The Basic Completion of Socialist Transformation

The seven years after the founding of People's Republic of China in 1949 were "the seven years in which the socialist transformation was basically completed."

While advancing the socialist industrialization step by step, the state carried out socialist transformation of individual agriculture and handicraft industry through the way of mutual aid and cooperation, and socialist transformation of capitalist industry and commerce through the way of state capitalism. In 1956, the socialist transformation was basically completed. Following the establishment of the basic political system of socialism in China, the basic economic system of socialism was established. This was the most important mark for China's entry into socialist society.

By 1952, the proportion of various economic components in national income was 19.1% in the state-owned economy, 1.5% for the cooperative economy, 0.7% for the public-private partnership economy, 71.8% for the people’s small individual enterprises economy and 6.9% for the capitalist economy. That is to say, the people’s small individual enterprises economy and the capitalist economy together accounted for 78.7%, i.e. the vast majority of the national income. By 1956, the proportion of various economic components in national income was 32.2% for the state-run economy, 53.4% for the cooperative economy, 7.3% for the public-private partnership economy, 7.1% the people’s small individual enterprises economy, and was close to zero for the capitalist economy. In other words, the socialist state-owned economy, the cooperative economy and the public-private partnership economy, which were basically socialist in nature, accounted for 92.9%, i.e., the overwhelming majority of the national income.

The public ownership sector economy as the mainstay main in the national economy, was the main achievement of socialist transformation. This showed that China had successfully completed the transition from New Democracy to socialism, and the basic socialist system was fully established in China. The CPC Central Committee had originally planned to spend 18 years, but actually only 7 years was spent to basically complete the socialist transformation. Due to the rapid progress, there were also some shortcomings and deviations in this completion work. After the summer of 1955, the work was faced with some problems in the process of building agricultural cooperation and during the transformation of handicraft industry and individual businesses. The transformation of capitalist industry and commerce also had shortcomings of eagerness to succeed hastily. It was supposed that small vendors, small handicraftsmen and small proprietors with only a slight exploitative nature would guide them to take the path of cooperation, but they were brought into joint ventures with capitalists; and the original industrial and commercial use and treatment was not very appropriate.

Nevertheless, the socialist transformation of independent farmers, independent handicraft industry and capitalist industry and commerce were basically in line with the objective requirements and the completion of these transformations was a matter of great historical significance. Socialist transformation was a great change in production relations from private ownership to public ownership, which directly promoted the development of the productive forces. During the period of socialist transformation in an all-round way, that is, from 1953 to 1956, the total industrial output value of the whole country increased by 19.6%, and the gross agricultural output value increased by 4.8% annually on average. The economic development was relatively rapid, the economic benefits were relatively good, and the proportional relationship between the important economic sectors were relatively coordinated. The market was prosperous, prices were stable, and people's living standards improved significantly.

The “Resolution on Certain Questions in the History of Our Party” adopted by the Sixth Plenary Session of the Eleventh Central Committee of the CPC in June 1981 clearly pointed out that although there were some shortcomings and errors in the socialist transformation, "but on the whole, it was definitely a historic victory for us to have effected so difficult, complex and profound a social change in so vast a country with its several hundred million people, a change, moreover, which promoted the growth of industry, agriculture and the economy as a whole.”

The overall establishment of the basic socialist system had laid a foundation for promoting China's industrialization and modernization and laid the basis for the future progress and development of China. However, China had entered socialism without realizing industrialization. On the one hand, as Deng Xiaoping said, “At that time, China had an advanced proletarian political party, a preliminary capitalist economy and international conditions, so it was able to engage in socialism under underdeveloped conditions. This is the same as Lenin's idea of opposing vulgar productive forces theory.” On the other hand, as the CPC analyzed later, since the economy and culture of China were relatively backward, its socialism is only at the primary stage of socialism, in other words, the “underdeveloped” stage of socialism, and without the great development of productive forces, it was impossible to overleap this stage.