15

p Mao Tse-tung was mistaken in his assumption that after Japan was defeated China would long be run by an “alliance of several classes”, the bourgeoisie included. Once the Soviet Army had defeated the Japanese troops in Manchuria and the area’s industry and transport had been restored with Soviet assistance, all the Japanese-owned large-scale industry, transport, banking and foreign trade in that rich area were taken over by the people’s democratic authorities. The major military-economic base built up in Manchuria (China’s North-East) did much to equip the People’s Liberation Army led by the CPC, help score the final victory over the reactionaries and US interventionists, and provide a foundation for the state sector in the national economy. Political power lay with the people’s democratic administration, which was also in command of the main economic instruments enabling it to influence the country’s entire economy.

16

In March 1949, with the main counter-revolutionary forces crushed and the country’s liberation about to be completed, the seventh Central Committee of the CPC met for its Second Plenary Session to debate the prospects of China’s development. At the session, the internationalist-minded Communists prevailed over Mao Tse-tung’s petty-bourgeois views, and the Party, relying on the newly formed popular sector in the economy and Soviet assistance, took the road of socialist construction and alliance with the Soviet Union and the People’s Democracies.

Fundamentals of the CPC General Line

p As the people’s system in China was emerging, part of the country was still in the hands of the reactionary Kuomintang and there was a continued threat of intervention by US imperialism. The popular government’s priority task was to effect a political consolidation of all the democratic forces on an anti-imperialist and anti-Kuomintang platform.

p At the same time, contradictions were also emerging within the democratic front itself, which sought to complete the struggle against imperialism, feudalism and bureaucratic capital by bringing together along with the workers and peasants the petty and middle bourgeoisie, the bourgeois intelligentsia and other social sections. Most of these contradictions, reflecting the differing class interests, involved urban problems, first of all, the future of the large industrial enterprises and other property formerly owned by foreign or bureaucratic capital. The question was whether the state was to retain its control over the large-scale industry, transport and banking which the people’s democratic authorities in Manchuria had already taken over from the Japanese and were holding as public property, and whether foreign and bureaucratic property in other areas was to be socialised as well or be handed over to private capital, something that would put China on the capitalist road of development. The choice was to decide China’s future. The decision to hand over the socialised means of production back to private capital would have meant forfeiting the main revolutionary gains and weakening the country’s democratic 17 forces. The experience of 1946-49, when the Chinese working class, with Soviet technical and economic assistance, rehabilitated industry and transport in Manchuria and turned the area into a major military stronghold and bridgehead for the PLA’s crucial offensive, showed the Chinese people that it was possible and advisable to put the people’s state in command of industry, transport and the other major branches of the national economy, and to make the popular sector the economic mainstay of the people’s democratic system.

p As for the Chinese national bourgeoisie, which claimed command over the nationalised property of the Japanese and bureaucratic capital, it was not at all equal to its claim either in technical or economic terms. In Manchuria and many other parts of Northern China, the Japanese occupation forces had exterminated most of the Chinese technical intelligentsia and the owners of firms, banks and enterprises, so that once the Japanese had gone the working people were left in virtual control of all their property, no forced expropriation being required. Many owners of large Chinese enterprises, banks and trading firms, and some of the technical intelligentsia from the trading and industrial centres in Southern, Eastern and Central China followed the Kuomintang army to Taiwan, or left the mainland for Hong Kong, Singapore and other places. The national bourgeoisie was so weak and disarrayed that it actually required outside help to run its own property, to say nothing of the large enterprises, transport and banking that once belonged to Japanese and bureaucratic capital. Some of the Chinese owners who stayed behind, especially those who had close trading links with the USA and large capitalist countries in Europe, would perhaps have liked to receive foreign economic aid from these countries, but there was no real opportunity for launching an initiative of this kind. US imperialist circles refused to accept the defeat of their puppets, the Chiang Kai-shek clique, preferring to boycott and blockade People’s China. Consequently, it was the actual state of affairs in the country at the end of the civil war that called for socialisation of the leading industries, transport, trade and finance. China’s objective need now was to follow the socialist road of development, and the working class and its vanguard, the 18 Communist Party, were the only ones that could lead the country along that way.

