Many of the questions you have raised today are very good and have been of great help to me.
As for the problems you want to solve, the government will discuss them with you and consult on a method.
All that can be solved must be solved.
There are some problems I have not studied, and I cannot answer them.
You have raised all the problems, and the government will study them. Vice Premier Chen Yun will consider them and solve those that can be solved.
I see that since the implementation of joint state-private ownership, the industrial and commercial circles have made great progress. We feel that we are more familiar with each other than before, and have drawn closer.
After joint state-private ownership, the only thing left for the capitalists is the issue of fixed interest. Their reputation in society has also changed, and their enthusiasm for study is very high—studying politics, studying skills, studying technology and management methods.
I hear that study classes have been set up in all localities. In each city, one session has several hundred people. In Shanghai, one session has nine thousand people; ten sessions would be ninety thousand people. In the study classes, there are capitalists of large, medium, and small enterprises.
This shows great patriotism, a willingness to work for the new country.
My view of the capitalists has improved compared to the past. I previously thought their transformation would be very difficult. You yourselves may not have expected the change to be so fast. In your studies, you have even launched criticism and self-criticism.
At the meeting of the Federation of Industry and Commerce last year, many people made self-examinations.
Self-criticism is a method of our Communist Party. Later, we thought of trying it out in the democratic parties.
Now it has been launched within the democratic parties. The China Democratic National Construction Association also used this method at its most recent meeting, launching criticism and self-criticism.
This is a method for resolving problems within the people.
The Communist Party, the government, the democratic parties, the workers, the peasants, the industrial and commercial circles, including the landlords whose right to vote has been restored, all belong to the category of "within the people."
Within the people, when there are shortcomings and problems, we must proceed from the desire for unity, use the method of criticism and self-criticism, put forward opinions, make demands, solve the problems, and achieve unity.
We have had two revolutions.
The bourgeois-democratic revolution has already passed; that problem has been solved.
The socialist revolution has now also been basically completed, but it is not yet finally completed. In agricultural cooperativization, handicraft cooperativization, and joint state-private ownership, there are still many problems.
In the future, after the socialist transformation is entirely completed, there will still be many problems.
Problems emerge one after another, for example, problems of livelihood, problems of work, problems of an economic nature, problems of a political nature, problems of a cultural nature.
So-called problems are contradictions. The world is full of contradictions.
The problems you have raised today are contradictions, they are disharmonies, things that are not in balance.
I will now talk about the current situation.
In your view, can socialism succeed or not? Are you like fifteen buckets drawing water from a well—seven up and eight down? Perhaps socialism cannot succeed? Perhaps the socialist camp is about to collapse? In my view, even if it collapses, it is no big deal, nothing to make a fuss about.
The most important countries in the socialist camp are the Soviet Union and China.
For China to draw close to the Soviet Union, this policy is correct.
But now there are still people who doubt this policy, saying we should not draw close, and believing that we can adopt a middle position, standing between the Soviet Union and the United States, to act as a bridge.
We believe that this method of standing in the middle is not good; it is not beneficial to the nation.
Because on one side is powerful imperialism, and our China has long been oppressed by imperialism. If we stand between the Soviet Union and the United States, it may look good, as if we are independent, but in fact we will not be independent.
The United States is not to be relied upon. It might give you some things, but it will not give you much. How could imperialism feed our country until it is full? Imperialism oppresses the countries of Asia, Africa, and Latin America; it has oppressed them for decades, for centuries, and has never let them eat their fill.
The armies of imperialist countries once burned our Yuanmingyuan and seized our Hong Kong and Taiwan.
Hong Kong is ours, China's; why did they have to seize it? Why was the Bandung Conference〔1〕 able to unite so many Asian and African countries? It is because imperialism invades and oppresses others.
These imperialist countries are mainly the United States.
To fantasize about gaining benefits by acting as a bridge between the Soviet Union and the United States—this kind of thinking is inappropriate.
We still do not know how to design large factories. Who is designing them for us now? For example, factories for chemicals, iron and steel, oil refining, tanks, automobiles, airplanes—who is designing them for us? Not a single imperialist country has ever designed one for us.
