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Industrial Management in China

— How China’s Socialist State-Owned Industrial Enterprises Are Managed

by Ma Wen-kuei

[This article is reprinted from Peking Review, #9, Feb. 26, 1965,
pp. 20-23. Bear in mind that this article describes the situation
the major transformations of the Great Proletarian Cultural Revolution.]

SOCIALIST state-owned industrial enterprises require a system of management which meets the demands of large-scale modern production and at the same time helps foster the revolutionary initiative and creativeness of the working class.

Democratic centralism is fundamental in the administration both of our state and of our socialist state-owned industrial enterprises. Comrade Liu Shao-chi has pointed out: “The system adopted in managing our enterprises is a system which combines a high degree of centralization with a high degree of democracy. All enterprises must abide by the unified leadership and planning of the [Communist] Party and the state, and, by observing strict labour discipline, ensure unity of will and action among the masses. At the same time, they should bring into full play the initiative and creativeness of the workers, develop the supervisory role of the masses, and get them to take part in the management of their enterprises.”1

All managment in our enterprises must conform to the spirit of democratic centralism. This fully suits the socialist nature of our industrial enterprises and the objective demands of modern industrial production. Both the nature of ownership by the whole people of the enterprises and the highly socialized nature of modern industrial production call for a highly centralized and unified leadership. Failing this, socialized production cannot be carried out in a normal way, nor can the principles, policies and plans of the Communist Party and the state be implemented thoroughly. But the centralized leadership of socialist industrial enterprises, in which staff and workers are also masters and enjoy the right to participate in management, is fundamentally different from the arbitrary dictatorship existing in capitalist enterprises. It should and can be combined with extensive democracy. Our system of democratic centralism is centralism based on democracy, and democracy under centralized guidance.

In leading socialist construction in China, our Party has developed a whole system of management which integrates a high degree of centralization with a high degree of democracy. Practice has proved that its correct implementation helps bring about in our industrial enterprises a vigorous and lively political atmosphere in which there is both centralism and democracy, discipline and freedom, unity of will and personal ease of mind. As a result, problems arising in the enterprises can be solved more correctly and production developed with greater, faster, better and more economical results.

The following are among the major features of this system of management: the director assumes full responsibility under the collective leadership of the Communist Party committee; a conference of staff and workers’ representatives; cadres participate in labour and workers participate in management; and close co-operation among leading cadres, technical personnel and workers.

Director Assumes Full Responsibility Under
Collective Leadership of Party Committee

The director assuming full responsibility under the collective leadership of the Party committee is a fundamental feature of the system of management in our state-owned industrial enterprises. The essence of this is the proper integration of collective leadership and personal responsibility with the leadership of the Party as the core.

Collective leadership is the basic principle and consistent tradition of our Party in given leadership. In his article “On Strengthening the Party Committee System,” Comrade Mao Tse-tung gave a comprehensive summary of the successful experience gained by our Party in carrying out collective leadership. He pointed out that “all important problems (of course, not the unimportant, trivial problems, or problems whose solutions have already been decided after discussion at meetings and need only be carried out) must be submitted to the committee for discussion, and the committee members present should express their views fully and reach definite decisions which should then be carried out by the members concerned.”2

Why must we adhere to the collective leadership of the Party and persist in having all important problems decided by the collective concerned instead of by individuals? This is because different opinions of the masses and various aspects of objective things in the courise of their development can be more comprehensively reflected through collective discussions with the airing of different views. In this way the masses’ experience and opinions can be brought together and summed up more correctly and decisions more consistent with reality reached. This has been fully borne out by the experience of our Party in leading revolution and construction over a long period.

In our state-owned industrial enterprises, the technical equipment for production is modern, the division of labour is extensive, links among various departments are close and production is highly technical, scientific and socialized. At the same time, the struggle between bourgeois and proletarian ideology and between the roads of socialism and capitalism runs in various forms through every aspect of the enterprises. The problem of management is, therefore, very complicated. In order to pool and sum up the masses’ opinions and experience in a fairly correct manner and successfully carry on the class struggle, the struggle for production and scientific experiments, the leadership of the enterprises must closely adhere to the Party’s principle of collective leadership.

Experience has proved that excellent results are achieved in those enterprises which persist in correctly integrating collective leadership and personal responsibility with the Party as the core, because (1) more correct decisions are reached through collective discussion in the Party committee and by relying on the experience and wisdom of the collective, and (2) the method of leadership characterized by division of responsibility and the mass line is employed to ensure the realization of various important measures. Precisely because of this, the Eighth National Congress of the Chinese Communist Party held in 1956 clearly stipulated that the principle of the director assuming full responsibility under the collective leadership of the Party committee must be put into practice in all industrial enterprises.

It goes without saying that by collective leadership of the Party committee, we do not mean the abandonment of personal responsibility. On the contrary, collective leadership and personal responsibility supplement and complement each other, neither can be ignored. Collective leadership can be brought about only through the division of responsibility among individuals, while the role of individuals can be brought into full play only by combining their experience and wisdom with those of the collective through collective leadership.

The highly centralized production of state-owned industrial enterprises calls for highly unified control and requires that the director assume responsibility for routine productive and administrative work under the leadership of the Party committee. Without the director strictly assuming full responsibility under the collective leadership of the Party committee, a state of confusion would arise in which duties are not clearly defined and no one bears responsibility. As Lenin said: “At any rate, and under all circumstances without exception, committee methods must be accompanied by the precisest definition of the personal responsibility of every individual for a precisely defined job. Irresponsibility on the plea of committee methods is the most dangerous evil.”3 Our own experience has furnished proof of this.

