38. Transition to Communism in China

Despite the conviction of American leaders that Red China was deeply implicated in the Korean War, Beijing in fact was almost wholly preoccupied with gaining full control of China, including Taiwan and Tibet, and with carrying out a great socialistic transformation of Chinese society in keeping with the tenets of Marxism-Leninism.

The effort to drive Chiang Kai-shek out of Taiwan roused a grave conflict with the United States. But far into the interior of central Asia, where the U.S. Seventh Fleet could not venture, Beijing reasserted China's traditional authority over Tibet, which had come under British protection with the overthrow of the Manchu dynasty in 1911-12.1

One of the coincidences of history was that Beijing proclaimed a land-reform law on June 30, 1950, only five days after North Korean troops crossed the 38th parallel.2 This law was to eradicate landlords and landlord control of the countryside and to equalize so far as possible the land holdings of the tillers of the soil. Land reform on the same order already had been undertaken in parts of north China years before but the June 30 law was the formal adoption of revolutionary change to the country as a whole.

The law had as one of its purposes the overturning of the established power structure in the countryside, where 80 per cent of the population lived. But Liu Shaoqi, a top Red leader, pronounced another and equally basic reason: to pave the way for industrialization.3

Land holdings were first to be equalized; later the peasants were to be collectivized into cooperatives, where they could be controlled and ordered to produce specified amounts of grains and others commodities at low prices. These grains and commodities could be used to feed and supply the great masses of workers that Beijing intended to assign to new factories, mines and workshops. They could also provide exports to exchange for imported machinery and technology.

There was no way in pitifully poor and underdeveloped China to find enough capital to create an industrial state except by relying on the forced delivery of food and commodities by the peasants. Although Beijing was "leaning to one side" toward the Soviet Union, the parsimonious and poor Russians, still recovering from the enormous destruction of World War II, were unwilling and unable to advance the money and means to permit China to industrialize without immense and unprecedented sacrifices by the Chinese people themselves. With the United States having closed off Western sources of aid, the Soviet Union offered the only available source of assistance.4

Nevertheless, Mao Zedong and the other Communist leaders were too much attuned to China's 120 million peasant families to prescribe an immediate program of collectivization that was wholly beyond peasant tradition and self interest. The Red leaders specifically wished to avoid the catastrophic mistakes of Joseph Stalin in 1929-30 when he forced through collectivization in the Soviet Union. At that time, the Russian Communist leadership ordered the peasants to surrender without compensation their farm animals and their land to collective farms (kolkhoz). The Russian peasants were to be paid on the basis of the amount and skill of their work. The state was to receive required deliveries of food at low prices.

The Russian farmers, asked to give up their small amounts of wealth and get nothing in return, reacted quite logically. They killed and ate great numbers of their farm animals rather than surrender them. This mass slaughter reduced drastically the animals available for farm traction and food production, creating a deficit that took many years to make up. The peasants, now working for a state-directed kolkhoz, also often malingered on the job or devoted their attention to the small garden plots permitted around their cottages. The result was a drastic lowering of farm production, which Stalin made far worse by rounding up millions of persons who resisted actively, branding them kulaks ("well-to-do farmers," though many were poor) and shipping them off to Siberia. There most of them died.

For the Chinese peasant, the transition from independent farmer to a member of a collective was to be in gradual stages over a number of years. First was to be the redistribution of land and eradicaion of the rural society's existing power structure, based upon exploitation of those less fortunate by landlords (and often rich peasants). The next stage was to be creation of small mutual-aid teams to bring peasants out of the family farm as the working unit. The third stage was to be consolidation of teams into "lower" or elementary agricultural producers' cooperatives in which land was to be pooled and farmed as a collectively but each member was to retain ownership in his land and be paid partly according to his labor and partly according to his land ownership.

