Joint state-private ownership (1954–1966)
공사합영 (1954~1966)
The method by which the People’s Republic of China converted private capitalist industry and commerce into state ownership through forms of state capitalism. The state took shares in and managed private firms, which were owned jointly with the capitalists, and with the conversion of whole trades in early 1956 purely private firms disappeared. Capitalists received a “fixed interest” of 5 per cent a year on their assessed assets, and when it ended in September 1966 the enterprises became property of the whole people.
In depth
In June 1953 the central committee drafted its “Views on Utilising, Restricting and Transforming Capitalist Industry and Commerce”, and on 2 September 1954 the Government Administration Council passed interim regulations on joint state-private enterprises. At first profits were divided under the “four horses share the fodder” formula among state taxes, enterprise reserves, workers’ welfare and bonuses, and the capitalists’ dividend, the capitalists’ share being about a quarter. In the second half of 1955 a trend towards converting whole trades appeared in the big cities, and in November the central committee led it through a meeting of provincial and municipal leaders.
On 10 January 1956 Beijing became the first city to announce the conversion of every trade, followed by Shanghai, Tianjin, Guangzhou, Wuhan, Xi’an, Chongqing, Shenyang and over fifty medium cities. From then on a uniform fixed interest of 5 per cent a year replaced dividends, and apart from it capitalists could no longer exercise any powers as capitalists. In 1956 67.5 per cent of modern industrial enterprises were state-owned and 32.5 per cent joint state-private. The 1981 “Resolution on History” called this the realisation of the peaceful “redemption” of the bourgeoisie envisaged by Marx and Lenin, while conceding that former industrialists and businessmen were not properly employed and handled. The fixed interest ended in September 1966, and policy documents after 1979 held that the joint assets already belonged to the state and did not return private shares.