p Working-class leadership was also vital if the country was to complete the anti-feudal revolution and solve the agrarian problem in the interests of the toiling peasantry. The agrarian reform, which had started in the liberated areas of the North-East and was spreading out to the other areas that were being liberated, was generating fresh and complex economic problems. Landlord property rights were being abolished and land was being handed over to the poorest peasants (who accounted for about 85 per cent of all the peasant households), which meant a radical transformation of the socio-economic structure of the Chinese countryside and an end to feudal exploitation and the landowner class. At the same time, there was a sharp drop in the output of marketable farm produce, which jeopardised the food supply of the urban population. The option facing the rural areas was either to encourage the kulaks, that is, to return to the exploitation of the working farmers, albeit in another form, or to set up socialist-type co-operative farms. The second choice would mean that industry would have to help agriculture to modernise its technical basis, as otherwise the farms would be unable to increase the share of marketable produce. The working peasantry could tackle this task only if it were assisted and guided by the working class.

p In 1950-52, taking due account of the state of affairs in China, the CPC began working out its general line for the period of transition from capitalism to socialism. Its point of departure was that upon the establishment of the People’s Republic of China the revolution’s bourgeois-democratic stage was in the main complete, giving way to its second, socialist stage. The Theses for the Study and Propaganda of the CPC General Line for the Transition Period said: “The second stage of the Chinese revolution is aimed to build a socialist society in China."^^18^^ The main tasks of the transition period were to be carried out in 15 years (starting after the 1949-52 rehabilitation period). This meant that by 1967 China was to become an industrial-agrarian socialist power, increasing its labour productivity and volume of production at a rate that would enable it to “satisfy the 19 people’s daily growing needs, raise the people’s living standards, ensure the country’s reliable defence against imperialist aggression and, finally, consolidate the people’s power".^^19^^ Gradual socialist change was to be carried out in the countryside and the private industrial and trade sector over three five-year periods, so as to make socialist ownership of the means of production the sole foundation of society and the state.

In its economic policy the CPC acted on Lenin’s idea that the building of communism definitely required “the greatest possible and most strict centralisation of labour on a nationwide scale”,^^20^^ and that socialist construction was impossible without the centralised state planning of the national economy.

The CPC’s Leading Role in Chinese Society

p Mao Tse-tung once promised the bourgeoisie and other non-working classes that upon winning political power, the CPC would not seek to monopolise it or establish the dictatorship of the proletariat. His scheme, however, was thwarted by history itself. Since the reactionary classes were putting up a bitter fight against the national-democratic movement and China was in danger of losing its national independence and being once again reduced to the status of a semi-colony of US imperialism, the CPC had to establish firm political leadership over the national-democratic revolution and the working class had to act as the vanguard of the Chinese people.

p In view of the CPC’s growing political influence inside the country, its stronger international ties and the support rendered to it by the CPSU and other Communist Parties, the CPC was now able to take the responsibility for steering Chinese society and became the chief guiding force of the People’s Republic.

p As the bourgeois-democratic revolution developed into a socialist one, the CPC’s leading role became essential. The CPC Central Committee’s Theses said: “Without leadership on the part of the Communist Party of China, equipped with the Marxist-Leninist doctrine on the laws of social development and voicing the interests of the Chinese working class 20 and all the working people, it is impossible to carry out socialist industrialisation in this country and socialist reform in agriculture, the handicraft industry, and the trading and industrial enterprises now in the hands of private capital."^^21^^

p The Theses attached much importance to the establishment of Leninist rules in Party affairs and pointed out that, in view of the unfortunate wartime experience—Mao Tsetung’s personal dictatorship in the Party and terrorism and repressions against the best Communist cadres—“collective leadership is the Party’s supreme organisational principle”, and that “needless and excessive emphasis on the outstanding role of any individual whosoever should never be allowed”. The CPC aimed to foster the Party and the people in a spirit of international solidarity, friendship and co-operation with the socialist countries. The Theses said: “The whole people should be taught to see that the assistance rendered to our country by the Soviet Union and the People’s Democracies, and the powerful consolidation of the whole camp of peace, democracy and socialism ... are indispensable conditions for the victory of the cause of socialist construction in this country.”

