Comments on Li Xiannian’s [1] Outline of an Oral Report on the Question of Equivalent Exchange [2] (August 17, 1962) Were Circulated for Discussion Among Comrades [3]. Issued by Mao Zedong on August 17, based on the manuscript. Notes [1] Li Xiannian was at that time a Secretary of the Secretariat of the CPC Central Committee, Deputy Head of the Central Financial Leading Group, and Vice Premier of the State Council concurrently serving as Minister of Finance. [2] These comments were written on a letter dated August 16, 1962, submitted by Li Xiannian to Mao Zedong along with an outline of his oral report on the issue of equivalent exchange. The outline stated that a prominent problem in the current market situation was the coexistence of two markets and two sets of prices: prices in the planned market were low, while those in the free market were high, with a substantial disparity between them. Among the two forms of exchange—between the state and the peasantry, and among the peasants themselves—the primary form of inequality was one that disadvantaged the farmers, whereas the disadvantage suffered by the state was secondary. Given the present shortage of production and limited supplies, it would be difficult in the short term to find a fundamental solution to the problems of dual markets, dual pricing, and achieving equivalent exchange; only transitional measures could be adopted. The following steps were envisaged: First, gradually and appropriately narrow the scope of state procurement and allocation so as to concentrate material resources for the purchase of major agricultural products. Second, progressively increase the proportion of grain, cotton, and edible oil exchanged for essential commodities supplied by the state. Third, after the state has completed its procurement tasks for grain, cotton, and edible oil, open up free markets for these items, allowing farmers to engage in free trade to balance surpluses and shortages, with supply-and-marketing cooperatives appropriately managing their wholesale and distribution activities. Private merchants would be prohibited from trading in grain, cotton, and edible oil. Fourth, fully leverage the leading role of supply-and-marketing cooperatives in the rural free markets. Fifth, make small and medium-sized farm tools, urgently needed by production teams in major grain- and cotton-producing areas, available at equitable prices whenever possible. Sixth, strengthen the state’s financial support for agriculture to the extent permitted by available fiscal and material resources. Alongside these economic measures, it was also emphasized that political leadership should be prioritized, that the socialist consciousness of the peasants should be continuously raised, and that they should be mobilized to assist the state in jointly overcoming the current temporary difficulties. [3] Refers to the comrades then attending the CPC Central Committee Work Conference in Beidaihe. 1