Basic Background on the Chinese Economy Mao Zedong and the Communist Command Economy 1) The revolutionary basis of CCP power Landlords and land reform basis of CCP power and success – 1952-1957 Land reform instituted across China break the power of – landlords Eliminate political resistance to industrial development PLA as major power base Chair of Military Commission is a major Party – figure Party commands the gun; the gun never commands the Party Problems of ideology and professionalism Communist government as the first modern state in China Party discipline allows for effective rule throughout the nation 2) Choices on economic growth Why was a system of peasants unacceptable to the CCP, both “capitalist” politically and economically? The basic problem of rapid economic growth in an agricultural society CAPITAL FORMATION for investment in industrialization must come from “Savings” agriculture Taxes are uncertain Control production and prices Government buys all produce at artificially low prices; sells to urban residents at a profit (but still low prices) and uses the surplus to invest in industry Move to control agriculture in collective farms to meet these needs 3) Why a command economy? Production targets command production levels – Investment plus increase output Focus on heavy industry; not labor-intensive industrialization
Basic Background on the Chinese Economy Mao Zedong and the Communist Command Economy 1) The revolutionary basis of CCP power Landlords and land reform – basis of CCP power and success 1952-1957 Land reform instituted across China – break the power of landlords Eliminate political resistance to industrial development PLA as major power base – Chair of Military Commission is a major Party figure Party commands the gun; the gun never commands the Party Problems of ideology and professionalism Communist government as the first modern state in China Party discipline allows for effective rule throughout the nation 2) Choices on economic growth Why was a system of “capitalist” peasants unacceptable to the CCP, both politically and economically? The basic problem of rapid economic growth in an agricultural society CAPITAL FORMATION “Savings” for investment in industrialization must come from agriculture Taxes are uncertain Control production and prices Government buys all produce at artificially low prices; sells to urban residents at a profit (but still low prices) and uses the surplus to invest in industry Move to control agriculture in collective farms to meet these needs 3) Why a command economy? Production targets – command production levels Investment plus increase output Focus on heavy industry; not labor-intensive industrialization
inb3118_26.docx