Among our country's democratic parties, non-party personages, high-level intellectuals, religious circles, and industrial and commercial circles, and even among a portion of the proletariat, there are still people who fantasize that the United States will help us, that Britain will help us.
This will not happen.
Is "leaning to one side" right or not? Our leaning to one side is to draw close to the Soviet Union. This kind of leaning to one side is on an equal footing.
We believe in Marxism-Leninism, and we integrate the universal truths of Marxism-Leninism with the actual conditions of our China. We do not mechanically copy the Soviet experience.
Mechanically copying the Soviet experience is wrong.
Our transformation of capitalist industry and commerce and our agricultural cooperativization are different from the Soviet Union's.
For several years after the collectivization of agriculture in the Soviet Union, production decreased, whereas after our agricultural cooperativization, production has increased.
This year's natural disasters are worse than last year's, but grain output can increase by 23 billion jin over last year, and several other cash crops have also seen increased production.
This is because our agricultural cooperativization has adopted a gradual and progressive method, moving from mutual aid teams to elementary cooperatives, and then to advanced cooperatives, proceeding in three steps.
The socialist transformation of capitalist industry and commerce has been to bring everyone along.
The bourgeoisie as a class is to be eliminated, but the people have all been brought along.
The industrialists and businessmen are not a burden on the state, but an asset. They have played a positive role in the past and continue to do so now.
The Chinese bourgeoisie is modern in economic terms, not handicraft-based.
Politically, it demands opposition to imperialism. It has a dual character, with one side that demands revolution.
Since the establishment of the people's political power, they have cooperated with the government, and their enterprises have undergone joint state-private ownership.
Having done such good things, one cannot say that the bourgeoisie is useless to the state; one should say it is useful, and very useful.
The workers do not quite understand this point, because in the factories they used to struggle against the capitalists. We should explain this clearly to the workers.
Since the high tide of study in the industrial and commercial circles, you have shown a willingness to study, and the workers will change their perception of you.
Among the capitalists, we must propagate the idea of linking personal affairs with the affairs of the state, and advocate patriotism. One must always think of the affairs of the state.
In the countryside, the slogan "To get rich, plant cotton" was once raised. As a result, everyone only cared about their own families. Later, it was felt that this slogan was incorrect, and it was changed to "Love the country and get rich, plant more cotton." This linked the family with the country.
You too must link your families with the country. You also have a share in this country.
The focus of this meeting〔2〕 of yours is to discuss your own affairs, but you must also connect them to the affairs of the state. When you go back to conduct propaganda and education, you must also connect them to the affairs of the state.
We must advocate patriotism.
Why must we carry out joint state-private ownership, why must we carry out socialism? It is to facilitate the development of the country. Socialism is more beneficial than the system of private ownership for developing the country's economy and culture, and for making the country independent.
We are not economically independent. We cannot make large machines, nor can we make precision machines. We can only make machines that are neither large nor small.
Airplanes have only just begun to come off the factory line; automobiles have only just begun to be produced.
Which country is designing them for us? It is the Soviet Union that is designing them for us. We should cooperate with the Soviet Union.
In our country, an anti-Soviet trend like that in some other countries has not occurred. It has not occurred among the industrial and commercial circles, nor has it occurred among university students.
Seventy percent of university students are children of the bourgeoisie. We must train them to be personnel for national construction, and we trust them completely.
They are your children, and solving your problems will also have an impact on them.
As for issues like school admission, student grants, joining the Youth League, and wearing the red scarf, there should be equal treatment for all. We should only look at whether the conditions are met, not at family background.
If a student's grades are not good enough, even a child of workers and peasants cannot be admitted. If a child of a capitalist has good enough grades, they should be admitted.
Student grants should be decided based on academic performance and family financial situation. Those from families of big capitalists should not be subsidized. Those from families of small and medium capitalists who are in straitened circumstances should be subsidized.
Joining the Youth League and the Party should both be based on the standard of whether the conditions are met.
