Vice Premier Chen Yun has just made many points; I would like to add a few comments.
I had already shared these views with some friends two days ago.
The fundamental question is this: What is the future—or, more precisely, the trend—of the socialist transformation of industry and commerce? A few weeks ago, our Party held its Sixth Plenary Session of the Seventh Central Committee, where similar questions were raised regarding agricultural collectivization: What lies ahead? What is the trend? This concern is widespread across the country because we are currently in the process of fundamentally changing the social system.
At present, two forms of private ownership exist in China: one belongs to individual small producers, and the other is capitalist private property.
As we move to transform these two systems, those who currently occupy positions within them naturally wonder about their future or the direction things are heading. They find themselves in a state of uncertainty, unsure of what tomorrow will bring.


In fact, our Constitution already provides a clear answer to this question. Comrade Liu Shaoqi’s report on the draft Constitution at last year’s First National People’s Congress, Premier Zhou Enlai’s Government Work Report, and various documents related to the Five-Year Plan have all addressed it. So why does this issue keep resurfacing? The reason is that people in such circumstances, when faced with a profound systemic change, inevitably feel anxious about the unknown.
Of course, they are not completely in the dark. They do have some understanding, yet the question persists, and they continue to ask: What will happen next?


Therefore, I would like to offer a perspective: Each person must take control of their own destiny. If one cannot determine one’s own fate, life becomes difficult and filled with daily anxiety. That was precisely the case in the old society. Regardless of class, no one could shape their own future. Workers, peasants, and other laboring people were under the rule of others; they possessed few rights, and their destinies lay in the hands of the ruling classes. Even the ruling classes themselves were unable to control their own fates—for example, the Nationalist government was itself deeply unsettled.
We, however, have a definite path forward and can grasp the laws governing social development. With this clarity, we should feel secure. But it is crucial to communicate this point clearly and repeatedly. Otherwise, any sense of stability may be fleeting: today we may be at peace, only to face unrest again tomorrow.


Take the united front, for instance. The question of whether it should continue arises frequently. This is not a matter for a single party—the Communist Party or its Central Committee—or for a small group or individual to decide arbitrarily. Rather, we must assess whether maintaining the united front remains beneficial, whether it serves the interests of the working people and our march toward socialism.
Vice Premier Chen Yun just pointed out that our path is broad and that there will never be a shortage of work in the future. We stand in stark contrast to the Nationalist regime of the past. Our endeavors are extensive and expanding annually, and we need not fear an abundance of personnel. Over the long course of our revolution, we have demonstrated time and again that having a united front is far preferable to operating without one. During the revolutionary war years, securing sufficient support was extremely challenging; there were no opportunities like today to gather so many comrades here for a meeting. Back then, the Nationalists actively opposed us, spreading vicious slander against the Communists, claiming we were disorganized—with not one head but three—and generally presenting ourselves in a repulsive light. They insisted that communism was entirely unsuited to China’s national conditions. Such propaganda took hold among many, making it even harder to build a broad united front. Now, however, experience has shown that the united front has been instrumental, not only in our previous anti-imperialist, anti-feudal bourgeois-democratic revolution but also in our ongoing struggle for socialism. Therefore, the united front must be upheld, as explicitly stipulated in the Constitution.


In short, our cause grows stronger day by day, while the Nationalist movement steadily declines. Today, our work encompasses resisting imperialist aggression as well as domestic economic and cultural development across all fronts. Construction efforts are still in their early stages, so everyone should remain confident. I urge my comrades to encourage even more people to stay calm and focused, rather than being tossed about by every passing rumor or speculation. My suggestion is to reduce reliance on makeshift solutions and instead rely on systematic, reliable mechanisms—ideally, complete mechanization—because machines do not waver. Only then can we truly rest easy. Vice Premier Chen Yun’s remarks also reflect this principle. There will undoubtedly be initial difficulties. Questions may arise concerning the appropriateness of work assignments or political arrangements. Yet through consultation, careful consideration, and thorough investigation, we can always arrive at practical, realistic solutions. In this way, each of us can take charge of our own destiny.


