Zhu Jiamu: Correctly Understand the Historical Role of China's Planned Economic System and Strengthen Historical Confidence in New China
The year 2023 marks the 70th anniversary of the implementation of New China’s First Five-Year Plan and the 70th anniversary of the commencement of the planned economic system.
If we date the formal establishment of New China's planned economic system to 1952, when the Central Financial and Economic Committee (hereafter referred to as the CFEC) issued the "Provisional Measures for Compiling the National Economic Plan" and the "Outline for Strengthening Planning Work," and mark its conclusion in 1992 when the 14th National Congress of the Party explicitly called for the establishment and improvement of a socialist market economic system, the system lasted exactly 40 years. Even if we take 1978—the year the integration of a planned economy with market regulation [1] began—as its endpoint, the system endured for 26 years. Calculated at 40 years, this system spanned more than half of the 73-year history of New China to date; calculated at 26 years, it covers the vast majority of the 29 years prior to reform and opening up. Therefore, how we view the historical role of the planned economic system is a major issue concerning whether we can correctly perceive the history of New China, correctly perceive the relationship between the historical periods before and after reform and opening up, and maintain Chinese historical confidence.
In our country's history, the First Five-Year Plan was the first instance of using a five-year period as a planning stage and was thus pioneering in nature. Since the "11th Five-Year" period in 2006, the Party and the government changed the term "Plan" (jìhuà) to "Guideline" (guīhuà) [2]; we are currently implementing the 14th Five-Year Guideline. General Secretary Xi Jinping has clearly pointed out: "We are developing a market economy under the overarching premise of the leadership of the Communist Party of China and the socialist system; at no time can we forget the qualifier 'socialist.' The reason we call it a socialist market economy is specifically to uphold the superiorities of our system and effectively prevent the defects of a capitalist market economy. We must persist in dialectics and the 'two-point theory' [3], continuing to work hard on the integration of the basic socialist system and the market economy to give full play to the advantages of both. We need both an 'effective market' and a 'capable government,' striving to solve this global economic puzzle through practice." It is evident that correctly viewing the historical role of the planned economy and economic planning [4] involves not only theoretical issues in contemporary Chinese history but also possesses vital practical significance for better exercising the role of the government under the socialist market economic system and solving the global economic puzzle of the relationship between government and market.
I. The Origins of the Planned Economic System
New China’s choice of a planned economic system possessed historical inevitability and rationality.
In the Manifesto of the Communist Party, based on a scientific analysis of the laws of human social development, Marx and Engels revealed the internal contradictions of capitalism and demonstrated the law that capitalism must inevitably perish while communism must inevitably triumph. Through his analysis of capitalism's development from free competition to the monopoly stage, Lenin further pointed out that socialism could first achieve victory in one or a few countries. The Communist Party of China integrated Marxism-Leninism with China’s concrete reality, and following Mao Zedong’s thought on the road of encircling the cities from the countryside and seizing political power through armed struggle, achieved revolutionary victory and established a New China of the people’s democratic dictatorship. However, old China was, after all, a country where capitalism had not fully developed and where the economy and culture were relatively backward. On the eve of and in the early days after the founding of New China, the Party Central Committee proceeded precisely from this reality and decided to first implement New Democratic [5] policies for a period of time. Under the conditions of the people’s democratic dictatorship and the leadership of the state-owned economy, the capitalist economy would be allowed to develop for another 10, 15, or 20 years, or even longer, to accumulate capital, materials, and talent. Once conditions were ripe, the focus would shift to developing heavy industry and implementing corresponding socialist policies. Simultaneously, it was natural to extend the system of Party-led economic work—previously practiced in the revolutionary base areas and liberated areas—to the whole country. Initially, however, this involved only trial compilation and implementation of economic plans; it was not yet a planned economic system, let alone a highly centralized one.
Engels once said: "The ultimate causes of all social changes and political revolutions are to be sought, not in men's brains, not in men's better insights into eternal truth and justice, but in changes in the modes of production and exchange. They are to be sought, not in the philosophy, but in the economics of each particular epoch." Similarly, the reasons for China’s implementation of a highly centralized planned economic system should not be sought in "men's brains" or perceptions, but in the "economics of the epoch."
Less than a year after the founding of New China, the Korean Civil War broke out. The United States immediately sent a fleet to blockade the Taiwan Strait and, under the banner of the "UN Command," sent troops to invade Korea, bringing the flames of war to the border of China and Korea. This posed a direct threat to the nascent people's political power in China, thereby highlighting the urgency of developing a modern national defense industry based on heavy industry. When relevant Chinese departments were compiling the draft of the First Five-Year Plan, they repeatedly compared the industrialization paths of the Soviet Union and Euro-American countries. They unanimously agreed that the First Five-Year Plan must prioritize heavy industry, thus emphasizing the necessity of China’s preferential development of heavy industry. However, it was impossible for New China—unlike old established capitalist countries like Britain and America—to achieve primitive accumulation by dispossessing its own peasantry and plundering colonies and semi-colonies, and then invest in light industry to expand accumulation before developing heavy industry. It was even more impossible to act like late-coming imperialist countries such as Germany and Japan, which launched foreign wars of aggression to loot other nations while raising domestic taxes and conducting extra-economic exploitation to rapidly accumulate capital for heavy industry. To carry out heavy industrial construction in a situation lacking capital, materials, technology, and talent, China could only seek help from advanced industrial nations. At that time, such a nation could not be a Euro-American capitalist country; it could only be the socialist Soviet Union. After the Soviet government agreed to provide comprehensive assistance for China’s First Five-Year Plan focused on heavy industry, the plan to prioritize heavy industry became a possibility. Yet, to turn this possibility into reality, it was necessary to establish a highly centralized planned economic system and carry out the socialist transformation of capitalist industry and commerce. Only in this way could the state maximize the centralized allocation of capital, materials, talent, and various resources; only thus could it interface with the highly centralized planned economic system practiced in the Soviet Union and ensure the smooth progress of large-scale industrial construction, Soviet aid, and Sino-Soviet trade. To do this, society could no longer be New Democratic, but had to be socialist. It is clear that the acceleration of large-scale industrial construction determined the implementation of the highly centralized planned economic system and the early transition to socialism, rather than the other way around.
One view holds that Mao Zedong’s decision to transition early to socialism was because the task of national economic recovery had been successfully completed by 1952, the proportion of industrial production in the national economy and state-owned economy in industrial production had grown rapidly, the agricultural mutual aid and cooperation movement was in full swing, the "five poisons" [6] of capitalists had intensified class contradictions, and the situation in the War to Resist U.S. Aggression and Aid Korea [7] had stabilized. In other words, the decision to facilitate an early transition was a "natural result of favorable conditions" (shuǐ dào qú chéng) [8]. This view is entirely correct in examining the early transition against the background of the objective situation, particularly economic changes. However, it overlooks a fundamental fact: the aforementioned factors did not fundamentally change the situation of extreme scarcity in the capital, materials, and talent required for large-scale industrial construction.
