Chapter 2: How Was the CPC Able to Clear up the Mess Left Behind by the KMT?

On October 1, 1949 the People's Republic of China was founded. The whole world was watching the New China, guessing whether it would be able to consolidate its position or not. This was not unreasonable. Although an independent and unified democratic republic where the people were the masters had been established, it was still facing very serious challenges, the focus of which was no longer a military problem, but a difficult economic problem which was comparatively more complex and difficult to solve.

Since the CPC had almost no previous experience of dealing with nationwide economic problems, particularly economic problems in big cities, people at home and abroad expressed doubts about the CPC's ability to manage the economy properly. They believed that the CPC had scored full marks militarily, and 80 percent politically, but they were afraid that it would get zero economically.

An American scholar, Nancy Bernkopf Tucker, wrote: "When the Communist armies marched to victory over the Nationalists during 1949, they brought to an end decades of warfare, but their struggle had just begun. The new Chinese leaders faced enormous difficulties in rehabilitating and modernizing China's economy. They had to overcome generations of political inequality and earn for China an independent place among the world's powers… American officials, at the same time, apparently nursed hopes that the CCP [Chinese Communist Party]'s victory would prove transitory."

However, in the short period of only three years, and despite having to wage the War to Resist US Aggression and Aid Korea (the "Korean War"), the national economy was successfully restored. The output of the main industrial products and agricultural produce reached the highest level in history, and the people's living standards improved significantly. How could the CPC manage this?