Our goal is to make our country vastly more developed, prosperous, and powerful than it is today. Currently, China remains poor and weak—a developing nation despite its vast size. While we are a major power, we are neither wealthy nor militarily strong. We lack the capacity to produce aircraft, artillery, tanks, automobiles, or precision machinery. Many essential goods must still be imported, and we are only now beginning to learn how to manufacture them. For now, we remain primarily an agricultural country. Under such circumstances, talk of strength or wealth is premature. Nevertheless, the current system and planned approach enable us to move steadily toward greater prosperity and might year by year, with tangible improvements visible over time. This prosperity and strength, moreover, will be shared by all, including the landlord class. After several years, landlords will gain suffrage and cease to be classified as such, becoming farmers instead. Members of the bourgeoisie, too, will eventually shed their former status—likely within approximately three Five-Year Plans—integrating into the ranks of the working class. The peasant class will likewise evolve, transitioning from individually owned farms to collectively managed cooperative holdings. This shared prosperity is attainable; it is not merely a vague aspiration for the distant future. The era in which individuals are unable to determine their own destinies should gradually come to an end within a few Five-Year Plans. By then, the entire population will consist solely of workers, peasants, and intellectuals—intellectuals who are, in essence, workers and peasants.


Vice Premier Chen Yun mentioned earlier that publicity constitutes an integral part of the comprehensive plan for transforming industry and commerce, emphasizing the need to intensify educational efforts. We are pleased to hear that study groups have been established among industrial and commercial circles in major cities. Participation in these programs should be expanded incrementally, aiming for several thousand members in each city, with ever-growing numbers engaging in the necessary learning. A key challenge lies in cultivating a core cadre of dedicated leaders. Our basic requirement for this gathering is that each major city should have dozens or even hundreds of such individuals. Within the industrial and commercial sectors, these pioneers should exhibit greater awareness and progressiveness, serving as educators who can guide their peers. Achieving this is entirely feasible. Over the past few years, we have observed that certain segments of the industrial and commercial community already demonstrate a relatively high level of consciousness, thoroughly understanding the state’s policies and guidelines. Based on this, it seems entirely reasonable to envision strengthening this cadre through the All-China Federation of Industry and Commerce, the China Association for Promoting Democracy, and other democratic parties, ultimately assembling a nationwide contingent numbering in the thousands.


Transforming capitalist private property requires several years of preparatory work. As I have often explained to friends, this does not mean that “communism” will be imposed overnight. Rather, it calls for deliberate preparation and extensive propaganda promoting socialism and communism—ideas that have long been maligned, including by Chiang Kai-shek. Although conditions have improved somewhat in recent years, some still view the transition to socialism with unease. Shifting from one system to another is inherently unsettling, especially during the transitional phase when remnants of the old order persist in people’s minds. To facilitate this transformation, we must engage in sustained, gradual propaganda aimed at reinforcing new ideas while simultaneously diminishing the influence of the old. Among industrial and commercial figures, levels of awareness will vary: some will be more receptive, others less so, and a small number may even remain resistant. The bourgeoisie, along with their families, comprises roughly seven million people. Meanwhile, the urban petty bourgeoisie—small merchants, independent artisans (excluding shop assistants and factory workers)—numbers around twenty million. Together, these two groups account for approximately thirty million individuals. Given the sheer scale of this constituency, a comprehensive education and publicity campaign is essential. Many colleagues in the industrial and commercial sector have noted that the section on publicity in the Five-Year Plan reports has been insufficient. I agree with this observation. Historically, such planning has indeed lacked comprehensiveness. Today, representatives from numerous government departments and the CPC Central Committee’s Propaganda Department are present. It appears that this critical area has not received adequate attention. Moreover, our propaganda efforts must be conducted prudently and truthfully. Assessments and analyses should be candid: strengths should be acknowledged as strengths, weaknesses as weaknesses, and the extent of any shortcomings should be accurately conveyed without exaggeration. Based on our observations, the industrial and commercial sector as a whole, along with the democratic parties, has made significant progress in recent years. The overall situation is positive, representing a meaningful step forward on the path toward socialist transformation. I believe this assessment is both accurate and necessary. Without