Economic Planning: Industry and Land Reform

Rebuilding the economy and changing ownership

When Mao’s Communist government took power in 1949, China needed both economic recovery and political transformation. Years of warfare had damaged factories, mines, transport and power supplies. Agriculture was disrupted, and inflation made money rapidly lose its value. Around 85% of the population were peasants, so changes in the countryside would affect most Chinese people.

During 1949–52, the government repaired infrastructure, brought banking under state control and stabilised the currency. By 1952, industrial and agricultural production had regained their previous peak levels. This recovery provided a foundation for more ambitious planning.

The Communists also wanted to change who controlled economic resources. In the countryside, this initially meant taking land from landlords and giving it to peasants. In industry, it increasingly meant government ownership and direction. These policies connected economic development with the extension of Communist power.

Early land reform: giving land to the peasants

Many peasants owned little or no land and had to rent fields from landlords. High rents and debt repayments kept them poor. Land reform promised to end this dependence by redistributing land to those who worked it.

The Agrarian Reform Law of 30 June 1950 made land reform official policy across mainland China. Communist work teams entered villages to supervise the process. People were classified as landlords, rich peasants, middle peasants, poor peasants or labourers. These classifications helped determine whose property would be taken and who would receive land, although they did not always fit local circumstances accurately.

By 1952, most land reform had been completed. Land had been redistributed to about 300 million peasants who previously had none. This was a substantial material change: many families held deeds to their own land for the first time. It also removed the economic basis of landlord power and helped the Communist Party win support among beneficiaries.

Land reform’s human and political costs

Redistribution was accompanied by public confrontation. At ‘speaking bitterness’ meetings, peasants accused landlords of exploitation and described their grievances. These meetings challenged the fear and deference that had previously protected landlords. Work teams helped organise and sometimes prompted the accusations, making the campaign a means of political mobilisation as well as redistribution.

Landlords could be publicly humiliated, beaten or executed. Accusations could also become arbitrary, and some people were wrongly labelled as landlords so that their possessions could be seized. Land reform therefore cannot be judged only by the number of people receiving land: it involved violence, intimidation and innocent victims.

The policy brought peasants greater independence from landlords, but also brought the Communist state more directly into village life. That independence would prove limited as the government moved towards collective farming.

Collectivisation: from separate farms to shared production

Land reform and collectivisation were different policies. Land reform redistributed ownership to individual peasants; collectivisation reorganised those farms into larger units. The government hoped that sharing labour, animals and equipment would improve efficiency. Larger units would also make it easier to obtain agricultural produce to feed towns and support industrial development.

The change took place in stages:

• Mutual aid teams: usually six or seven households helped one another with labour and resources while retaining separate farms.
• Lower-stage agricultural producers’ cooperatives: households pooled farming resources. Their income depended partly on the land they contributed and partly on their labour.
• Advanced cooperatives, or collectives: farming was organised collectively, and income shares depended on labour contributed rather than land ownership. Families could still retain small private plots for vegetables, fruit and livestock for their own use.

For example, a family contributing more land could receive a larger land-based share in a lower-stage cooperative. In an advanced cooperative, that land contribution no longer determined its income share. This shows why collectivisation reduced the importance of the individual ownership established by land reform.

Collectivisation began gradually but accelerated in 1955–56. By 1957, about 93.5% of farm households belonged to advanced cooperatives. This greatly increased collective organisation and government influence over agriculture.

There were economic gains: agricultural output grew by an average of about 4% a year during the First Five Year Plan, with cooperation and more efficient organisation contributing to growth. However, agriculture received relatively little state investment. Its growth lagged behind industry, and the government struggled to increase grain purchases sufficiently to supply urban consumers. Collectivisation expanded state control, but it did not remove all the difficulties of feeding an industrialising country.

The First Five Year Plan, 1953–57

The First Five Year Plan aimed to turn China into a stronger industrial economy. It followed the Soviet model: central planning, increasing state ownership and a priority on heavy industry. Steel, coal, electricity, cement and machinery were important because they supplied the materials and power needed to build further industries.

Soviet planners helped draw up the programme, while Soviet engineers, technicians and scientists assisted with new industrial facilities. China also purchased Soviet equipment and complete plants. This support gave China access to expertise and technology needed for rapid development.

Government control over businesses increased through financial pressure and incentives encouraging private owners to sell to the state or enter joint public-private enterprises. By 1956, approximately 67.5% of modern industrial enterprises were state-owned and 32.5% were jointly owned under state control. None remained wholly private. Industrial policy therefore changed both production and ownership.

How successful was economic planning?

The First Five Year Plan achieved substantial industrial growth. Thousands of industrial and mining enterprises were constructed, including 156 major facilities. Iron and steel, coal, electricity, cement and machine building expanded, creating a stronger foundation for future development. Industrial production grew by an average of 19% a year between 1952 and 1957.

However, success was uneven. Investment concentrated on heavy industry at the expense of agriculture, whose growth was much slower. Expanding towns and industrial workforces increased the importance of reliable food supplies, yet grain procurement remained a concern.

Overall, the early policies transformed the relationship between the Chinese people and the state. Land reform weakened landlords and gave millions of peasants land, but brought severe violence. Collectivisation then limited peasants’ independent control of farming. Industrial planning produced rapid growth while bringing modern industry under state control. Economic development and Communist consolidation advanced together, but neither benefits nor costs were shared evenly.

Land reform, 1950–52

• 30 June 1950: Agrarian Reform Law enacted.
• Land redistributed to about 300 million previously landless peasants; most reform completed by 1952.
• Benefits: individual ownership, reduced landlord power and support for the Communist Party.
• Costs: ‘speaking bitterness’ meetings, humiliation, violence, executions and wrongful accusations.

Collectivisation

Separate farms → mutual aid teams → lower-stage cooperatives → advanced cooperatives.

• Mutual aid teams shared labour and resources.
• Lower-stage cooperatives rewarded contributions of land and labour.
• Advanced cooperatives rewarded labour, although small private plots remained.
• Accelerated in 1955–56; 93.5% of farm households were in advanced cooperatives by 1957.
• Improved cooperation and increased state control, but reduced individual independence. Agricultural output grew about 4% annually, while grain procurement remained difficult.