Article 35 of the Common Program

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In 1949, the Chinese economy faced extremely low productivity levels. Despite over 80% of the population being engaged in agriculture, China was not self-sufficient in food production and had to import large quantities of grain and cotton annually. The agricultural output value had dropped by more than 20% compared to its pre-1949 peak. Industrial development was similarly lagging, with pig iron and steel output at only 13.9% and 17.1%, respectively, of the highest annual figures before 1949. China's economic development was highly uneven. Industrial production was primarily concentrated in Northeast China and major eastern coastal cities. Over 90% of power plants were located in Northeast China and several major coastal cities. Additionally, more than 70% of knitting spindles and looms were concentrated in Shanghai, Qingdao, and Tianjin, while over 75% of wool spinning was centered in Shanghai.

Labour-intensive production of consumer goods dominated China’s early industrial landscape. In 1933, textiles, garments, and food processing made up two-thirds of industrial output, even when excluding handicrafts. Industrial activity was highly concentrated regionally, with nearly two-thirds of production located in the southeast coastal provinces, and half of that narrowly clustered in Shanghai and the adjacent Jiangsu province. Additionally, 10 percent of industrial production was located in the northeast (Manchurian) region, largely driven by Japanese investments. These Japanese enterprises were confiscated and reorganized by the GMD regime as Chinese SOEs, before the CCP took control of Manchuria in 1948.
After their victory in Manchuria in 1948, CCP leaders in the region established a new model of socialist industrialization by simultaneously drawing on Soviet economic planning and utilizing the physical assets, human resources, and economic institutions inherited from the Japanese Empire and Chinese Nationalists. The CCP particularly relied on thousands of Japanese and former Nationalist Chinese experts to rebuild major state-owned enterprises in Manchuria. This approach, however, challenged the CCP's political image as a purely proletarian and anti-imperialist regime. Ironically, Manchuria became the hub of the PRC's "socialist industrialization" largely due to the enduring influence of the two preceding anti-Communist regimes, rather than in spite of it. Following the Communist victory in 1949, the Soviet Union became China's sole supplier for rebuilding its war-torn industry and economy. However, this shift was complicated by China's technological history. Many factories and plants inherited by the Communist regime had been built in the early 20th century using Western machinery, equipment, and standards, and had operated under Western procedures for decades. As China distanced itself from the West, the new regime made it clear that these factories and plants had to adapt to the technological and operational standards of the Soviet Union.
In November 1949, the central government established the Chinese Academy of Sciences (CAS), uniting the majority of Chinese researchers working on the mainland. Many of these researchers had been trained in Western countries or had previously worked for the Nationalist government. Consequently, they were more familiar with Western knowledge and practices and had limited exposure to Soviet science and technology, with few knowing Russian. These Western-trained scientists and engineers at CAS were required to shift their focus from Western technology to Soviet-based methods. The government not only criticized their Western inclinations, particularly towards the US, but also compelled them to adopt Soviet learning approaches and contribute to national economic and defense objectives. In October 24, 1952, CAS formalized this shift by approving "The Decision of CAS on Strengthening the Learning and Introducing Soviet Advanced Science". See also Article 43.

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From 1950 to early 1952, there were 42 projects designed with the help of the Soviet Union. There are 30 in Northeast China, 20 of which are related to electricity, steel, coal, and aluminum production, and the other 10 are related to machinery, chemicals, and papermaking. There are 6 power stations in Taiyuan , Chongqing , Xi'an , Zhengzhou , and a fertilizer and dye plant in Taiyuan. 5 in Xinjiang, power plants and hospitals and 1 in Inner Mongolia. The "156" project was considered iconic, and planners carefully deliberated over site selection. They prioritized economic criteria in their decisions, focusing on three key factors: (i) proximity to natural resources accessible via existing roads and railways, (ii) connectivity to the transportation network, and (iii) the location within an agrarian province. These investments were viewed as a means to promote more equitable spatial distribution of income. However, planners were concerned that the plants might become the target of enemy attacks during the Korean War, so senior military officials had a strong say in the locations of the new plants. The decision process thus heavily relied on the locations of allied airbases, mostly in the Soviet Union and North Korea, being able to intercept US bombers.
The first 50 plants were planned during the visit of Mao Zedong in the SU. The second agreement was signed on May 15, 1953, Li Fuchun and Mikoyan the Agreement on the Assistance of the Government of the Union of Soviet Socialist Republics to the Central People's Government of the People's Republic of China in Developing China's National Economy on behalf of the two governments stipulating that the SU would use technical equipment to assist China in building and renovating 91 enterprises from 1953 to 1959. During Khrushchev visit in October 1954, hesigned with his Chinese counterpart an ageement to build 15 additional industrial plants, completing the Soviet-sponsored “156” program. See Overview 156 Projects. In fact, only 150 locations actually received assistance from the Soviet Union, 146 of which were developed during the period of the “First Five Year Plan.