a sound, objective foundation, confidence will erode—not only among industrial and commercial circles themselves but also among those tasked with guiding them. People may begin to doubt the feasibility of the transformation, viewing it as hopeless: that private property cannot possibly be uprooted, that the roots of capitalism run too deep. What then? All efforts would be in vain. After five or six years of work, little or no tangible progress has been achieved. Consequently, some might conclude that pursuing socialist transformation or state capitalism is a misguided strategy. However, I firmly reject such a conclusion. Nor can it be argued that the industrial and commercial sector has contributed nothing whatsoever to the War to Resist US Aggression and Aid Korea, economic construction, processing orders, public-private joint ventures, or the purchase of government bonds. No such claim has ever been made, nor do I believe it to be true. Instead, we should recognize the achievements of the industrial and commercial community and the democratic parties. Failure to do so would undermine morale and render further action untenable. Moreover, such a claim simply does not align with reality, as concrete results have indeed been attained over the past few years. Of course, acknowledging these accomplishments does not negate the existence of shortcomings; imperfections will always remain. The key is to identify and address them directly, assessing their nature and magnitude with honesty and objectivity. This is the essence of seeking truth from facts and conducting a thorough, holistic analysis. We must avoid subjective interpretations and partial, one-sided assessments, both of which lack a solid factual basis. Regarding the topic of “communism,” it is important to speak openly and frequently. Engaging in frank discussions with a small group of trusted colleagues can help dispel fears and misconceptions. In my view, “communism” is neither frightening nor undesirable. With time, you will come to understand this for yourselves.
National-level coordination plays a vital role. Capitalist private property, however, severely hinders such coordination and obstructs the nation’s prosperity and strength, as it operates outside any planned framework and conflicts with a command economy. Therefore, the issue of transforming capitalist private property must be addressed openly. At the same time, we should be cautious not to create unnecessary panic by suggesting that “communism” will arrive overnight. On the contrary, our preparations will span several years and unfold in distinct stages: first, processing orders; second, public-private joint ventures; and finally, we will reassess the situation at that juncture. The timing of nationalization will always be determined through consultation with all stakeholders. Nationalization will not occur abruptly, like the detonation of an atomic bomb, sweeping across the country in a single morning. Instead, it will proceed gradually.
For now, the focus remains on education and publicity. Through sustained efforts over one or two months, or even one to two years, we can gradually instill the principles of the new system in people’s minds, alleviating anxieties and building a core group of committed supporters. Expanding this core cadre will help demonstrate to the broader population that the new system is both viable and beneficial. If the new system cannot convincingly prove itself superior to the old, it would lack legitimacy. The very rationale for adopting it lies in its substantial advantages—not merely for a select few, but for the entire nation.
In practice, our current socialist transformation of capitalist industry and commerce draws upon the buyout policy originally proposed by Marx, Engels, and Lenin. This approach does not involve the state purchasing capitalists’ private property—specifically, means of production such as machinery and factories—with a lump-sum payment or by issuing government bonds. Nor does it rely on sudden, coercive measures. Instead, the process is carried out gradually over an extended period, perhaps fifteen years, during which workers effectively generate a portion of the profits that would otherwise accrue to the capitalists. These profits, distributed privately, amount to roughly 400–500 million yuan annually—though precise figures may vary—but cumulatively represent tens of billions over a decade. This is precisely the policy we are implementing.
The total value of fixed assets owned by capitalists nationwide has been estimated at 3.3 billion yuan: 2.5 billion for industry and 800 million for commerce. I believe that if we extend the transformation period to include a three-year recovery phase after the initial fifteen years, the total profits generated by workers on behalf of the bourgeoisie will exceed this figure.
Thus, the question arises: Is it better to adopt the approach taken in 1949 against bureaucratic capital—complete confiscation without compensation—or to pursue a more gradual strategy, allowing workers to earn a share of capitalists’ profits over fifteen to eighteen years while simultaneously guiding the entire class toward socialism? These two paths represent opposing approaches—one harsh, the other gentle; one forceful, the other peaceful. The method we have chosen involves numerous transitional steps, extensive education and publicity, and thoughtful arrangements for the capitalists themselves. From this perspective, it is clearly the preferable course.