Statistics show that comparing 1950 and 1952, the proportion of China’s total industrial output value in the total industrial and agricultural output value was 33.2% and 43.1% respectively; fiscal revenue was 6.217 billion yuan and 17.394 billion yuan respectively; grain output was 132 million tons and 169 million tons; steel output was 610,000 tons and 1.35 million tons; and the number of university students was 137,000 and 191,000. That is to say, the conditions of capital, materials, and talent in 1952 were not significantly different from those in 1950; the "water" for the transition to socialism had not arrived, nor had the "canal" been formed. What, then, prompted the early transition to socialism? In the author’s opinion, the primary and direct reason could only be the once-in-a-lifetime historical opportunity encountered when the Soviet Union agreed to provide comprehensive assistance for China’s First Five-Year Plan focused on heavy industry.
Based on available materials, the first disclosure that the focus of the First Five-Year Plan was heavy industry and the national defense industry appeared in the "Decision on Implementing Streamlining, Increasing Production and Practicing Economy, and Opposing Corruption, Waste, and Bureaucracy" made by the CPC Central Committee on December 1, 1951. In a passage added to this decision, Mao Zedong pointed out: "From 1953, we will enter large-scale economic construction, preparing to complete China's industrialization within twenty years. Completing industrialization certainly does not mean only heavy industry and the national defense industry; all necessary light industries should be built. To complete national industrialization, we must develop agriculture and gradually complete the socialization of agriculture. However, what is primarily important and capable of driving light industry and agriculture forward is the construction of heavy industry and the national defense industry." This passage indicates that the Party Central Committee was already inclined toward taking the preferential development of heavy industry as China's industrialization strategy at that time and had proposed the task of agricultural collectivization for this purpose.
Six months later, at the National Financial and Economic Conference convened by the CFEC in May 1952, Li Fuchun, then deputy director of the CFEC, elaborated in depth and detail on the guiding ideology, principles, tasks, and main indicators of the First Five-Year Plan. He explicitly stated: "The focus of economic construction is on heavy industry, especially basic industries such as steel, fuel and power, machinery and military industry, non-ferrous metals, and the chemical industry, to lay the foundation for our country's industrialization; agriculture, light industry, and transport should develop around this center of heavy industry." After the meeting, the CFEC and relevant departments did two things: first, they further revised the outline draft of the First Five-Year Plan; second, they prepared to request the Soviet Union for materials needed for the heavy industry infrastructure projects in the plan. On July 1, Chen Yun submitted the draft of the First Five-Year Plan to Mao Zedong with an attached letter stating: the key point "is what new factories are to be built in the next five years... so that in July or August we can present a request to the Soviet Union for the equipment we need." Subsequently, the Secretariat of the CPC Central Committee held three consecutive meetings on July 12, 14, and 17. Although there are currently no materials documenting the specific contents of these meetings, it can be inferred that they made at least two decisions: first, to take the construction of an industrial foundation as the central link of the five-year plan; second, to have Zhou Enlai lead a Chinese government delegation to the Soviet Union to negotiate for Soviet assistance on 141 industrial projects. Soon after, the "Principles for Compiling the Five-Year Plan Outline" and the "China’s Economic Situation and Tasks and Appended Tables for Five-Year Construction" issued by the CFEC both stated that the basic task of five-year construction was to lay the foundation for national industrialization, with the principle of construction being to prioritize heavy industry supplemented by light industry. Zhou Enlai, Chen Yun, Li Fuchun, and their party departed for the Soviet Union on August 15 of the same year.
Both the Chinese and Soviet sides attached great importance to Zhou Enlai’s delegation. In addition to Zhou Enlai as the chief representative, and Chen Yun, Li Fuchun, Zhang Wantian, and Su Yu as representatives, the delegation included a large group of advisors and attendants who were senior cadres from various departments. The Soviet delegation responsible for negotiating with the Chinese side was also composed of the highest-level Soviet leaders of the time, including Molotov, Bulganin, Mikoyan, Vyshinsky, and Kumykin. Zhou Enlai and his party arrived in Moscow on August 17, and Stalin held a three-hour conversation with them on the 20th, clearly expressing his willingness to assist China’s five-year plan in areas such as industrial resource surveys, design, industrial equipment, technical data, and sending people to study and intern in the Soviet Union. After reviewing the documents provided by the Chinese side, Stalin held a second meeting with the Chinese side on September 3, reiterating that assistance would certainly be given for the equipment, loans, and experts required by the First Five-Year Plan; specifically what would be given and what would not would require two months of calculation by staff. Stalin’s attitude indicated that China’s First Five-Year Plan, focused on heavy industry, had received a clear guarantee of comprehensive assistance from the Soviet Union. Consequently, Zhou Enlai and Chen Yun returned to China first, while Li Fuchun and other members of the delegation remained to continue negotiating specific issues with the Soviet side.
Stalin had long harbored doubts about whether the Communist Party of China was a truly nationalist party. The fact that his attitude toward assisting China's First Five-Year Plan shifted so dramatically was clearly related to China’s dispatch of troops to Resisting U.S. Aggression and Assisting Korea [9]. Precisely because of this campaign, Stalin not only dispelled his suspicions of our Party but also felt a sense of debt toward China. This is evidenced by Stalin’s remarks during meetings with the Chinese government delegation. When he heard the Chinese side express gratitude for Soviet aid, he stated on the spot: "The Chinese People's Volunteers fighting in Korea and the development of rubber production within China are themselves forms of assistance to the Soviet Union." Regarding the connection between Stalin’s shift in attitude toward our Party and the War to Resist U.S. Aggression and Aid Korea, Mao Zedong also spoke of this in a 1958 conversation with the Soviet Ambassador to China, Pavel Yudin. He said: "When did the Soviets start to believe in the Chinese? It began with the Korean War. From that time on, the two countries began to close ranks, and only then [did we get] the 156 items."
Zhou Enlai and Chen Yun returned to Beijing on September 24, 1952, and Mao Zedong convened a meeting of the Secretariat of the CPC Central Committee that very evening. According to the Chronicle of Mao Zedong’s Life (1949–1976) compiled by the Party History and Literature Research Institution of the CPC Central Committee, there were only two items on the agenda: first, to hear their report on the negotiations with the Soviet Union, and second, to discuss the principles and tasks of the First Five-Year Plan. It was at this meeting that Mao Zedong proposed for the first time: "We must now begin to use a period of ten to fifteen years to basically complete the transition to socialism, rather than beginning the transition only after ten years or later." The Biography of Mao Zedong, also compiled by the Party History and Literature Research Institution, evaluates the event as follows: "This was an extremely important meeting. This speech by Mao Zedong indicates that his views on the steps and methods for the transition from New Democracy to socialism had undergone a change from his original conceptions."
It was certainly no coincidence that Mao Zedong proposed an accelerated transition to socialism at the very meeting where he heard the report on Zhou and Chen’s visit to the Soviet Union and discussed the First Five-Year Plan. Rather, it reflected the internal links between three things: the choice of a strategy prioritizing heavy industry, the Soviet promise of aid for the First Five-Year Plan, and the decision to accelerate the transition to socialism. This demonstrates that it was precisely the objective circumstances—China’s security situation forcing us to decide on early industrialization, and the Soviet agreement to provide comprehensive aid for prioritizing heavy industry—that allowed Mao Zedong to keenly perceive a rare opportunity for the Chinese nation to catch up with advanced world levels and close a century-long gap. He realized this opportunity had to be seized by means of an earlier transition to socialism. At the same time, it shows that both the prioritization of heavy industry and the accelerated transition were collective decisions reached through long-term deliberation by Mao and the Party’s decision-making core; they were by no means purely his personal dictates, let alone a sudden whim or "fantasy" born of a "socialist complex."