The 156 project expanded and modernized the Chinese industry in a wide range of sectors, but with a bias towards heavy, extractive, and energy industries (e.g., coal mining or power plants, military industries made up a fifth of the plants). Soviet experts played a vital role in all aspects of central planning, particularly during the First Five-Year Plan, with their involvement being most critical for the "156" program. They were responsible for designing and constructing the plants and training Chinese cadres and workers to operate and maintain the factories and equipment. To ensure the program's long-term success, 80,000 Chinese students were sent to Soviet universities and technical institutes, with the expectation of taking positions in these plants upon their return.
Economic cooperation between China and the SU involved significant technology and financial transfers, with technology transfer being a key component of the "156" program. The SU supplied some of the most advanced equipment of the time, and blueprints and technical documents were shared with Chinese engineers at no cost, allowing China to gradually absorb and adapt Soviet technologies. Under the agreements that established the "156" program, the Soviet Union committed to overseeing all aspects of the design process, from site selection to implementation, providing the necessary equipment, supervising construction, and guiding new product manufacturing, as well as training workers, technicians, and cadres. "Exporting complete sets of equipment was one of the most important means of providing assistance to China. The machines the Soviet Union and Eastern European countries provided equipped collieries; power plants; steel smelting and processing factories; non-ferrous and rare metal factories and mines; chemical plants; machine tool factories; heavy machine plants; car, truck, tractor, and tank manufacturing plants; locomotive works; airplane factories; electric generator factories; mining and petroleum machinery manufacturing plants; electrical equipment and radio plants; special paper-producing factories; sugar refineries; pharmacy production; and many others."

Financially, the SU provided loans to China, most notably a $300 million loan at a preferential interest rate of 1% per annum, negotiated by Mao Zedong during his first visit to the Soviet Union. This loan partially financed the "156" program. In return, China agreed to repay the Soviet Union by supplying large quantities of raw materials, including tungsten concentrate, tin, molybdenum concentrate, antimony, rubber, and other produce like wool, rice, and tea. Additionally, some low-skilled Chinese workers were sent to Siberia. Beyond loans, Soviet cooperation included a significant aid component. Technological cooperation involved the free transfer of blueprints and documents, which held considerable monetary value. The SU also granted China product manufacturing patents, valued at approximately 3–3.5 million rubles. Soviet experts recommended, in order to minimize costs, that priority be given to expanding existing plants.

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During the early years of Communist control (1949-51), there was one central government agency responsible for the machine-building industry, the Bureau of Machinery Industry of the Ministry of Heavy Industry, under the GAC. No distinction was made between civilian and defence production. In August 1952, two ministries of machine-building industry were created; although there was no official statement concerning the division of functions between them, scattered data indicate that the First Ministry was in charge of civilian production and the Second Ministry specialized in military production. The machine-building industry was intensely concentrated in a few coastal areas of China, particularly in Liaoning and Shanghai. In 1952, machinery manufactured in the three cities (Beijing, Tianjin and Shanghai) and seven provinces (Liaoning, Hebei, Shangdong, Jiangsu, Zhejiang, Fujian and Guangdong) along the coast accounted for more than 80 per cent of the national total. Since most of the machine-building centres in eastern China are situated at a great distance from the metallurgical and coal bases in the north and north-east, this results in a considerable waste in transportation.
From a national defense perspective, Chinese leaders viewed coastal areas susceptible to foreign attacks. Consequently, as much of the machine-building capacity was allocated to military products, made the industry very sensitivity to national security. In the early 1950s, Chinese leaders anticipated that any enemy assault would likely come from the sea, making inland locations ideal for the machine-building industry. Therefore, cities such as Taiyuan, Xian, Luoyang, Lanzhou, Chengdu, Chongqing, and Kunming were strategically chosen based on this consideration.
In Shanghai, 60% of the workers in the machine-building industry had over seven years of experience, enabling them to produce a wide variety of high-standard products. In contrast, newly developed centers faced a critical shortage of skilled workers. Despite the rapid increase in the workforce in these areas, the newly recruited labor force was mainly composed of peasants who lacked the skills needed to operate complex machinery and instruments. As a result, the rate of depreciation of fixed capital was extremely high, and productivity was generally lower than in the older industrial bases. To tackle this problem skilled workers were recruited, one source of technicians and higher staff was the large, well-established plants, particularly those in Shanghai and the northeast. Often, a group of skilled men trained and experienced in enterprises like the Anshan Steel Works, Jilin Chemical Corporation, or Changchun Motor Corporation was sent to new plants to form a nucleus that would train additional skilled workers. Additionally, workers traveled from distant areas to cities like Shanghai or Shenyang to acquire advanced skills before returning to their home regions.

