The question of how a state committed to Communism became the world’s biggest trading nation in markets dominated largely by capitalist countries, controlling industries and setting prices, has long been puzzling. Author Jason M Kelly, in Market Maoists, provides a sober, detailed account of the way modern China came to see that global trade could be a way to “fortify socialism … rather than degrade it.”
Subtitled “The Communist Origins of China’s Capitalist Ascent”, the book traces the Party’s reliance on trade with non-socialist countries back before the nation’s founding and shows that many levers of foreign commerce were intact well ahead of the vaunted “Reform and Opening” in the late 1970s. The ability to read global markets for rice and wheat, technology and currency, for instance, and to know how and when to walk and talk like a “capitalist imperialist”, took decades to develop.
The book’s roughly 200 well-researched pages of narrative, plus another 100 or so of notes and index, focus on many of the CCP’s biggest decisions and debates on economy and trade up until about 1973, when the Four-Three Program was ratified. In the words of the author, an assistant professor at the US Naval War College, this plan amounted to a “colossal buying spree” of technology and equipment from capitalist countries.
It definitely didn’t jibe with Communist Party rhetoric:
Beset by the xenophobia of the Cultural Revolution and devoted to an anti-imperialist, socialist, and revolutionary path to modernity, how was it that this China aspired to a multibillion-dollar trade program with the very capitalists who embodied the imperialist aggression that Mao’s China aimed to crush?
A short answer is that the Party had little choice. Commercial and diplomatic relations with the Soviet Union soured, and the Great Leap Forward and the Cultural Revolution were disasters. China, as Kelly tells it, also found trade could be faster and smoother with capitalist-minded nations and corporations, which, like today, were extremely eager to access the mainland market (whatever its politics).

Kelly nicely charts the budding trade relationships between the CCP and certain foreign countries amid the 1950s US embargo. New connections started to form on the sidelines of conferences in Moscow in 1952 and in Geneva two years later, and China recast its bureaucracies and shifted its strategies accordingly. To help meet the lofty targets of the second five-year plan, a foreign trade directory, similar to the Sears Catalog, was introduced, replete with advertisements. An amusing ad reproduced in the book touts dress shirts with a “scientific collar” and features an insignia very similar to one still used today for Kool menthol cigarettes in the US.
With extensive quotes and citations from archives—some of which, he says, were never before sourced by historians—Kelly describes the tortuous process behind many of the decisions to do deals with the so-called enemy. The book illustrates and analyzes exchanges between key men, including Zhou Enlai, Chen Yun, Li Xiannian and Mao Zedong. While some of the interpretations felt perhaps a little overdone, Kelly conveys what a highwire act it must have been to conduct business on Mao’s watch. “What consequences might befall the unlucky cadre who strikes the wrong balance between these contradictory impulses?” Kelly asks at one point. “Nobody seemed to know.” Later, he shows the terrible repercussions that several men eventually suffered as a result of their association with foreign capitalism.
Some seeds of the Party’s own long relationship with global markets were planted after the United Front alliance was formed against the Japanese in the 1930s and the CCP was allowed openly to operate funding offices in Nationalist-controlled areas. Although the shaky alliance didn’t last, by the end of the war, the Communists had more than fifty such outposts that would be used “for trade with large mainland markets and, ultimately, overseas markets as well.”
Hong Kong was a milestone in this regard. Kelly describes a “forgotten but fateful” meeting where Zhou Enlai asked Britain’s ambassador to Nationalist China to allow the CCP to open up shop in the colony. In early 1938, after some debate, an office at 18 Queen’s Road Central was founded with Britain’s approval. The office, despite having signage for a teashop, proved too conspicuous to last. Yet lessons were learned about business dealings abroad.
Another firm, set up a few hundred meters from the false front—Liow & Company—seemed to take heed. Run by Qin Bangli, who had the “budding paunch of a bourgeois climber”, the company survived and, after it changed its name to China Resources in 1948, was a linchpin in the country’s engagement with global markets.
Faced with “the prospect of mass starvation at home”, Party cadres turned to this Hong Kong firm around 1960 to work out the logistics of importing hundreds of thousands of tons of “capitalist grain”. It was so politically and economically sensitive that each day China Resources sent a courier across the border to Shenzhen to brief the foreign trade ministry in person, the privacy of Hong Kong phone lines being rather suspect.
Kelly, who’s also an associate in research at Harvard’s Fairbank Center for Chinese Studies, argues that studying trade during the Mao era is more important than the comparatively small volumes would indicate. “These deals,” he writes,
also served as sites for the exchange of ideas, habits, and beliefs, and as venues where individuals, institutions, and the logics that guided them formed subtle but lasting legacies.
China Resources, for its part, has become a conglomerate with 371,000 employees, eight Hong Kong-listed entities and stakes in foreign firms including Dutch Heineken and Swedish Oatly.
The Four-Three Program, the book shows, was itself a commercial success. All of the twenty six large industrial projects mooted in the 1973 plan were completed by 1982. The facilities were imported from “capitalist states”, including the US.
Kelly writes that it wasn’t long before then that the Party aimed to participate in markets mainly as a way to “hasten the demise of capitalism itself”. Market Maoists helps explain how this didn’t quite work out.
Timothy Sifert is an American writer. He's worked as a journalist in Hong Kong, New York, London and Warsaw.
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