Prioritizing heavy industry required massive investments of capital and materiel. However, China’s economic base at that time was far weaker than that of the Soviet Union when it implemented its own first Five-Year Plan. This made it even more necessary to concentrate limited resources on heavy industrial construction, to require light industrial enterprises to reduce costs and increase efficiency to pay more taxes and profits to the state, and to require agriculture to significantly increase yields to provide more commodity grain and agricultural byproducts for export to earn foreign exchange. It was all of this that determined we had to accelerate the cooperative transformation of agriculture and the socialist transformation of private industry and commerce, and that we could not do without a highly centralized planned economy system. Soviet aid covered a wide range of fields including the economy, science and technology, and education. To ensure this aid proceeded smoothly, it was necessary for both sides to achieve close alignment in economic systems, mechanisms, working methods, and procedures. For example, Soviet enterprises were state-owned; in Sino-Soviet trade, the Chinese side naturally had to interface with them through state-owned enterprises. Furthermore, the Soviet Union practiced a highly centralized planned economy; when equipment was to be delivered, installed, and commissioned all had to proceed according to plan. If the Chinese side had no plan, or if the execution of the plan was not rigorous, cooperation would have been fraught with difficulty.
Regarding how the strategy of prioritizing heavy industry determined the socialist transformation of agriculture, handicrafts, and capitalist industry and commerce, Mao Zedong made this very clear in 1953 when he used the metaphor of "one bird and two wings" [10] to describe the "one industrialization and three transformations" of the General Line for the Transition Period. The study and propaganda outline for the General Line, which was reviewed and revised by Mao, also pointed out: "Capitalist countries began with the development of light industry and generally took fifty to a hundred years to achieve industrialization. The Soviet Union, however, adopted the policy of socialist industrialization, starting with heavy industry, and achieved national industrialization in just over a decade (from 1921 to the completion of the first Five-Year Plan in 1932)... Our country’s realization of socialist industrialization is precisely based on the Soviet experience of starting with the establishment of heavy industry." This fully demonstrates that although there was a large gap in understanding compared to today regarding what socialism is and how to build it, people back then were quite clear in their minds that the implementation of socialism was intended to make the relations of production and the economic system adapt as much as possible to the development of the productive forces, and that the implementation of a planned economy system was intended to seize the opportunity for accelerated development.
II. The Historical Contribution of the Planned Economy System
While the report to the 14th National Congress of the Party established the goal of building a socialist market economy system, it also pointed out: "The original economic system had its historical origins and played an important positive role." Jiang Zemin also once said: "We fully affirm the historical role that the planned economy system once played." However, at that time, there was no detailed exposition on what exactly the "fully affirmed" and "important positive" aspects of the planned economy were. For the study of the history of the People's Republic of China, especially on the occasion of the 70th anniversary of the implementation of the First Five-Year Plan, it is entirely appropriate and necessary to clarify and explain this.
If we take 1952 and 1992 as the start and end dates of the planned economy system, then one need only look at the staggering achievements in China’s economic construction over those 40 years to see clearly what constitutes its "important positive role" that should be "fully affirmed." Taking the changes in several of China's economic indicators between 1952 and 1992: GDP rose from 67.9 billion yuan to 2.69 trillion yuan; annual per capita consumption rose from 80 yuan to 1,116 yuan; annual steel production increased from 1.35 million tons to 80.94 million tons; annual petroleum production increased from 445,000 tons to 142 million tons; and the length of railways in operation increased from 22,900 kilometers to 58,100 kilometers. These achievements all occurred during the period when the planned economy system was in effect and are undoubtedly part of the "important positive role" that the planned economy played in history. However, in my view, the role of the planned economy system is not limited to these; it is more importantly found in the following four aspects:
(1) The formation of an independent and relatively complete industrial system and national economic system
As is well known, China is the only country in the world to possess all industrial categories listed in the UN International Standard Industrial Classification, with a production system spanning 41 major categories, 207 medium categories, and 666 small categories. That is to say, China possesses the only complete industrial layout in the world. Some developed countries are constantly clamoring to "decouple" from China, yet they can never quite manage it; the fundamental reason lies here. However, Old China could not even produce a single automobile, airplane, tank, or tractor. How did New China undergo such a gargantuan change in just over 70 years? The facts show that the root lies in China's First Five-Year Plan and several subsequent five-year plans and programs, which were consistently formulated with the goal of establishing an independent and complete industrial system and national economic system, and were constructed according to these plans. In early 1951, Mao Zedong proposed the idea of "three years of preparation and ten years of planned economic construction." Simultaneously, the Central Committee formed a five-year plan drafting leadership group, which included Zhou Enlai, Chen Yun, Bo Yibo, Li Fuchun, Nie Rongzhen, and Song Shaowen. At that time, the actual situation China faced was: first, the economy was "poor and blank" [11]; second, the War to Resist U.S. Aggression and Aid Korea was still ongoing; and third, there was an extreme lack of talent and experience in industrialization. We were not yet quite clear on what should be done first and what should follow. But one thing was clear from the start: the arrangement of industrial projects had to proceed from a systematic layout. This can be seen in the draft outline of the First Five-Year Plan formulated by the Committee of Financial and Economic Affairs (CFEA) in May 1952, and also in the 156 key industrial and mining construction projects aided by the Soviet Union (hereinafter referred to as the "156 Projects").
The draft outline of the First Five-Year Plan was the blueprint for implementing the strategy of prioritizing heavy industry. It consisted of 25 volumes covering iron and steel, non-ferrous metals, machinery, automobiles, ships, electrical appliances, chemicals, building materials, electric power, coal mining, petroleum, textiles, light industry, mineral geology, railways, transportation, posts and telecommunications, and more. It is easy to see that these areas encompassed almost every major category that a complete industrial system should possess.
The 156 Projects were the backbone of the backbone of the First Five-Year Plan. Some were proposed by us and others by the Soviet Union. During the First Five-Year Plan period, 150 projects were under construction: "44 military industrial enterprises, including 12 in the aviation industry, 10 in the electronics industry, 16 in the munitions industry, 2 in the aerospace industry, and 4 in the shipbuilding industry; 20 metallurgical enterprises, including 7 in iron and steel and 13 in non-ferrous metals; 7 chemical industrial enterprises; 24 machinery processing enterprises; 52 energy industrial enterprises, with 25 each in coal and electric power and 2 in petroleum; and 3 enterprises in light industry and medicine." The nuclear industry was added in the later stages of the First Five-Year Plan. It is not difficult to see that these projects were the indispensable skeleton for a complete system of basic industry and national defense industry.
While Soviet aid to China’s First Five-Year Plan was generally sincere and diligent, the Soviets were not entirely in favor of China building an independent and complete industrial system. History shows that the formulation of this goal and the advancement toward it were primarily led and insisted upon by our Party.