Before 1949, the civilian machine-building industry consisted primarily of four sectors: electrical machinery, electrical apparatus, machine tools and consumer appliances. From 1952 onwards, new investments were mostly in two new sectors: power generating equipment and transportation equipment.

Machine-building has facilitated the expansion of several major industries which would not have been possible without a domestic supply of equipment. The contribution of machine-building to agricultural mechanization was relatively minor due to several factors. During the 1952-57 period, only 7% of the total machine-building output was allocated to the agricultural sector. In contrast, the expansion of the machine-building industry significantly boosted China's military strength. Notably, 36% of the 6.93 billion yuan allocated for capital investment in metal-processing industries went to the defense sector. The machine-building industry's contribution to economic self-sufficiency is evident through its significant import-substitution effect. Between 1952 and 1960, when statistical data are relatively complete, this effect in the machine-building sector was particularly pronounced.

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Established on April 17, 1951, the Aviation Industry Corporation of China (AVIC) is the country's largest aviation enterprise, primarily responsible for producing all of China’s domestic military aircraft. Initially, AVIC was part of the Ministry of Machine Building (MMB) under the Ministry of Defense. During the First Five-Year Plan (1953-1957), the MMB expanded to include several aviation colleges, universities, and 13 supporting enterprises. This expansion enabled China’s fledgling aviation industry to transition from merely maintaining existing aircraft to producing their own equipment and aircraft. For example, the state-owned Weijian Machinery Manufacturing Plant and Harbin Aircraft Manufacturing Company. On April 1, 1952, Factory 122 was officially established as one of the first six main engine factories of the aviation industry. Significant assistance from the SU facilitated this shift, with many aircraft and equipment being copies of Soviet models like the MiG-19.
The Bureau of Aviation Industry (BAI) was established in 1951 as the first authority overseeing aircraft production in China. In 1953, the PRC launched its first Five-Year Economic Development Plan, which included constructing several aircraft factories primarily for military aircraft production for the PLAAF and the air component of the PLAN. With Soviet support, aircraft factories were built and commissioned in Nanchang, Shenyang (formerly Mukden), Chengdu, Harbin, and Xi’an. However, actual production did not commence until 1954, a year after the Korean War had ended. See also Article 22

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In the 1930s, power plants in dozens of large and medium-sized cities across China relied on electricity-generating equipment imported from various foreign countries, including the United States, Britain, Germany, and Switzerland. This led to inconsistent power transmission voltages and frequencies across different plants. To address this issue, a new standardized electricity system was established in 1954, becoming the first national standard in the PRC.
By October 1949, the Communists had firmly taken control of the cities, a notable achievement given their limited experience in managing large urban areas. This control was significantly influenced by their efforts to dominate the electrical industries, which laid the foundation for their grasp on the urban economy. By gaining the support of Western-educated engineer-bureaucrats who had served the Guomindang regime, the CCP were able to inherit the existing power infrastructure with minimal damage. Contrary to the common narrative that the PLA simply surrounded and seized the cities from the countryside, a closer examination reveals that their economic management strategies, particularly concerning electricity, helped them secure popular support among urban residents. The controlover power stations was an important part of the strategy to conquer cities. See Part 3

