Conclusions & Remarks Chapter 4
The evolution of the structure of economic planning and budgetary administration during the first two to three years of the First Five- Year Plan led to a substantial decentralization of economic planning authority. Following the formation of provincial economic commissions in 1953, the volume of provincial expenditures grew rapidly, almost doubling between 1952 and 1957. Although provincial- and subprovincial-level expenditures were increasing rapidly, this growth was both constrained within a relatively narrow scope and subject to considerable central influence. Most important, the evolution of the system of economic and financial planning had still not provided a mechanism for coordinating all economic activities within each region. That is, the scope of local planning and the level of expenditures had grown to accommodate the increased emphasis on the provision of social services and a modest growth of local industry, but there was still no mechanism to coordinate the vertical and horizontal components of the plan at the local level. Indeed, in some ways the expansion of the importance of the vertical hierarchical dimension of the planning process had caused increased economic inefficiency. These constraints on local economic planning are most easily understood by examining the distribution of expenditures among levels of government and the system of central control of the composition of local expenditures.
The newly unified and strengthened China after 1949 sparked widespread optimism. Hopes were high for eradicating illiteracy within years, achieving industrialization in just over a decade, mechanizing rural areas, and fulfilling consumer needs. Communist leaders fueled this optimism by rallying public support for their cause.
However, the First Five-Year Plan, while not entirely dismissing these utopian aspirations, forced a pragmatic re-evaluation. As the first serious attempt to implement these grand visions, it demanded a confrontation with economic reality. Limited funds, materials, and personnel necessitated scaling back many programs and postponing others indefinitely. The concrete plans seemed rather ordinary compared to the initial lofty visions, and the process of lowering expectations was so painful that these reduced goals were never fully embraced. Not only did ambitions have to be curbed, but greater effort was required across all sectors.
The extremity of land reform can be attributed to several factors: 1. Political Objectives: The CCP aimed to dismantle the traditional rural power structures dominated by landlords and establish new governance aligned with communist ideology. This necessitated radical measures to ensure the complete overthrow of the old order. 2. Mobilization of the Masses: By encouraging peasants to actively participate in land redistribution, the CCP sought to awaken class consciousness and foster a sense of empowerment among the rural populace. This grassroots mobilization often led to heightened emotions and, consequently, extreme actions. 3. Elimination of Opposition: To prevent potential counter-revolutionary activities and consolidate power, the CCP implemented severe policies against perceived class enemies, including landlords and rich peasants. This approach was intended to eliminate any threats to the nascent regime. 4. Socio-Economic Disparities: Significant inequalities in land ownership and wealth distribution in rural China created deep-seated resentments among the peasantry. Land reform provided an outlet for these grievances, often resulting in extreme measures during the redistribution process. These factors combined to create an environment where land reform was implemented in an extreme manner, leading to profound and lasting impacts on Chinese rural society. Through land reform, the Communist Party achieved significant control over China's rural areas—not only through "violence" but also through "words and actions"; not only targeting the "wealthy class" but also mobilizing the "poor peasants." However, while eliminating traditional legal systems, it has encountered unprecedented "moral" issues (or "legitimacy" issues, such as "fairness," "justice," or "trust in the system") Gao Wangling, Piao Yang The radicalization of land reform 土改的極端化 https://www.cuhk.edu.hk/ics/21c/media/articles/c111-200812069.pdf Yang (2020) Analyzing the complexity of China's rural class problem and the reasons for the doom of the land-rich in the context of land reform at the beginning of the founding of the People's Republic of China does not mean that we can criticize the Communists of that year. We have reason to believe that most of the leaders