Making the Scale of Development Commensurate with the National Strength

Speech delivered by Chen Yun at a meeting of Party committee secretaries from each province, autonomous region and municipality directly under the Central Government on January 18, 1957. It is included in Volume 3 of the Collected Works of Chen Yun.

Chen Yun fully affirmed the great achievements made in the socialist transformation and socialist economic construction of China in 1956 and pointed out the problems existing in the financial and economic work in 1956. He argued that these problems were mainly manifested in the overspending on finance and credit funds, and the tension in the supply of means of production and consumer goods.

Chen Yun also proposed concrete measures to solve financial and economic problems in his speech, including initiate a campaign to increase production and practice economy, appropriately reducing the amount of capital construction investment, and controlling the rate of increase in people’s purchasing power in a planned way. He emphasized that the scale of development should have been commensurate with the national capacity. In order to avoid the danger of economic development exceeding the national capacity, Chen Yun proposed five suggestions: Firstly, financial revenue and expenditure and bank credit should have been balanced, with a small surplus. There would be an overall balance between purchasing power and the supply of goods and materials only if revenue and expenditure and credit were balanced. Secondly, materials and goods should have been distributed rationally, according to priorities. Essential production and consumption should have been guaranteed prior to conducting necessary construction. There should have been a prioritized sequence for the distribution of supplies like steel, timber. Thirdly, the people's purchasing power should have been increased to some extent, but the rate of increase must have been commensurate with the supplies of consumer goods. Fourthly, in looking at the proper balance between capital construction and financial and material capacity, we should have not only considered the current year, but also the past and the future. Fifthly, China's agricultural situation greatly restrained the scale of economic construction. On this basis, Chen Yun proposed that we should have paid attention to the study of the proportional relationship of the national economy. If we did not carefully study the proportional relationships within the national economy, we were bound to bring about an unbalanced and chaotic situation. “To properly work out the proportional relationships, we cannot rely on books and mechanically copy or apply what has been written. We must work them out based on the current economic situation in our country and on our past experience. We should research which proportions are workable, but more importantly, we should deal with actual problems.”

This speech is a summary of China's experience in the construction of the First Five-Year Plan. The correct proposals put forward by the speech, such as maintaining the balance of revenue and expenditure, the balance of supply and demand for materials, and the balance of bank credit, are of great significance in curbing the bias of greed for more and speed and impatience and adventurism that tends to occur in socialist construction.