In October 1956, at an executive meeting of the State Council, Chen Yun and Zhou Enlai had a dialogue regarding why China needed to establish an independent and complete industrial system. Chen Yun said: "Regarding whether the Soviet Union is holding something back in their assistance, I think they are in certain respects. We felt this some time ago. The Soviets say we have done too little in raw materials and too much in the machinery industry. But the Soviet Union started with the machinery industry themselves, and we must also concentrate our forces on the machinery industry first. If the Soviets refuse to give it, we will do it ourselves. 'If we don't build the whole thing, what will we do if there is a war?'" Zhou Enlai said: "If the Soviets have difficulties or hold something back in certain areas, then we must rely on our own ideas—primarily relying on self-reliance while also striving for foreign aid. The Soviets are basically helping us. However, they do not understand that for a large country like China, it will not do without building a complete industrial system."
In November 1956, while explaining the principles of national construction in a report to the Second Plenary Session of the Eighth Central Committee, Zhou Enlai also explicitly proposed: "In order to turn our country from a backward agricultural country into an advanced socialist industrial country, we must build a basically complete industrial system within three five-year plans or a bit longer." "A large country like ours must establish its own complete industrial system; otherwise, if there is a 'sign of disturbance' [12], no other country will be able to help us solve our problems completely."
In 1959, while reading the Soviet Textbook of Political Economy, Mao Zedong also remarked: "At the first session of our Eighth National Congress, we said we would establish a solid foundation for socialist industrialization during the Second Five-Year Plan, and we also said we would build a complete industrial system in fifteen years or more. These two statements are somewhat contradictory. Without a complete industrial system, how can one say there is a solid foundation for socialist industrialization?"
Subsequently, our Party further evolved the terminology of industrialization into "modernization," adding the term "national economic system" to the concept of the industrial system. In August 1963, while attending a meeting of the drafting committee for the "Issues Concerning Industrial Development," Zhou Enlai remarked: "The phrasing 'industrial country' is incomplete; proposing the establishment of an independent national economic system is more comprehensive than merely proposing an independent industrial system." Later, at the First Session of the Third National People's Congress convened at the end of that year, he proposed the goals of the Four Modernizations: "Starting from the Third Five-Year Plan, the development of our national economy can be considered in two steps: first, to build an independent and relatively complete industrial system and national economic system; second, to comprehensively realize the modernization of agriculture, industry, national defense, and science and technology, so that our country's economy stands in the forefront of the world." Regarding this "two-step" plan, Zhou Enlai reaffirmed it in the Government Work Report at the First Session of the Fourth National People's Congress in 1975: namely, to build an independent and relatively complete industrial system and national economic system before 1980, and to comprehensively realize the Four Modernizations within the 20th century.
The guiding ideology that our country's industrial construction must aim at establishing an independent and complete system was always clear in the minds of the first generation of our Party and state leadership. After the smashing of the "Gang of Four," [13] we opened our doors; some people looked at the outside world and simplisticly compared China with the then-touted "Four Little Dragons" of Asia, [14] believing China to be inferior. In response to such public opinion, Chen Yun pointed out at the Central Work Conference prior to the Third Plenary Session of the 11th Central Committee of the CPC in 1978: "They were intentionally fostered by the United States, and they primarily engage in processing industries, whereas we seek to build a modernized industrial system."
The above demonstrates that precisely because China's economic planning targeted the establishment of an independent and complete industrial system from the very beginning—coupled with our people's fine traditions of diligence, thrift, and arduous struggle, as well as ultra-large-scale market demand—after more than 70 years of construction, and particularly the 40-plus years of reform and opening up, New China finally became not only the world's largest manufacturing power but also the country with the most complete range of industrial categories in the world. If New China's industrial construction had not used the establishment of an independent and complete industrial system as the blueprint for economic construction from the start, all these achievements would be utterly unimaginable. This point alone is sufficient to see the vital positive role our country's planned economy played in history.
(2) The completion of a large number of backbone enterprises supporting China's industrial foundation
Industry in old China was not only a small proportion of the total social output but also suffered from obsolete equipment and simple products; aside from some raw material and light industries, it consisted mainly of machine repair. Today, New China not only possesses the world's most advanced raw material, energy, and transportation sectors but is also the world's recognized leading manufacturing powerhouse. The reason for this, beyond having an independent and complete industrial and national economic system, is primarily that a large number of enterprises acting as the "backbone" of various industrial sectors were built during the era of the planned economy. They not only hold a decisive position within their own sectors but also, like a mother hen hatching chicks, have incubated generation after generation of new enterprises. Most of the large and medium-sized enterprises now showing their prowess in the national economy can, if traced back to their origins, find their initial form among the backbone enterprises newly built, renovated, or expanded during the planned economy era.
The core components of the current 98 central state-owned enterprises (SOEs) were mostly built during the planned economy era. For example, the Aviation Industry Corporation of China (AVIC) can be traced back to the Bureau of Aviation Industry of the Ministry of Heavy Industry of the Central People's Government established in 1951. Its subsidiary, Chengdu Aircraft Industrial (Group), was originally split off in 1958 from the Hongdu Machinery Factory in Jiangxi—one of the "156 Projects" [15]. It initially produced trainer aircraft, then later produced the J-5, J-7, "Vigorous Dragon" (J-10), and "FC-1 Xiaolong" models, and now produces the J-20. In the "Great Battle for the Daqing Oilfield" starting in 1960, many core personnel came from the Yumen Oilfield, which had been expanded during the First Five-Year Plan; "Iron Man" Wang Jinxi [16] was one of them. Subsequently, when the Dagang, Shengli, and Zhongyuan oilfields were built, many of their backbones came from Daqing. During the "Third Line Construction" [17] of the 1960s and 70s, the vast majority of factories were also split off from the large plants built during the First and Second Five-Year Plans, with many being entire organizational relocations. For instance, at the Panzhihua Iron and Steel Plant, founded in 1965, not only was much of the equipment transported from Anshan Steel and Shanghai Steel, but the management cadres, technicians, and worker backbones were also transferred from those older plants. It is evident that the large number of industrial enterprises built during the planned economy era subsequently evolved into backbone enterprises supporting China's industrial foundation, making outstanding contributions to China's industrialization.
(3) Laying the technical foundation for socialist modernization
Compared to agrarian societies, the greatest difference in an industrial society is the broader knowledge, more complex technology, and greater variety of categories involved. The "poverty and blankness" [18] of the early period of New China was manifested not only in capital and materials but even more so in personnel and technology. Chen Yun said at the time: "It must be recognized that building a factory or constructing a railway is not as easy as opening a handicraft workshop or buying a donkey. This is a massive and complex task; without the necessary technical forces, even with capital, one cannot build factories and railways." Yet, when construction under the First Five-Year Plan began, technical forces were exactly what was lacking. In 1949, 80% of China's 540 million people were illiterate, and the school enrollment rate for children was only 20%. In the 36 years between 1912 and 1948, there were only 185,000 higher education graduates, of whom only 30,000 were engineering graduates. When New China was founded, there were fewer than 50,000 scientific and technical personnel nationwide, fewer than 1,000 senior researchers, and only about 200 geological personnel in the field.
