Central Instructions on Standards and Procedures for Handling Industrial and Commercial Households in the Five-Anti Campaign [1] (March 5, 1952) To all Central Bureaus, with copy to sub-bureaus and provincial/municipal party committees; also directly to Shandong, Qingdao, Nanjing, South China, Yunnan, and Xinjiang:  (1) The Central Committee has approved the Beijing Municipal Party Committee’s proposal “Standards and Procedures for Handling Industrial and Commercial Households in the Five-Anti Movement” [2], deeming it correct. Except for Articles 7 and 8, which are to be kept within the Party and not published, the remaining articles will be adopted and promulgated by the Administrative Council. Local party committees whose own standards and procedures differ from these should revise them accordingly. Should special circumstances necessitate certain modifications, approval must be sought from the Central Committee. The basic principles underlying this document are: leniency in the past, strictness in the future (for example, supplementary tax payments generally cover only the year 1951); leniency for the majority, strictness for the minority; leniency for those who confess, strictness for those who resist; leniency for industry, strictness for commerce; leniency for ordinary commerce, strictness for speculative commerce. It is hoped that party committees at all levels will adhere to these principles throughout the Five-Anti Campaign.

(2) In defining the categories of private industrial and commercial households under the objectives of the Five-Anti Campaign, they should be classified into five types: law-abiding, basically law-abiding, half-law-abiding/half-illegal, seriously illegal, and completely illegal. In large cities, the first three categories account for approximately 95 percent, while the latter two comprise about 5 percent. There may be slight variations among individual large cities, but the overall proportions remain fairly consistent. Medium-sized cities, however, differ considerably from these figures.

(3) These five categories include both bourgeois and non-bourgeois independent handicraftsmen and family-run businesses, but exclude street vendors. Beijing has 40,000 vendor stalls, which are to be dealt with in due course, though they cannot yet be addressed during this Five-Anti Campaign. Large cities may likewise postpone action on vendors for the time being, but it is advisable to proceed with independent craftsmen and family businesses; the municipalities of Beijing and Tianjin are currently doing so. Medium-sized cities would do well to include both independent traders and vendors in their Five-Anti efforts. Independent traders who employ no workers or clerks—though some households may have apprentices—number very highly in our major and medium-sized cities. In Beijing, they constitute roughly 38 percent of the city’s 50,000 industrial and commercial households, totaling around 19,000 establishments. Many of these are law-abiding, while others are basically law-abiding yet engage in minor infractions (such as small-scale tax evasion, or what are termed “minor problems”). A small minority fall into the category of half-law-abiding/half-illegal, involving more substantial tax evasion—some cases even reaching one or two hundred million yuan. Certain family-owned shops have a larger workforce and do not hire clerks, conducting trade volumes far exceeding those of small capitalists employing two or three assistants; consequently, their tax evasion tends to be more significant. Beijing’s bourgeois class comprises 31,000 households, of which 17,500—accounting for 35 percent—employ fewer than three workers or clerks. It is imperative that we not only conclude the current Five-Anti investigation concerning this large group of small capitalists but also endeavor, as far as possible, to complete proceedings against an equivalent number of independent traders, thereby securing beneficial outcomes both for the ongoing Five-Anti campaign and for future economic development. Generally speaking, neither of these two groups presents major difficulties, and reaching conclusions on their cases should pose no great challenge. Once such determinations are made, we can expect broad popular support. However, if individual cities deem it more convenient to first conclude matters for other categories of traders and defer decisions regarding independent merchants, that approach is also acceptable.

(4) Based on local conditions, we have decided to revise the previously established four-category classification of traders into five categories, splitting the single “law-abiding” category into “law-abiding” and “basically law-abiding,” while leaving the other three categories unchanged. Among Beijing’s 50,000 industrial and commercial households (excluding vendors), law-abiding establishments make up approximately 10 percent, or about 5,000 households. Basically law-abiding households account for roughly 60 percent, or around 30,000. Half-law-abiding/half-illegal households constitute approximately 25 percent, or about 12,500. Seriously illegal households represent roughly 4 percent, or about 2,000. Completely illegal households form approximately 1 percent, or around 500. By distinguishing between fully law-abiding traders and those with minor infractions who are otherwise basically law-abiding, and further differentiating between those evading less than one million yuan in taxes and those evading between one and two million yuan—providing corrective guidance without requiring additional tax payments for the former, and waiving payment for the first million yuan while demanding restitution for amounts exceeding that threshold for the latter—a significant educational effect could be achieved.

