Study of Chinas first five year plan
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Published: Mon, 5 Dec 2016
The industrial system taken over by the Chinese Communist leadership in 1949 was not only rudimentary and war-devastated, but also extremely imbalanced. Over 70% of the industrial assets and output were concentrated in the coastal areas while the rest of the country shared the remainder. Within the coastal region, modern industrial production was again heavily concentrated in a few cities, namely Beijing, Tianjin, Shanghai, Shenyang, Anshan, Benxi, Dalian and Fushun accounted for 55% of the total for the coastal region. China was a typical dual economy, in which a few industrial cities were surrounded by large-scale agriculture. When the Chinese leadership started its efforts at industrialization, it regarded the huge coast-interior imbalance as irrational because, firstly, areas of industrial production were usually too far away from energy and raw materials supply areas and the interior market, meaning substantial long-distance transport costs and creating a strain on China’s undeveloped transport system. Secondly, the rich resources in the inland areas could not be properly exploited. Finally, since the coast was easily exposed to foreign military power, the heavy concentration of industry there represented a national security risk, as was the case during the Second World War. To rectify that regional imbalance, the Chinese leadership decided to pull the levers of centrally directed investment. (Yang, 1990)
During the land reform, a significant amount landlords were murdered at Communist Party gatherings, the land was then given to peasants and there was also the Campaign to Suppress Counter-revolutionaries, involving public executions of mainly former Kuomintang officials, businessmen accused of market disturbances, former employees of Western companies and intellectuals whose loyalty was suspect. In 1976, the U.S. State department estimated around a million may have been killed during land reform, and a further 800,000 killed in the counterrevolutionary campaign (Shalom, 1984, p24). “Mao himself claimed that a total of 700,000 people were executed during the years 1949-53” (Chang & Halliday, 2005). However, because there was a policy to select “at least one landlord, and usually several, in virtually every village for public execution”, the number of deaths ranged between 2 and 5 million. In addition, at least 1.5million people (Short, 2001), perhaps as many as 6 million were sent to “reform through labour” camps where many perished (Valentino, 2004). Mao played a personal role in organizing the mass repressions and established a system of execution quotas, which were often exceeded, arguing that these killings were a necessity for securing power.
First Five year plan
China’s first Five-Year Plan entailed the forced provision of cheap agricultural supplies to cities, though per capita allocation kept low to discourage urbanization. In rural areas, production decisions are shifted from households to “mutual aid teams,” and then to cooperatives where a cadre makes key decisions. Ownership is redefined in the form of state-owned enterprises and collectivized farms. In terms of financial structure, the binding constraints on households and enterprises at this time are coupons, authorizations, and orders to deliver. These instruments rather than money determine production and consumption outcomes; therefore prices are of secondary importance. The Hundred Flowers campaign brings unanticipated criticism, especially from intellectuals, which Mao silences in the repressive “anti-rightist campaign.”
Almost two-thirds of the major projects, including many being built with Soviet aid were located in the interior. Despite allowance made to help rehabilitate war-devastated coastal industrial facilities, nearly 56% of the state investment in fixed assets went to the interior during this period. The interior-orientated investment policy took its toll in terms of economic efficiency as coastal industrial growth was sorely needed as a foundation for the development of the whole country. More concentrated efforts at rehabilitation and improvement of old enterprises in the coastal region could have produced more immediate economic pay-offs than making new investments in areas that lacked infrastructural support. Thus, Mao, in his April 1956 speech “On the ten great relationships,” commented that in “the past few years we have not laid enough stress on industry in the coastal region” so that the productive power of coastal industry could be used for the full development of the whole country, especially the interior. In the same speech, however, Mao also revealed he was in favour of building most of heavy industry, “90% or perhaps still more,” in the interior.
Worden, Savada and Dolan (1987) discussed how China used a Soviet approach to economic development was manifested in the First Five-Year Plan. The main objective was a high rate of economic growth, with primary emphasis on industrial development at the expense of agriculture and particular concentration on heavy industry and capital-intensive technology. Large numbers of Soviet engineers, technicians, and scientists assisted in developing and installing new heavy industrial facilities, including entire plants and pieces of equipment purchased from the Soviet Union. Government control over industry was increased during this period by applying financial pressures and inducements to convince owners of private, modern firms to sell them to the state or convert them into joint public-private enterprises under state control. By 1956 approximately 67.5% of all modern industrial enterprises were state owned, others were under joint ownership. No privately owned firms remained. During the same period, the handicraft industries were organized into cooperatives, which accounted for 91.7% of all handicraft workers by 1956.
Agriculture also underwent extensive organizational changes. To facilitate the mobilization of agricultural resources, improve the efficiency of farming, and increase government access to agricultural products, the authorities encouraged farmers to organize increasingly large and socialized collective units. From the loosely structured, tiny mutual aid teams, villages were to advance first to lower-stage, agricultural producers’ cooperatives, in which families still received some income on the basis of the amount of land they contributed, and eventually to advanced cooperatives, or collectives.