The CPC Theses were a most important theoretical document for the ideological training and political guidance of a party without a programme of its own, which had for a long time been under the influence of Mao Tse-tung’s bourgeois-nationalist “ideas” that were hostile to Marxism-Leninism.

Main Principles of Economic Policy and Characteristics
of the PRC’s Economic Sectors

p As the people’s democratic system was gaining ground, changes and improvements were being made in the programme for economic construction. These were also recorded in legislative acts by the people’s government.

p Before starting work on the main tasks of the socialist construction programme, that is, before going over from the bourgeois-democratic to the socialist stage of the revolution, the CPC had to make the fullest use of the capitalist enterprises (in 1949, these were producing 48.7 per cent of the country’s industrial output) and, consequently, to 21 introduce state control over private-capital activity in production and circulation.

p The Common Programme of the Chinese People’s Political Consultative Conference, which laid down the goals and tasks for the rehabilitation period (1949-52), said in this context: “The basic principle for the economic construction of the People’s Republic of China is to develop production and bring about a prosperous economy through the policies of taking into account both public and private interests, of benefiting both labour and capital, of mutual aid between the city and countryside, and circulation of goods between China and abroad."^^22^^

p But “the policy of benefiting both labour and capital”, that is, trying to square their antagonistic interests, could not go on for more than a short period until the launching of wide-scale socialist construction. During the rehabilitation period, the class contradictions between labour and capital were already being exacerbated. From 1950 to 1952, the CPC had to wage a resolute struggle both against the growing capitalist tendencies in the national economy and the Right-opportunist, bourgeois deviations within the Party itself.

p The political and economic tasks of the rehabilitation period were carried out with success: the main indicators of industrial production rose to somewhat above the maximum prewar level, and the agrarian reform to abolish landowner property rights was carried out in the main—something that, to quote the Preamble to the 1954 Constitution, created the necessary conditions “for planned economic construction and gradual transition to socialism".^^23^^ At that stage, the principle of “benefiting both labour and capital" was no longer in keeping with the proclaimed goals, so that Article 4 of the Constitution said that in the new period “the People’s Republic of China, by relying on the organs of state and the social forces, and by means of socialist industrialisation and socialist transformation, ensures the gradual abolition of the systems of exploitation and the building of a socialist society”.

p The state sector became paramount in the pluralistic Chinese economy, which comprised various forms of ownership of the means of production: state, i.e., national property; 22 co-operative, i.e., collective property of the working people; individual working people’s property, and capitalist property. Article 6 of the Constitution said: “The state sector shall be the socialist sector in the economy based on the property of the whole people. It shall be the leading force in the national economy and the material basis for the state’s socialist transformations. The state shall ensure priority development for the state sector.”

p When the Constitution was promulgated in 1954, the state sector accounted for 47.1 per cent of industrial production; the state also owned about half the assets in the state-private sector, which accounted for 9.8 per cent of the country’s industrial potential. This meant that in the second year of the five-year period the state’s share in industry had already topped 50 per cent, which gave it decisive influence over material production as a whole. The state was also in control of the main raw material sources, finance, foreign trade and the key industries: ferrous and non-ferrous metallurgy, engineering, the coal, oil and many other industries.

p Private capitalist industry, on the other hand, was no longer able to carry on effectively without any state control: by the end of the rehabilitation period (1952), its share was down to 30.7 per cent, and by the end of 1956 it was almost totally transformed on mixed, state-private lines. In 1956, state-private industry produced 27.1 per cent, and the cooperative industry—17.1 per cent of total industrial output, as against 1.6 and 0.4 per cent, respectively, in 1949.

