Backnotes

Mao’s Economic Policies + Great Leap Forward (1952-62)

1952-6 First Five-Year Plan

1954 Fall of Gao Gang and Rao Shushi

1957 Hundred Flowers Plan 

1958-62 Great Leap Forward 

1959  Soviet advisers withdrawn from PRC

          Lushan Conference 

          Tibetan rising

1962 Cuban Missile Crisis

         Sino-Indian War 

         Liu Shaoqi and Deng Xiaoping appointed to tackle famine

  1. Industry 
  • Modernization of econ, essential to PRC
    • Early attempt influenced by Russians 
    • Initially dependant on Soviet Substances
  • 1952 first FYP introduced
    • Aimed to grow heavy industry 
  • GMD already established a National Resources Committee
    • Control over industrial investment policy 
    • Between 1949 – 57 urban pop. doubled 
    • As a result PRC already had large and available workforce w/ experience
  • First relevant success was unaided
    • In first 2 years managed to control inflation left by the GMD
      • From 1000% in 49 to 15% by 51
    • Achieved by
      • Slashing public expenditure 
      • Raising taxes on urban dwellers 
      • Replacing old Chinese dollar with yuan (¥)
  1. The First Five Year Plan (52-56)
  • Targeted areas were
    • Coal 
    • Steel 
    • Petrochemicals 
  • Civil engineering projects were undertaken
Output1952 Output targets1957 Output Achieved 
Gross Industrial Output¥53,560¥65,020
Coal (mil ton)113115
Oil (mil ton)2,0121,458
Steel (mil ton)4.125.35
  • Figures may be unreliable
    • Officials increased numbers to appease the government. 
    • Similar what happened to Russia

The Plans Success

  • Considerably successful due to Korean War effort
  • Econ. growth rate of 9% between 53-57

PRC expenditure (% of nat. budget)

195019521957
Economic Dev.25.545.451.4
Education and culture11.113.616.0
Defence41.526.019.0
Govt. Admin19.310.37.8
Misc2.64.75.8
Total ( ¥, mil)6,81016,79029,020
  1. Second FYP: The Great Leap Forward 
  • Between 1958-62
    • Aimed to turn PRC into modern industrial state in the shortest amount of time possible
    •  Revolutionizing China’s agriculture and industry would build an economy on par with modern nations at the time 
  • Thought that development relied on workers and industry, not peasants and agriculture
    • Would surpass other nations purely through the efforts of the Chinese people
  • Would be able to ‘overtake capitalist nations in a fairly short amount of time and become one of the richest and most advanced and powerful countries in the world’
  • Mao admired the USSR for econ. Achievements
    • Regretted the PRC had been so reliant on the Soviets 
    • Determined to match USSRs econ. achievement without following Soviet methods 
    • By ‘57 Mao felt China was strong enough to stop receiving subsites from Soviets 

Mass Effort 

  • Wanted to achieve industrial lift-off
    • Mao intended on doing this by harnessing China’s massive population
    • Believed that the chinese people could achieve two great advances
      • First the collective peasants working on their communes would prod. a surplus of food that could be sold abroad to raise money for the expansion of Chinese industry
      • Second, the workers would create, literally with their own hands, a modern industrial economy. powerful to compete with the USSR and the West
    • Mao assumed that production compared to the first 5 year plan could be vastly increased
      • Emphasis on heavy industrial production and large construction projects
        • The scale of a construction rather than the econ. value that impressed Mao
      • He was convinced that with sheer manpower China could solve all its industrial problems
    • There was construction with manual labour alone
      • Workers used rudimentary tools rather than mechanical tools
        • Large bridges, dams and canals built 
      • Became common sight to see thousands of workers dressed in identical blue uniforms
        • Govt. issued propaganda of the workers smiling and singing as the built 
      • Prisoners also forced to worked under the supervision of armed guards
    • Although the plan was issued in 1958 in a frenzy of propaganda there was a sense that it wasn’t really a plan at all
      • Targets and quota constantly being reset
        • Not based on econ. analysis rather chosen at random 
      • Projected upwards by officials to appease Mao


Backyard Furnaces

  • Mao thought that prod. Masses of steel would solve China’s econ. Problems
    • Insisted that all chinese people build backyard furnaces
    • China would not only draw its supplies from large foundries and mills but from small family kilns
  • A communal activity that all of China could participate in
    • Everybody could be involved
      • Even ministers families were involved
    • Would be a ‘glorious example of learning by doing’
      • Soon became a national movement 
    • Foreigners in china impresses by the scale and intensity of the people’s response 

Weakness of the Campaign

  • People may have been eager but they went successful
    • Only steel suitable for use came form large foundries, homemade steel was virtually useless
    • Collected from the smiling arms of peasants
      • The ‘peoples steel’ ended up being hard and unusable blobs
        • Ended up being dumped and buried 

State Owned Enterprises (SOEs)

  • Important feature of the GLF was the creation of State Owned Enterprises
    • Attempt to bring industry under total gov. direction
      • Existing firms could no longer operate as private and profit-making 
      • Instead work for the state as designated SOEs
    • Under new system
      • Companies given state subsidies 
      • Workers given a fixed and guaranteed wage
        • Thi destroyed any motive for managers or workers to show initiative 
        • Didn’t matter if an SOE was efficiently manages as all surplus was taken by the state
        • Workers had an ‘iron rice bowl’

Production Under the 2nd FYP

  • Initial expansion up to 1960 then a serious fall in production in the early 60s
    • Figures may be impressive they only relate to the prod. of materials not how they were used
  • There was no integrated plan for turning raw materials into manufactured goods
    • As a result China lacked
      • Technical skills
      • Managerial know-how
      • Efficiently run factories and plants
      • An adequate transport system 
    • Without these essentials China couldn’t build the modern econ. Mao had promised 

The Limitations of the GLF

  • Many communal efforts impressed foreigners and thrilled the Chinese
    • However the plan did not reach the goal of creating a modern industrial econ.
    • Some explanations for this are
      • The quality of the products fell short of China’s industrial needs
      • Political interference made the plan impossible to manage purely as an econ. enterprise 
      • Officials issues demands and threats but few detailed instructions as to how things were actually meant to be done
      • Despite the setting up of SOEs so much was left to local initiative that China never operated as an integrated national plan
      • The result was to effective organisation and quality control became difficult to achieve
      • In 1959 the USSR withdrew its technical assistance which resulted in the closure of half of the 300 industrial plants that the Soviets had sponsored in China

Mao’s Limitations as an Economic Planner

He didn’t understand industrial processes and thought that via. pure manpower he could achieve his goals

Mao believed that ‘applied communism’ would always produce an effective system of production

Planning was really a set of politically inspired slogans

GLF delegates shouted slogans and counter slogans at each other instead of addressing actual econ. problems 

 Mao refused to take accountability for his econ failures rather blaming it on ‘sabotage by the bourgeoisie and backsliders’

Mao, with his econ. policies attempted to create a modern industrial power

Ambition was not enough 

His econ. strategy was misconvened