The CCP had very few concrete plans for the operation of industry and what they did have came from the Soviet Union. Mao and the CCP accepted and enacted a version of the Soviet Union’s 4th Five-Year Plan (FYP) of 1946-1950. The Soviet plans were copied because of the lack of relevant experience within the CCP, because the Soviet Union had suffered almost as much in the war as had China and was demonstrating a rapid recovery, and because there was no other source of such help.
The PRC’s industrial management model, primarily used in heavy industry, was taken lock, stock, and barrel from the Soviet Union. The essential features of the plan were: (1) Linking economic goals and patriotism (Party members and activists would paste the factory walls with slogans and distribute leaflets urging co-workers to ever greater exertions); (2) Involving the work force in campaigns to increase production and reduce waste through work unit and factory meetings; (3) Trades unions to educate and motivate workers in how to improve their working methods; (4) Meticulous attention paid to plan fulfilment; and (5) Authority within the factory resting with the local CCP cell which had responsibility for increasing labour productivity.[29]
In private enterprises, the capitalists retained their power. In nationalised factories power was nominally invested in a Control Committee consisting of representatives of the former owners, representatives of the supervisory personnel and representatives of the workers, and chaired by the factory manager. The Regulations for the Conduct of Factory Committees stated[30] that if a decision passed by a majority of the Committee was judged by the manager to be in “conflict with the factory’s best interests” or “in conflict with the instructions of higher authority”, the manager was empowered to prohibit its implementation.
The petty-bourgeois and bureaucratic nature of the CCP, through its overwhelmingly peasant membership and its Stalinist politics, soon became obvious as was admitted in the North East Daily News;
“members of the party working in the factories lacking an understanding of the point of view of the masses, believe that the manager should take responsibility for all important decisions without asking for the opinion of the Party and the trade union, and believe that the Control Committee is superfluous and the trade unions are only meddlers.”[31]
The basic policy of the PRC was “mutual consideration for both state and private property, equal benefits for both labour and capital.” In practice this meant the property of the bureaucratic bourgeoisie was confiscated by the state while the private property of the national bourgeoisie was protected and allowed to secure ‘legal profits’ subject only to the condition of working in ‘coordination’ with the nationalised industries.
The contradictions in Mao’s programme were becoming ever more apparent. The CCP wished to construct a democratic capitalist economy, but in seizing bureaucratic capital it had taken ownership and control of virtually all heavy industry and a sizeable chunk of light industry. It wished to industrialise China, particularly the hinterland, but the magnitude of the task meant that quite spontaneously planning was being adopted as the rational way forward. It wished to leave the road of capital accumulation open to the rich peasants, landlords and national bourgeoisie but the agrarian struggle in the south kept on bursting out.[32] Mao’s New Democracy called for a mixed economy and protection of private capital but the actual direction being taken to solve Chinese capitalism’s problems was all too clearly towards state planning and control.
On 6 June 1950, Mao addressed the Central Committee and sounded the alarm, calling for a re-adjustment of relations between the state and private sectors of the economy. He endorsed moves towards a new economic policy for China. Private (light) industry was to be encouraged by the state handing out huge orders and granting generous credits. The number of state retail shops was to be substantially reduced and the number of products they could sell was to be limited. There would be a big reduction in the “tax burden” through large scale demobilisations of PLA troops. In the countryside there would be “a change from the policy of requisitioning surplus land and property to one of maintaining a rich peasant economy.” He concluded “The view … that it is possible to eliminate capitalism and realize socialism at an early date is wrong, it does not tally with our national conditions”, and to put a lid on such thoughts “the whole Party must carry out a large-scale rectification movement.”[33]
The regime attempted to proceed according to Mao’s wishes but the Korean War intervened. By the autumn of 1950, US troops led by General MacArthur and fighting under the banner of the United Nations, had pushed the North Korean army until its back was against the Chinese border. This greatly revived the KMT anti-communist guerrillas who drew around them dissident peasants. With the Korean War (China entered October 1950) the regime was compelled to mobilise broad mass support, and to modify its policies accordingly, making yet another turn in its policy towards industry and agriculture and sharpening the struggle against the urban and village bourgeoisie.[34]
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Kaple, D. Dream of a Red Factory: The Legacy of High Stalinism in China, OUP, 1994.
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Wang Fanxi, The Stalinist State in China… 1951, Socialist Review.
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Ibid.
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Anon. Labor in Revolutionary China, Fourth International, March – April 1953.
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Mao Zedong, Fight for a Fundamental Turn, June 1950, w.m.org.
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Peng Shuzi, Report on …. Op. cit.