Letter to Huang Yanpei [!]
(September 29, 1952)

Mr. Renzhi:

Your esteemed letter of September 22nd has been received; many thanks. I apologize for the delayed reply, as I was engaged in consultations with the financial and economic authorities.

The issues you raised concerning taxation and labor-management relations indeed warrant careful adjustment. According to reports from comrades in the Financial and Economic Commission, some adjustments have already been made, others are underway, while still others remain to be studied further.

As for the few points I discussed with you previously regarding small and medium-sized industry and commerce [3], they were rather brief and not suitable for public release. It would be more appropriate for the relevant financial and economic bodies to solicit opinions from all sides and handle such matters accordingly.

I have forwarded your comprehensive letter together with several enclosures to Comrades Chen Yun and Bo Yibo [4] for their consideration and study. Our office has also received numerous letters from industrial and commercial circles, which clearly reflect their views on shortcomings in our work.

These days I have been quite busy; I hope to have an opportunity to discuss this matter with you in person at a later date.

Best wishes,

Kangji

Mao Zedong

September 29th

[!) Huang Yanpei, whose courtesy name was Renzhi, was then Vice Premier of the Government Administration Council and Chairman of the Central Committee of the China Democratic National Construction Association.
[2)
Huang Yanpei’s letter mentioned that small and medium-sized industrialists and merchants in Shanghai were burdened by taxation. Because they had virtually no business from January to May 1952, they found it particularly difficult to pay one-third of their 1952 income tax liability by the end of September, based on their 1951 tax assessment. The letter also touched upon certain negative sentiments within Shanghai’s business community, suggesting that reversing these attitudes would require addressing both tax policies and labor-management relations. Attached to the letter was a transcript of a conversation between Mao Zedong and Huang Yanpei on September 10, 1952, concerning small and medium-sized industry and commerce, which Huang requested Mao review.
[3]
During his discussion with Huang Yanpei on September 10, 1952, Mao Zedong inquired about the post-“Three Antis” and “Five Antis” campaign conditions across various regions, with particular emphasis on the situation of small and medium-sized enterprises. Upon learning that these businesses indeed faced unique challenges requiring specific solutions, Mao outlined the following suggestions: First, small and medium-sized enterprises could move toward joint operations—starting with collaborative efforts among three to five, seven to eight, or even twenty firms—and gradually progress to pooling capital, ultimately forming corporations. Second, historically, most small enterprises had depended on larger ones for their existence, especially small factories relying on big factories for raw materials and technical support. However, following recent changes in circumstances, particularly after the “Three Antis” and “Five Antis” campaigns, large enterprises may no longer play the role of nurturing smaller ones. Government loans and contract manufacturing orders often fail to reach small factories directly, a limitation that cannot be easily overcome. Under such circumstances, it might be feasible to designate a specific large factory to provide assistance to a group of small factories, with the government extending loans and placing contracts with that larger enterprise on the condition that it take responsibility for supporting those smaller firms. For example, in the case of contract manufacturing, the larger factory, under proper supervision and guidance, could allocate work to smaller factories based on local demand, capacity, and fair compensation. Similarly, large retail outlets—particularly state-owned department stores—could supply goods to small shops at reasonable prices for resale, thereby helping small businesses resume operations. Of course, implementing these measures would require the development of appropriate procedures. This “large-leading-small” approach could serve as one viable path forward for small and medium-sized enterprises. Third, where conditions permit, transforming small and medium-sized enterprises into cooperatives would also be a viable option. Which of these paths proves most suitable, or whether there are other alternatives, would depend on the actual circumstances and should be decided accordingly.
[4]
Chen Yun was then Vice Premier of the Government Administration Council and Director of the Financial and Economic Commission. Bo Yibo was Vice Director of the Financial and Economic Commission and Minister of Finance.