Central Instructions on the Handling of Various Categories of Capitalists During the Five-Anti Campaign (February 15, 1952)  To the Tianjin Municipal Party Committee, all Central Bureaus with transmittal to their subordinate branches and to the provincial, municipal, and district party committees; also to the Central Financial and Economic Commission:   (1) The Central Committee approves the report submitted by the Tianjin Municipal Party Committee on February 14 [1], deeming it correct. All municipal party committees and people’s governments should, while launching the Three-Anti and Five-Anti campaigns, simultaneously ensure the normal functioning of economic life. Should an abnormal situation arise within a short period, steps must be taken promptly to restore normalcy.

(2) In order to maintain the normal course of economic activity, in addition to encouraging law-abiding industrial and commercial operators who are not implicated in any wrongdoing—numbering 10,000 in Beijing and over 10,000 in Tianjin—to continue their business as usual, those whose violations are minor and who operate on the borderline between legality and illegality should have their cases concluded in several batches following the commencement of the Five-Anti campaign, so as to reassure them. Such operators constitute the vast majority of all industrial and commercial entities—in Beijing they account for more than 37,000 out of a total of 50,000. Most of them are involved only in tax evasion or underreporting, while a smaller number have engaged in embezzlement or theft, though these offenses are not serious. For these individuals, after mobilizing workers and shop assistants to clearly demarcate the boundary between labor and capital, to encourage them to expose instances of tax evasion, embezzlement, and theft, and to persuade them through various means to confess their illegal acts, a decision should be reached to require them to pay one year’s back taxes; those found guilty of embezzlement or theft must return the ill-gotten gains, and they should be exempted from fines. This “return only, no penalty” policy can stabilize the great majority of capitalists and help build a broad united front for the Five-Anti Campaign. A genuine Five-Anti united front can be formed only after several batches of such capitalists have been given “return only, no penalty” decisions and these decisions have been publicly announced. Approximately two or three batches of such conclusions should be reached about one month after the campaign begins, and the entire process must be completed within one and a half to at most two months. The municipalities of Beijing and Tianjin must finish this work within the current month; delays would be highly detrimental.

(3) The two categories of capitalists mentioned above—the law-abiding and those operating on the borderline between legality and illegality—account for roughly 95 percent of the total capitalist class. Only by winning them over can the remaining approximately 5 percent of reactionary capitalists be completely isolated. Therefore, the policy of “return only, no penalty” (and certainly no arrests) must be strictly adhered to in dealing with borderline offenders, and efforts should be made to reach conclusions as early as possible. It is acceptable even if some issues remain unresolved; attempting to fully clarify every matter concerning these individuals during the present campaign would inevitably prolong the process and prove disadvantageous to the overall situation.

(4) The remaining approximately 5 percent of capitalists may be further divided into two groups: (a) Those who have committed serious but not wholly illegal offenses. This group constitutes about 4 percent of the total. Our policy toward them is to conduct investigations, collect back taxes, recover stolen property, and impose fines, without resorting to arrest. (b) Those who have acted in complete violation of the law. This subgroup accounts for roughly 1 percent of the total. It is further subdivided into three categories. The first category involves collecting back taxes, recovering stolen assets, imposing fines, and making arrests, but without sentencing to imprisonment. That is to say, they are detained for a few days, then released on bail pending further summons. The purpose of the arrest is solely to dampen their reactionary spirit, not to secure a prison sentence, since excessive use of imprisonment would be counterproductive. This category comprises about 0.5 percent of the total. The second category entails collecting back taxes, recovering stolen property, imposing fines, making arrests, and sentencing to imprisonment up to and including confiscation of property. This group also represents approximately 0.5 percent of the total and should not be allowed to grow too large, particularly with respect to the extent of property confiscation. The third category calls for the death penalty and confiscation of property. This last group must be kept extremely small; Beijing and Tianjin plan to execute only about ten individuals in total, and such executions should not take place prematurely. Any executions of capitalists elsewhere must be approved by the Central Committee before being carried out, for capital punishment differs from that meted out to counter-revolutionaries and must be approached with utmost caution, lest adverse consequences ensue.

(5) The general criteria for arresting capitalists are threefold: first, that they have acted in complete violation of the law; second, that they have resisted the campaign; and third, that they enjoy poor standing among their peers. If only the first two conditions are met, without the third, any arrest would undoubtedly alienate public support. By “poor standing,” we mean that the majority of fellow capitalists regard them as morally reprehensible.

(6) With regard to the allocation of processing orders and other matters pertaining to the restoration or maintenance of normal economic life, the Central Financial and Economic Commission is requested to address these issues expeditiously.

Printed on February 15 by the Central Committee, based on Mao Zedong’s handwritten draft.

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Note [1]: Refers to the report submitted by the CPC Tianjin Municipal Committee on February 14, 1952, to Mao Zedong, the Central Committee, the North China Bureau, the Central Financial and Economic Commission, and Peng Zhen, requesting guidance on maintaining normal economic activity during the Three-Anti and Five-Anti campaigns. The report states that since the onset of the Three-Anti Campaign, both internal and external exchanges, as well as urban–rural interactions, have come to a standstill, significantly impacting Tianjin’s economy. Wholesale trade has declined by half compared with previous levels; banks are reluctant to extend credit, resulting in severe liquidity constraints; private consumers are refraining from purchasing goods, and merchants lack the incentive to sell; industrial production has begun to decline; and tax revenues have dropped markedly. A segment of the working population directly affected by these developments has already voiced complaints. Without prompt measures, the economic contraction will continue to deepen, and if left unchecked for too long, the damage to the city’s economic vitality could become irreparable. Following the Three-Anti Campaign, the task of economic recovery will face even greater challenges, with further adverse effects on production and tax collection. After careful consideration of the situation, the Municipal Party Committee has determined that, without undermining the Three-Anti Campaign, it is imperative to attend concurrently to economic affairs. Concerning the property of corrupt merchants arrested during the Five-Anti Campaign, past efforts had focused primarily on auditing their accounts, neglecting the actual control of funds; as a result, many of these individuals managed to conceal substantial assets prior to their arrest. Once an asset freeze was imposed, the capitalists’ representatives simply ceased cooperation, while workers demanded resumption of operations, yet there were neither raw materials nor sufficient capital, and much of the machinery was in disrepair, creating numerous difficulties. Ultimately, the municipal finance bureau was compelled to advance wages to keep the workforce employed. The Municipal Party Committee believes that a blanket asset freeze is not an appropriate measure; rather, steps must be taken to prevent capitalists from siphoning off funds and thereby undermining the economic gains achieved through the Five-Anti Campaign.