(5) Bribery constitutes a serious offense and must be dealt with rigorously. However, the number of offenders is substantial. In Beijing, setting aside petty kickbacks and instances of extortion—which are not considered bribery—there remain over 13,000 households, accounting for 26 percent of the total industrial and commercial population, or more than a quarter. Of these, 169 engaged in bribery exceeding 100 million yuan; 172 involved sums ranging from 50 million to 100 million; 195 from 30 million to 50 million; 642 from 10 million to 30 million; 3,161 from 1 million to 10 million; and 8,748 below 1 million yuan. The Central Committee had originally planned to impose supplementary fines on approximately 4 percent of offenders, to detain and fine another 0.5 percent, and to imprison (including capital punishment in a few cases) yet another 0.5 percent, bringing the total affected to roughly 5 percent (in medium-sized cities, this proportion is lower, with some areas reaching only 3 percent or even less). Given the sheer scale of bribery, it would be highly inappropriate to penalize only a small fraction while leaving the vast majority unpunished. Conversely, if sanctions were extended to all offenders, more than a quarter of the entire industrial and commercial sector would be subject to punishment, resulting in an excessively broad crackdown. Therefore, Article 6 of the Beijing proposal includes the addition of the phrase “except for cases of minor significance.” Beijing intends, upon implementing the measures, to exempt the over 8,700 households involved in bribes below 1 million yuan from monetary penalties, instead recording the act of bribery in official notices and issuing a formal warning. This point merits your attention as well.

(6) In several major and medium-sized cities, certain municipal party committees lack a clear understanding of the situation regarding the various categories of traders, and their strategic approaches to differentiated treatment remain vague. Furthermore, the organization and training of trade union and government work teams (or inspection groups) have been conducted in a haphazard manner, leading to the premature launch of the Five-Anti Campaign and subsequent confusion. It is urged that these committees take note of this issue and promptly rectify it. Moreover, inspections of illegal traders must be strictly controlled by the municipal party committee and government; no agencies should independently dispatch personnel for inspections, nor should capitalists be arbitrarily brought in for interrogation. Regardless of whether it is the Three-Anti or Five-Anti Campaign, the use of physical coercion to extract confessions is strictly prohibited, and every effort must be made to prevent suicides. Where such incidents have occurred, immediate preventive measures should be put in place, ensuring that both campaigns proceed smoothly and soundly toward complete success.

(7) At present, counties, districts, and townships are not conducting either the Three-Anti or Five-Anti Campaigns. Further instructions regarding when and how these campaigns will be carried out will be issued separately by the Central Committee. Those who have already initiated trial Five-Anti campaigns in counties or Three-Anti campaigns in districts must exercise strict control to avoid disrupting spring plowing and other economic activities. Similarly, medium-sized cities should not launch the Five-Anti Campaign simultaneously across the board, but rather in phased implementation under tight supervision. These points have been communicated previously and are reiterated here. Issued by the Central Committee on March 5, based on Mao Zedong’s manuscript. Abbreviated and included in Volume 5 of the Selected Works of Mao Zedong.

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Notes [1] When incorporated into Volume 5 of the Selected Works of Mao Zedong, this instruction had its fifth section removed, with other portions undergoing minor textual revisions. [2] Refers to the Beijing Municipal Party Committee’s “Standards and Procedures for Categorizing and Handling Industrial and Commercial Households in the Five-Anti Movement.” The document consists of nine articles. Upon transmission by the Central Committee, Mao Zedong appended the following passage after Article 9, which reads: “Profits derived from tax evasion and shoddy workmanship shall generally be subject to supplementary payment only for the year 1951; no retroactive restitution is required for periods prior to that year. However, those who refuse to confess or whose offenses are particularly grave may, at the discretion of the authorities, be ordered to make up for one and a half or two years’ worth, or even two and a half or three years’ worth.” The added text states: “Profits from all other unlawful acts shall generally be traced back to the founding of the People’s Republic of China. Only concealment or misappropriation of enemy-occupied or puppet-regime property shall be calculated from the date of Japan’s surrender. Where the amount concealed or misappropriated is small and poses no serious threat to the state, prosecution may be waived.”