Guideline for the Economic Construction of New China

An outline of the inner-Party report on the economic construction of New China written by Liu Shaoqi. It was written in June 1949. It was included in the Selected Works of Liu Shaoqi (Part I) published by the People’s Press in 1981.

There are 14 items in the outline:

(1) As the War of Liberation is coming to an end, the central issue in the future is how to restore and develop China's economy.

(2) Economic construction is a new problem for our Party, and we are not ready yet. Our cadres are not yet familiar with the economic work.

(3) Our country is a big country with backward industry and unbalanced development. Under the leadership of the Communist Party, how and what route should China take to develop its economy?

(4) After the overthrow of imperialism and the rule of the KMT, New China’s national economy consists mainly of five economic components: state-run economy, cooperative economy, state-capitalist economy, private capitalist economy, small commodity economy and semi-natural economy.

(5) Among the five economic components, small commodity economy and semi-natural economy have absolute advantages. Cooperative economy is still very small today, but it can develop very quickly. The state-capitalist economy is also rare, but it may be organized to a large extent. The state-run economy is a sizable but still small component after taking over the national bureaucratic capital and after recovering a number of large enterprises in the future. But it allows the economic lifeline of society to be in the hands of the state and occupy the leading position in the national economy. Under the leadership of the proletariat and the Communist Party, the national economy composed of the above five economic components is called the new democratic economy.

(6) There are contradictions and struggles within the new democratic economy composed of the above five economic components. This is the struggle between the factors and trends of socialism and capitalism, that is, the struggle between the proletariat and the bourgeoisie. This is the basic contradiction within New China after the elimination of imperialist and feudal forces. Such contradictions and struggles will determine whether China's future development will be transited to a socialist society or a capitalist society. New democratic economy is a transitional economy.

(7) Cooperative economy is the ally and decisive assistant of the state-run economy. The state capitalist economy can also be the assistant of the state-run economy to a certain extent, while the small commodity economy and the semi-natural economy are a wavering force.

The state-run economy of the new democratic country under the leadership of the proletariat is an economy of socialist nature. The state capitalist economy is very close to the socialist economy. The cooperative economy is an economy with socialist nature in various degrees.

Private capitalist economy is the basis of the development trend of capitalism.

A large number of independent small producers, on the one hand, can accept various forms of co-operatives to varying degrees, on the other hand, they "engender capitalism and the bourgeoisie continuously, daily, hourly, spontaneously, and on a mass scale".

(8) The policy of economic construction of New China should be as follows: the five economic components mentioned above should be encouraged and developed, except those operated by speculation and harmful to the national economy and people's livelihood of New Democracy.

Under possible conditions, we should gradually increase the socialist component in the national economy and strengthen the planned nature of the national economy so as to gradually and steadily transition to socialism. This transition must go through a long and arduous process of struggle.

(9) Enterprises of imperialist countries in China will gradually be revoked or placed under state supervision.

(10) Establishment of cooperatives in areas where the agrarian reform has been completed. Schools should be set up to train cadres, and national cooperative leading bodies and cooperative banks should be established.

(11) The economic form of state capitalism is likely to be adopted on a large scale and is also much needed. Its forms are concessions, processing, orders, etc.

(12) Depending on the degree of development of national commerce and cooperative commerce, a rationing system for certain goods is appropriately implemented to ensure the livelihood of the military, workers, institutional staff and school students. For the market, the policy of price adjustment is used to fight against the profiteers.

(13) The assistance of the proletariat from the Soviet Union and the Eastern European countries is of great significance to the development of China's economy and the realization of the above tasks. Such assistance includes empirical, technical and financial assistance. In addition, in terms of goods and materials, mutual economic assistance within a certain extent and scope should be implemented.

(14) In the future, China's economic construction must oppose the following two wrong tendencies: one is the tendency of capitalism, the other is the tendency of adventurism. This outline has played an important role in guiding the recovery of the national economy in the early days of the founding of New China.