The fourth stage was to be transformation of the lower co-ops into "higher" or advanced agricultural producers' cooperatives. In these, private land ownership was to be abolished and members' rewards were to be based wholly upon the quantity and quality of their labor. These advanced co-ops were to be full-fledged collective farms differing from the Soviet kolkhoz only in name.5

In 1950, the Communist party encountered formidable problems: it had to bring about land reform, gain control of urban economies, stop hyperinflation and lay the groundwork for massive industrialization (to be formalized in the first five-year plan).6

Even as the PLA was occupying the cities of central and southern China in 1949, the party was establishing the conditions for long-term reform. The takeover of the cities astonished everyone, Chinese and foreigners alike. Soldiers refused gifts of food and other presents. They brought in supplies on their own backs and didn't requisition locally owned trucks. This was in sharp contrast with the situation in 1945 when returning Nationalist officers rushed to seize Japanese automobiles and other vehicles and to retain them for their own use.7

As soon as possible after capturing a city, the Communist leaders moved grain and other essential foodstuffs into the city to help stabilize prices and feed the people. They quickly exchanged the old Nationalist "gold yuan" for the Communist "people's notes" (Renminbi) at a rate of 10 yuan to 1 Renminbi. There was little immediate confidence in this new currency, especially since the people had been cruelly exploited by Nationalist hyperinflation for years. Speculation in currency commenced immediately and people continued to buy gold, silver and foreign currencies. The Reds made a dramatic new departure, however. They banned speculation in and circulation of gold, silver and foreign currencies but allowed individuals to hold deposits of them in the People's Bank. The deposits could be withdrawn on demand in Renminbi at the official rate at the time of withdrawal.

At first the public believed the decrees, like Nationalist orders of the past, need not be taken seriously. The ax fell on June 10, 1949, however, in Shanghai. The PLA threw a cordon around the stock exchange, the city's center for speculation in precious metals, and arrested over 2,000 persons. After lectures, the authorities allowed the majority to go after twenty-four hours. But they detained almost two-hundred persons whose offenses they deemed more serious. These included some of the most important speculators in Shanghai.8

The Communists also introduced a new "parity" or "commodity savings deposit unit" to protect savings against the worst effects of inflation. People's Banks converted Renminbi deposits into commodity units, representing the sum of the current market prices for about one pint of rice (or wheat or corn flour), one foot of cloth, one catty (1.1 pounds) of coal and one ounce of edible oil. When an individual withdrew his deposit, he received Renminbi in terms of the prices of these basic commodities prevailing at the time of withdrawal, plus interest. Eventually the government calculated all loans and paid wages of public employees and many others in terms of the units.9

Inflation continued because the Red government did not have enough income to cover expenditures and printed Renminbi as needed. However, the Chinese people discovered that the old grasping ways of the Nationalists were not to be continued. Within months Beijing centralized all finance and expanded the tax base. The central government stripped local governments of the power to spend based upon tax revenues. In 1950 a variety of agricultural, commodity, industrial and commercial taxes came under control of the center. The People's Bank served as the government treasury and controlled credit expansion.10 To encourage savings and absorb purchasing power, the government promoted the sale of government bonds (payable in commodity units). Though the public was hesitant, it eventually subscribed to the issues.

The government also instituted a graduated tax system designed to take wealth away from industrialists and businessmen. The rates were fairly heavy and the exceptions few. Although the urban well-to-do protested vehemently, the Red leadership replied that the peasants had borne the cost of government in the past and now the cities must contribute as well.11 Government revenues increased substantially and, though deficits continued, bond sales covered much of the shortfall. By March, 1950, the inflationary spiral had been broken. Although it resumed under pressures of the Korean War, inflation remained under control, due to continued growth of tax revenues and sharply reduced spending on nonmilitary items.12

The Communists recognized that reliable delivery of commodities, especially food, to city dwellers was imperative if unrest was to be avoided. The government rationed some essential items in short supply and built municipal stocks of basic necessities: rice, millet, salt, oil, coal, cloth. It threw these stocks on the market whenever prices showed signs, through speculation, of violent fluctuations.13

The new government's venture into industrial production was slow and deliberate. The first tasks were to restore the badly shattered national transportation network, primarily railways, and to reopen factories closed because of the war. The state initially made no attempt to operate industrial and transportation enterprises other than those inherited from the Nationalists. Formerly Nationalist-owned factories produced about a third of industrial output. But the government controlled much less of wholesale and retail trade. The economy remained largely market-oriented and the new Communist government promoted coexistence between the public and private sectors.