The North Hebei Power Company, which had grown into the largest state-owned electric utility under the GMD, became the central battlefield in the struggle to control China's electrical industry. Under the command of generals Peng Zhen, Nie Rongzhen, Lin Biao, and Luo Ronghuan, the PLA executed the first successful power blockade in Beijing between December 1948 and January 1949, trapping Nationalist forces under Fu Zuoyi. By securing the support of the engineering elite at the power station, the CCP took control of the station that supplied most of Beijing's electricity before encircling the city in December 1948.
The "power blockade," which had previously been a blunt instrument, was transformed into a precision strike weapon. The PLA managed to briefly restore power for a few hours to alleviate the inconvenience for Beijing’s residents. By forging an alliance between the military, workers, and the engineering elite, the Communists used the blockade to facilitate Beijing's "peaceful liberation" in January 1949. They replicated this strategy elsewhere, allowing them to inherit the electrical infrastructure intact following a bloody civil war. However, after the take-over of Shanghai, the authorities had to measures against GMD air attacks. On February 6, 1950, seventeen bombers dropped around seventy bombs on Shanghai. The city’s four major power stations, Yangshupu, Zhabei, Chinese Merchants’ Electric Company, and the French Power Company, were the primary targets.

The ongoing state of war following the establishment of the People’s Republic in October 1949 fostered a siege mentality within the electric power sector. Recognizing the strategic importance of electrical power, military representatives took control of the industry. However, military power alone was insufficient to assert authority. During this period, technical experts ceded decision-making powers to nonexperts, with increases in electrical output achieved through industrial reorganization rather than the installation of additional generating capacity. In line with the ideal of workers seizing the means of production, electrical workers without formal engineering training replaced engineers as power plant superintendents.

The electrical industry reflected the Leninist and Maoist principle of “development as a unity of opposites.” Despite the presence of Soviet advisers, China’s power sector operated independently of foreign influence. Determined to forge their own path, the Chinese went beyond their “Soviet Big Brother” by entrusting the means of production to rank-and-file workers rather than highly educated technocrats.

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On the eve of the Communist takeover in late 1949, the coal industry, like many other industries and the railways, was semi-paralyzed due to bombings and looting. Although significant reconstruction and re-equipping were necessary, a relatively swift restoration of the previously profitable coal industry was feasible. Abundant cheap labor had kept mechanization at a low level, resulting in a largely unskilled workforce, and the coal quality was poor due to inadequate washing and sorting. As in many countries, the location of coal deposits significantly influenced the development of the railways, with several lines built before 1911 becoming main transport arteries.
The government promptly initiated repairs on existing railway lines and bridges and began constructing new lines in the northwest, south-central, and southwest regions. At that time, the northwest and southwest had few railway lines, and there were no lines at all in Qinghai, Ningxia, or Xinjiang. The existing lines were of non-uniform gauge, and the equipment was outdated. By the end of 1952, the government had centralized railway management and claimed that 22,900 km of lines were operational. See Article 36

Since 1949, as the deposits close to the east coast have become exhausted, the centre of gravity of production has shifted from north-east China to become heavily concentrated in the north, particularly the provinces of Shanxi and Inner Mongolia. Small rural mines were common in the pre-Communist period but after 1949 most were closed down by the new authorities, both for safety reasons and to protect the State Owned Enterprises’ monopoly.
During 1949–52, the major objectives were to gain control of coal supplies, reconstruct the existing mines, and concentrate all new coal mine construction in the northeast and to increase coking coal output for steel production and to build a base for the construction of Chinese machinery for the coal industry so the PRC would be able to fulfill its policy of self-reliance. In 1949, the Chinese initially estimated that around 175 coal shafts would need to be closed or abandoned by 1955. Newly dug coal wells leaked, threatened to collapse, and had to be shut down, wasting all the precious investment. In their rush to produce more coal, inexperienced CCP managers failed to conduct necessary explorations. Similarly, in Jilin, the Shuangyahe gold mine, another CCP self-reliance project, was costing the new government hundreds of millions of yuan each month while producing little gold. Hundreds of other projects suffered from poor accounting and mismanagement. The very confidence the CCP enjoyed among the proletarian masses was at risk. Frustrated but ambitious, the CCP turned its gaze to its newly acquired ally, the Soviet Union. However, after consulting with Soviet advisers in 1952, this estimate was revised to no more than 60 shafts by 1957. As part of their loan package, the Soviets provided nearly all the rolling stock required for the industry's startup. Among the 156 projects supported by the SU and other Eastern Bloc countries at the time, 24 were coal projects, with a focus on large mines and preparation plants. Additionally, the Poles delivered at least five plants and contracted to supply complete equipment for two coal mines, three coal dressing plants, and several smaller projects. By 1952 production had recovered to the pre-1949 peak. In 1952 the largest concentration of coal production was in Liaoning (17.7 per cent), followed by Shanxi (16.3 per cent), and Hebei (15.2 per cent). Together the north and northeast regions produced almost 70 per cent of total output, 36 per cent in the north and 33.2 per cent in the north- east.Investment in coal production as a proportion of total investment in energy decreased from 51.9 per cent in 1953 to 34.2 per cent in 1957 The Soviets advocated for the practical implementation of world-class technology tailored to the specific geological conditions of each mine. In contrast, the Chinese sought both cutting-edge technology and the extensive use of human labor to overcome any challenges. This approach was also promoted as a solution to the unemployment issue.
Throughout the 1950s, China's predominantly rural population relied heavily on coal and biomass as primary energy sources. Coal accounted for 96 percent of the country's energy production and 94 percent of its consumption. However, between 1949 and 1954, as China began its industrialization process and pursued energy independence, its commercial energy industry grew rapidly. Primary energy consumption increased from 24 million tonnes of coal equivalent (mtce) in 1949 to 50 mtce in 1952.