p Radical structural socio-economic changes had also taken place in agriculture. The expectations implicit in the 1950 land reform law that kulak farms could be a source of marketable grain had not materialised. The kulak farms, with their primitive machinery, were not productive enough. Besides, from the early days of the people’s power, the kulaks had taken a hostile stand to the CPC general line, refusing to hand over land to the working peasants. The land reform led to a rapid increase in the number of peasant households. PLA fighters were returning to the countryside, large-family farms were being divided up into smaller ones, etc., so that the number of peasant households went up from 105.5 million in 1950 to 116.3 million in 1953, which naturally made them smaller and market-wise less productive. As 23 the towns and workers’ settlements grew in size, and the deprived and declassed millions were involved in the economy, there was need for more foodstuffs, which, however, could not be provided in sufficient quantities by the pettycommodity poor and middle households.

Large state and co-operative farms, based on advanced machinery and the science of agronomy, were becoming an objective need for China’s agriculture.

National Economic Plans and Their Fulfilment

p The First Five-Year Plan for the development of the national economy (1953-57) and the 12-year plan for the development of agriculture (1956-67) were a practical expression of the CPC general line for the transition period, a line based on the actual state of affairs in China and agreeing with the working people’s fundamental interests.

p The First Five-Year Plan aimed to establish a primary industrial basis for socialist industrialisation and socialist change in farming, develop the handicraft industry and convert most of capitalist industry and trade into various forms of state capitalism. Under the plan, the main effort was to be concentrated on 694 industrial projects, whose backbone—156 enterprises and shops—was to be built with Soviet assistance.

p The First Five-Year Plan was being successfully fulfilled. In the five years, industrial production went up 2.3-fold, with the annual growth rate averaging 18 per cent; agricultural production increased by 24.7 per cent. Heavy industries, like engineering, electrical engineering and the chemical industry, developed at a particularly rapid pace. Production of the means of production was increasing twice as fast as that of the articles of consumption, and this made extended reproduction possible. There was a steady increase in the output of industrial goods and farm produce per head of population. These economic successes enabled the PRC Government to report to the Eighth National Congress of the CPC that, “as a decisive victory has been scored in socialist transformation, the socialist sector has assumed the predominant position in all fields of industry, agriculture, transport and commerce".^^24^^ The report of the Central 24 Committee of the CPC to the Eighth National Congress said that the question of “who will win in the struggle between socialism and capitalism"^^25^^ in China had been decided in favour of socialism.

Industrial growth led to a rapid increase in the urban population: from 57.6 million in 1949 to almost 100 million in 1957, with a marked increase in the number of industrial and office workers:

1949 (mil) 1957 (mil) Total number of industrial and office workers.............. 8 24.5 Of which: in industry............. 3 7.5 Of these: industrial workers...... 2.2 5.6

p Although the working class made up less than 1 per cent of the population, its leading role in the country’s politics and economy was becoming ever more important. Promotion of workers to leading state posts and the training of technical intelligentsia from among the workers and toiling peasants, together with the growing support from the world socialist system helped to strengthen the people’s democratic state.

p Analysing the state of affairs in the country, the Eighth National Congress of the CPC (September 1956) described the country’s political set-up as follows: “After the foundation of the People’s Republic of China, the people’s democratic dictatorship began to shoulder the task of bringing about the transition from capitalism to socialism. That is to say, it was to change the private ownership of the means of production by the bourgeoisie and the small producers into socialist, public ownership, and to eliminate in a thorough way the exploitation of man by man. Such state power, in its essence, can only be the dictatorship of the proletariat."^^26^^ In fact, however, the conclusions drawn by the Eighth Congress were rather the expression of an emerging tendency than of the actual state of things in the country. The working class’s actual influence in the organs of the people’s power and in society was still inadequate. The working class amounted to no more than 23 per cent of the entire urban 25 population engaged in production and the services. Bourgeois-nationalist parties were still in existence, and bourgeois representatives were still present in the city and regional organs of the people’s power (as deputy mayors in Peking, Shanghai, Canton and other cities) and often had more say in the economy than the representatives of the working people.