State control of private firms grew by gradual incorporation of private firms into public ownership through economic measures, such as a tax and credit policy which discriminated against private owners. During the period 1949-52 the share of modern industrial output by private companies dropped to less than a fifth. The share of private wholesale and retail trade also declined. Nevertheless, traditional handicrafts, which accounted for most industrial output, remained overwhelmingly in private hands.14

The Communist authorities clamped down hard on labor unrest in order to get production going again. In the first months of liberation, the Red leadership allowed workers to agitate for wage increases, cost-of-living allowances, increased severance pay and better treatment. Workers relied on old, tested techniques: strikes, slowdowns, sit-ins and harassing employers. The party, however, quickly brought labor under its control. It provided a basic level of economic security for workers by guaranteeing supplies of low-cost essential commodities. It developed cadres of activists, many of them young students hastily recruited, who were able to explain and implement the party's policy. And it extended a Communist-dominated union organization among key elements of the labor force.

The government authorized private companies to terminate operations and hire and fire on the basis of production needs, not the demands of workers. It limited severence pay to three months' wages. In cases of disagreement, it set up a three-step process: mediation, arbitration and, if this failed, submission to a People's Court for a binding decision.

Cadres advised workers to submit to "reasonable exploitation" for the time being. The extreme conditions made it impossible to gain much immediate improvement in wages or benefits. The firm hand of the party quickly brought labor disputes to an end and soon "spontaneous" requests came from workers in some industries to reduce their pay.15

Despite successes, the Reds had a number of difficulties and made errors as well. They were unable to alleviate the shortage of raw materials, especially as Nationalist ships were able to impose a partial blockade on shipping, which reduced imports of foreign supplies, paticularly at Shanghai, where the largest industries were located (aside from the heavy industry in Manchuria). The problem was most acute in the case of raw cotton, since textiles represented half of Shanghai's industrial output. Sufficient cotton was unattainable inside China and Beijing had to buy American cotton, circumventing the blockade by taking deliveries at unaffected ports in the north.

Initial successes of labor in getting concessions raised production costs in some cases so high that factories could not make a profit. A Communist effort to help workers, students and the poor by giving them a better rate of exchange from the old gold yuan to the new Renminbi currency (3 to 1 instead of the normal 10 to 1) had to be rescinded because speculators began to abuse the practice. In Beijing authorities for a while paid wages in millet. Merchants obliged to exchange millet wages for cash manipulated the price of the grain and the practice had to be abandoned. An effort to reduce government employment by firing unnecessary personnel ultimately failed because people let go had no other employment.16

One of the greatest successes of the Communists was their ability to gain a major source of energy and enthusiasm in the nation's students and intellectuals, especially students. Although theoretically a party of the proletariat and the peasant, the CCP recognized the tremendous value of these educated young people and assigned them as cadres to carry out party policy. Most of the students, of course, had been trained in Nationalist schools and colleges and possessed only the most rudimentary knowledge of Marxism-Leninism. The party set up a number of short courses where officials taught the most essential Communist elements before sending the students out to villages, factories, offices and other places to direct and oversee party directives. The students, despite having conflicts with the new regime because they stemmed from largely landlord or rich-peasant families, generally made substantial contributions to advancing Red policies.17

The decline of the Christian missionary movement in China was another success from the Communist point of view but a black mark against the regime in the West. Americans made up nearly two-thirds of all Protestant missionaries in China.18 Official policy was to protect missionaries because the Communist party wanted no martyrs in China. Missionaries generally received good treatment in cities. But officials and soldiers in the less sophisticated regions of the interior, especially in western China, sometimes confused Christianity with proscribed secret societies and behaved harshly. Catholics everywhere received worse treatment than Protestants. The Chinese considered celibacy of priests and nuns as unnatural and firm controls from Rome as threatening. The Catholics also had become too closely aligned with Chiang Kai-shek. The archbishop of China publicly supported the KMT and Catholic pressure resulted in Nationalist defense of the city and Catholic holdings at Ganzhou in southern Jiangxi. The principal Communist conflict with the Catholics, however, was over the tremendous estates the Catholic church had accumulated, which the Reds marked for confiscation.19

The first major change for the missionaries came when Red civilian authorities took over control in localities. Although they treated church property like any other, it no longer was exempt from taxation and this new financial burden was too heavy for some missions to bear. In the spring of 1950, Zhou Enlai told a group of Chinese Christians that they must no longer use "the church to cloak" the "nefarious imperialistic methods" of the United States. Beijing prevented new missionaries from entering China and forbade missionaries on furlough to return. But the government placed no restrictions on missionaries already in China, except to prohibit them from engaging in political activity. Some missionaries decided to remain, others to depart.

