Mao Tse-tung was clearly the unchallenged leader of the Chinese Communist Party (CCP) throughout the 1949-57 period. In this period, broad agreement existed within the CCP leadership on adopting the Soviet model of socialism. The essence of Mao's program for revolution before 1949 had been the need to address Chinese realities, and he was not about to disown that principle during the stage of building socialism. Differences in economic and cultural levels, agricultural patterns, local customs, and ethnic composition all required suitably varied responses. The crucial difference, however, was the degree of CCP presence in various areas before 1949. In addition to gradualism, the common program adopted the classic united front tactic of narrowly defining enemies as 'imperialism, feudalism and bureaucratic capitalism'. The crucial task for the new liberated areas generally was land reform. To this task the CCP brought experience and personnel that were often lacking for the more complex conditions of the cities.

This chapter surveys the history of the Chinese economy from the end of the Manchu dynasty to the establishment of the People's Republic. While the quantitative indicators do not show large changes during the republican era, China in 1949 was nevertheless different from China in 1912. Modern industrial, commercial and transport sector for the most part remained confined to the treaty ports. The census-registration of 1953-54-54 reported a population of 583 million for mainland China. In describing the Chinese economy in the closing years of the Ch'ing dynasty, it is noted that at least 549 Chinese-owned private and semiofficial manufacturing and mining enterprises using mechanical power were inaugurated between 1895 and 1913. China's economy in the republican era was overwhelmingly agricultural. Neither the 'distributionist' nor the 'technological' analysis of China's failure to industrialize before 1949, is by itself satisfactory. Poorly developed transport continued to be a major shortcoming of the Chinese economy throughout the republican period.