China

Urban socialist changes

Mao combined this massive transformation of the agricultural sector with a call for the “socialist transformation” of industry and commerce, in which the government would become, in effect, the major partner. In Chinese communist fashion, this change was not simply decreed from above. Rather, extreme pressures were put on private merchants and capitalists in late 1955 to “volunteer” their enterprises for transformation into “joint state-private” firms. The results were sometimes extraordinary. For example, all the capitalists in a given trade (such as textiles) would parade together to CCP headquarters to the beat of gongs and the sound of firecrackers. Once there, they would present a petition to the government, asking that the major interest in their firms be bought out at the rate that the government deemed appropriate. The government would graciously agree.

Such actions can be understood against the background of the experiences of the capitalists in the previous few years. The Five-Antis campaign of 1952 had terrorized many of them and left most deeply in debt to the government, owing purported back taxes and financial penalties. In any case, the state sector of the economy and the state controls over banking had increased to such a degree that the capitalists relied heavily on the government for the contracts and business necessary to keep from bankruptcy. After the Five-Antis campaign, the government extended the reach of its trade unions into the larger capitalist enterprises, and the “joint labour–management” committees set up under government pressure in those firms usurped much of the power that the capitalists formerly had exercised. Thus, many Chinese capitalists saw the socialist transformation of 1955–56 as an almost welcome development, because it secured their position with the government while costing them little in money or power.