Conditions became intolerable for American missionaries only after President Truman quarantined Taiwan on June 27, 1950. Missionaries suddenly faced the threat of espionage charges if they possessed a radio transmitter or a gun. Red authorities arrested and convicted fewer than fifty missionaries but the intense pressure caused the great majority of those remaining (nearly two thousand) to leave China. On December 29, 1950, thirteen days after Washington froze Chinese assets in the U.S., Beijing ordered all Christian organizations to sever connections with American mission boards.20

* * * * * * * * * *

Gaining control of the cities and getting factories and trade restarted was vital to assuring Communist control of the country. However, the transformation of China's ancient society required revolutionizing the countryside. The Communists succeeded extremely well but the process took several years.

The overall Red agrarian policy was to "leave the middle alone while equalizing the two extremities." This meant, in theory, bringing all laborers and poor peasants up to middle-peasant level and reducing landlords and rich peasants to middle peasants.21 In practice, the party left the rich peasants alone and concentrated on eliminating the landlords. The policy, therefore, was to "confiscate the land of the landlord class and to redistribute it to peasants having insufficient or no land."

Party directives stipulated that only rich peasants' land rented out to tenants was to be confiscated. Although retaining rich peasants would not place all persons at the same level, the central government decided that preserving the high production of rich peasants was mandatory to the national economy.22 There also was another important reason: to make the agrarian-reform law appeal to the broadest possible constituency and to isolate the opposition to a tiny minority. The government therefore focused the class struggle upon the landlord and "neutralized" the rich peasant so he would not oppose land reform.23

The distinctions between poor, middle and rich peasants were relative.24 Poor peasants, who often had difficulty covering their minimum survival needs, made up well over half the populations of most villages, while middle peasants, whose returns usually gave them enough to live frugally but without actual deprivation, constituted some twenty to thirty per cent. Rich peasants and landlords comprised the rest.25

The Communist party accomplished land reform by sending into each village a cadre of three or four persons, often former students whose knowledge of peasant conditions was usually quite meager. The cadres' first task was to select activists, generally poor or landless peasants, though often middle peasants because they tended to have some education.

The first stage was to demand refunds of rent deposits and what the villagers considered to be excessive amounts of rent. This set off fierce confrontations between tenants and landlords and had the benefit, from the Communists' point of view, of developing class distinctions among the people. The second stage was to identify land ownership, sometimes difficult because landlords attempted to hide their holdings by having a friendly poor peasant, usually a relative, take temporary ownership of some land. The cadres were able to root out most actual ownership by informers.26

The third step was to force landlords to surrender all their surplus grain, leaving only enough for subsistence and to plant the next crop. The purpose was to strip the landlords of their economic power. During this period the cadres mobilized the people to make revolution in earnest against the landlords, usually by "su ku" ("speak bitterness") meetings. At these public meetings, village activists and cadres led peasants to air old grievances and anger against landlords for acts of suffering, cruelty and humiliation they had imposed upon the peasants. Reminder of these acts inflamed peasant hatred and made the process of confiscation easier.27

The final step was to confiscate the landlords' property, along with all land owned by clans, temples and other groups. Under guidance by the cadres, peasants' associations redistributed the land on an inexact but equitable formula. Cadres usually established some norm of what was sufficient in each locality for support per-capita, since all persons, male and female, young and old, were entitled to receive an equal share. Cadres added in the amount of land already owned by poor farmers, then divided it, along with confiscated land, on a per-capita basis among the poor and landless and also among the now-dispossessed landlords.28