China's national bourgeoisie is a patriotic class, but let's not call it a red bourgeoisie.
Among the national bourgeoisie, there are the advanced, the intermediate, and the backward. Their colors are not uniform, their ideological states are not uniform, and they have a dual character, with a progressive side and a backward side. This is in accord with the facts.
Therefore, there is a task, which is to study.
If we were to say they are all good, that would not conform to the facts, and there would be no need to study; they would have become saints.
A person should not be complacent. There are many things in the world that we do not know. We must step up our study.
To admit our own shortcomings is beneficial. This way, we have a task: to study.
The Hungarian Incident〔3〕—was it better for it to have happened or not to have happened? Since there were problems, it was bound to happen. For it to have happened is actually a good thing. A boil must eventually burst and release its pus.
The Hungarian Incident was mainly because the work in that country was not done well. They mechanically applied the Soviet methods in all cases, without taking into account their own country's specific conditions.
Therefore, a lesson can be drawn: we must act in accordance with the universal truths of Marxism-Leninism, combined with the specific conditions of our own country.
We have put forward the slogan of learning from the advanced experience of the Soviet Union, but we have never put forward the slogan of learning from their backward experience.
Overall, China is politically sound, the socialist camp is also sound, and the Hungarian Incident has also been basically resolved.
Of course, there will still be troubles in the world, and there will be troubles in China too.
But don't think that just because a Gao Gang〔4〕 emerged, a Beria〔5〕 emerged, and Stalin made mistakes, it's the end of the world and you can't sleep at night.
You have all become familiar with the character of our government. It is one that discusses things with the people, that discusses things with the workers, peasants, capitalists, and democratic parties. It can be called a government of consultation.
We are not the type to put on a stern face and just lecture people, nor do we strike someone with a cudgel if their opinion is not right, beating them until their head is down and their feet are in the air.
We are called the People's Government. You can speak your minds freely; we will not use it as a pretext to persecute people.
I will now talk about economic issues.
What you are concerned about is how to solve the problems of the large, medium, and small capitalists, and how to solve the problem of fixed interest〔6〕.
Large, medium, and small should be divided into strata.
I will now offer an opinion. Whether it is correct or not, I ask you to consider it.
I propose that the 90 percent who are small and medium capitalists not be classified within the scope of the bourgeoisie. Those whose fixed interest is only enough to buy a few packs of cigarettes should be called the petty bourgeoisie.
Capitalists' agents also belong to the scope of the petty bourgeoisie, called the upper petty bourgeoisie.
We have done this before. During the land reform, there was a type of small landlord, and we called them small land-lessors, not landlords.
As for capitalists' agents or capitalists who receive very little fixed interest, if they are absolutely unwilling to continue and want labor insurance, they can be separated out, but not this year—next year or the year after, to avoid a situation where 90 percent of the people give up their fixed interest, making it difficult for the 10 percent who still receive it.
Could such a proposal be put forward? I ask you to consider it, and the government must also consider it.
If small and medium capitalists are willing to renounce their fixed interest, they may do so. Those who are unwilling to renounce it should be allowed to continue receiving it.
Regarding the duration of fixed interest, everyone is very concerned.
There is a principle for solving this problem: we must solve the problem without harming the interests of the capitalists, especially without harming the interests of the big capitalists.
Is it the big capitalists or the small and medium capitalists who play a greater role in the national economy and the people's livelihood? The small and medium capitalists are numerous, accounting for 90 percent of the total number of capitalists, but their role in the country's economic life is not large. It is the big capitalists who play a major role in the country's economic life.
You might say that I am looking after the big capitalists and not the small and medium ones, that this is right opportunism.
It is not that we are not looking after the small and medium capitalists. The small and medium capitalists are very numerous, and it would be a mistake not to pay attention to making arrangements for them. We must solve their problems in all aspects.
There was once a "small and medium line" in our Party. It should be admitted that the "small and medium line" was incorrect.
The small and medium capitalists must be looked after. We are now placing them within the scope of the petty bourgeoisie to solve their problems.