The primary considerations for arranging the lives of capitalists revolve around two key areas: employment and political status. Both must be carefully managed. With regard to political status, there is no longer any need to debate the issue of suffrage, as we have already announced that the national bourgeoisie will not have its political rights stripped away—differing from our treatment of the landlord and bureaucratic bourgeoisie. For those classes, political rights were temporarily revoked; landlords, for example, typically faced a five-year restriction, which could be extended depending on their behavior. Only after demonstrating appropriate conduct would their social classification be changed, thereby restoring their voting rights. In contrast, the national bourgeoisie has been granted cooperative treatment, retaining their existing political rights. Should their social status eventually shift from capitalist to worker, this would be advantageous, given the higher social standing accorded to the working class compared to the bourgeoisie. Historically, wealth conferred considerable prestige; today, however, it seems that true fulfillment lies in embracing the identity of the working class. Do you aspire to join the working class? Rest assured, it is entirely achievable. I am prepared to issue a check guaranteeing your admission to this esteemed category. This represents a bright political position and a promising future. Once individual and capitalist private property are abolished, only the working class, the peasantry, and the intelligentsia will remain. Only then will our nation as a whole enjoy greater prospects for advancement and development.
Our ultimate goal is to catch up with and surpass the United States. With a population exceeding six hundred million, compared to America’s little more than one hundred million, we certainly have the potential to do so. Comrade Li Fuchun once reported that achieving this would require no more than a century—an assessment with which I concur. The actual timeline, however, depends on our collective efforts. At minimum, fifty years may be necessary; perhaps seventy-five—equivalent to fifteen Five-Year Plans. Only when we finally overtake the United States will we be able to breathe a sigh of relief. Presently, we are far from reaching that stage. We continue to face external pressures and feel unduly constrained. Despite our vast territory, rich history spanning millennia, abundant resources, and large population, our annual steel production amounts to only about 2.3 million metric tons, and automobile manufacturing is still in its infancy, yielding meager output. Clearly, we are falling short of our potential. Therefore, all sectors of society—including the industrial and commercial community and the democratic parties—must redouble their efforts to transform China into a prosperous and powerful nation. We bear a responsibility to contribute to this global endeavor. As one of four people worldwide, we cannot afford to remain so underdeveloped. We must rise to the occasion.
Let me now turn to the subject of leadership methods. Effective leadership can make a significant difference, while poor leadership can lead to serious setbacks. A leader must align with the objective laws of development. When this alignment is achieved, fewer mistakes are made, and work proceeds more smoothly. Conversely, when a leader fails to adhere to these laws, performance suffers. Accordingly, we must pay close attention to our leadership practices. Each political party, the All-China Federation of Industry and Commerce, and officials at both central and local levels should carefully consider how best to raise awareness and inspire progress. Why do enterprises engage in tax evasion? A major contributing factor is insufficient education and publicity directed at business leaders. Increased learning leads to reduced tax evasion; without proper education, such behavior is almost inevitable. Thus, tax evasion is not solely the fault of businesses; it also reflects shortcomings on the part of our leaders. Of course, we are not the only ones responsible. Everyone present here—people’s deputies, vice mayors, members of the All-China Federation of Industry and Commerce, members of the Chinese People’s Political Consultative Conference, and leaders of democratic parties—shares this responsibility. Ultimately, the burden falls back upon us. I, too, must assume my share of accountability; it is incumbent upon all of us to shoulder this collective duty.
Regarding the task of relaying these messages, I wish to draw particular attention to a few points. First, we must avoid creating fleeting trends or sensationalizing the idea of “communism.” Today, we are dealing with millions of entrepreneurs of varying sizes and degrees of progressiveness. Initiating a rash, short-lived movement would achieve little and could even prove counterproductive. In short, we should refrain from propagating the notion that “communism” is imminent, sparking a whirlwind of activity akin to a typhoon. Such an approach would be highly detrimental.
