Completing the Transformation from Capitalism to socialism through State Capitalism [1] (September 7, 1953) () Over the past three-plus years, some work has been done, but we have been preoccupied with other matters and have not devoted sufficient effort.
From now on, we must do more. () With more than three years of experience, it can already be affirmed that completing the socialist transformation of private [industry and commerce] through state capitalism is a sounder policy and approach. (3) The principle set forth in Article [2] of the Common Program should now be clearly defined and gradually concretized.
By “clearly defined” is meant that, first and foremost in the minds of leading cadres at both central and local levels, state capitalism must be firmly established as the necessary path for transforming capitalist industry and commerce and for progressively accomplishing the socialist transition.
Neither the Communist Party nor the democratic personages have yet reached this understanding; the purpose of this meeting should be precisely to achieve it. (4) We must advance steadily and avoid undue haste.
It will take at least three to five years to bring virtually all private [industry and commerce] onto the track of state capitalism—without exception—and therefore no shocks or unrest should be permitted. (5) Public–private joint ventures, processing-on-commission arrangements whereby the state supplies all raw materials and receives finished products, and partial-product-receipt schemes are the three principal forms of state capitalism in the private industrial sector. () State capitalism can also be applied to [private] commerce; it cannot simply be dismissed with the word “exclusion.”
Experience in this area is still limited and requires further study. (7) Private industry and commerce, employing roughly ten thousand workers and shop assistants, constitute a major national asset and play an important role in the national economy and people’s livelihood.
Private [industry and commerce] not only supply goods to the state but also help accumulate funds for it and train cadres for its use. (8) Some capitalists maintain a considerable distance from the state and have yet to abandon their profit-driven mindset; while others among the working class move too quickly, refusing to allow capitalists any profit whatsoever.
We should educate both groups so that they gradually—seeking to proceed as rapidly as possible—come into line with the state’s policies: even though China’s [private] industry and commerce primarily serve the national economy and people’s welfare, they may also, to a certain extent, benefit the capitalists themselves—thus entering the orbit of state capitalism.
There is a table showing: taxes .% welfare expenses .% housing fund .% employer’s dividends .%

[Total] 0 0%. (9) Patriotic education among capitalists must continue.
To this end, we need to systematically cultivate a contingent of forward-thinking, progressive capitalists who are willing to draw closer to the Communist Party and the People’s Government, so that they may, in turn, persuade the majority. (10) The implementation of state capitalism must be based not only on necessity and feasibility (as stipulated in the Common Program), but also on the voluntary consent of the capitalists, for this is a cooperative endeavor.
Cooperation cannot be forced, unlike our approach toward landlords. (11) Over the past few years, all ethnic groups, democratic classes, democratic parties, and people’s organizations throughout the country have made considerable progress.
It is believed that over the next three to five years, this progress will be even greater; therefore, it is feasible to basically complete the task of guiding private industry and commerce onto the path of state capitalism within that time frame.
The superior performance of state-owned enterprises serves as a material guarantee for achieving this objective. (12) There is no such thing as a “Little Five-Anti Campaign,” nor any sudden measures; this point must be made clear. (3) As for completing the entire transitional period—encompassing the basic completion of national industrialization and the basic accomplishment of socialist transformation in agriculture, handicrafts, and capitalist industry and commerce—it cannot be achieved in just three or five years, but will require several Five-Year Plans.
On this issue, we must oppose both the attitude of setting an indefinite deadline and that of impetuous adventurism. (14) There is the leader, there is the led; there is he who pursues no private interests, and there is he who still seeks some personal gain, and so forth—these are different situations.
However, private [industry and commerce], by and large, serve the national economy and people’s livelihood (in terms of profit distribution, approximately three-quarters of profits accrue to this end) [3]; accordingly, workers can and should be persuaded, just as in state-owned enterprises, to engage in increased production and economizing, labor competitions, higher labor productivity, lower costs, and improved quantity and quality—benefiting both public and private interests as well as labor and management alike. (5) The shortcomings currently prevalent in most public–private joint ventures—chiefly the lack of decision-making power on the part of the private side and the failure to distribute dividends—must be rectified; otherwise, they will obstruct the path of state capitalism.
We should… follow the example of the Xuesheng Industrial Company.
Printed from Mao Zedong’s manuscript.
Abbreviated and included in Volume V of the Selected Works of Mao Zedong.
Notes [1] These are key points from a conversation written by Mao Zedong with representatives of the democratic parties and parts of the industrial and commercial circles.
When abridged and included in Volume V of the Selected Works of Mao Zedong, it was titled “The Necessary Path for Transforming Capitalist Industry and Commerce.” [2] “Cooperation between State Capital and Private Capital” Article 31 of the Common Program stipulates: “The economy shall be of a state-capitalist nature.
Under conditions of necessity and possibility, private capital should be encouraged to develop in the direction of state capitalism, for example, by undertaking processing work for state enterprises, entering into joint ventures with the state, operating state enterprises under lease agreements, or developing the state’s resources, and so forth.” [3] Mao Zedong’s statement here refers specifically to private enterprises that have entered the orbit of state capitalism.
The proportion of profit distribution in such enterprises can be found in paragraph eight of this text.