Although the result of land reform was to give everyone somewhat equal shares, it did not eliminate disparities, since rich peasants still owned somewhat larger shares.29 As Vivienne Shue, an expert on land reform writes, "Land reform made a relatively few people poorer and a great many people somewhat better off. But it made no one rich."30

The government imposed graduated taxes based on output or production of the individual family. The tax rate was 6 per cent for extremely poor households, rising to 25 per cent for wealthy households. However, the government usually set the "normal productive value" of each plot well below the actual output. If farmers increased the normal yield, they paid no taxes on the surplus, a strong stimulus to increase production.31 Taxes after land reform probably did not drop but they became more equitable.32

One benefit to come out of the Communist takeover was a vast new emphasis on education. In most villages in 1950, only a minority of people could read and write. The Communists urged the peasants to send all children of both sexes to school and also set up free evening and winter classes for adults, taught by college and high school students, using simplified texts. The Communists established short training courses for peasant leaders in various economic and political subjects. The effect was sweeping. Even common peasants began to be subjected to growing pressure to possess literacy in order to get along in the new social and political order. The Communist regime communicated with the people directly in the form of notices, wall posters, directives, slogans and educational materials.33

When land reform came to an end, the peasants thought they would be left alone. The phrase they used was "fajia zhifu," translated usually as "to settle down and get rich." The peasants believed the old village order which had existed for centuries would continue.34 They didn't know that land reform was only the first stage on their journey toward collectivized agriculture and a weaning away from their traditional habits and attitudes.

In China population growth had put so much pressure on the available arable land as to turn agriculture into a form of intensive gardening, not an economic activity which could be modernized and expanded within its existing framework. Leninist theory holds that farming has to be transformed into an agricultural factory where machines and other mechanical tools are operated by skilled technicians and where modern principles like division of labor can be applied. Such farm factories, under Leninist principles, are necessary to lift the peasant out of his ancient trap where he is condemned to labor-intensive, low per-capita production as a way of life instead of as an economic pursuit.35

The Communist leadership selected mutual-aid teams as the device to bring peasants out of the family farm as the working unit and to refocus thought on the group as a stepping stone to full collectivization. To the peasants, mutual-aid teams were not radical innovations. Peasants everywhere for millenia have shared labor and tools to accomplish specific farming tasks. The Beijing government built on this tradition to create more formal mutual-aid teams of three to half a dozen or so families, generally those who already shared a working arrangement. The teams pooled labor, tools and draft animals. One change from old practice was government insistence that each team select a leader to be responsible for the team's work and relations with banks and other government agencies. Another departure was the introduction of a "work-point system" to measure and keep account of work done and compensation due each member.36

However, there was no conclusive evidence that mutual-aid teams enjoyed any fundamental superiority over the family farm. But the function of the teams was less to increase efficiency than to transfer production from private hands to an economy under state planning. The state could influence production by setting targets, like a certain number of catties of grain per unit of land or a certain percentage increase over previous years. Likewise, teams could be pitted in contests against other teams to raise production. In some cases this produced enthusiasm to grow bigger crops, in others it resulted in falsification of results.37

Despite the cooperation engendered in the mutual-aid teams and progressive taxation which hit the rich peasant hardest, deep-rooted attitudes were extremely difficult to change and a "rich-peasant mentality" reemerged. Efforts toward capitalism and private accumulation of wealth grew. Communist leaders decided the state would have to intervene more directly to restrict the economic advances of the better-off peasants and to establish conditions for the transition to socialism in the countryside.38

The problem for China was acute. Development of industry required low-cost food and other agricultural products for the workers in the factories. A small-peasant economy could not be forced to provide this extra grain at state-fixed prices, despite quotas and contests between mutual-aid teams. Peasants, left to themselves, would consume much of their increased production unless market prices were sufficiently high. This was a serious problem, recognized by Mao Zedong and others.

