China has grown into a formidable global power, boasting an impressive array of military capabilities. With intercontinental ballistic missiles (ICBMs), a fleet of 2,500 military aircraft, a standing army of 10 million soldiers, and a significant naval presence, China stands as a dominant force on the international stage. This military might positions China just behind two historical superpowers: the United States of America (USA) and the Union of Soviet Socialist Republics (USSR).
Condition of Industries in 1950
In the aftermath of World War II, China’s industrial sector was relatively underdeveloped. By 1949, the modern industrial segment of the country was not only small but also predominantly under foreign ownership. The majority of existing industries, which were mainly light industries, were concentrated along the Eastern coast and in the region of Manchuria. Steel production in China at that time was modest, not exceeding one million tons.
Machine manufacturing industries were scarce, signaling a lack of industrial diversification. The electric power infrastructure was insufficient, with only a few power stations in operation, resulting in limited electricity production. The railway network spanned approximately 12,000 miles, connecting some major cities, but it was not extensive by any means. When compared to India’s industrial base and infrastructure in 1947, China’s were notably smaller.
Inflation Controlled
One of the first challenges the Chinese government faced was rampant inflation, which had reached such extreme levels that the cost of a single meal could reach a million dollars. Currency notes were reduced to mere paper with little to no value. In 1950, the People’s Bank of China was charged with the responsibility of managing all paper money circulation, with the goal of limiting its supply and restoring its value.
To combat inflation, the government implemented several measures. It began by setting low wages for government employees. Additionally, other employers were encouraged to provide their workers with basic daily necessities and only a minimal amount of currency notes to purchase luxury items. These strategies were part of a broader plan to stabilize the economy and ensure a return to financial normalcy.
Questions for UPSC
1. How did the Chinese government’s approach to controlling inflation in the 1950s compare to modern economic stabilization techniques?
2. What were the long-term effects of the concentration of industries along the Eastern coast and in Manchuria on China’s regional economic development?
3. In what ways did the limited industrial and infrastructure development of China in the 1950s impact its subsequent economic policies and growth trajectory?