p The difficulties facing the country in the sphere of political leadership stemmed from the weakness of its material and technical basis. Despite the latter’s rapid development and the leading role which the socialist sector had come to play in the national economy, the economy as a whole was still backward. That is why the consolidation of the working people’s power and the implementation of the CPC general line depended mainly on the CPC leadership’s adherence to Marxist-Leninist principles, the internationalist assistance of the socialist countries and the world communist movement.

p Industrial development and the rapid growth of the cities produced some complex problems. In view of the shortage of skilled manpower, the state had to involve in industry many artisans and handicraftsmen, something that had a telling effect on the handicraft industries and trades, once the main sources of employment for the population at large. The number of artisans and handicraftsmen even declined: from 7,489,400 in 1952 to 6,527,700 in 1957. As large state and co-operative trading centres and department stores were being set up, millions of hawkers and small shopkeepers were driven out of business, and many of them were unable to find employment in large-scale industry (in the first five-year period, the number of workers went up by only 1.8 million). What with the big overall population increase (about 2 per cent) and the large pool of manpower inefficiently employed in the countryside, the problem of employment and rational use of able-bodied persons in material production was becoming extremely complex and important. While reducing or stemming growth in the handicrafts and the domestic trades, the main sources of employment for the swelling population, the developing large-scale and highly productive machine industry was still unable to cope with the employment problem.

26

p Farming, still handicapped by its primitive implements and the virtual lack of land organisation, could also do very little to ensure full employment. Besides, administration in agriculture during the first five-year period had some considerable failings. Nationwide planning in agriculture was in fact introduced as late as 1955, upon the launching of the massive co-operation campaign. From 1952 to 1956, state investments in agriculture were very small: 5 per cent of the total investments in 1952, 4.2 per cent in 1953, 1.9 per cent in 1954, 2.3 per cent in 1955 and 2.9 per cent in 1956. The 12-year plan for the development of agriculture was only due to be launched in 1956 (1956-67). It comprised schemes to extend the ploughland area by 33 million hectares, to build an extensive irrigation network so as to increase the watered area from 26 million hectares in 1955 to 60 million hectares in 1967, and to increase the output of chemical fertilisers to 5-6 million tons in 1962 and 15 million tons in 1967. It was also meant to produce more modern implements and machinery, to develop better strains of seed, to go over to high-yielding varieties and to carry out other agrotechnical schemes. By 1967, China was to have a grain output of 360-375 million tons as against 175 million tons in 1955.

p The CPC general line provided for gradual socio-economic reform in the countryside. The CPC Central Committee’s Theses said: “We must gradually transform the country’s agriculture on the basis of socialist principles so as to raise our backward, individual and small-scale farming to the level of advanced, collective and large-scale farming. To increase its output, ensure the needs of planned economic construction, guarantee industrialisation and effect a gradual and overall increase in the farmers’ living standards, it is necessary to make use of tractors and other farming machinery, apply chemical fertilisers, adopt scientific methods of cultivation, develop irrigation networks and machinery, extend the area of farmland and resettle farmers in large but sparsely populated areas to farm new lands."^^27^^

p But the CPC’s general line on co-operation and the development of farming was soon breached. In July 1955, Mao Tse-tung was already calling on a meeting of secretaries of regional, town and district Party committees not to link up socialist reform in agriculture with switching over to a 27 modern scientific and technical basis. He said: “Large-scale machinery can only be applied once agriculture has been co-operated."^^28^^ He also proposed renouncing the gradual change-over and completing co-operation in the main over a period of 14 months, by October 1956.

p Intensified co-operation in agriculture, as a result of which 91.9 per cent of all peasant households were by late 1956 already incorporated in producer co-operatives, with 63.2 per cent of these becoming members of higher-type co-operatives, led to a marginal increase in agricultural production owing to the application of collective effort, but these advantages could not be fully realised because of the outdated implements and the inadequate material assistance on the part of the state.

p If the co-operatives, a socialist form of farming, were to convince the toiling peasants of the advantages of socialism, the Party and the state had to take radical measures to improve the material and technical basis of agriculture, that is, to implement the CPC general line for the transition period and carry out the agrotechnical and land organisation work under the 12-year plan.