Facing this situation, our Party utilized the methods of mandatory planning and administrative orders to adopt corresponding countermeasures. For example, educated cadres were transferred to the industrial front; higher education institutions, especially engineering and technical schools, were established or expanded; the "restructuring of university departments" [19] was carried out, extracting science and engineering departments and specialties scattered across various universities to establish independent institutes of technology; some engineering schools were converted into cadre schools, such as converting the Xi'an Petroleum School into a fast-track Petroleum Cadre School and expanding student enrollment from 300 to 1,200; science and engineering students were permitted to graduate early; large numbers of students were sent to the Soviet Union and other "democratic countries"; and various targeted training classes and workshops were held. Through these measures, the sharp contradiction between industrial construction and the lack of talent was basically alleviated. In 1980, when discussing how to realize the Four Modernizations, Chen Yun explicitly proposed that modernization must proceed from the reality of existing technical forces: "Existing technical personnel are the foundation of our intellectual strength. We have several million college graduates and self-taught technicians who have undergone one or two decades of tempering in practical work." "It must be affirmed that the technical levels of the 1970s and 80s should stem from these technical backbones of the 1950s and 60s." Today, China possesses the world's largest workforce of scientific and technological talent; this foundation was also laid during the planned economy period.
(4) Accumulating rich experience for our Party in leading economic work
The economic construction of New China has been led by our Party from beginning to end, and very rich leadership experience was accumulated during the planned economy period, much of which is equally applicable under the conditions of a socialist market economy. This is because these experiences are not limited to solving the problems of a planned economy; rather, they are primarily reflected in a profound grasp of China's basic national conditions, a comprehensive understanding of socialist modernization, and a scientific recognition of the laws of macroeconomic operation. Relative to these more fundamental matters, whether to implement a planned economy or a market economy is merely a different means and method adopted by our Party in the process of leading economic work, in response to different developmental stages, objective conditions, and specific tasks. As long as China's basic national conditions remain unchanged, as long as we are engaged in socialist modernization, and as long as relationships such as macro vs. micro, government vs. market, central vs. local, urban vs. rural, accumulation vs. consumption, and China vs. foreign countries exist in economic operations, the experiences formed by our Party during the planned economy period—which reflect our basic national conditions and objective economic laws—will not become obsolete under the socialist market economy. For instance, Mao Zedong's discourses in On the Ten Major Relationships and On the Correct Handling of Contradictions Among the People—concerning the correct handling of the relationships between heavy industry, light industry, and agriculture; between coastal and inland industry; between the state, units of production, and individual producers; between China and foreign countries; and on issues regarding industrial and commercial entrepreneurs, intellectuals, ethnic minorities, overall planning and all-round consideration with appropriate arrangements, and the path of Chinese industrialization—are all experiences formed by our Party while leading economic work during the planned economy period. These experiences possess equally important guiding significance for our Party's leadership of economic construction under the conditions of a socialist market economy.
In the New Era, the Party Central Committee with Comrade Xi Jinping at its core has combined new situations, circumstances, and problems to propose a series of new concepts, ideas, and strategies regarding development and reform. For example, on the guiding ideology of development, it emphasizes "people first," being "people-centered," and that "improving people's well-being is the fundamental purpose of development," ensuring that the fruits of development benefit all people more extensively and fairly; it proposes the new development philosophy of innovation, coordination, green development, openness, and sharing; and it bases the protection and improvement of people's livelihoods on the foundation of economic development and financial sustainability. Regarding economic work principles, it establishes the general keynote of "seeking progress while maintaining stability," emphasizing that we should not "judge heroes" [20] based on growth speed or output value, but must take the promotion of high-quality development as the theme. On the grain issue, it emphasizes accelerating the construction of a strong agricultural country, strictly guarding the "red line" of 1.8 billion mu of arable land, [21] and comprehensively consolidating the foundation of food security to ensure that "the rice bowls of the Chinese people are held firmly in their own hands." Regarding ecological construction, it proposes and adheres to the basic national policy of resource conservation and environmental protection. On institutional reform, it emphasizes grasping the correct political direction, proposing that the purpose of reform is to promote the "self-improvement and development" of the socialist system; things that should and can be changed will be changed resolutely, while things that should not or cannot be changed will resolutely remain unchanged. It advocates adopting the method of pilot exploration and "throwing a stone to ask the way," unifying "crossing the river by feeling the stones" [22] with strengthening top-level design, and moving forward only when things feel stable. Regarding opening up, it requires an even more proactive strategy, insisting on the equal importance of "bringing in" and "going out," promoting high-level institutional opening up and the high-quality development of the "Belt and Road Initiative," and implementing the strategy to upgrade pilot free trade zones. All these new concepts, ideas, and strategies were proposed on the basis of combining new situations and summarizing our Party's experience in leading economic work—including the leadership of the planned economy—and are in a direct line of succession and highly consistent with the economic thoughts and work methods of the first generation of our Party and state leadership.
Common sense tells us that when building a high-rise, the hard work and achievements of laying the foundation are often not easily seen; yet the fact that the building is constructed quickly, loftily, and well serves as counter-proof that the foundation was laid firmly and well. Before reform and opening up, China's economic construction was generally in the stage of foundation-laying; it is natural that changes in urban and rural areas and the improvement of people's living standards were not as obvious as they have been since reform and opening up. However, the ever-increasing speed of construction and the daily changes in the economic landscape since reform and opening up serve to prove that the industrial foundation laid during the planned economy era was solid and substantial. Reform and opening up was the key choice that decided the fate of contemporary China, but it did not start from the ruins of old China. Rather, as General Secretary Xi Jinping has pointed out, it started on the basis that, prior to reform and opening up, New China had already "completed the most extensive and profound social transformation in the history of the Chinese nation, laying the fundamental political prerequisite and institutional foundation for all development and progress in contemporary China, laying a solid foundation for China's development and prosperity and for the people's affluent life, and achieving a great leap from the Chinese nation's continuous decline to a fundamental turnaround of its destiny and its continued march toward prosperity and strength." In this process, the planned economy system made an indelible historical contribution and prepared the full material conditions for the establishment and development of the socialist market economy system.
III. Several Reflections on the Issues of the Planned Economy System
(1) Why the planned economy system was chosen in the early years of New China
People of every era should approach historical questions from the level of understanding of their own time; simultaneously, they must not replace the objective reality of the past with the perceptions of the present. Instead, issues must be placed within their specific historical conditions. Situated as we are today in the period following the 14th National Congress of the CPC, and especially the 18th National Congress, our retrospective and evaluation of the planned economy system must undoubtedly stand at the cognitive heights of the socialist market economy and socialism with Chinese characteristics in the New Era. We must observe and analyze using new perspectives—such as "both planning and markets are economic means" and "combining the decisive role of the market in resource allocation with the better functioning of the government"—rather than remaining at the cognitive level of the planned economy era or clinging to old concepts that designated the planned economy as an essential characteristic of socialism. However, we also cannot detach ourselves from the historical context of that time to claim that the planned economy was devoid of any merit. We must not accuse the choice of the planned economy system of being a mere exercise in book-learning and theory, a blind copying of foreign models, or a mistake that hindered economic development and the improvement of people's living standards.
The origins of the planned economy system have been discussed previously. Here, I will focus on answering whether the choice of the planned economy was derived from books and whether it was an imitation of foreign models, as well as how we should view the slow improvement in people's living standards during that period.
