(f) Success of the First Five Year Plan

Why it was not immediately introduced?

• Political Consolidation: The Communists first had to secure complete political control by eliminating the remaining Nationalist opposition and extending their authority over all the outlying provinces.

• Economic Stability: It was essential to stabilize the economy by reducing the inherited annual inflation rate which was a staggering 1,000 percent.

• Peasant Support: To repay the peasants for their crucial support, the regime prioritized and arranged for immediate land redistribution.

• Military and Conflict: Detailed planning was further hampered by high military spending and the major disruption caused by China's involvement in the Korean War, which began in October 1950.

How did the CCP reduce inflation by 1951?

Inflation was cut to 15% through cuts in public spending, higher taxation, and replacing the Chinese dollar with the yuan (renminbi).

What major economic policy did Mao introduce after stabilising inflation?

The first Five-Year Plan, launched in 1952, intended to be the first of three.

What economic model was the First Five-Year Plan based on?

It followed the Soviet model of central planning.

Why did Mao align China with the Soviet Union rather than the West?

Despite past tensions, Soviet Russia inspired the CCP, and Mao declared in 1949 that China would “lean to one side”by aligning with the USSR.

Why was the Soviet economic system attractive to China?

It had enabled Stalin to defeat Nazi Germany, making it seem the best—if only—model available.

Why was it easier for Mao to introduce central planning in China?

China already had state involvement in industry dating back to imperial times, expanded under Chiang Kai-shek.

What role did the National Resources Committee (NRC) play?

It controlled industrial investment and encouraged migration from countryside to cities under the GMD.

How did Mao benefit from the NRC after 1949?

He used the expertise of NRC managers, many of whom remained after the fall of the GMD.

What was a key feature of the Sino-Soviet Treaty of 1950?

The agreement allowed Soviet advisers to come to China to teach the CCP how to run a Communist state.

How many Soviet advisers came to China and what did they do?

Over 10,000 civilian technicians brought expertise in civil engineering, industry, government organisation, and higher education.

What costs did Soviet expertise involve for China?

Advisers were paid high salaries by the Chinese and housed at China’s expense in guarded compounds outside cities, echoing imperial-era foreign concessions.

What financial support did the USSR give China under the treaty?

The USSR lent $300 million, secured by Chinese bullion reserves, and the loans had to be repaid with interest.

How did China learn Soviet political and propaganda methods?

Chinese delegations visited Moscow to train in propaganda techniques and government organisation.

How was Soviet influence visible in Chinese cities?

Traditional Chinese buildings were demolished and replaced with Soviet-style brutalist architecture, which drew criticism.

How did Soviet ideas influence Chinese education?

Russian became the only foreign language, school timetables were changed to six morning classes, with lunch at 3 p.m., copying Soviet practice.

How did Soviet control affect Chinese media?

TASS, the Soviet news agency, became the main source of news for Chinese newspapers.

What slogan symbolised Soviet influence in China?

“The Soviet Union’s today is our tomorrow.”

How did Soviet influence extend beyond cities into rural China?

Through the adoption of Lysenkoism, which had a major impact on life in rural communes.

overall aim

The overall aim was to make the PRC as self-sufficient in food and manufactured goods as possible, in order to protect China in a potentially hostile capitalist world

By when were the principles of China’s new economic planning in place?

: By 1952, even though detailed industrial plans could not be finalised until after the Korean War.

How were production targets set under the new system?

Targets were set from above by state planners, not in response to consumer demand.

Which industries were prioritised?

Heavy industry came first: iron and steel, transport and communications, energy supply, industrial machinery, and chemicals.

Why were large public works projects included?

Projects like bridges across the Yangtze at Nanjing were included partly for their propaganda value.

Where were the new economic ideas tested before national rollout?

In Manchuria, where heavy industry was already well developed.

How were resources redirected within the economy?

Resources were channelled into heavy industry and away from consumer goods, which were seen as less important.

How did limiting consumer goods support industrial investment?

With fewer goods to buy, people were encouraged to invest in patriotic savings schemes, which the state could use for industrial development.

How were collective farms used to support industrial workers?

Farms were forced to sell food cheaply to the state, keeping urban food prices and workers’ wages low.

Were all industries nationalised immediately after 1949?

No. Only foreign-owned firms and key sectors—banking, gas, electricity, and transport—were taken under state control in 1949.

When and how was private ownership ended completely?

When and how was private ownership ended completely?

Why did business owners accept nationalisation?

Accepting state compensation was safer than risking denunciation as “rightists”, which would have brought severe punishment.

How was the First Five-Year Plan financed?

Through food requisitioning from APCs, patriotic savings schemes, higher urban taxation, and loans from the USSR.

How successful was the First Five-Year Plan according to official statistics?

Most sectors met their production targets, according to official figures.

What was the rate of economic growth during the plan?

Around 9% per year, which compared favourably with the Soviet Union in the 1930s, despite disruption caused by the Korean War.

How did the plan affect urban living standards?

Wages and job security improved, but there was a loss of freedom to change jobs or travel.

What demographic change occurred during the plan?

Large-scale migration to cities, with the urban population rising from 57 million in 1949 to about 100 million by the mid-1950s.

Why are the official production figures from the First Five-Year Plan unreliable?

Officials had a vested interest in exaggerating output to please superiors, similar (though less extreme) to commune cadres covering up problems.

What was a key problem with target-based planning?

It prioritised quantity over quality, leading to poor-quality output.

What weaknesses did Soviet guidance expose in China’s workforce?

Low skill and literacy levels among workers, which could only be solved by educational reform.

Why was education unable to address workforce problems during the plan?

By the end of the plan, less than half of children under 16 were in full-time education.

How did the ‘anti’ campaigns affect economic management?

They drove out experienced Nationalist-era planners, weakening the quality of bureaucratic administration.

What issue existed between private firms and state-owned enterprises (SOEs)?

There was competition for resources, which was only resolved when private ownership ended in 1956.

How did the First Five-Year Plan affect the countryside?

It had more negative than positive effects on rural areas.

Why were peasants suffering food shortages?

Why were peasants suffering food shortages?

Food was exported to the USSR to pay for Soviet assistance and sold cheaply to cities to support urban workers.

Lysenkoism, which China paid for as part of Soviet guidance, worsened peasants’ lives rather than improving them.