Economic effects of Mao's authoritarian rule

Event 1: Agrarian Reform Law

• (1950), built on reforms in Yanan and ‘liberation’ areas’. 40% of cultivated land was taken away from landlords and given out to 300 million peasants

• up to 2 million landlords killed

• ‘Speak Bitterness’ meetings were held where peasants could denounce their landlords

effects:

• peasants don’t have any equipment for the land, so they move into mutual aid teams which consisted of 5-10 households who shared animals and equipment

Event 2: Nationalisation

• (1950), all major banks, the railway network and about a third of heavy industry were nationalised

• A People’s Bank was opened in 1951 which controlled all financial transactions and the issue of money

• Farmers had to sell 15-20% of their grain to the government at a fixed low price

effects:

• business owners and industrialists (capitalists) lost property and influence

• strengthened CCP control

Event 3: Treaty of Friendship, Alliance and Mutual Assistance

• 1950 - agreement with the Soviet Union to provide aid and assistance to the newly-communist China

• Negotiations were difficult - Mao said dealing with Stalin was ‘like getting meat out of the mouth of a tiger’

effects:

• helped develop the Chinese economy

• gave $300 million of financial aid and sent in 10,000 Soviet engineers

Event 4: 1953-57 The First Five Year Plan

• Planning was highly centralised on heavy industry - coal, steel and machinery

• Financial aid lent by the USSR was only 3% of total investment under the Five Year Plan, so the Chinese Government had to raise money to fund the plan from its citizens: agriculture was squeezed to pay for heavy industrial expansion, the state set the prices it paid for grain low to produce a large profit to invest in industry

• China’s light industry (cotton making, food processing etc) and agriculture was neglected

effects:

• the production of consumer goods was unprioritized

• the amount of produced goods by 1957 were higher than the government predicted

• industrialisation boosted urbanisation - 57 million → 100 million people in towns by 1957

Event 5: Collectivisation of agriculture 1953-58

• From 1953, peasants were encouraged to join lower Agricultural Producers’ Cooperatives (APCs) - 30-50 families shared profits based on how much land/equipment was contributed to make bigger, more efficient farms

• By 1956, 80% of rural households were in cooperatives. This encouraged Mao to move toward Higher Level Cooperatives in which land was collectively owned, small allotments were permitted and they consisted of 200-300 households. All peasants worked for wages, regardless of their input of land or equipment

• In 1958, co-operatives became communes in which not even small private allotments were allowed - only buyer of grain was the state

effects:

• local cadres inflated harvest figures to meet political expectations, causing the state to requisition unrealistic amounts of grain - directly contributed to shortages

• dismantled family-based farming and replaced it with state-controlled production teams, eroding community autonomy

• over-requisitioning led to escalating food shortages and laid the groundwork for the Great Leap Forward famine

• strengethening of CCP control over the countryside

Event 6: The Great Leap Forward

• Mao wanted a more balanced approach than the First 5YP - focusing on agriculture as well as industry. He wanted faster growth, to assert independance from the USSR and to regain the revolutionary spirit of the pre-1949 years

• Communes were created and designed so that people could focus solely on work. Communal eating halls, nurseries, schools and carehomes were established. Small commune factories were established. Average commune size was 500 families who would eat and work together. - Childcare meant no time or effort was wasted

• Backyard Steal Campaign: 600,000 backyard steel furnaces were set up in towns all over China to produce steel. - no safety measures were in place.

• Poor harvest in 1958 despite good weather as too many people were working in the backyard steel campaigns to harvest crops properly. Great Sparrow Campaign launched to try to help produce more grain ( banging pots and pans to scare them away). Terrible weather in 1959 and 1960 let to terrible harvest. The government had an ineffective response and 1959-61 became known as the ‘Three Bitter Years’

• Mao gave up post of Head of State to Liu Shaoqui but stayed as CCP Chairman. Late in 1960 the Great Leap Forward starts to be reversed - cautiously as to not upset Mao