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Economic Rehabilitation Period - 1950-1952

In December 1949, the Chinese Communists designated 1950-52 as the period of rehabilitation of the national economy. They planned to restore productive facilities and transportation systems that were damaged or destroyed during the Sino-Japanese War (1937-45) and the Civil War (1946-49). In 1945, apparently operating on the likelihood that the Nationalist Government would reestablish its authority in China, Moscow ordered the dismantling of many key installations in Manchuria and their removal to Russia as Japanese reparations.

The newly established Government attempted to restore heavy industry, especially the industrial base in Manchuria. However, the atternpt was severely hampered by the increasing demand for milit·ary supplies that resulted from amphibious landing operations against the offshore islands held by the Nationalists and from the direct military involvement in the Korean conflict. Nevertheless, a number of plants in light industry recovered to their full capacity during the period.

When the Chinese Civil War reached its peak in 1949, China's industrial production fell to its lowest level since 1945. Production of pig iron fell to only 10.9 percent of its historical high, crude steel 15.8 percent, cement 30.9 percent, and coal 44.5 percent. Facing these low production levels; the Government reluctantly postponed the attainment of its main political objective, public ownership of the means of production, in order to use the talents of experienced non-Communist technicians, businessmen, factory owners . and workers, and administrators. It adopted a liberal policy toward the industrial sector and provided incentives to owners and workers. Some private enterprises were allowed to survive throughout the whole period of rehabilitation.

The policy produced improved economic results. By 1952, many factories attained their 1947 level of production capacity. Production of crude steel increased from 0.3 million metric tons in 1947 to 1.3 million tons in 1952, and production of pig iron increased from 0.3 million to 1.9 million tons over the same period. Output of the cement industry increased from 1.2 million tons for 1948 to 2.9 million tons in 1952. Production of cotton fabrics doubled, from 1.9 billion meters in 1949 to 3.8 billion meters in 1952. The textile industry had been important in China for centuries, and the liberal policy toward the industrial sector no doubt contributed to the rapid restoration o the indusry. Many entrepreneurs in the industry stayed in Shanghai to run their businesses during the period.

Another factor in the quick recovery was the availability of transportation. Most cotton textile mills were located in large cities on the East Coast, such as Shanghai, Tianjin, and Tsingtao. They could easily get their raw and intermediate materials from inland or abroad, because railroads connecting the major coast cities and inland cities were almost completely repaired during the period.

The restoration of agricultural production also proceeded rapidly since it required little of China's scarce capital equipment. Most farmers ploughed and sowed using only human labor. Only a fraction of farmers possessed ploughing animals such as oxen, water buffaloe, or horses. Farming tractors were rare at that time. The most significant action the Government took for agriculture was land reform. Under the land reform program, landlords' properties were confiscated and redistributed to the peasants. At the same time agricultural "mutual aids teams" and cooperatives were formed to enhance productivity by pooling resources. On 21 September 1952, Liao Luyuan, Vice Secretary General of the State Council, reported that the distribution of land to peasants was successfully accomplished.

The land reform movement was not accomplished without violence. The provisions of the land refo·rm law were very harsh. Article 10 of the land reform law specifically provided that landlords who acted improperly to their tenants could either be executed or laboriously reformed. Estimates of the loss of lives of landlords ranged from 800,000 to 2 million.

After China entered the Korean War, the initial moderation in Chinese domestic policies gave way to a massive campaign against the "enemies of the state," actual and potential. These enemies consisted of "war criminals, traitors, bureaucratic capitalists, and counterrevolutionaries." The campaign was combined with party-sponsored trials attended by huge numbers of people. The major targets in this drive were foreigners and Christian missionaries who were branded as United States agents at these mass trials. The 1951-52 drive against political enemies was accompanied by land reform, which had actually begun under the Agrarian Reform Law of June 28, 1950. The redistribution of land was accelerated, and a class struggle against landlords and wealthy peasants was launched. An ideological reform campaign requiring self criticisms and public confessions by university faculty members, scientists, and other professional workers was given wide publicity.

Artists and writers were soon the objects of similar treatment for failing to heed Mao's dictum that culture and literature must reflect the class interest of the working people, led by the CCP. These campaigns were accompanied in 1951 and 1952 by the san fan ("three anti") and wu fan ("five anti") movements. The former was directed ostensibly against the evils of "corruption, waste, and bureaucratism"; its real aim was to eliminate incompetent and politically unreliable public officials and to bring about an efficient, disciplined, and responsive bureaucratic system. The wufan movement aimed at eliminating recalcitrant and corrupt businessmen and industrialists, who were in effect the targets of the CCP's condemnation of "tax evasion, bribery, cheating in government contracts, thefts of economic intelligence, and stealing of state assets."

In the course of this campaign the party claimed to have uncovered a well-organized attempt by businessmen and industrialists to corrupt party and government officials. This charge was enlarged into an assault on the bourgeoisie as a whole. The number of people affected by the various punitive or reform campaigns was estimated in the millions.

China's economic restoration was slowed by participation in the Korean conflict. The industrial · secto.r had been seriously damaged by the Civil War and by war reparations imposed by the Soviet Union after World War II. Thus, much of the industrial sector was unable to resume production at full capacity within the 3 years from 1949 to 1952. The agricultural sector achieved roughly its 1936 level of output by 1952, but there was a considerable backlog. of repair and maintenance to be done on river control and irrigatlon installations. The economy of China had not fully recovered by the end of 1952.

It is difficult to analyze the course of the Chinese economic development since 1950 for several reasons. First, there have been significant changes in the institutional structures in China, so it is difficult to construct a single model of the Chinese economy that would apply to the entire period. In particular, economic development was profoundly influenced by political and ideological developments within the Communist party. Second, public information and statistics for the period are limited and conflicting. Sometimes, the differences between the estimates were considerable.