The People's Republic of China must abolish all the prerogatives of imperialist countries in China. It must confiscate bureaucratic capital and put it into the possession of the people's state. It must systematically transform the feudal and semi feudal land ownership system into a system of peasant land ownership; it must protect the public property of the state and of the cooperatives and must protect the economic interests and private property of workers, peasants, the petty bourgeoisie and the national bourgeoisie. It must develop the people's economy of New Democracy and steadily transform the country from an agricultural into an industrial one.
Now a survey follows on nationalizations. Mao Zedong tells Mikoyan in February 1949 (See Part 4), that there are no plans for nationalization.
"Our policy with regard to private industrial enterprises must not repeat former mistakes, so as not to scare away the national bourgeoisie, therefore now we will not carry out the confiscation of private industrial capital and its enterprises."
The CCP has always made a difference between national enterprises and foreign businesses. The latter should be eliminated as soon as possible. Except for American assets, no systematic plan for nationalization was made before May 1952.
"The CCP’s standard practice was to manoeuvre foreign firms into positions where they had no option but to offer their assets to the state ‘voluntarily’ to avoid any possible compensation claims later. To apply pressure, the Communists denied foreign firms the opportunity to make profits or to sell their property, while increasing their liabilities.65" At the end of December 1950, the People's Republic of China decides to confiscate all American possessions and to freeze all private and national assets. This is in line with the decisions of the 6th CCP congress in 1928 which stated the nationalization of all foreign firms.
In 1951, the Chinese government decides to take over all American funded schools and institutes and to destroy all American influences. Before the Second World War, there were 13 American-supported colleges and universities in China, many of which had been created by religious congregations. See Article 41. Moreover, an important percentage (of the order of 50%) of the Chinese professors had studied in the United States for some time. In short, there was a strong cultural connection between China and the United States.
In April 1952, the UK and the People's Republic of China conclude a commercial agreement, but this does not prevent confiscation of British possessions in Shanghai, Tianjin, and Wuhan. At the other hand, in 1957, ten British-owned companies still operated in Shanghai.
"In practice, the ‘foreign’ was often very difficult to untangle from the ‘Chinese’.23 British commercial enterprises were tied into the Chinese economy in a multitude of ways. Removing them presented complex problems that were too difficult to resolve along simplistic ideological lines." All schools, churches, and other social or cultural organizations which receive money from foreign countries are obliged to cut off their relations with their financiers.
The most important tool to destroy feudal remnants is the Land reform law. On June 30, 1950, the government promulgates this law. This law stipulates a division of land, livestock, and farm implements of the rich farmers (10% of the total number of farmers) to the poor farmers (70%) and to the small and medium farmers (20%). To guide this law properly, the government announced four days later the decision that regulates class status in the country. Liu Shaoqi notes in his explanation of the land reform law:
"The policy we have adopted to preserve the rich peasant economy is of course not a temporary but a long term policy. That is to say throughout the stage of new democracy we shall preserve the rich peasant economy. It will become unnecessary only when farming is mechanized on a large scale, collective farms are organized and socialist transformation is carried out in rural areas. This will become possible only in the rather distant future. This is why we advocate preservation of the rich peasant economy at present."Article 27 of the Common Program relates to this law.