Policy of "Four Contradictions Involving Eight Side"

On December 25, 1947, Mao Zedong clearly declared in his report "The Present Situation and Our Tasks" that the three major economic policies of the New-Democratic Revolution were: "Confiscating the land of the feudal class and turn it over to the peasants, confiscating monopoly capital, headed by Chiang Kai-shek, T. V. Soong, H. H. Kung and Chen Li-fu, and turn it over to the new-democratic state, and protect the industrial and commercial business of the national bourgeoisie.”

In this report, Mao Zedong analyzed that in view of China's economic backwardness, even after the country-wide victory of the revolution, it would still be necessary to permit the existence of the capitalist sector of the economy represented by the vast upper petty bourgeoisie and the middle bourgeoisie should be allowed to exist for a long period of time, even after the nation-wide victory of the revolution in the country; and taking into consideration the division of labor in the national economy, there was still the need to develop all sectors which would be beneficial to the national economy; these sectors were still an indispensable part of the national economy as a whole. He added: “Therefore, it is absolutely impermissible to repeat such wrong ultra-left polices towards the upper petty bourgeois and middle bourgeois sectors in the economy which were adopted by the Party during 1931-1934 (such as unduly advanced labour conditions, excessive income tax rates, encroachment on the interests of industrialists and merchants during the land reform instead of prioritizing the task of developing production, promoting economic prosperity, giving consideration to both public and private interests and considering both the interests of labour and capital, a myopic one-sided approach under the pretext of prioritizing the welfare of the workers),” and Mao Zedong added: “ repeating such mistakes will certainly damage the interests both of the working masses and of the new-democratic state.”

Mao Zedong said that the principles guiding the new-democratic national economy should closely conform to the general objective of “developing production, promoting economic prosperity, giving consideration to both public and private interests and benefiting both labour and capital.” Later, he put forward the economic policy of “giving consideration to both public and private interests, benefiting both labor and capital, mutual aid between the city and the countryside, and circulation of goods between China and abroad.”

Article 26 of the “Common Program” stipulated: "The basic principle of economic construction of the People's Republic of China is to develop production and bring about a prosperous economy through a policy of taking into account both public and private interests, of benefiting both labor and capital, of mutual aid between the city and the countryside, and circulation of goods between China and abroad.” “The state should coordinate and regulate state-owned economy, cooperative economy, the individual economy of peasants and handicraftsmen, the private capitalist economy and the state capitalist economy, in their spheres of operations, supply of raw materials, marketing, labor conditions, technical equipment, policies of public and general finance, etc., and in this way all components of the social economy can, under the leadership of the state-owned economy, carry out division and coordination of labor and play their respective parts in promoting the development of the social economy as a whole.”