In October 1949, Mao had declared the People's Republic of China at the Gate of Heavenly Peace in Beijing. He now faced very large problems. China had been fighting a civil war since the 1920's and a full-scale war with the Japanese since 1937 to 1945. After nearly 20 years of fighting, China now many problems.
The country had little industry. What had existed had been destroyed after so many years of war.
Money was valueless.
The towns had high unemployment.
The countryside was experiencing food shortages; and if the countryside was not producing food, then the cities were bound to be short of food as well.
China's population was increasing by 14 million a year which would only make all shortages worse.
Mao was Chairman of the People's Republic while Zhou Enlai was the nation's prime minister. Though Mao claimed to lead a coalition government (there were 14 separate political parties in the government), the country was run by the Communist Party. Officials from the Communist Party were put in charge of society at every different level. The media was controlled by the Party.
In 1950, Mao passed the Agrarian Reform Law. Party officials went around China to help with land reforms. Animals, machinery and land were given to the peasants. Landlords had reason to fear for their safety.
Immediately after the Communist Party came to power, landlords were rounded up to account for what they had done. The Communist Party encouraged the peasants to take over the land and to try “evil landowners”. Many former landlords were guilty of many crimes against peasants on their former land and it is thought that as many as 1 million ex-landlords were executed between 1949 and 1953. Those not executed were sent to special camps to be re-educated. By 1951, the land revolution had ended. The largest section of society - peasants - had been rewarded for their support of the Communists while a potentially large threat - the landlords - had been eradicated.
In cities change also occurred. Cars, foreigners and foreign businesses all disappeared. The favoured means of transport was the bicycle. Cities became overrun with them. Beggars also disappeared.
Family life was changed. In 1950, Mao introduced the Marriage Reform Law which banned forced marriages. The law was very blunt:
“All marriages are to be based on the free consent of men and women.”
Divorce was made easier to get. It had been all but impossible under the old regime. Polygamy, the sale of women into prostitution and the killing of unwanted female babies were all banned. Punishment for breaking these laws could be severe.
The government managed to control inflation by the fixing of wages and prices. All private banks were closed down and a new state bank was established. A company had to have the support of the Communist Party if it wanted to get a loan from this bank. Small businesses were allowed to continue as the newly formed government needed their expertise if China was not going to descend into financial chaos.
In 1950, China became involved in the Korean War. As a result, the government announced its “Three Antis Campaign”. This was against corruption, waste and bureaucracy. Those found guilty of breaking the “Three Antis” could be shot.
In 1953, all private businesses were brought under state control. The owners were “re-educated” by publically denouncing their past 'crimes' against people.
The “Three Antis Campaign” was followed by the Five Antis Campaign. This was against bribery, non-payment of taxes, fraud, taking government property and spying. Those found guilty of these were usually sent to prison rather than be shot.
Those who were found guilty of speaking out against the party line faced serious punishment. They could be sent to prison or sent into the countryside to be “reformed” by the peasants.
By 1953, Mao felt strong enough to embark on his next campaign - the Five Year Plan for industry.