The central authorities divided the country into three zones: heated, transition, and non-heated. Consumption was much higher in all the provinces and autonomous regions north of the Changjiang River because they were allocated coal for winter heating, unlike those to the south. This government-decreed demarcation caused significant hardship for people living in the middle transition zone, such as in Shanghai, who lacked the desired quantities of fuel for heating during winter. In 1952, Shanghai alone accounted for nearly one-fifth of the nation’s coal consumption. The eastern region as a whole accounted for 36.3 percent, with Jiangsu and Shandong also having sizable shares. The second-largest concentration of consumption was in Liaoning. Overall, the northeast region accounted for 29 percent, the north for 14.2 percent, the south-central for 12 percent, the southwest for 6.1 percent, and the northwest for 2.4 percent.

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From the start, The CCP regarded crude oil as a ‘strategic material’ and the oil industry was regarded as a ‘strategic industry’. However, in 1949, the Yumen Oil Field in Gansu province was the only domestic oil field able to support industrial production and it fell far short of China's oil needs. Shipping millions of tons of crude oil from the west to the east exhausted the only railroads serving these regions. After the collapse of the GMD government, most of the geologists and engineers remained in mainland China and worked for the PRC. After the retreat, more than a hundred heavy industrial enterprises; nearly one thousand manufacturing, mining, and power generation units; thirty-two thousand staff members, and more than 600,000 skilled workers remained on the mainland. This continuity contributed greatly to the post-1949 production successes. From 1950 to 1957, China's total crude oil output was less than 6 million tonnes, leading to a reliance on oil imports. The oil production could only meet a quarter of the domestic demand in 1952, which made petroleum the most important and expansive product to import. To achieve self-sufficiency in crude oil for industrialization, the central government adopted a quasi-military "massive campaign" model for exploring and developing oil resources. The government provided the necessary funds and quickly mobilized human and material resources nationwide to the targeted areas for exploration and development. The required massive human resources were supplied by the PLA. In 1952, Mao Zedong ordered the reorganization of the 57th Division of the 19th Army of the PLA (8000 soldiers who receives simple drilling training) into the 1st Division of Oil. Starting in 1955, several oil fields were discovered.
Comprehensive prospecting for natural resources was a top priority during the First Five-Year Plan. At the National Geology Planning Work Conference in Beijing near the end of 1952, Chen Yun declared, “The geology industry is the most important industry in the national economy.” The conference set a goal to increase "technical" human geological resources tenfold by 1953 compared to their 1952 levels. Significant investments were made in mining-resource prospecting and workforce training, with 1.7 billion yuan allocated solely for geological prospecting. Mining-machine factories were established in the early 1950s, and the number of geology students in higher education and technical schools was planned to increase by 70 percent annually during the First Five-Year Plan. By 1957, the number of geological technicians had surged to over 19,000, up from just 644 in 1952. In 1949, only eighteen petroleum geologists with eight drilling machines, including two previously abandoned by Standard Oil, were engaged in oil exploration. By 1955, over six thousand geological workers had access to several hundred drilling machines. March 1950, Sinochem (China Chemical Import and Export Company) was established and monopolised the import and export businesses of the oil industry. On March 1, 1951, the company officially opened for business in Tianjin, with the main task of breaking the "blockade" and "embargo" imposed by Western countries on China and developing trade with capitalist countries. Shell remained in China after 1950 and became the only western oil company trading in the PRC and was allowed to retain its Shanghai head office.

