Heavy industry

Sergei Witte, the Minister of Finance, wanted Russia to catch up with the industrial economies of Western Europe. His approach concentrated on heavy industry and transport: Russia needed coal, iron and steel to supply factories and build railways.

Peasants could sell their produce rather than surrendering it through grain requisitioning, and small businesses could operate privately. However, the state retained control of heavy industry and large businesses. The NEP was therefore not a completely free-market economy.

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.