The transition from a planned economy system to a socialist market economy system represented a major breakthrough in the practice of socialist construction and a major innovation in Marxist economic theory. It greatly liberated and developed China's social productive forces, significantly enhanced its comprehensive national strength, and accelerated the historic leap of the people's standard of living from overall subsistence [23] to a moderately prosperous society (xiaokang). Any nostalgia for the planned economy system lacks both theoretical and factual basis; any attempt to restore a highly centralized planned economy system would both fail to keep pace with the times and run counter to the will of the vast majority of the people. However, this by no means implies that the original choice of the planned economy was a mistake, or that the decades of construction and exploration under the planned economy were meaningless.
History has eloquently demonstrated that if we had not chosen a planned economy system—which allocates resources based on national needs—and had instead chosen a market economy system—which allocates resources based on market demand—it would have been absolutely impossible to concentrate our limited human, material, and financial resources for large-scale industrial construction. It would have been impossible to establish the foundations of industrialization in such a short period of time. If the choice and implementation of the planned economy system had been based only on theory rather than reality, if it had only possessed the defects of stifling economic vitality without the positive effect of promoting productive forces, and if it had only provided lessons of failure from acting on subjective will without the successful experience of acting according to objective economic laws—then the brilliant achievements of the planned economy era would be unimaginable and impossible to explain rationally.
The proportional distribution of social labor time among different production sectors is an objective law of human society. Capitalist society achieves this proportion passively and after the fact through the spontaneous force of the law of value and the coercive regulation of economic crises. Only in a "society based on the collective" can this proportion be achieved consciously, planned, and in advance through an understanding of economic laws. This great idea was first proposed by Marx. Both the Soviet Union and China, following the victory of their revolutions, described their implementation of a planned economy as originating from this thought. Today, people are aware that when Marx spoke of a "society based on the collective," he was referring to a higher stage of socialist society built upon the ruins of capitalism where the socialization of production was highly advanced; his "planned distribution of labor time among different production sectors" was a logical and scientific foresight of a future society. However, the Soviet Union and China, having just achieved revolutionary victory, were either industrially underdeveloped or essentially agrarian societies; neither possessed the socio-economic conditions described by Marx for the conscious, proportional development of the national economy. Why, then, did the Soviet Union and China still choose the planned economy system? By examining the historical background of the time, it is not difficult to see that the fundamental reason for doing so in both countries was not merely a mechanical following of Marx's ideas, but rather a response to practical needs.
Following their revolutionary victories, both the Soviet Union and China faced domestic economic backwardness and military threats from imperialism. Consequently, both needed to develop capital-, technology-, and talent-intensive heavy industries as quickly as possible to achieve national industrialization in a relatively short timeframe. This was necessary to lay the material foundation for strengthening national defense, consolidating the new regimes, and subsequently improving the people's standard of living. However, faced with a scarcity of capital, technology, and talent—and in the face of imperialist economic blockades—if the Soviet Union and especially China had adopted market economy methods, it would have been difficult to maintain even a normal economic order, let alone prioritize heavy industry and rapidly achieve industrialization. The most effective method could only be the allocation of resources through unified, highly centralized state planning to resolve the contradiction between accumulation and consumption under conditions of insufficient supply. Furthermore, the organizational principle of democratic centralization practiced by the Communist Party of China—built upon the original public-sector economic components in the Liberated Areas [24], as well as the confiscation of bureaucratic capital [25] and the takeover of imperialist enterprises in China after the revolutionary victory—established a state-owned economy. This provided the socialist state with the capacity to utilize planned economy means and "concentrate resources to accomplish major tasks." Moreover, the economic structure at that time was relatively simple and the economic scale was not large. Under these circumstances, it was natural for the leaders of both countries to be inspired by Marx’s vision of the future society's planned and proportional economic development and to seek the basis for implementing a planned economy therein.
For New China, beyond the needs of its own development strategy and the inspiration of Marxist theory, there was another important reason for choosing the planned economy: the exemplary role of the Soviet Union’s implementation of a planned economy. China’s economy was originally more backward than that of the Soviet Union, and its revolutionary victory came 32 years later. Therefore, the fact that the Soviet Union used only two Five-Year Plans to transform itself from a backward industrial country into a major European industrial power—and ultimately defeated the overweening forces of Fascist Germany—exerted a massive demonstration effect on China. Furthermore, the Soviet Union’s agreement to provide comprehensive assistance for China’s First Five-Year Plan, which focused on heavy industry, made China's adoption of the Soviet planned economy a logical choice.
It is evident that New China's choice of the planned economy system did not stem from books or theory, nor from a blind copying of the Soviet model, but primarily from its own objective needs. At the same time, it must be recognized that although New China consciously copied some Soviet construction and management experiences during the initial period due to a lack of experience in industrialization, it nevertheless remained attentive to integrating these with its own actual conditions. In some respects, it even innovated; particularly towards the end of the First Five-Year Plan, there was an increased emphasis on focusing on China's own experience.
As for the issue of the slow improvement in living standards during the planned economy era, this must similarly be viewed within the historical conditions of the time. Agricultural productive forces in Old China were inherently backward, and the commodity rate [26] of agricultural products was very low. For New China to undertake large-scale industrialization, it was necessary to recruit a large number of workers from the countryside into the cities, thereby increasing the supply of agricultural products to urban areas. It also needed to use agricultural products—including grain, oilseeds, meat, eggs, and fruit—for export to earn foreign exchange to import machinery and equipment. All of this naturally restricted the consumption of both urban residents and peasants. Regarding how to view this issue, Chen Yun [27] spoke very clearly in 1954: "Reducing consumption is, of course, an uncomfortable thing, but we must choose between two options: either temporarily reduce consumption where it can be reduced in order to complete national industrialization and thereby establish a foundation for the further development of agriculture and light industry, making it possible to rapidly increase the output of various consumer goods in the future; or consume everything domestically, thus failing to build industry and leaving our country's economy in a long-term state of backwardness. The people of the whole country should naturally choose the former and not the latter."
(2) Why the planned economy system had to be changed to a socialist market economy system in the early 1990s
China's implementation of a unified and highly centralized planned economy system achieved great success, but it also suffered from various problems. For example, for a period of time, the Chinese economy experienced several major fluctuations; there were phenomena of high input with low output, tight market supplies, and a lack of variety in commodities. Especially after the "Great Leap Forward," planning became increasingly all-encompassing and rigid. Mandatory planning management was continuously strengthened, while indirect and guidance planning gradually disappeared. Frequent shifts in plans and instances of decoupling between different sectors became common. If we place these issues in the historical context of the time and summarize them through a contemporary lens, we can see that the problems primarily stemmed from the unitary system of public ownership and the highly centralized planned economy. While a planned economy is conducive to concentrating limited resources where they are most needed and avoiding waste, in the absence of smooth information transmission, with backward statistical methods and high monitoring costs, it inevitably brings about defects such as inaccurate planning, a lack of vitality, and inefficiency in certain areas.
Planning is a goal formulated and a blueprint designed by humans for future activities; it is a conceptual thing. In the words of Mao Zedong, "planning is ideology. Consciousness is a reflection of reality, and it in turn acts upon reality." This being the case, there are two possibilities for the plans humans formulate: one is to proceed from objective reality, respect objective laws, and conform to objective facts; the other is to proceed from subjective desires, ignore objective laws, and violate objective reality. If one analyzes the various maladies that occurred during China's planned economy era, one will see that most of the problems arose when formulating plans by proceeding only from subjective desires while ignoring objective economic laws.