p The departure from the CPC general line on agriculture and attempts at radical changes in industrial production (raising the average annual growth rate from 15 to 30 or even 50 per cent) caused some grave difficulties throughout the national economy in the first half of 1956. The proportionate development in agriculture was upset and, in view of the inordinate growth of investment, enterprises were being started at a slower pace.

p The CPC had to go back to discussing China’s prospects. Its Eighth Congress reaffirmed the 1952 general line adopted by the 1954 National People’s Congress and laid down concrete tasks for its implementation in a second five-year period (1958-62). In accordance with the target figures for economic development, adopted by the Congress, gross industrial and agricultural output from 1957 to 1962 was to increase by 75 per cent: double in industry and up by 35 per cent in agriculture. Growth in heavy industry was to outpace that in industry as a whole, so that by the end of the five years its output was to amount to 50 per cent of total industrial output, as against 38 per cent in 1957. There 28 was also to be a marked advance in light industry, smallscale and handicraft production in particular. The CPC Central Committee’s political report said: “In the second five-year period, we must build and renovate small and medium enterprises in a planned way, while building our large enterprises, in order to ... facilitate full utilisation of our resources and existing enterprises, particularly the large number of joint state-private enterprises."^^29^^

p To increase its output, farming was “to rely on the agricultural producers’ co-operatives and the peasants to raise per mou yields by such means as building water conservancy works, applying more manure to the land, ameliorating the soil, improving seeds”, and so on. Any large-scale mechanisation of agriculture in the second five-year period was impossible: by the end of the period, machine-tilled areas were to go up to only 10 per cent of the country’s sowing areas, whereas the problem of sweeping mechanisation was to be tackled in the third five-year period and later on. So, in the second five-year period, farming was still mostly to rely on outdated implements, and state investment in farming was to be far from adequate: 10 per cent of the overall investment.

p Some of the other decisions of the Eighth Congress resolutely condemned the tendencies to insulate China from the Soviet Union and other socialist countries that had emerged within the CPC leadership. While censuring the “help-me” attitude, the striving to get everything from abroad, the Eighth Congress also rejected the mood of isolation, the attempts to split away from the world socialist system. In his report to the Congress, the Premier of the State Council said: “Another view, that we can close our doors and carry on construction on our own, is wrong, too. Needless to say, the establishment of a comprehensive industrial system in our country requires assistance of the Soviet Union and the People’s Democracies.” The CPC Rules, adopted by the Congress, said: “The Party shall develop and strengthen the friendship with the countries of the camp of peace, democracy and socialism, led by the Soviet Union, and strengthen internationalist proletarian solidarity.”

p The Congress attached particular importance to strengthening China’s political system by enhancing the CPC’s leading role, involving the masses in government and improving 29 socialist economic management. The new Rules said: “The Party shall not allow any action to violate its political line or organisational principles, any splitting activity or factionalism, arbitrariness with regard to the Party, or any moves to raise an individual above the Party collective.”

p The first eight years of the PRC showed that the new system was being moulded under the Party’s leadership into a kind of dictatorship of the proletariat; that the economy was heading along the socialist road and the successful fulfilment of the First Five-Year Plan had laid the groundwork for a socialist foundation; that private capital, though still extant, was largely operating on state-private or private petty-commodity lines; and that collectivisation in agriculture, though carried out in violation of the CPC general line and without any sound material basis, was in the main complete.

The Eighth Congress made an objective analysis of the manifested shortcomings and deviations from the general line, aiming its decisions to improve the methods of socialist economic management, largely to solve the problem of rational employment of the able-bodied population in material production through wider factory and handicraft production, and to undertake large-scale land-organisation projects in agriculture. The CPC reaffirmed the need to continue the line to strengthen friendly co-operation with the Soviet Union and other socialist countries so as to make up for the CPC’s inadequate political and economic experience in state administration, and to help foster the Party members and the other working people in a spirit of proletarian internationalism based on Marxism-Leninism.