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Chinese leaders, particularly Chairman Mao Zedong, emphasized the importance of steel production in China's industrial development. As a result, the steel industry received 45% of the total investment in the "156 Projects," (see figure 35.5)leading to the construction of twenty industrial clusters comprising 304 plants. Although these plants were grouped under single companies, they operated independently with separate planning, financial, and labor departments. Soviet technology, recognized globally as among the best, was central to these efforts. Soviet blast furnaces, considered the world's best, were installed in Chinese plants before even being used in some Soviet factories. The transfer of Soviet steel technology to China was on par with that of the most advanced Western economies. Soviet experts were responsible for training Chinese colleagues, improving steel production and quality, and implementing the latest Soviet organizational and management techniques.
The massive Anshan Iron and Steel complex in the northeast, established by the Japanese in 1916, reached its peak output in 1943 but subsequently suffered from "American bombing and Soviet looting." During the Civil War, it "changed hands eight times" until November 1948, when the PLA finally seized its heavily damaged plants. The destruction was extensive, with most of the mills reduced to debris. Production resumed on 1 May 1949, but in the first two years, it never exceeded 10% of the pre-war peak due to a shortage of spare parts and technical workers.

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In May 1949, during a visit to Tianjin, Liu Shaoqi inspected the Tanggu Alkali Factory and invited Hou Debang, the company's chief engineer, who was in India at the time, to return to China. Zhou Enlai, in a meeting with Hou Debang, emphasized the need for his return to manage the company. Hou Debang raised concerns about insufficient raw materials, limited product sales, and slow capital turnover at Yongli Gu (a soda ash factory) and Ning factories in Nanjing (which produced nitrogen fertilizers, phosphate fertilizers, and synthetic fiber raw materials). Zhou Enlai assured him that the government would purchase products, provide working capital, and assist with raw material supply once transportation was unblocked. Zhou Enlai also encouraged Hou Debang to report any difficulties that hindered production development, promising full government support.
In October 1949, Zhou Enlai met another chemical industrialist, Wu Yunchu, in Beijing. Unlike Hou Debang, who joined the CCP in 1957, Wu Yunchu gradually surrendered control of his enterprises during the Three-Anti and Five-Anti campaigns. On June 1, 1950, the Chemical Industry Bureau was founded as part of the Ministry of Heavy Industry. The Shenyang Research Institute of Chemical Industry (SYRICI), the earliest comprehensive chemical research institute in China, was established on January 8, 1949.
In 1949, the GAC established the Ministry of Fuel Industry and the Ministry of Heavy Industry, with the petroleum industry and chemical industry managed by these two departments respectively. In 1950, the China National Import Corporation, a specialized foreign trade company operating nationwide, was established as the predecessor of China National Chemical Corporation (Sinochem). Shanghai Refinery, constructed by New China, began operating with an annual crude oil processing capacity of 100,000 tons using atmospheric distillation equipment. The Nanjing Uranium Plant of the Yongli Chemical Industry Company completed China's first fertilizer catalyst production workshop. The Chemical Industry Bureau of the Ministry of Heavy Industry was established in Beijing.
In 1951, the Chemical Industry Bureau of the Northeast Ministry of Industry took over the Dalian Soda Factory (formerly Dalian Manchurian Soda Co., Ltd.), renaming it Dalian Alkali Plant. Its output exceeded the highest annual output during the Japanese occupation period. The State-owned First Rubber Factory developed a bulletproof self-repairing tire and produced 600 of them for the Chinese People's Volunteer Army. On August 31, 1951, the 100th Executive Meeting of the GAC passed the "Decision on the Cultivation of Rubber Trees," promoting rubber tree planting in Guangdong, Guangxi, Yunnan, and Fujian. A large number of experts, scholars, military cadres, and overseas Chinese residents came to the western Guangdong region to set up reclamation farms. In Hainan, the military and civilians began collaborating on the planting and processing of natural rubber.

