This year, the Border Region has witnessed another revolutionary advance in production: the organization of both public and private labor forces through cooperative structures. This has galvanized the masses’ enthusiasm for production, boosted labor efficiency, and significantly expanded output.

In the past, the feudal exploitative relations prevailing in the Border Region had severely constrained productive forces. Land reform had already dismantled these feudal shackles in half of the region, while rent and interest reductions had considerably weakened them elsewhere. Taken together, more than half of the feudal exploitation system had been shattered across the entire Border Region—this constituted the first major revolution. However, without shifting from individual to collective modes of production, further development of the productive forces would remain impossible. Hence, it became imperative to establish labor mutual-aid organizations based on the individual economy—without undermining private property—that is, agricultural production cooperatives among peasants. Only such a transformation could substantially raise productivity.

The experience of the Shaanxi–Gansu–Ningxia Border Region demonstrates that ordinary mutual-aid teams can achieve the output equivalent of three workers with just one, while model teams can match or even surpass the output of a single worker. If all peasant labor were organized into collective mutual-aid arrangements, the region’s overall productive capacity could be increased by 50 to 100 percent. This approach is applicable not only to all anti-Japanese base areas but, in due course, to the whole country—a development that will merit a prominent place in Chinese economic history. Notably, this reform entails no change in the tools of production, nor does it convert outputs to public ownership; rather, it transforms the social relations of production. Such a transformation constitutes a revolution in the very system of production—the first of its kind.

Currently, the Border Region boasts a total labor force of 350,000. This year, over 30,000 people have been regularly engaged in collective labor through mutual-aid teams, accounting for roughly one-tenth of the total workforce. Meanwhile, ad hoc mutual-aid arrangements are widespread: in Yan’an County, for example, some 70 percent of farmers participate. These efforts can be further expanded next year. Should the proportion of regularly organized collective labor rise to about one-twelfth of the total—roughly 100,000 people—and if temporary mutual-aid networks could reach Yan’an’s level, involving an additional half of the labor force, a formidable labor army would emerge.

Our military units, government organs, and schools also operate along cooperative lines. For instance, a company functions as a small cooperative, while a brigade serves as a larger one. Among various cooperative production initiatives within these institutions, the experience of the Yangjialing Transport Team is particularly instructive. Prior to its reorganization, the team possessed eight carts and sixteen pack mules. Under normal circumstances, it was expected to transport at least 170,000 jin of goods daily, yet actual output seldom exceeded 190,000 jin. Beyond standard supply allowances, the unit required an additional monthly subsidy of 60,000 yuan to cover operating expenses.

This year, guided by the principle of mutual benefit for both public and private interests, the transport team was transformed into a cooperative. The state contributed the eight carts, sixteen pack mules (later increased to twenty), and all associated equipment, valued at eighty shares, while each of the ten drivers received one share based on their status, totaling one hundred shares. Profits were distributed monthly at a rate of eighteen cents per share. All costs—including those for personnel, livestock, and supplies—were henceforth borne entirely by the cooperative. Remuneration for transporting state materials was calculated according to distance and weight, eliminating the need for supplementary subsidies. At the same time, the cooperative took steps to improve the drivers’ living conditions. After thorough explanation, all members unanimously approved the new arrangement. As a result, daily transport volume doubled from 190,000 to 389,000 jin, representing a 100 percent increase and exceeding normal capacity by 30 percent. Moreover, the drivers’ sense of responsibility and initiative markedly improved, substantial savings were realized in funds and equipment, and greater care was taken of the animals. For example, whereas previously torn sacks containing flour might be left unrepaired, drivers now carry needles and thread to mend them themselves. Open-secret embezzlement of horse feed has disappeared, and minor damage to vehicles or equipment is now addressed by making do rather than demanding immediate replacement. Livestock management has likewise become more attentive. Following the reorganization, transport expenses have fallen by one-third; whereas the unit once required an extra 60,000 yuan per month beyond standard allowances, it now operates profitably without any subsidies, generating several tens of thousands of yuan in surplus each month. Other government agencies that adopted this approach have likewise achieved remarkable results. The Administration Bureau’s transport battalion, comprising one hundred head of livestock and ten carts, previously handled only 110,000 jin of cargo per month. After restructuring as a cooperative, its monthly throughput rose to 185,000 jin, a 50 percent increase.

Therefore, I urge everyone to consider extending this cooperative model more broadly to our state-owned factories and farms. Such measures are beyond the reach of capitalist countries and the Kuomintang; only we are capable of implementing them, because our aim is not to exploit the people but to pursue a policy that balances public and private interests. Within the military, for example, the 359th Brigade engages in wool-spinning and crafts made from willow and elm branches, with the following rule: for manual labor using state-owned tools, four-fifths of the output goes to the public sector and one-fifth to the individual; for work conducted without such tools, one-third is allocated to the public and one-third to the individual. This arrangement satisfies public needs while effectively supplementing soldiers’ allowances and incorporating cooperative principles. The essence of cooperation lies in serving the masses—to keep their interests foremost in all our endeavors. This fundamental distinction sets us apart from the Kuomintang and forms both the starting point and ultimate goal of the Communist Party’s revolutionary mission: to draw strength from the people, act for their benefit, and resolve problems from their perspective, thereby ensuring success in all undertakings. Accordingly, every Communist Party member must prioritize the welfare of the people; commanders should attend to the needs of their troops; and leaders of government organs and schools should ensure adequate support for kitchen staff and other auxiliary personnel. This mass-oriented approach to production overturns earlier erroneous theories and is the only viable framework for achieving robust industrial and agricultural development. I call on comrades throughout the country to actively promote cooperative production. Production in military units, government offices, and schools is inherently cooperative, as is collective mutual aid in rural areas. There are also comprehensive multi-sectoral cooperatives, such as salt-carriage transport cooperatives and artisanal mutual-aid cooperatives. By developing these diverse cooperative models, we can collectively lift all sectors of society out of poverty and overcome the current difficulties confronting our bases behind enemy lines.