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China - 2nd Five-Year Plan 1958-1962

Officially, the period from 1961 through 1965 was designated as one of readjustment and consolidation, while it actually consisted of a major depression spanning approximately from the latter part of 1960 through the first half of 1962, followed by gradual recovery.

The Chinese Communist leadership intended to follow up the successful First Five-Year Plan (1953-57) with a Second Five-Year Plan (1958-62). The new plan was superseded in early 1958, however, by the Great Leap Forward, a complete turnabout in Chinese Communist economic policy. The Great Leap Forward was an ill-conceived scheme to drive the Chinese economy ahead at a much faster pace; output in industry and agriculture was to be doubled and redoubled in a few short years; seemingly regardless of the effect on men, machinery, and quality of output. Instead of the grateful acceptance of the dour Soviet model of economic development, the new era was marked by fanaticism and sloganeering. "Politics must command economics." "Produce more, faster, better, and more economically." "Catch up with Great Britain in the production of steel and other industrial commodities in 15 years" (later the time span was shortened to 10 years).

Mao independently seized on the notion that an alleged vast reservoir of under-employed rural labor could be mobilized politically to accelerate economic growth and restore a revolutionary atmosphere to the bulk of society left untouched by the capital-intensive industrialization. Against the nearly unanimous opposition of his top lieutenants, he pushed through collectivization and socialization during 1955-56. But by 1957 the disruptions of this program had loosed bitter criticism and were seemingly forcing major retrenchments.

Mao was stung into doubling his bets, launching in 1958 a total political mobilization of Chinese society through communes and the Leap Forward. Technical and fiscal controls were largely abandoned in the political drive. There was brief, heady talk of achieving an economic miracle in a few years, such as an annual steel output of 40 million tons and an urban population of 200 million. Instead, the Leap Forward disintegrated into chaos, and ended in mid-1960 with a collapse of farm output, massive economic imbalances, and the Soviet Union contemptuously washing its hands of responsibility of China's industrialization.

In 1961 the political tide at home began to swing to the right, as evidenced by the ascendancy of a more moderate leadership. In an effort to stabilize the economic front, for example, the party — still under Mao's titular leadership but under the dominant influence of Liu Shaoqi, Deng Xiaoping, Chen Yun, Peng Zhen, Bo Yibo, and others—initiated a series of corrective measures. Among these measures was the reorganization of the commune system, with the result that production brigades and teams had more say in their own administrative and economic planning. To gain more effective control from the center, the CCP reestablished its six regional bureaus and initiated steps aimed at tightening party discipline and encouraging the leading party cadres to develop populist-style leadership at all levels. The efforts were prompted by the party's realization that the arrogance of party and government functionaries had engendered only public apathy.

On the industrial front, much emphasis was now placed on realistic and efficient planning; ideological fervor and mass movements were no longer the controlling themes of industrial management. Production authority was restored to factory managers. Another notable emphasis after 1961 was the party's greater interest in strengthening the defense and internal security establishment. By early 1965 the country was well on its way to recovery under the direction of the party apparatus, or, to be more specific, the Central Committee's Secretariat headed by Secretary General Deng Xiaoping.

The initial task for the 1960s was to raise farm output and to elevate industrial technology, a prerequisite to regain social stability and to secure a domestically-based recovery of industrial output. For this purpose, the planners chose to concentrate resources in the most efficient bases, the rich farm areas and the old industrial cities. The plans proposed that, as these bases developed surpluses, development would be extended to other areas of China in the 1970s, but selectively along lines dictated by economic considerations. The initial results of the strategy were dramatically successful.

In the 1961-65 period, the Chinese Communist leadership had been practically forced to conduct economic planning on a year-to-year basis. As the regime regained control of the situation and achieved some forward progress, it began to prepare for a Third Five-Year Plan. Premier Chou En-lai in a speech in December 1964 alluded in very general terms to a plan being drawn up to cover the period 1966-70, but nothing was publicly known about the plan itself. The plan almost certainly was not a detailed economic blueprint like a Soviet 5-year plan but rather a preliminary sketch of major economic policy and of output goals for key commodities. There did not seem to be, for example, a detailed 5-year plan for even major industrial establishments.

The programs for political and social change, called for at the Tenth Plenum of the Eighth Central Committee in September 1962, generated much motion and little movement. Society and the lower levels of the Party have been concerned with daily problems and diminished personal prospects, and have tended to fulfill the letter but not the spirit of Peking's directives, avoiding painful change through appropriate excuses and bureaucratic devices. Chinese society shows little interest in the outside world, and Mao's audacious plans to reshape this world do not excite it. The pleas of the Party Central to instill the "world view" in Chinese society had simply fallen on deaf ears.

For the first 3 years of the Second Five-Year Plan, statistical data available to the planners suffered especially from inaccurate reporting; political bias, deterioration in the statistical reporting system, and dilution of trained reporting staff as a result of an explosion of the volume of work led to gross exaggerations. For the entire period of 8 years (1953-60) the reporting system suffered from lack of means for the rapid and accurate processing and organization of statistical and other information.

Chou explained the discrepancy between the initial 1959 plan and reality in the following terms: "There were certain shortcomings and errors made in the course of drawing up and implementing the 1959 national economic plan and during the upsurge of the Great Leap Forward; the main ones were that production targets were set rather too high, the projected scale of capital construction was bigger than it should be and the increase in the numbers of workers and staff a bit excessive. Our departments in charge of planning and economic affairs are not yet adept at the work of coordination and maintaining a balance under the conditions of a big leap forward in the national economic plan."

Since the degree of plan fulfillment was measured by certain indicators, such as the physical output quota, the management of an enterprise, when hard pressed, is liable to concentrate on one index of success at the expense of another. Underlying such behavior are both the very human tendency to pursue symbols of success rather than its substance, a tendency which is par- ticularly fostered in any large organization or bureaucracy, and the Communist ideology which discourages the use of any meaningful criterion for the economic allocation of investment. The latter doctrinaire attitude was reflected in the expression, often employed in Communist Chinese circles, to the effect that "even if the meat in a stew should disintegrate (through overcooking) it would stay in the pot," by which is meant that no loss would be incurred in production, whatever may be its apparent cost, because in the absence of the exploiting class, all the fruit of labor now belongs to the people. What the people do not at first receive in one form, they will receive eventually in another.