In 1952, the central government decided to abolish the major administrative regions' agencies. Factories and mines previously under the Northeast, Southwest, and East China chemical bureaus were placed under the leadership of the Chemical Industry Bureau of the Ministry of Heavy Industry. The Northeast Petroleum Administration Bureau of the Ministry of Fuel reorganized the synthetic oil and refining enterprises in the Northeast into ten petroleum plants. The following year, the Northeast Petroleum Administration Bureau was dissolved, and the petroleum plants in the Northeast were transferred to the Petroleum Administration Bureau of the Ministry of Fuel.
In 1953, the Chemical Industry Bureau of the Ministry of Heavy Industry was renamed the Chemical Industry Management Bureau of the Ministry of Heavy Industry of the People's Republic of China (Central Chemical Bureau). The Central Industrial and Commercial Administration Bureau issued "Document No. 1" to award an invention certificate to Hou Debang for the Hou's Alkali Process, valid for five years. The 401 Factory pioneered a process for producing acid from low-concentration smelting flue gas. China and the Soviet Union signed the "Agreement on the Soviet Union Government's Assistance to the Central People's Government of the People's Republic of China in Developing the National Economy" in Moscow. In 1954, the Soviet government added 15 more projects to the original 156 assistance projects, including 13 in the chemical industry, petroleum refining, and chemical and petroleum equipment manufacturing. China's first specialized scientific research institution in the petroleum refining industry, the Fushun Petroleum Research Institute, was established, focusing on synthetic oil and petroleum refining research.
In 1954, the Chemical Industry Bureau of the Ministry of Heavy Industry proposed the first five-year development plan for the chemical industry. The Ministry of Heavy Industry established the Chemical Geology and Mineral Company to lead geological exploration and the construction of mines in the chemical industry. The Ministry of Heavy Industry established the Chemical Geology and Mineral Resources Company, which was responsible for leading the geology, exploration and mining production construction of the chemical industry. The Shanghai Institute of Organic Chemistry (SIOC) was founded in 1950 and covers all aspects of organic chemistry. Basf managed to maintain its offices in Shanghai and Tianjin during the early years of the People’s Republic In 1949, China produced only 27000 tons of chemical fertilizers, in 1941 the record production was 227000 tons. This was surpassed in 1953. China remained the world's largest importer of fertilizers until the 1970's. Production mainly serves agriculture and the light and textile industries. Over the period 1949-79, 52 percent of investment in the chemical industry was directed at products for agricultural use and 20 percent at textile production.

Phosphorus is produced in 1955, potassium not before 1966.

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In China, the textile industry was a traditional native sector, with a well-developed handicraft segment for silk and cotton until the mid-nineteenth century. Following the opening of ports in 1842, the Shanghai Mechanical Textile Bureau was established in 1880 and began production in 1890, becoming a pioneer of modern factories in the Chinese cotton industry aimed at substituting imported machine-made cotton products. However, the defeat in the First Sino-Japanese War and the signing of the Shimonoseki Treaty in 1885 allowed foreign companies to establish factories in open port cities, prompting an influx of foreign direct investment in China.
It wasn't until the outbreak of World War I (1914–18) that modern textile enterprises with Chinese private capital began to emerge. As imports of European products declined, Chinese private investors gradually entered the textile industry. At the same time, direct investment from Japanese cotton companies in China became increasingly significant. Similar to the city itself, Shanghai's cotton textile industry emerged from the ambitions of Chinese entrepreneurs and officials who sought to modernize industry in China, as well as from the efforts of foreign textile companies and their supporting governments to establish operations and exert influence in the region. By the early 1920s, large mill complexes occupied extensive areas along the waterfront in the Yangshupu district by the Huangpu River, as well as in the Zhabei and Putuo districts adjacent to Suzhou Creek.