The peasants are petty bourgeoisie, the rural petty bourgeoisie. There is also an urban petty bourgeoisie, which includes the small and medium capitalists.
From the perspective of joint state-private ownership and nationalization, the big capitalists are of greater significance to the state.
"Big" is also relative; it does not mean that the small and medium capitalists are of no significance.
Without the small and medium capitalists, without the handicraftsmen, we could not live.
Without the peasants, we would have no food to eat.
If the big capitalists are not well looked after, and the 90 percent who are small and medium capitalists all have their "hats" removed, the remaining 10 percent who are big capitalists will feel that it is not glorious, saying that everyone else is red while we are still white, which doesn't look good.
We cannot do this.
As for how long fixed interest should last, the Central Committee of the CCP has discussed it and believes that too short a time is not good. Redemption must be genuine redemption, not a deception.
It doesn't cost much money.
Some people ask, how many more years will there be? Everyone is very concerned.
We will take seven years as the period, that is, this year and next year plus the Second Five-Year Plan, for a total of seven years.
This idea was already present in the documents of the Eighth National Congress, and now we are discussing it with you.
The workers may object, and the small and medium capitalists may also object.
The workers will say this is letting the capitalists off too easily. According to the workers' thinking, it would be best to cancel fixed interest immediately.
The small and medium capitalists think that one or two years would be enough; why should it be so long?
So there are two sources of resistance: the first is the workers, and the second is the 90 percent who are small and medium capitalists.
This requires persuasion.
If we are to redeem, we must redeem completely, not half-redeem and half-confiscate.
In reality, the capital of China's national bourgeoisie is not large. The private industrial share capital is only 1.7 billion yuan, which is less than 700 million U.S. dollars. It's only that much.
How could our country not be bullied? The imperialists have a reason to bully us; our national capital is only this much.
If we are to redeem, let's redeem it all. Let's not save this little bit of money, let's not have a tiger's head and a snake's tail, a beginning without an end.
We must persuade the workers not to harm the interests of the big capitalists. This is beneficial to the entire country.
I say we can even let it drag on a bit, into the Third Five-Year Plan. What do you think? Seven years is the tiger's head and body. If the problem is still not solved, it can be extended a bit longer. In any case, it must be reasonable and humane.
The small and medium capitalists are numerous; we must help them solve their problems.
The big capitalists are few in number, but their capital is large, and their role for the country is greater than that of the small and medium capitalists. Therefore, the "small and medium line" is incorrect; it should be a "large, medium, and small line."
Among the delegates to the General Assembly of the Federation of Industry and Commerce, the small and medium capitalists are in the majority. It must be explained to them that they should not harm the interests of the big capitalists. Harming their interests may not be beneficial to the workers, peasants, or small and medium industrialists and businessmen.
The interest of the small and medium capitalists is to have their "hats" removed as soon as possible, while the interest of the big capitalists is to have the period of fixed interest extended.
Each can have their own way. Those who want their "hats" removed early can have them removed early. The tiger's head and body is seven years; those who are willing to continue receiving fixed interest can continue to do so.
Is it feasible to do it this way? There is no law at present; everyone can discuss it. If the problem cannot be solved in seven years, it can be extended a bit longer.
We must explain clearly to the workers that our adoption of this policy is beneficial to the entire nation, beneficial to the workers, peasants, and small and medium industrialists and businessmen. They may not understand this benefit for the time being.
Seventy percent of university students are children of the bourgeoisie. They do not want inheritance rights, but they will be satisfied with the government treating the capitalists this way.
The democratic parties, non-party personages, upper-level leaders of ethnic minorities, and religious circles will also be satisfied.
If fixed interest is canceled quickly, they will be dissatisfied.
And then there are the foreigners. When they come to China, they all want to go to Shanghai to see Mr. Rong Yiren〔7〕, to see how many cars he has, one or two, and whether there is a piano in his house.
After seeing it, a French capitalist said that as long as the French Communist Party does things this way, he would be at ease.
Our doing things this way also has a great impact on the countries of Asia and Africa and some countries in Europe.
