how successful was the first five year plan?

Why it was not immediately introduced

• Although Mao regarded the establishment of a much stronger industrial base as vital if China was to develop as a world power, no major economic plan could be launched until more immediate problems had been solved

• First, the Communists had to consolidate their political control by mopping up the remnants of Nationalist opposition and conquering the outlying provinces

• Second, they had to reduce the annual inflation rate from the staggering 1,000 percent that they inherited

• It was also necessary to reward the peasants for their support by arranging for land redistribution to take place as soon as possible, so this look priority

• Further delay in detailed planning was also caused by the high level of military spending and the disruption caused by participation in the Korean War from October 1950

The USSR's financial and technical support: Why they used the Soviet model

• By 1951, the annual inflation rate had been cut to a manageable 15 percent, by a combination of cuts to public spending, increases in taxation and the replacement of the old Chinese dollar with the yuan (or renminbi)

• The first of what Mao envisaged would be three Five-Year Plans was launched the following year

• It was based on the Soviet model

• Despite the difficulties of the relationship between the CCP and the Russian Communist Party over the previous 25 years, Soviet Russia was still, at this stage, an inspiration to the Chinese Communists, and Mao had made it clear in 1949 that he would lean to one side, by aligning China with Russia rather than looking towards the West for help

• Also, despite its problems, the centrally planned Soviet system had enabled Stalin to defeat Nazi Germany, so it was regarded as the best, albeit only, available option for China to copy

• Mao's task in introducing a centrally planned economy was made easier by the fact that there had been some degree of state involvement in Chinese industry since imperial times, and this had accelerated under Chiang Kai-shek, who had established a National Resources Committee (NRC) to control industrial investment and encourage migration from the countryside to the cities

• Mao was able to take advantage of the expertise of the managers of the NRC, many of whom remained after the fall of the GMD

The USSR's financial and technical support: The nature of Soviet help

• A vital part of the Sino-Soviet Treaty of 1950 was the arrangement for Soviet advisers to come to China and teach them how to run a Communist state

• Over 10,000 civilian technicians brought their specialist knowledge of civil engineering, industry, governmental organisation and higher education

• Their expertise came at a cost, however their high salaries were paid by the Chinese, and they were housed, at China's expense, in closely guarded compounds outside the main cities, in an odd throwback to the situation in imperial times, when European concessions had enjoyed similar specal privileges, Russia also agreed to lend China $300 million, as security for which the Chinese had to hand over a large part of their bullion stocks

• Furthermore, the credit was not a gift: the loans were to be repaid with interest

• Chinese delegations also visited Moscow, particularly to be trained in propaganda techniques and in aspects of governmental organisation

• The influence of the Soviet Union soon became clear to see in the cities, where critics complained that classical Chinese buildings were being cleared to make way for new office blocks and construction projects built in 'Soviet brutalist' style

• Russian ideas also penetrated education, where Russian was the only foreign language taught in schools, and the lunch hour was pushed back to three in the afternoon, to copy the Russian practice of having six consecutive morning classes

• TASS, the official Soviet news agency, became the main source from which the Chinese newspapers gathered their information

• 'The Soviet Union's today is our tomorrow' soon became a slogan familiar to all in the cities

• While Soviet influence may have made more visual impact in urban areas, it also exerted a profound influence on the lives of those in the rural communes through the adoption of Lysenkoism

The plan's targets: 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

The plan's targets: the principles

• Although detailed plans for each industry could not be finalised until the Korean War was over, the principles were already in place by 1952

• Targets would be set from above by economic planners, rather than in response to consumer demand, and heavy industry iron and steel, transport and communications, energy supply, industrial machinery and chemicals) would come first several spectacular public works projects, like new bridges across the Yangtze at Nanjing, were added for their propaganda value

• The basic ideas were given a preliminary dry-run in Manchuria, where heavy industry was already well established, before being applied to the entire nation

• The aim was also to channel resources into these heavy industries, away from consumer goods, which were regarded as less important

• Also, it was hoped that people would be more willing to invest in patriotic savings schemes, which the government could then direct into industrial investment, if there were few consumer goods to tempt them into spending on alternatives

• By forcing the collective farms to sell food at low prices to the government, it was hoped to keep industrial workers' wages low, because cheap food would be readily available in the urban areas

The plan's targets: nationalisation of industry

• Initially, not all industries were nationalised

• only those belonging to foreigners and those in the banking, gas, electricity and transport sectors of the economy were taken under state control in 1949

• However, the fear generated by the 'five antis' campaign (see Chapter 1) made it possible, in early 1956, to bring an end to private ownership entirely

• For business owners, it was easier to accept compensation from the state for their enterprises than to run the risk of being denounced as rightists' and suffer the inevitable punishment that would have incurred

• As well as by food requisitioning from the APCs and patriotic savings schemes, the plan was to be financed by higher levels of taxation in the cities and loans from the USSR

Successes of the plan

• According to the official statistics, most sectors of the economy succeeded in reaching their targets

• The annual growth rate was about nine percent per year during the plan, a figure that compared favourably with the Russian experience in the 1930s, particularly when it is remembered that the war in Korea disrupted long-term planning early on

• Urban living standards improved in terms of wages and job security, though at the expense of a loss of freedom to change jobs or travel

• More people were migrating to the cities, where the population grew from 57 million in 1949 to 100 million by 195

failures of the plan

• the figures are unlikely to be completely reliable, because officials had an obvious vested interest in exaggerating levels of production in order to please their superiors, in the same way, although not to the same extent, as cadres in the communes covered up the true state of affairs

• The emphasis on reaching targets also inevitably put the emphasis on quantity over quality

• There were also other negative aspects to the plan

• While Soviet guidance was invaluable, it exposed shortcomings in the skill and literacy levels of Chinese workers that would only improve when the education system was updated

• However, by the time the plan ended, less than half the children under 16 were in full-time education, so this was a long way from happening

• At a managerial level, many of the economic planners who worked for the Nationalists had remained in place after 1949, but by the time the plan began, the 'anti' campaigns of 1951-52 had driven out many of them, and the standard of bureaucratic administration suffered as a result

• Finally, there was competition for resources between private and state-owned enterprises (SOEs), which was not resolved until the ending of private ownership in 1956

• In the countryside, the plan had more negative than positive influences

• Here, the peasants in the communes were going short of food because it was being exported to Russia to pay for the Soviet advice, and sold cheaply to the cities to feed the urban workers

• It was an ironic twist that Lysenkoism, which formed part of the Soviet advice that they were paying for, was actually making peasants' lives much worse