The solution was to move rapidly to collectives. Political control of collectives would insure delivery of agricultural products to the government at low prices. The days of the relatively relaxed mutual-aid teams were numbered.39

Chapter 39: Carthago delenda est >>

1. When India got independence after World War II, it stepped into Britain's shoes as de facto sovereign in Tibet and sought to foster Tibeten independence as a cover for Indian influence. Immediately after the Chinese Reds established the People's Republic, however, Beijing announced its armies soon would enter Tibet and ignored a New Delhi protest. Other preoccupations kept Beijing from moving into Tibet for over a year. In August, 1950, however, the Communist government announced Tibet's regional autonomy and religious freedom would be preserved and Chinese forces occupied eastern Tibet in late October, 1950. In May, 1951, Beijing signed a treaty with Tibet granting it political, economic and religious privileges. But the Reds feared the United States might be trying to arouse support for an independent Tibetan regime and in September, 1951, Chinese troops occupied Lhasa, the capital. Beijing now largely ignored the May agreement. India, more concerned with Red China's friendship, did not support Lhasa's appeal to the United Nations to endorse Tibet's claim to independence. See Lach and Wehrle, pp. 190-3; Neville Maxwell, India's China War, Harmondsworth, England: Penguin Books, 1972.

2. Yonosuke Nagai and Akira Iriye, eds., The Origins of the Cold War in Asia, New York: Columbia University Press, University of Tokyo Press, 1977, p. 218; Cambridge, vol. 14, chapter 2, "Establishment and Consolidation of the New Regime," by Frederick C. Teiwes, reader in government, University of Sydney, p. 85.

3. Cambridge, vol. 14, p. 85.

4. Ibid., pp. 65-66.

5. Yang, pp. 204-05.

6. Cambridge, vol. 14, p. 71; chapter 3, "Economic Recovery and the First Five-year Plan," by Nicholas R. Lardy, professor of international studies, University of Washington, Seattle, pp. 149-50.

7. Pepper, pp. 387-8.

8. Ibid., pp. 391-5.

9. Ibid., p. 396.

10. Cambridge, vol. 14, pp. 150-1.

11. Pepper, p. 396.

12. Cambridge, vol. 14, p. 151.

13. Pepper, p. 397.

14. Cambridge, vol. 14, p. 152-3.

15. Pepper, pp. 400-04.

16. Ibid., pp. 402, 405, 409.

17. Ibid., pp. 412-8; Cambridge, vol. 14, p. 74.

18. When the Reds founded the People's Republic in October, 1949, there were 236 Protestant mission schools, 248 hospitals, thirteen colleges and fifty theological institutes scattered through China, operated by 2,246 foreign missionaries. There were also forty urban YMCA centers. American Protestant property was worth over 70 million dollars, while Roman Catholic facilities and land were even more valuable. See Tucker, p. 102.

19. Ibid., pp. 104-05.

20. Ibid., pp. 103, 105, 205.

21. Yang, p. 151.

22. Ibid., p. 133.

23. Shue, pp. 43, 53.

24. Cambridge, vol. 14, p. 153.

25. Yang, p. 41. The precarious position of poor and landless peasants before the revolution is shown in C.K. Yang's thorough study of land reform in the village of Nanjing in southern Guangdong province near the city of Guangzhou. See ibid., pp. 58-61.

26. The definition of a landlord was not always easy, but the rule was that if his major source of income was from land rent, he was a landlord. See Shue, p. 48.

27. Ibid., pp. 73-74.

28. Ibid., p. 65; Yang, pp. 134-51. Under the land-reform law, all landlords' draft animals, farm implements, surplus grain, extra rooms or houses not needed for living space and furniture were subject to seizure and redistribution. However, the law prohibited seizing pigs, sheep, ducks, chicken and other "yard" animals. See Shue, pp. 48-49.

29. Shue, pp. 50-51.

30. Ibid., p. 90; Yang, p. 203; Cambridge, vol. 14, p. 87.

31. Shue, pp. 105-13, 121-2.

32. Ibid., pp. 126-36; Yang, pp. 157-8.

33. Shue, pp. 181-6.

34. Ibid., p. 99. The phrase literally means: "to set up a household and make one's fortune."

35. Yang, p. 204.

36. Ibid., p. 205; Shue, pp. 145-74, 181-3.

37. Yang, pp. 207-10.

38. Shue, pp. 190-1.

39. Yang, p. 213.