In terms of economic growth the First Five-Year Plan was quite successful, especially in those areas emphasized by the Soviet-style development strategy. A solid foundation was created in heavy industry. Thousands of industrial and mining enterprises were constructed, including 156 major facilities. Industrial production increased at an average annual rate of 19% between 1952 and 1957, and national income grew at 9% a year. Despite the lack of state investment in agriculture, agricultural output increased substantially, averaging increases of about 4% a year. This growth resulted primarily from gains in efficiency brought about by the reorganization and cooperation achieved through collectivization. As the First Five-Year Plan wore on, however, Chinese leaders became increasingly concerned over the relatively sluggish performance of agriculture and the inability of state trading companies to increase significantly the amount of grain procured from rural units for urban consumption. The First Five-Year Plan was for a long time the only plan that was even partially executed.
The success of the First Five Year Plan encouraged Mao to initiate the Great Leap Forward, in 1958. Mao also launched a phase of rapid collectivization. The Party introduced price controls as well as a Chinese character simplification aimed at increasing literacy. The Great Leap was not merely a bold economic project, it was also intended to show the Soviet Union that the Chinese approach to economic development was more vibrant, and ultimately would be more successful, than the Soviet model that had been used previously. Under the economic program, the relatively small agricultural collectives which had been formed were rapidly merged into far larger people’s communes, and many of the peasants ordered to work on massive infrastructure projects and the small-scale production of iron and steel. Some private food production was banned; livestock and farm implements were brought under collective ownership.
Under the Great Leap Forward, Mao and other party leaders ordered the implementation of a variety of unproven and unscientific new agricultural techniques by the new communes. Combined with the diversion of labour to steel production and infrastructure projects and the reduced personal incentives under a commune system this led to an approximately 15% drop in grain production in 1959 followed by further 10% reduction in 1960 and no recovery in 1961 (Spence, p.553). To win favour with superiors and avoid being purged, each layer in the party hierarchy exaggerated the amount of grain produced under them and based on the fabricated success, party cadres were ordered to requisition a disproportionately high amount of the true harvest for state use primarily in the cities and urban areas but also for export, which resulted in the rural peasant snot left enough to eat and millions starved to death in the largest famine in human history. This famine was a direct cause of the death of some 30 millions of Chinese peasants between 1959 and 1962 and about the same number of births were lost or postponed. Further, many children who became emaciated and malnourished during years of hardship and struggle for survival, died shortly after the Great Leap Forward came to an end in 1962 (Spence, p.553).
The famine was due to Mao’s leaning heavily on mass mobilization to speed up industrial development. The Great Leap emphasized heavy industry in general, and the iron and steel industry in particular. In any case, the Great Leap came to be a leap into disaster and was a major cause of China’s worst famine (1959-61). During this period state investment in industrial assets in the interior continued to increase. It averaged 59.4% of the national total during 1958-62 and further grew to 62-5% in the post-Leap adjustment period (1963-65). In the meantime, worsening Sino-Soviet relations and U.S. involvement in Vietnam led China’s leaders to perceive a greater need for enhancing its national defence capabilities. As a result, despite the much felt post-crisis need to invigorate existing industrial production and restore consumption levels, Mao in 1964 ruled in favour of building more defence-orientated industries in the interior so that China’s industrial infrastructure would survive a foreign invasion and provide for a protracted defensive war. (Yang, 1990, p.236-7) As part of this push for hierarchical organization and revolutionary thinking, Mao initiates the People’s Commune Movement to foster a communist-agrarian society. Bad incentives and bad weather bring the famine of 1960 with its accompanying economic turmoil, starvation, and rural revolt. Twenty to thirty million people lose their lives through malnutrition and famine (Fairbanks 1987, p.296). The failure of the Great Leap Forward and the People’s Commune Movement created the first open split within the ranks of communist leaders. Furthermore, a major rift opens with the Soviets, leading to a break in relations and Russian aid flows. (Jaggi et al., WP 1996)
The Great Leap Forward was a disaster for China. Although the steel quotas were officially reached, almost all of it made in the countryside was useless lumps of iron, as it had been made from assorted scrap metal in homemade furnaces with no reliable source of fuel such as coal. At the Lushan Conference in 1959, several leaders expressed concern that the Leap was not as successful as planned. The most direct of these was Minister of Defence and Korean War General Peng Dehuai. Mao, fearing loss of his position, orchestrated a purge of Peng and his supporters, stifling criticism of the Great Leap policies. Senior officials who reported the truth of the famine to Mao were branded as “right opportunists” (Becker, 1998). A campaign against right opportunism was launched and resulted in party members and ordinary peasants being sent to camps where many would subsequently die in the famine. The party have now concluded that 6 million were wrongly punished in the campaign. (Valentino, 2004, p. 127)