In the early 1990s, the reason the Party Central Committee decided to change the economic system from a planned economy to a socialist market economy was certainly due in part to the inherent deficiencies of the planning system itself. However, the fundamental reason lay elsewhere: after the construction of six consecutive Five-Year Plans and more than ten years of reform and opening up, both domestic and international realities had undergone profound changes. The planned economy system could no longer adapt to an economic situation characterized by an ever-increasing economic volume, an expanding market scope, the continuous development of a diversified economy, and the ever-widening door of opening to the outside world.
First, the task of large-scale industrial infrastructure construction had been completed, and an independent and relatively complete industrial system and national economic system had been established. For example, in terms of economic scale, China's GDP in 1992 reached 426.916 billion USD, ranking 10th in the world; total foreign trade imports and exports reached 165.6 billion USD, ranking 11th. In terms of industrial categories, the planned economy period mainly featured traditional industries such as agriculture, animal husbandry, fisheries, manufacturing, energy, transportation, and construction. By the 1990s, in addition to traditional industries, there emerged information technology, real estate, securities, tourism, logistics, leasing, and various social services such as law, credit, and domestic services. In terms of the number of enterprises, during the First Five-Year Plan, there were only 10,000 industrial and mining enterprises undergoing capital construction; by the end of 1991, there were nearly 1.6 million collective-owned enterprises alone.
Secondly, during the period of the highly centralized planned economy, the prices of the means of production and most consumer goods were mandated by the plan. However, through more than a decade of reform and opening up following the Third Plenary Session of the 11th CPC Central Committee [28], over 90% of retail commodity prices and over 80% of sales prices for the means of production have been liberalized. The fields under direct planned management have shrunk significantly, and the role of the market in regulating economic activity has been greatly enhanced. After the "Three Great Transformations" [29], the economic components consisted basically of only two types of ownership: state-owned and collective; the individual economy was negligible. After reform and opening up, in addition to the state-owned and collective economies, a large number of individual businesses emerged, along with the private economy, joint-stock economy, Sino-foreign joint ventures, wholly foreign-owned enterprises, Hong Kong-Macao-Taiwan invested enterprises, and other domestic-funded economies. Under these circumstances, people’s modes of employment, interest relations, and distribution methods have become increasingly diverse, and the independence, selectivity, and variability of people's thinking and social activities have grown stronger. If we continued to lead economic work through mandatory planning as in the past, it would indeed be increasingly difficult to adapt. In 1984, the leadership of the State Council at that time wrote to Chen Yun [30] to seek his opinion on the formulation of the "planned economy system." The letter proposed: "A planned economy is not equivalent to being dominated by mandatory plans. Both mandatory and guidance plans are concrete forms of a planned economy. For the current period and a considerably long time to come, our policy should be to gradually shrink mandatory planning and expand guidance planning." Chen Yun replied that this formulation regarding the planning system "conforms to the current actual conditions of our country."
Finally, since the opening of Sino-US relations in the early 1970s, the primary targets of China's foreign economic activity were no longer socialist countries practicing planned economies, but Western capitalist countries practicing market economies. If we had continued to implement a planned economy, it would clearly have been detrimental to foreign trade and the attraction of foreign capital. Particularly from 1986 onwards, in order to obtain equal status in international trade, China began negotiations to resume its status as a contracting party to the General Agreement on Tariffs and Trade (later the World Trade Organization). WTO rules stipulate that any country wishing to join must abide by market economy rules. This was undoubtedly another important reason prompting the Party Central Committee to decide on establishing the socialist market economy system as the goal of economic structural reform, allowing the market to play a fundamental role in resource allocation under macro-control.
(III) Why "Socialist" Must be Added as a Qualifier Before "Market Economy"
After the 14th National Congress of the CPC, some people suggested that a market economy is simply a market economy and there was no need to add the four characters for "socialist" (社会主义). Even today, some people still hold this view. However, the Party Central Committee has always emphasized that the word "socialist" before "market economy" cannot be dispensed with. General Secretary Xi Jinping’s discourse cited earlier also states that "we must never forget the qualifier 'socialist' at any time." As I understand it, the reasons mainly include the following three points:
1. To reflect that the nature of the socialist market economy differs from that of the capitalist market economy
Before the 14th National Congress, Jiang Zemin pointed out: "Establishing a socialist market economy system is about reforming the previous model of the planned economy, but it does not mean doing away with plans. Even Western market economy countries attach great importance to the role of planning. We are a socialist country and have even more necessity and possibility to correctly utilize necessary planning maneuvers." It can be seen that from the day the decision was made to establish the socialist market economy system, our Party did not exclude planned regulation from the socialist market economy system; on the contrary, it viewed it as an inherent part of that system.
The Third Plenary Session of the 18th CPC Central Committee further changed the market’s role from "playing a fundamental role" (as proposed at the 14th National Congress) to "playing a decisive role" in resource allocation. This is a brand-new positioning of the market's role and another new breakthrough in our understanding of the laws of building socialism with Chinese characteristics. Yet, General Secretary Xi Jinping simultaneously pointed out: "A key factor in the great success of China's economic development is that we have leveraged both the strengths of the market economy and the superiorities of the socialist system." He also stated: To build a high-level socialist market economy system, we must "give full play to the decisive role of the market in resource allocation and better play the role of the government." "Both the 'invisible hand' and the 'visible hand' must be used well, striving to form a pattern of organic unity, mutual supplementation, mutual coordination, and mutual promotion between the roles of the market and the government, so as to promote sustained and healthy economic and social development." The "visible hand" and the role of the government mentioned here include not only administrative measures and mandatory plans but also the formulation of annual plans, Five-Year Plans, and the use of guidance plans to lead economic and social development.
The fundamental reason why a socialist market economy, compared to a capitalist market economy, has more necessity and possibility to correctly use planning maneuvers lies in the fact that the socialist market economy is bound up with the basic socialist system. Although capitalist countries also have planned regulation and state intervention, these differ fundamentally from those in socialist countries in terms of purpose, scope, form, and means, as well as in the effectiveness of implementation. Deng Xiaoping said: "Socialism has two very important aspects: first, public ownership is the mainstay; second, there is no polarization [into rich and poor]." He also said: "Compared with capitalism, the superiority of socialism lies in its ability to coordinate the whole country like a single chessboard, concentrate resources, and guarantee key projects." To ensure that public ownership remains the mainstay, to follow the path of common prosperity, and to coordinate the whole country like a single chessboard by concentrating resources on key projects, one cannot do without planned regulation, macro-control, and state intervention. This is the purpose for which the government in a socialist market economy uses planning maneuvers, as well as the scope and form of their implementation. In these respects, the governments of capitalist countries will not and cannot act.
