Notes by the North China Bureau on a Report Concerning the Adjustment of Industry and Commerce (June 2, 1950)

North China Bureau: Your report of May 31 [1] has been received. I believe that the policy you are now adopting to adjust industry and commerce and improve relations between the public and private sectors is correct, and I urge you to implement it accordingly.  Mao Zedong June 2

Printed from the manuscript.  Notes  [1] Refers to the report submitted by the North China Bureau of the CPC Central Committee to Mao Zedong and the Central Committee on matters concerning the policy for adjusting industry and commerce and improving public–private relations. In response to the sluggish state of industry and commerce in North China and its underlying causes, the report put forward six measures:

First, ensure that cadres fully understand the principle that the “four friends” must cooperate and that the five types of economy must be planned and managed under the leadership of the state-owned sector, thereby correcting “left” tendencies. The key at present lies in correctly implementing the policy of “giving due consideration to both public and private interests while benefiting both labor and capital,” overcoming the erroneous ideas of “putting the public interest first before the private” or “favoring the public to the exclusion of the private,” and even attempts to eliminate commercial capital.

Second, dispel the anxieties of private industrialists and merchants by reaffirming the government’s policy of stabilizing prices and preventing sharp rises and falls. At the same time, adopt measures to encourage enterprises to resume operations as soon as possible and maintain normal production levels.

Third, delineate spheres of operation. With regard to major materials essential to the national economy and people’s livelihood—such as grain, coal, oil, cloth, and tools of production—the state-owned trade sector should control one-third to one-half; all other commodities, however, should be left to private enterprise, which should be allowed to earn legitimate profits.

Fourth, establish specialized organizational structures to guide private industry and commerce. Governments at the central, provincial, and county levels should set up dedicated administrative bodies, labor–management consultative meetings and federations of industry and commerce should be widely established, and the contract system should continue to be effectively promoted.

Fifth, educate workers, whether employed in public or private enterprises, to regard the maintenance and development of production as their own responsibility, and to correct any failure to observe labor discipline or unreasonable demands for higher wages and benefits. As for cadres engaged in economic work, they should receive enhanced policy education so that they not only master their professional tasks but also deepen their understanding of the Party’s general line and overall policies for economic construction, thereby ensuring the correct implementation of the Party’s economic policies.

Sixth, it is proposed that, with the exception of heavy industry and large-scale light industry, which should remain under direct central administration, the remaining state-owned industries be entrusted to provincial authorities, as this would be more advantageous. Profits earned by state-owned industrial and commercial enterprises should be uniformly prescribed by the government.