The socialist transformation demands thorough preparation—mental readiness, educational outreach, and other preparatory work—carried out in an orderly, step-by-step manner, rather than in a haphazard fashion that risks causing unintended damage. Our aim should be to minimize losses as much as possible. Hence, the role of a committed core group is paramount. Only with such a nucleus can effective leadership emerge, enabling a disciplined, systematic implementation of the transformation.
Our socialist transformation has already yielded significant results, and we can expect even greater achievements in the future. Since the founding of the People’s Republic of China, our shops have consistently maintained ample stocks of goods on their counters and shelves. This uninterrupted supply, following such a momentous revolution, is truly remarkable. Many foreigners observe our plentiful provisions with envy. China’s socialist transformation, including the transformation of capitalist industry and commerce, holds not only national but also international significance. As the world increasingly turns toward socialism, we stand at the forefront of efforts to transform private enterprise. Chinese capitalists will soon become pioneers in this regard, and I am prepared to issue a corresponding check to support this historic shift. Indeed, China is poised to lead the way.
(Zhou Enlai: This applies to comparatively backward countries.)
Of course, I am not suggesting that every nation will follow our path. Rather, I emphasize that less developed countries will look to us as a model.
Currently, we are witnessing a surge of enthusiasm for socialism. My concern is that without adequate preparation, this momentum may quickly dissipate. I urge everyone to take note of this point.
There is a fundamental principle: the more good deeds one performs, the brighter one’s future becomes. I have often discussed this with friends: the more good deeds you do, the better your prospects, the greater the benefits you receive, and the higher your standing in society. Specifically, during the bourgeois-democratic revolution and the subsequent socialist transformation, the more service one renders to the people, the more commendations one earns, and the more one contributes to the common good, the more meritorious one’s record becomes. It would be illogical and unacceptable to suggest that those who have rendered great service should nevertheless suffer misfortune. Such a notion is unreasonable, untenable, and deeply resented. Establishing clear standards to reward virtuous conduct can motivate people to strive for excellence and accomplish even more.
Naturally, there will be variations. You, as pioneers, may anticipate a wave of enthusiasm. However, the industrial and commercial community comprises millions of entrepreneurs of all sizes, including tens of millions of small traders. Their reactions will likely be mixed—filled with hesitation and doubt—before they ultimately resolve to embrace the socialist path. Peasants face a similar dynamic when deciding whether to join a cooperative: after multiple deliberations and family discussions, they may waver between joining and staying out, only committing after repeated consideration. Does this mean that the industrial and commercial sector lacks the same depth of reflection and deliberation? Certainly not. We must guide them patiently toward socialism, gradually reducing their doubts and hesitations. To achieve this, we must first cultivate a steadfast core of pioneers, then gradually encourage wider participation to dispel skepticism and indecision.
The socialist transformation of industry and commerce must proceed in an orderly, step-by-step manner. Though it may appear slow at first glance, this method actually accelerates progress. As I have told friends before, we should allow events to unfold naturally, letting the fruit ripen on the vine and the water flow to the channel. This is a wise approach. When conditions are ripe, outcomes tend to be more natural and organic—far removed from mere chance or blind spontaneity. Rather, it reflects the result of persuasion, education, and constructive criticism overcoming numerous obstacles.
Undoubtedly, the socialist transformation will present challenges and may involve some degree of disruption. In certain areas where collectivization has been implemented, cattle have perished, pig populations have declined, and a peculiar phenomenon known as the “three cries”—human, pig, and cow—has emerged. To prevent this, collectivization must be carried out systematically and in an orderly fashion, ensuring that people, pigs, and cattle alike have access to adequate food. For the industrial and commercial sector, however, the concept of the “three cries” does not apply in the same way. While human hunger pangs are understandable, machinery does not cry out for sustenance. In summary, the socialist transformation must minimize adverse impacts, proceed in an organized and methodical manner, and be thoroughly prepared. The more comprehensive our preparations, the more successfully we can carry out this undertaking.
Printed based on the transcript of the speech preserved in the Central Archives.
Notes:
[1] The term “communism” used in this text refers to the nationalization of capitalist industry and commerce.
[2] Li Fuchun served as Vice Premier of the State Council and Director of the State Planning Commission at the time.