Therefore, there is no benefit in being anxious to cancel fixed interest.
In reality, fixed interest does not amount to much money, only 125 million yuan a year. Some even say it's only 110 million. The total for seven years is less than 800 million.
This money is not being given to the Japanese or the Americans; it is being given to the Chinese.
In short, the fertile water has not flowed into others' fields. It is a case of "the bow lost by a man of Chu is found by a man of Chu."〔8〕 It is part of the country's purchasing power, and also a target for selling public bonds. It can also be used to open factories. It can be considered from various aspects.
When we do things, we must "accord with the principles of heaven, respond to human feelings, adapt to the trends of the world, meet the needs of the masses, and be resolutely carried out by those with foresight and vision; then there is absolutely nothing that cannot be accomplished."〔9〕 These are the words of the great revolutionary Mr. Sun Yat-sen.
Our revolution is to carry on the work of Mr. Sun Yat-sen. We have completed the bourgeois-democratic revolution and are now completing the socialist revolution.
Revolution is to clear the way for construction.
Revolution changes the relations of production and the superstructure, changes the economic system, changes the superstructure such as the government, ideology, law, politics, culture, and art. But the purpose is not to establish a new government or new relations of production, but to develop production.
In the past seven years, we have developed some, but still very little.
Right now we only have just over four million tons of steel. Next year we will have five million tons. After another five years, we will only have just over ten million tons of steel.
Our country has a population of 600 million; this amount of steel is nothing. Compared with Japan and France, we can surpass them. To catch up with the United States' 100 million tons of steel, we will need another forty or fifty years of hope.
I ask everyone to turn your goals in this direction.
In the past, we carried out the bourgeois-democratic revolution; now we are carrying out the socialist revolution. The Federation of Industry and Commerce holds meetings, the China Democratic National Construction Association holds meetings, everyone studies—for what purpose? It is precisely to achieve this goal.
Besides steel, we need other things. We also need to run schools. The entire population must at least graduate from junior high school. After so many more years, the street sweepers, the master chefs, and everyone else must be able to graduate from university, to know astronomy above and geography below.
All our work is for the purpose of achieving this goal.
I hope that all you friends will guide the more than one thousand people attending this conference to turn their goals toward production.
We will need several decades to turn the tide in production, science, and culture. Therefore, we must unite all who can be united.

Published according to the transcript of the talk preserved in the Central Archives.

Notes
〔1〕 The Bandung Conference, see Note 2, p. 148 of this volume.
〔2〕 Refers to the Second National Congress of the All-China Federation of Industry and Commerce, held in Beijing from December 10 to 23, 1956.
〔3〕 The Hungarian Incident refers to the anti-government political events that occurred in Hungary from October to November 1956.
〔4〕 Gao Gang, see Note 7, p. 45 of this volume.
〔5〕 Beria (1899–1953) held positions including member of the Presidium of the Central Committee of the CPSU, First Deputy Chairman of the Council of Ministers of the USSR, and Minister of Internal Affairs. In July 1953, a plenum of the Central Committee of the CPSU found him guilty of "anti-Party and treasonous" crimes and decided to expel him from the Party. In December, a special tribunal of the Supreme Court of the USSR secretly tried the Beria case and issued the "Communiqué of the Special Tribunal of the Supreme Court of the USSR on the Trial of the Treason Case of Beria and Others." Beria was sentenced to death.
〔6〕 Fixed interest, see Note 6, p. 172 of this volume.
〔7〕 Rong Yiren, born in 1916 in Wuxi, Jiangsu. At the time, he was the general manager of the Shanghai Sung Sing Cotton Mill.
〔8〕 An allusion from *Shuoyuan*, "Zhi Gong": "King Gong of Chu went hunting and lost his bow. His attendants requested to search for it. King Gong said, 'Stop! A man of Chu lost the bow, a man of Chu will find it. Why search for it?'"
〔9〕 See Sun Yat-sen, *The Program of National Reconstruction* (*The Complete Works of Sun Yat-sen*, Vol. 6, Zhonghua Book Company, 1985 ed., p. 228).