mschenhistory - 1952-7 First Five Year Plan

FIRST FIVE YEAR PLAN 1952-1957

Mao’s Aims for the Chinese Industry

Mao’s early attempts to modernize the Chinese economy carried the stamp of Soviet Influence
- Impressed by apparent success of Stalin’s Five-Year Plans
- Mao wanted PRC to build on the same model
- 1952, China’s first Five year pan introduced and develop the state-directed growth of heavy industry
- Partial basis already existed under Chiang’s rule when he established the National Resources Committee
  - Large number of NRC managers and over 200,000 of its workforce had stayed on in China after 1949
  - Between 1949-1957, migration from countryside to towns nearly doubled the urban population from 57 million to 100 million
  - Thus PRC began its economic reforms when it had a large potential workforce and considerable industrial expertise
  - In first two years, it brought under control the inflation
    - Rate of 1000 per cent in 1949, inflation dropped to manageable 15 percent by 1951
    - This was achieved by:
      - Slashing public expenditure
      - Raising tax rates on urban dwellers
      - Replacing Old Chinese dollar with new currency

The First Five-Year Plan 1952-6555

Areas targeted for increased production were coal, steel and petrochemicals
Attention was also to be given to development of Chinese automobile and transport industry

The Plan’s Scale of Success

China’s economic growth rate of nearly nine percent between 1952 and 1957 compared favourably with that of USSR in 1930s
Sino-Soviet Agreement of 1950, USSR agreed to provide China with economic assistance, but bargain was weighted very much in favor of the USSR
- Aid had to be paid with commercial concessions
- PRC required to send substantial portion of its bullion reserves to the USSR
- 10,000 USSR economic advisers came at price
Lynch: "Chinese found out they had been exploited rather than aided"