The Sino-Soviet Schism } 131
could partially be repaid by selling the products of that investment. But
investment in heavy industry typically had a longer payback time. Military
industry, of course, produced no revenue at all. This meant that CCP advo-
cates of very rapid development of heavy and defense industries needed gen-
erous Soviet support. Soviet and East European capital goods were typically
not given gratis. They had to be paid for, albeit over a period of years and at a
low interest rate. Since perhaps 90 percent of China’s population still worked
in the agricultural sector, and since China’s industrialization was just begin-
ning, most of China’s capital goods imports were repaid with agricultural
goods: rice, wheat, soy, seed oils, meat, eggs, pig bristles, fruits, vegetables,
and nuts. The crux of trade between China and the socialist camp was Soviet
and East European capital goods for Chinese foodstuffs. The larger China’s
demand for Soviet-bloc capital goods, the larger its exports of foodstuffs
needed to be.
The Soviet-style centrally planned economy imposed on China by the
CCP in 1950–1953 had the great advantage of allowing planners to concen-
trate resources in targeted sectors. More or less investment could be funneled
to one sector or another. Following the example of Stalin’s 1928–1941 crash
industrialization drive, Mao believed that the largest amount of investment
possible should be poured into expanding military industry and the set of
heavy industries necessary to support it: mining, metal forging and working,
machine building, electricity, petroleum, heavy transport, chemicals, etc.
Investment in consumer goods, agriculture, housing, public sanitation, and
education was held down as much as possible.
Government monopoly on the purchase of agricultural produce at
government-stipulated low prices was one key mechanism of the new sys-
tem of Stalinist development. The state became the sole, monopoly purchaser
of a list of agricultural goods including most basic foodstuffs. Sometimes
the “procurement price” paid by the state for agricultural goods was higher,
sometimes lower, but it was always what the state (and not markets) said it
was. Private sale of listed foods became a crime. If the state paid out higher
procurement prices to the farmers, the farmers would be better off but the
state would have less money to funnel into industrialization. State monopoly
on agricultural produce had the great advantage, from the CCP point of view,
of putting the agricultural harvest in the state’s hands. One difficulty of the
various cooperative systems implemented before full collectivization was
that before selling their produce to state agents the peasants took the har-
vest home, and once at home it was liable to being underreported and eaten,
hidden, or sold by the farmers on illegal markets for a price better approxi-
mating its real, market value. This “problem” would be solved by formation of
the People’s Communes in 1958, in which the entire production process was
brought under control of CCP cadres, with the harvest going directly from
fields to cadre-controlled granaries and warehouses. The agricultural harvest