The largest ‘man-made’ famine on record was the Chinese famine of 1958-1961, which resulted in the death of an estimated 30 million people and approximately the same number of births lost or postponed. This famine was thought to be as a direct result of the decision by Mao Zedong to launch the ‘Great Leap Forward’, a mass mobilization of the population to achieve economic advancement. Mao followed the Stalinist ideology of heavy industry being the answer to economic advancement, peasants were ordered to abandon all private food production and instead produce steel which proved to be of extremely poor quality and of little or no use (Smil, 1999). This created a similar pattern to that of the loss of grain production needed to feed the population as seen in the Ukraine in the 1930’s,by the spring of 1959 famine had affected people living in one-third of China’s provinces. Until the mid 1980s, when official census figures were finally published by the Chinese Government, little was known about the scale of the disaster in the Chinese countryside, as the handful of Western observers allowed access during this time had been restricted to model villages where they were deceived into believing that Great Leap Forward had been a great success. There was also an assumption that the flow of individual reports of starvation that had been reaching the West, primarily through Hong Kong and Taiwan, must be localized or exaggerated as China was continuing to claim record harvests and was a net exporter of grain through the period. Because Mao wanted to pay back early to the Soviets debts totalling 1.973 billion yuan from 1960 to 1962, exports increased by 50%. (O’Neill, 2008)
Censuses were carried out in China in 1953, 1964 and 1982. The first attempt to analyse this data in order to estimate the number of famine deaths was carried out by Dr Judith Banister. Given the gaps between the censuses and doubts over the reliability of the data, an accurate figure is difficult to ascertain. Banister concluded that the official data implied that around 15 million excess deaths incurred in China during 1958-61 and that based on her modelling of Chinese demographics during the period and taking account of assumed underreporting during the famine years, the figure was around 30 million. The official statistic is 20 million deaths, as given by Hu Yaobang (Short, 2001).
Temporary realignment of political power, from Mao to Liu Shaoqi
Recovery policies informed by pragmatism
Readjustment of priorities – Agriculture, Light, Heavy
“Take agriculture as the key link”
“Agriculture as the foundation of the economy; grain as the
foundation of the foundation”
Reorganisation of agricultural institutional framework – commune
production brigade, production team
Introduction of grain imports
Retrenchment in industry
Third Five year Plan (1966-1969) tasks included developing agriculture to feed the populace and meet other basic needs (such as clothing); strengthening national defence (a priority given Chinese concerns of a potential war); advancing technology; developing infrastructure; encouraging economic self-reliance. Again striving to expand his command over the Party, Mao orchestrates the “Cultural Revolution.” Early stages of the movement entail a struggle against the so called “antiparty clique,” including Liu Shaoqi and Deng Xiaoping. Mao calls on the youth as “Red Guards” to spread revolutionary zeal. They make a specialty of attacking professionals and intellectuals, and wreak havoc on the educational system. Begun as a political struggle, the Cultural Revolution paralyzes normal life and throws the economy into turmoil.
The Cultural Revolution
change political succession
discipline government bureaucracy
produce a new “generation of revolutionary successors”
introduce egalitarian policy initiatives
Transfer of political power from pragmatic economic
technocrats to radical elements of CCP (esp. ‘gang of four’)
Three elements of ‘Cultural Revolution economic strategy’
the Third Front
Cultural Revolution as an urban, not rural, phenomenon
– industry, not agriculture, the major loser
The Fourth Five Year Plan was more successful than anticipated, with the industrial and agricultural goals exceeded by 14.1% and industrial gross output value goals by 21.1%. Agricultural gains also exceeded goals, but more moderately, with a 2.2% rise above expectations. According to the Official Portal of the Chinese Government, however, the focus on accumulation and rapid development in this and preceding plans were impediments to long-term economic development In September 1970, the Plan was drafted with such goals as maintaining an annual growth rate of 12.5% in industry and agriculture as well as specific budget allowances for infrastructure construction (130 billion yuan during the Plan). In 1973, some of the specific provisions of the plan were amended to lower the targets. All targets had been reached or surpassed by the end of 1973. China experienced a vibrant economy in the years 1972 and 1973.
In conclusion, Mao’s five year plans, during his time as Chairman of the CPC, were not only enabled China to grow in terms of GDP, but enabled improved rates of literacy, improved living standards – if only slightly, some elements of trade liberalisation occurred and a focus on agriculture was eventually made in order to develop food securities, there was some industrialisation and investment in infrastructure. The growth was mainly export-led as GDP per capita did not drastically increase, infrastructure investment rose to a level allowing China to uphold it’s ability to It therefore can be argued that although many millions of people suffered due to Mao, that China today has partly benefited from the Mao years, although I believe that if Mao had not been kept unaware of the situation that arose in the Great Leap Forward years, that the suffering and deaths that occurred could have been avoided.
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