlai, fought a rear guard action for a more gradual approach to industrialisation and a slower rate of change in the countryside.[10] The differences within the CC reached such a level that Mao sent a letter to the State Council in which he mounted (without naming names) a concentrated attack on efforts to maintain private property in the countryside.[11]
Measures to extract as much surplus as possible to fund industrialisation were announced. In August 1953, grain rationing was introduced in an attempt to limit personal consumption and ration cards (or ‘coupons’) were issued by local authorities, the smallest being for only 5 grams of rice or wheat. More importantly, the government moved to take control of the grain trade from the village level upwards which meant peasants would no longer buy or sell grain on the open market, but only from and to the state. Publically, these moves were promoted as necessary to obtain food to feed the poorest peasants and those in areas hit by natural disasters but were, in effect, an increase in agricultural tax. This monopoly was soon extended to include cotton and cotton cloth, and oil-bearing crops.[12]
To improve the efficiency of farming, and increase government access to agricultural products, the CCP encouraged peasants to organise themselves into ‘state guided’ Agricultural Producers’ Cooperatives (APCs). The peasantry had experienced the benefits of mutual-aid teams which had gone well with little recorded dissent because any extra work produced more for the peasants themselves. A directive was issued by the CC of the CCP in October 1953 proposing a move from mutual aid teams to village level co-operatives (Lower Stage APCs), in which the peasants pooled not only equipment but also their land and received a return in proportion to their input. Mao may have described these as “semi-socialist”, but they were based firmly on private ownership of the land and piecework payments. The CC proposed 20% of all peasant households be incorporated into APCs by the end of 1957.
The CC saw co-operatives as a cure-all for its agrarian problems: the poorest would be better off, there would be a greater surplus to be taken for industrial investment, and the resurgence of landholding and growth of usury would be ended. By the end of 1953 some 4,000 viable co-operatives existed.[13] A typical size was 30-50 households with small fruit and vegetable plots allowed for private use. At first most peasants really did join voluntarily because regulated co-operation meant that all team members had to carry out their fair share of the work and, in the end, this benefitted everyone. Once the projects reached a certain size or the co-operation was sufficiently complex it became the norm to hire “an intellectual” to keep records.[14]
With recovery from the devastation of the civil war there had been big increases in agricultural output during 1951 and 1952. This was a once-and-for-all increase and could not be sustained but it led to over-optimistic targets being introduced. Even with the introduction of co-operatives, the rate of increase in grain production was a modest 2% for 1953 and 1954, compared to a target of 9%. This was a serious problem for the industrial development of China. Agriculture directly supplied about 80% of raw materials for the manufacture of light industrial products, and taxes on agricultural produce supplied much of the investment for heavy industry.[15] It was clear that an agricultural economy based on near-subsistence farming produced too little surplus to fund the desired industrial development.
By the end of 1954 over 50,000 Lower Stage APCs were operating and by the end of 1955 the claimed number of such co-operatives was nearly two million, containing more than 70 million rural households.[16]
By 31 July 1955, Mao Zedong was strongly advocating an acceleration in agricultural policy and in his report to the CC, he enthusiastically called for a “high tide of social transformation in the countryside”, and ridiculed the conservatives as “women with bound feet”. After painting a picture of the masses “running” to form co-operatives he called for the inclusion of the whole of the peasantry in Higher Stage APCs by 1960; land was to be owned by the village and not individuals, all peasants worked for wages with no additional return from their input of property, tools or land. Mao saw this development as being “of a socialist nature”, because agricultural production was part of a state plan in which the great majority of industry was nationalised and there was a state monopoly of key agricultural produce.[17]
Liu Shaoqi, Deng Xiaoping, and Deng Zihui (Minister of Agriculture) argued for a more prudent policy, based on genuinely voluntary membership, to be completed by 1967, and may even have had the support of a majority on the Politburo.[18] Mao simply by-passed their objections and over the head of the Politburo, called an enlarged plenum of the CC for October 1955 and packed it with lower ranking Party officials; municipal, provincial, and regional secretaries who had previously declared themselves supporters of his line, and who outnumbered full members by about 10 to 1. The plenum strongly endorsed Mao’s proposals and agreed that co-operativisation be effectively completed in 1957.[19]