The Second Sino-Japanese War (1937–45) and the civil war had a complex impact on the textile industry. While these conflicts disrupted production, they also led to significant changes, including the establishment of the state-owned China Textile Construction Company after World War II, which took over former Japanese textile production facilities and increased the presence of state-owned enterprises in the sector. Despite this shift, the private sector still accounted for 63% of the textile industry's total output in 1949 (excluding handicrafts), remaining the primary producer in the industry. In summary, until 1949, China's textile industry evolved with a coexistence of Chinese private enterprises, foreign-invested companies, and traditional rural handicrafts. By 1949, when Mao Zedong officially declared the liberation of China and the establishment of the People's Republic, many Shanghai businesses had already relocated. They moved much of their salvageable equipment to nearby Hong Kong, where a new textile industry quickly emerged. The outbreak of the Korean War in 1950 and China's subsequent entry into the conflict accelerated governmental control over the distribution of raw materials and products, even prior to the implementation of the First Five-Year Plan in 1953. In response to heightened military demand, state-owned enterprises (SOEs) and government organizations began ordering products from private companies and outsourcing processing tasks. This led to an expansion of SOEs supplying raw materials and private companies handling processing. Consequently, the share of private companies in the total production value increased to 73.2% by 1952. However, these enterprises became “factories” that engaged only in production activities. While the textile industry was placed under governmental control with the formation of the socialist system, it suffered from the relative suppression of investment under the “heavy-industry-oriented strategy.” The textile industry mainly relied on existing production facilities due to a lack of investment, and improvements in the level of technology were limited. Because of the central control, therefore, factories and individuals had little incentive for innovation or increased productivity.
When the CCP gained power, they adopted certain assumptions from their republican and imperial predecessors. The CCP leadership did not view household-based textile work as having any moral or economic value, instead, they associated women's work at the spindle and loom with backwardness and underdevelopment. They believed that rural handicrafts had been largely eliminated by foreign competition and would need to be phased out, even if they still existed. On December 7, 1950,  State monopoly of the purchase of cotton yarn and cloth is introduced. All cotton yarn and cloth produced privatly or publicly must be purchased exclusively by the State Cotton, Yarn and Cloth Company. On September 9, 1954 the government introduced  the implementation of the planned acquisition and planned supply of cotton cloths. Before long, private companies began to depend on state-run entities for the purchase and distribution of their goods, leading to the gradual disappearance of competitive markets. In undermining these markets, the new government likely did so unintentionally at first, but it ultimately made it increasingly challenging for private firms to operate. The fact that China's handloom industries had managed to hold their own against mechanized competition was a concern rather than a reason to celebrate. As long as millions of rural households continued to use handmade cloth, China could not develop a strong cotton industry, which was considered a crucial first step towards a trajectory that included cotton mills, railroads, and heavy industries.
Interestingly, before their victory in the Civil War, CCP leaders had supported manual textile industries. From 1941 to 1949, the CCP, then based in the Shaanxi-Gansu-Ningxia border region centered on Yan'an and engaged in an undeclared civil war with their Nationalist rivals, mobilized tens of thousands of rural women (and many men, including soldiers and party leaders) in a mass spinning movement. In the face of a Nationalist embargo, CCP leaders promoted hand-spinning and hand-weaving to improve rural living standards, raise political awareness among women, and strengthen the economic independence of the border region. In an area with no strong native textile tradition, 150,000 to 200,000 women produced yarn and cloth in private households or loosely knit collectives. However, after the Civil War victory, the socialist government discontinued this policy. According to a 1949 article, the priority now was to develop a modern cotton industry, and hand-spinning and hand-weaving would be phased out in the next two to three years.
The nation faced a dilemma similar to that of individual households: land allocated for cotton cultivation could not be utilized for growing grain, and increased warmth and comfort from cotton meant less food available for consumption. Compounding this issue was the fact that China, which had historically been a net importer of cotton and cotton products, transitioned to becoming a net exporter in the 1950s.

Cotton procurement prices were kept so low while textile retail prices remained high that cotton factories established in the early 1950s recouped their investments within just one year of operation. In summary, the cotton sector successfully accomplished the objectives set by state planners: it generated capital, subsidized heavy industry, and earned hard currency for essential imports. Unified purchase and marketing ensured that most cotton ended up in the state’s hands, but it did not give the state full control over the cotton harvest. "Women continued to spin and weave by hand not in spite of but because of the industrialization of the textile sector – because of policies that, on the one hand, left little cotton in the countryside, but on the other kept rural people so undersupplied that they were forced to produce cloth with whatever scraps of cotton they could find. State planners could have attained their dual aims – mobilizing all rural female labor for work in agriculture or infrastructure and ensuring that all cotton was processed in factories and contributed to accumulation – by raising farm incomes or by lowering the price of factory cloth. However, this would have reduced profits in state industry and slowed down capital accumulation."

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Chapter 4 of Common Program

• Road to Common Program
• Common Program
• Bibliography
• Documents
• Contact