Commentary on the Investigative Report Entitled “Rural Commerce Should Be Made More Dynamic” (May 29, 1961) To All Comrades Present at the Work Conference [1]. I have read this document concerning commercial work [2] and find it very good; it may be circulated for discussion at both the county and commune levels. Mao Zedong May 29th Handled by Shang Kun [3]. Printed from the manuscript.

Notes [1] Refers to the CPC Central Committee Work Conference held in Beijing from May 21 to June 12, 1961. [2] Refers to the fourth investigative report, titled “Rural Commerce Should Be Made More Dynamic,” prepared on May 5, 1961, by an investigative team composed of officials from the CPC Central Organs and the Liaoning Provincial Party Committee, led by Hu Yaobang, First Secretary of the Communist Youth League Central Committee.

The report states: Together with comrades from the provincial and municipal commerce departments, we conducted a series of investigations into rural commercial work in the Niuzhuang Commune of Haicheng County and several other communes and production teams. During this period, Anshan City also convened a financial and trade work conference, at which participants put forward numerous opinions. I. On the Issue of the Rural Commercial System: (1) A change in the rural commercial system is imperative. Since the commune movement of 1958, rural commercial operations have been reduced from operating on two tracks—state-owned commerce and supply-and-marketing cooperative commerce—to a single track; from being based on two forms of ownership—public and collective—to a single form; and from involving three channels of commodity exchange, including market trading, to just one channel.

As evidenced by developments over the past two-plus years, entrusting all buying and selling entirely to state-owned commerce has done more harm than good. Collective and individual producers are unable to directly exchange their products with one another, which is inconvenient for consumers and detrimental to production; the state-owned commerce sector enforces uniform pricing that is often unreasonable, hindering the sale of both individual and collective goods and creating artificial shortages; grassroots commercial outlets, which once served the people’s production and daily needs, now perform these functions less effectively than before; and commune members have grown distant from the supply-and-marketing cooperatives, showing little interest in, oversight of, or support for them, leading to a decline in the cooperatives’ management standards.

(2) Several Proposals for Reforming the System: The first proposal suggests maintaining the nature of state-owned commerce while introducing democratic management and mass supervision. This approach has been put forward by some grassroots commercial workers. The second proposal advocates for state-owned commerce to absorb investments from collectives and individuals, thereby increasing the share of collective ownership. This idea originates among middle-level cadres in the commerce sector. The third proposal calls for restoring the original nature of the supply-and-marketing cooperatives as collectively owned enterprises. Farmers unanimously endorse this option. It appears that the third proposal offers a more thorough solution to the problem.

(3) There should be an appropriate division of labor between state-owned and collective commerce. Such a division ought to be guided by the principles of stimulating commodity production, invigorating the rural market, and facilitating purchases and sales for the masses. The methods can be flexible and adapted to local conditions, and activities of collective commerce should not be overly restricted or rigidly controlled. (4) The principle of thrift and efficiency in business must be firmly upheld.

II. How Can Rural Commercial Work Be Made More Dynamic? Resolving the systemic issues is a fundamental step, and making certain policy adjustments is also important. The views expressed by participants include: First, an appropriate adjustment of the retention ratios for agricultural and sideline products is needed to provide incentives for production. Second, excessive centralization and rigid control should be avoided. Third, prices of certain commodities should be adjusted. At present, the purchase prices for some rural handicrafts are even lower than the cost of raw materials. Fourth, efforts should be made to reduce circuitous transportation routes for goods. Any items that rural areas need and are capable of producing should generally be processed locally. To this end, rural oil mills, tofu workshops, flour mills, and distilleries should be gradually restored. Fifth, when supplying certain goods, due consideration should be given to the special needs of rural mothers, infants, the sick, and the elderly.

On May 28, Chen Boda, Director of the CPC Central Political Research Office and Mao Zedong’s secretary, wrote a report to Mao Zedong submitting this material, stating: “Having read this report prepared by the investigative team led by Comrade Hu Yaobang, I find it excellent and highly thought-provoking with regard to issues in commercial work.” Mao Zedong’s commentary was written directly on Chen Boda’s report.

[ ] Shang Kun refers to Yang Shangkun, who at the time served as Alternate Secretary of the CPC Central Secretariat and Director of the Central Office.