DIFFICULTIES OF PRIVATELY OPERATED INDUSTRIAL AND COMMERCIAL ENTERPRISES IN CHINA DURING 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700170419-7
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: September 1, 2011
• Sequence Number: 419
• Publication Date: April 28, 1954
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/09/02 : CIA-RDP80-00809A000700170419-7
STAT
Sanitized Copy Approved for Release 2011/09/02 : CIA-RDP80-00809A000700170419-7
 Sanitized Copy Approved for Release 2011/09/02: CIA-RDP80-00809A000700170419-7
DIFFICULTIES OF PRIVATELY OPERATED INDUSTRIAL
AND COAAiERCIAL ENTEPPRISES IN CHINA DURIi7G 1950
During March 1950, various difficulties began to appear in privately operated
industrial and commercial enterprises throughout China. These difficulties were
more serious in private enterprises in large cities than in the smaller cities
and in the rural areas. Raw materials were not available for purchase, capital
was not circulating properly, and goods were not being sold despite price drops.
As a result, enterprises produced less, many firms were forced into bankruptcy,
and unemployment was rampant.
An analysis of the difficulties revealed that they were caused by: (1)
temporary maladjustments following the complete take over of the mainland by
the Communist government, inefficient and corrupt management in many enterprises,
high production costs, and blind competition among private enterprises for
illicit profit; and (2) more serious problems which were the result of the
corruption and incompetence of the Kuomingtung re ime over a long period of
time, foreign trade problems, and the crippling of Chinas electric power by
the bombing and blockading of China's coastal areas by Chiang Kai-shek.
Overcoming the Difficulties
To overcome the difficulties the following conditions must prevails (1)
Private enterprises and government agencies must have a prope.? i?eaiization of
the causes and the nature of the problems facing private enterprises. (2) The
government must aid private enterprises in every possible way. (3) Private
enterprises must not be entirely dependent on the government but must put forth
maximum effort to rehabilitate themselves.
The government has already aided private industries by loaning a great
deal of money, placing orders for goods, and fixing prices as well as taxes on
many commodities. The following example shows the government's attempt to
aid private enterprise. Two-thirds of the cost of setting up and operating a
Shanghai weaving and dyeing plant were borne by the government.
On the whole, the growth of industrial and commercial problems has been
curbed by the cooperation of private industry and the government agencies. As
a result of the joint efforts of private enterprises and the government the
following improvements in conditions can be noted: (1) interest rates are
decreasing (2) normal buying power is being restored gradually and (3) prices
are becoming stabilized.
However, difficulties facing private industry are extremely complex and
can be overcome only after a long period of time.
Sanitized Copy Approved for Release 2011/09/02 : CIA-RDP80-00809A000700170419-7