of the CPC Central Committee who are also born as landlords and rich peasants may not be unaware of the differences between large and small, good and evil as individual landlords and rich peasants, and they may not be unaware that many of China's landlords and rich peasants are also from poor backgrounds. In this regard, as long as you read the memories of Mao Zedong and Liu Shaoqi on the history of their parents, you can clearly see their sympathy and understanding of this. 117 The reason why they used a "one-size-fits-all" method to demonize all landlords and kulaks at this time was obviously not because of their lack of knowledge, but because of a practical political need, that is, they believed in their own theory of class struggle and the experience of internal and external class struggle. As time goes by, when the needs of reality change, the understanding of the Communists themselves will eventually return to their true nature. If you don't believe it, let's read a few stories written by communists about the rich land in today's new environment. 分析中国农村阶级问题的复杂性, 和建国初土改背景下地富成份者遭遇厄运的原因, 并不意味着我们可以苛责当年的共产党人。我们有理由相信, 同样出身于地主、富农的多数中共中央领导人, 未必不清楚作为个人的地主、富农有大小、善恶等种种区别, 未必不了解中国的地主、富农很多也是苦出身。对此, 只要读过毛泽东和刘少奇等对自己父母发家史的回忆, 就可以清楚地看出他们对此的同情与理解。117他们这个时候之所以会用“一刀切”的办法来妖魔化所有地主和富农成份的人, 显然不是因为他们缺少知识, 而是因为一种现实的政治需要, 即他们相信自己的阶级斗争的理论和内外阶级斗争的经验, 他们也确实利用这样的理论和经验, 彻底改造了中国的农村社会, 实现了国民党始终无法达成的目标, 建立起了一个巩固的大一统的政权与国家。而随着时光的流逝, 当现实的需要发生了改变, 共产党人自身的认识也终究还会渐回本真。不信, 让我们来读几则共产党人在当今新环境下所写的地富发家史
"Industrialization in Mao-era China was colored by frequent ruptures brought by changes in high politics and diplomacy. At the ground level, however, there were strong continuities across these changes in physical assets, institutions, human resources, and faith in the state’s capacity to direct the nation’s industrialization. The Japanese and Na- tionalist legacies in Manchuria influenced the shape of China’s Soviet-style industrialization in the First Five-Year Plan. In turn, the legacies of Soviet-style industrialization continued to influence the development of China’s planned economy even after Mao’s expressed de- parture from the Soviet model. Such continuities and similarities were made possible by the common “ideology of development” shared by these rival regimes.153"
China's trade strategy after 1949, unlike that of the 1930s, was designed to support industrial growth as part of its Five-Year Plan. This yielded two significant results. Firstly, by importing industrial goods and machinery rather than consumer products, the economic multiplier effect was substantially increased, leading to rapid technological advancement. Secondly, strategically placing new industrial facilities in the interior of China spread these technological advancements geographically. While this represented a significant improvement over the 1930s, the economic impact was limited by the fact that the Soviet Union provided loans, not direct financial aid.
Ting (1980) concludes "Notwithstanding the subsequent submission of the industrialists and merchants to nationalization, the fact remains that the Chinese tax system, possibly for good reasons, has favored relatively regressive commodity and trade taxes over what in the West are considered more progressive forms of taxation. The salt tax is the clearest example of a regressive tax which is a heavier burden on the poor than on those with surplus income. Similarly, the industrial and commercial tax both before and after consolidation had the effect of raising consumer prices for all, though the potential regressive effect may be offset somewhat by the preferential rates on foodstuffs and necessary consumer goods. It is difficult to estimate whether the agricultural tax has a progressive or regressive impact." Shue (1976) "While the activities of private merchants may have sparked hoarding and speculation by individual peasants, the real roots of the problem were seen as lying in the very nature of the small peasant economy. Thus, Unified Purchase was intended not only to rectify the immediate economic instability, but also to create the conditions for a quicker transition to socialism in the village"
The Chinese Communist Party's tax law reform, transitioning from localized to centralized systems, effectively integrated local fiscal infrastructures, shaping them into a modern tax framework. Moreover, the party adopted a top-down strategy to establish a standardized and auditable accounting system, overcoming information asymmetry. The integration of centralized tax laws grounded in local structures, coupled with uniform accounting standards, played a crucial role in the rapid fiscal success of the People's Republic of China.
