Panic Grips Over Return of Mao-Era Controlled Economy in China

China is returning to the ‘planned economy’ after the conclusion of the 20th National Congress of the Communist Party of China (CCP). Not only the Chinese government is speeding up the restoration of the supply and marketing cooperatives system, but even the share market has begun to pursue the marketing of “social concept shares”. In addition, the construction of state-run canteens in various places is also accelerating, and some have already opened for business. 

These Mao-era institutions that have been out of the public eye for decades suddenly return to the spotlight overnight. These institutions once functioned as a pillar of the socialist command economy. The Chinese Communist Party under Xi Jinping is accelerating the return of the “planned economy”, which caused economic havoc during Mao Zedong’s sweeping command and control regime. The comeback of supply and marketing cooperatives and state-run canteens has made people feel tizzy and fearful that it would bring the Chinese back to the unforgettable era of a controlled economy. For someone born before the 1960s, that’s a pretty painful memory.

From 1950 to 30 years before the “opening up economy” to the outside world in the 1980s, the CCP controlled the production and supply of all materials in Chinese society by relying on administrative planning. All households had to purchase daily necessities through supply and marketing cooperatives. Or the products produced by the family workshops must also be sold to the designated supply and marketing cooperative system. Otherwise, they may be charged with “speculation”.

Beginning in 1953, the Communist regime implemented a planned grain purchase in rural areas and a quantitative rationing policy in cities referred to as unified purchase and sales; because of the scarcity of materials, the primary necessities of life for the Chinese needed to be supplied with tickets. You can only buy as many “tickets” as you are allocated, such as food stamps, oil stamps, meat stamps, cloth stamps, etc. It is a unique product of the era of the CCP’s planned economy.

Chinese social media is abuzz with people’s concern that if they go back to the model of unified purchase and sales and quantitative distribution now, they will undoubtedly be driving backwards. Some netizens recalled the horrible years of the past when the current supply and marketing cooperative existed. Some netizens also worry that if the supply and marketing cooperatives supported by the state continue to expand, small private supermarkets, small community stores, and even large supermarkets may be squeezed out of the market, creating new monopolies.

However, the harm of the supply and marketing cooperatives and the unified purchase and sale system is far more than that. It is also the main culprit of the great famine that began in China in the late 1950s. The great famine in China in 1959 killed tens of millions of people in a few years. Communist regimes’ “people’s communes”, “cooperatives”, and “big canteens” were the reasons for the famine.

The older generation still remembers how the Chinese countryside was destroyed. Therefore, people are afraid not only facing the lack of materials again but also of the “Great Leap Forward, Rectification, Suppression of Rebellion, Cleansing, Cultural Revolution” and other movements, which have also revived together with the planned economy.

China is currently facing an economic recession. In times of financial crisis, the market economy will give way to the planned economy, the era of material scarcity will return, and the days of supply by ticket will follow. The CCP authorities have already hinted with great fanfare that the Chinese people will live together in misery.