The speed at which co-operatives were created reflected not the wishes of the peasants but the desire of party cadres to please their superiors. Mao’s target was met; by the end of 1957 nearly 95% of peasant households were enrolled in Higher Stage APCs. However, in too many cases the cadres with responsibility for establishing the co-operatives behaved in rude, arbitrary, harsh and even violent ways to meet and surpass their targets. As the number of co-operatives expanded, and to accelerate the pace, some peasants were coerced: join or lose your fishpond or fruit trees or have credit withheld. This was possible because the peasants remembered the Three-Antis and Five-Antis Campaigns and the moves took place during yet another campaign to suppress traitors and counter-revolutionaries.[20]
The Lower Stage APCs had generally been welcomed but middle and rich peasants often opposed the transition to the Higher Stage because it meant they received a smaller share of the crops. In many areas the changes required coercion through mass struggle actions to force so-called counter-revolutionary peasants into acceptance. The result was a serious decline in grain production by up to one third in some co-operatives. Local cadres, who owed their positions to Beijing, saved face by not reporting the real situation. This meant state procurement levels were not reduced to match the actual harvest, and peasants went hungry. Inevitably there was resentment, general unrest and even riots in some rural areas which were suppressed under the campaign against counter-revolutionaries. Many who voiced dissent were sent to border regions for hard labour to reform their thinking.[21]
Numerous peasants sought to solve their problems by fleeing to the towns which meant fewer hands to plant and harvest the crops and an increase in the food needed for the cities. The regime responded by introducing residence permits and movement passes, making it difficult for peasants to leave their villages. Factory managers were prevented from hiring rural workers, ‘non-productive’ workers were sent into the countryside to increase the labour available for the rural ‘production front’. The government fixed the volume of output of firms, the number of workers, and the total wage bill, while banks were instructed to exercise tighter controls over each firm’s finances. Just after defining itself as the dictatorship of the proletariat, the government introduced severe wage controls which kept the lowest urban wage rate close to rural earnings to reduce costs but also, and more importantly, to dissuade peasants from moving to the cities.
On 9 August 1957, the CC of the CCP, concerned at the low level of rural productivity and the threat this posed to industrialisation, issued a directive calling for CCP cadres to go into the countryside, take part in the peasants’ daily work, and mobilise them for greater productivity. This movement, coupled with extremely good weather, produced an exceptional harvest in 1958. On Mao’s insistence, the grain harvest was reported as a record 375 million metric tons. The CC was aware that this figure was due as much to cadres exaggerating performance to curry favour, as good weather and hard work. So much exaggeration went on that the announcement of a record harvest was a political decision not a statistical measure, but one which would have catastrophic consequences.[22]
-
Lardy, R. Chinese Economic Planning, Sharpe, Inc., 1978.
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Lardy, N. Foreign Trade and Economic Reform in China, Univ. of Cambridge, 1992, p16-17.
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Zhou Enlai, Report of the Work of the Government, 23 September, 1954, FLPH.
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Shabad, T. Communist China’s Five Year Plan, Far Eastern Survey, Dec., 1955 24(12)189-191.
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Twitchett, D. and Fairbank, J. (eds) Cambridge History of China, CUP, 1987, Vol.14, p156.
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Ibid. p184.
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Kerry, T. The Mao Myth Pathfinder Press, 1977, p49.
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Lenin, V. Speech in Favour of the Resolution on the Current Situation, April 1917, CW 24:308.
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Peng Shu-tse, The CCP in Power, Monad Press, 1980, p162-166.
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Pantsov, A. and Levine, S. Mao, Simon & Schuster, 2012, p403-404.
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Mao Zedong, Refute Right Deviationist Views, 15 June 1953, w.m.org.
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Selden, M. The Political Economy of Chinese Development, East Gate Books, 1993, p127-130.
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Twitchett, and Fairbank, Op. cit. p166.
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Li, H. Village China Under Socialism and Reform, Stanford U.P., 2009, p25.
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Twitchett, and Fairbank, Op. cit. p162.
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Chatham House, From Land Reform to Communes in China, The World Today, 1959, 15(3)124-13.
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Mao Zedong, On the Cooperative Transformation of Agriculture, www.marxists.org.
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Twitchett, and Fairbank, Op. cit. p168.
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Pantsov and Levine, Op. cit., p418-420.
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Fairbank, J. The Great Chinese Revolution 1800-1985, Harper Perennial, 1987.
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Bernstein, T. Mao Zedong and the Famine of 1959-1960, The China Quarterly, No. 186, 2006, p421-445.
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Twitchett, and Fairbank, Op. cit., p366 & 379.