2. To give play to the unique institutional advantages of socialism
Before the 14th National Congress, when explaining why "socialist market economy" was chosen as the target for economic reform among three formulations—"socialist commodity economy combining plan and market," "socialist planned market economy," and "socialist market economy"—Jiang Zemin explicitly stated: "A planned commodity economy is a planned market economy. The socialist economy has been planned since its inception; this has always been clear in people's minds and understanding. The absence of the word 'planned' in the formulation will not lead to doubts about whether plannedness has been abolished." Currently, the former State Planning Commission has been renamed the "Development and Reform Commission" (发展和改革委员会), removing the word "planning," but its main task remains to compile annual plans, Five-Year Plans, and long-term goals for national economic and social development for the Party and the state. It still conducts administrative review and approval for major construction projects and issues mandatory targets for matters concerning the national economy and people's livelihood. Moreover, the strikes, plans, and long-term goals must first be proposed as concepts by the Party Central Committee; after being drafted by relevant departments, they must be studied and determined by the Party Central Committee before finally being submitted to the National People's Congress for deliberation and approval.
General Secretary Xi Jinping has repeatedly emphasized that economic construction is the Party's central work, and the Party's leadership must be reflected in economic work. The Party Central Committee regularly studies and analyzes the economic situation, formulates strategic goals and major policies for national development, and determines Five-Year Plans and annual plans for national economic and social development—this is the manifestation of the Party's leadership over economic work and its "handle" [31] for leading economic work. In early July 2023, while inspecting Jiangsu, General Secretary Xi Jinping again emphasized: We must "fully grasp the scientific connotation and essential requirements of Chinese-path modernization, base ourselves on reality, give play to our own advantages and characteristics, advance steadily, and turn the beautiful blueprint of Chinese-path modernization into reality step by step." Reviewing the history of New China, the reason why the strategic goals proposed by our Party over more than 70 years—such as the "two steps," the "three steps," the "new three steps," and the "new two steps" [32]—could eventually become reality and allow our country to step-by-step move from poverty to wealth and from weakness to strength, is due to a direct and important reason: our Party always formulates plans and programs around established strategic goals. Once these are passed, each successive government ensures continuity and strict execution, leading the people with perseverance to strive for their realization. To date, 14 Five-Year Plans and programs have been implemented consecutively. The vast majority of developing countries in the world implement market economies, yet China alone has developed the fastest. An important reason is that our market economy is led by the Party and the government, is linked to the basic socialist system, and does not exclude planned guidance and macro-control. This enormous advantage of China's economy is envied by many developing countries.
The negative aspects of the market economy—its spontaneity, blindness, and lag—are difficult to overcome on its own. For example, market regulation cannot automatically realize the stability and balance of macroeconomic aggregates, and it is difficult to regulate a significant portion of public facilities and consumption. In certain monopolistic industries and industries with significant economies of scale, market regulation fails to achieve ideal results. In resource allocation, there are links that the market is incapable of handling, and it easily leads to the disorderly expansion and wild growth of capital, resulting in a wide gap between rich and poor and polarization. These weaknesses and limitations of the market economy can only be compensated for and overcome by a socialist government giving play to the advantages of planned regulation and providing macro-guidance and control over market activities.
In short, while the planned economy and economic planning are related, they are not the same thing. Although we have terminated the planned economy system in terms of economic operation today, we have not abandoned the method of using economic planning. In our country, whether it is a "plan" (计划) or a "program" (规划—which is essentially guidance planning), or the market allocation of resources, these are all means to achieve the ultimate goal of stable and rapid economic development and the continuous improvement of the people's living standards. As long as it is conducive to stable and rapid economic development and the improvement of the people's living standards, we will use whatever means are effective. We should not be ambiguous or obscure about this; rather, we should promote it with a clear-cut stand and full confidence.
3. To adapt to the basic national condition of China's primary stage of socialism
Currently, China's total economic output ranks second in the world, and the principal contradiction in society has been transformed into the contradiction between the people's ever-growing need for a better life and unbalanced and inadequate development. However, the basic national condition—that China is in and will long remain in the primary stage of socialism—has not changed, nor has China's international status as the world's largest developing country. In 2022, China's GDP reached nearly $18 trillion, but the per capita value is not yet high. Problems of unbalanced and inadequate development remain prominent; technological innovation capacity is not yet strong; and the gaps in development between urban and rural areas and in income distribution remain large. The masses still face many difficulties in employment, education, medical care, childcare, elderly care, and housing. Especially in recent years, the trend of anti-globalization has reared its head; unilateralism and protectionism have risen significantly; the world economic recovery is weak; and the world has entered a new period of turbulence and change. External suppression and containment could escalate at any time, placing China in a period where strategic opportunities coexist with risks and challenges, and where uncertain and unpredictable factors are increasing.
In short, China and the developed countries are neither on the same starting line nor have they reached a state of parity. Given such national conditions and stage of development, in advancing the construction of Chinese-path modernization, China has an even greater need to strengthen the Party's leadership over economic work. This ensures we can both vitalize the economy and concentrate resources to accomplish major tasks. We need to link the market economy closely with the basic socialist system to suppress the spontaneity of the market and the disorderly expansion and wild growth of capital. We need to use planned regulation to solve major problems encountered in development, promote common prosperity for all people, prevent polarization, maintain overall national security, and ensure the realization of the Party's Second Centenary Goal and the great rejuvenation of the Chinese nation.
Since General Secretary Xi Jinping explicitly proposed that we must correctly view the relationship between the two historical periods before and after reform and opening up—stating that one cannot use the latter to negate the former, nor the former to negate the latter—voices publicly negating the history prior to reform and opening up are rarely heard. However, whenever specific issues are encountered, such views still emerge. How to view the formation of the planned economy system and the achievements of the planned economy period is precisely one of those specific issues.
It goes without saying that both the Soviet Union and China, due to an exaggeration of the role of subjective agency, committed errors of subjectivism [33] and allowed planning to diverge from reality during the implementation of the planned economy. However, the fact that the planned economy historically committed errors of subjectivism and detachment from reality does not mean that economic planning must inevitably produce subjectivism or inevitably be detached from reality. In fact, both the Soviet Union and China engaged in unremitting and arduous exploration regarding how to make economic plans conform as much as possible to objective economic laws and actual conditions, and they gained considerable successful experience. If we do not acknowledge this, or even deny it, we will be unable to correctly view the relationship between the two historical periods before and after reform and opening up [34]; we will be unable to establish institutional confidence in socialism and historical confidence in New China; and we will be unable to summarize experience and draw wisdom from history.
In short, affirming the historical role of the planned economy is not equivalent to returning to the planned economy system; abolishing the planned economy system is likewise not equivalent to denying the positive role of economic planning. General Secretary Xi Jinping has clearly pointed out: "In all our forward progress, we must not forget the path we have traveled; no matter how far we go or how glorious a future we reach, we cannot forget the past we have traversed, nor can we forget why we set out in the first place." [35] Our commemoration of the 70th anniversary of the implementation of the First Five-Year Plan and our investigation into the historical role of the planned economy are aimed precisely at not severing history, but rather at remembering the struggles, practices, and great achievements of the Party and the people during that era. Our goal is to criticize the denigration of New China's history by the trend of historical nihilism [36], to summarize historical experiences and lessons, to better utilize the role of the government in the socialist market economy, and to provide spiritual inspiration and intellectual support for the steady and sustained progress of building socialism with Chinese characteristics and the successful realization of the Party's Second Centenary Goal [37].
(Author Profile: Zhu Jiamu, former Vice President of the Chinese Academy of Social Sciences, President of the Association for the History of the People's Republic of China)