Staff and Workers’ Representatives Conference

The staff and workers’ representatives conference is an important means of broadening democracy and getting the masses of staff and workers to take part in management and to supervise the work of the administration. Comrade Teng Hsiao-ping has said: “The staff and workers’ representatives conference under the leadership of the Communist Party committee is a good means of broadening democracy in the enterprises, of recruiting workers and staff to take part in the management and of overcoming bureaucracy. It is an effective method of correctly handling contradictions among the people.” The conference helps integrate centralized leadership with the bringing into play of the initiative of the masses of staff and workers, thus simultaneously strengthening the centralized leadership from top to bottom and providing supervision by the masses from below. This results in continuously improving administrative work and ensuring the overall fulfilment of state plans.

In state-owned industrial enterprises, the staff and workers’ representatives conference is an important form through which the staff and workers all participate in management. The conference may hear and discuss the director’s report on the work of the enterprise, examine and discuss production, financial, technological and wage plans as well as major measures to realize them, check regularly on the implementation of these plans and put forward proposals. It may examine and discuss the use of the enterprise’s bonus, welfare, medical, labour protection and trade union funds as well as other funds allotted for the livelihood and welfare of the staff and workers. On condition that the directives and orders issued by higher authorities are not violated, the conference may adopt resolutions on the expenditure of the above funds and charge the administrative or other departments concerned to carry them out. It may criticize any of the leaders of the enterprise and, when necessary, make proposals to the higher administrative authorities for punishing or dismissing those leaders who seriously neglect their duties and behave badly. Should there be disagreement with the decisions of the higher administrative authorities, the conference may put forward its own proposals, but if the higher authorities insist on the original decisions after due study, it must carry them through accordingly.

This is why the staff and workers’ representatives conference is an important means of developing democracy and getting the masses of staff and workers to participate in management throughout the factory. Through this conference, the Party’s principles and policies can be better implemented among the masses, the relations between the interests of the state and those of the staff and workers of the enterprise in question can be correctly handled, those between the administration on the one hand and the trade union organization and the masses of the staff and workers on the other can be correctly adjusted; and at the same time the socialist consciousness of the staff and workers and their sense of responsibility as masters in their own house can be raised, the masses’ supervision over administrative work strengthened, and the improvement of management promoted.

The staff and workers’ representatives conference is convened regularly and presided over by the trade union. When the conference is not in session, its routine work is done by the trade union under the leadership of the enterprise’s Party committee and with the active support and co-ordination of the enterprise’s administration.

Cadres Participate in Physical Labour and Workers in Management

Another important means of correctly implementing the mass line in the management of industrial enterprises is that of cadres participating in physical labour and workers participating in management. This is also a means of key importance in correctly handling contradictions among the people and contradictions between those engaged in production and management.

As regards the significance of cadres’ participation in labour, the Central Committee of the Chinese Communist Party has pointed out: “When leading cadres take part in productive labour and become one with the masses, this helps in the timely discovery and practical solution of problems, helps improve the style of leadership and consequently makes it easier to avoid and overcome many errors of bureaucracy, sectarianism and subjectivism, and helps to change the attitude of despising physical labour which exists in society…. The Central Committee holds that provided they are fit for physical work, not only cadres working at county, district and hsiang levels, but also the main leading personnel of Party committees at various levels above the county and the leading Party cadres who are working in government organs and people’s organizations, including the members of the Party’s Central Committee, must devote some time every year to doing some physical labour.”4 The Central Committee also pointed out that “our Party’s tradition of keeping in close touch with the masses and of hard work and plain living must be carried forward. Participation in physical labour by leading cadres at all levels helps gradually integrate mental and physical labour and constitutes a system whereby this splendid tradition can be carried forward.”

Experience has shown that by regularly participating in physical labour and production in order to give on-the-spot leadership, cadres can acquaint the masses with the Party’s policies more directly and more promptly and their relations with the masses will become closer. In this way, the masses’ initiative and the workers’ sense of responsibility as masters in their own house can be greatly stimulated.

Through taking part in labour, cadres can improve their style of work and method of leadership. By regularly going to the production front, taking part in labour and acquainting themselves with conditions on the spot, cadres in leading posts are able to combine general directives with concrete guidance and to discover and solve problems promptly, thus giving better leadership in production.

Adhering to the practice of cadres participating in labour and the style of work which embodies the Party’s mass line is, therefore, of great significance in improving the management of industrial enterprises and promoting industrial production. Moreover, by taking part in labour and maintaining close contacts with the masses, cadres can raise their level of ideological and political consciousness and thus promote their own revolutionization. Meanwhile, they can learn production techniques and gradually make themselves cadres who are both politically advanced and professionally proficient.

In a word, by having cadres participate in labour we can avoid bureaucracy and prevent revisionism and dogmatism. For the socialist system, it is a matter of fundamental significance.

There are many ways in which cadres take part in labour in the industrial enterprises. Here are some of them: working with a shift of workers to make investigations and studies; working with a shift to find solutions to actual problems; living and working together with a shift which lags behind in order to help it catch up with the more advanced; working with a shift when conditions are hardest and most difficult; working with a shift which is doing the most critical and important job or faces complicated conditions. Some enterprises have developed cadres’ participation in labour into a regular system by demanding that they do physical labour on a fixed day (or days) in the week, at a fixed job and with specific responsibilities and that, when they become skilful enough, they fulfil an ordinary worker’s quota. This is good experience. But whatever form is chosen, when cadres participate in labour, they must at the same time help organize production and do ideological and political work.

The participation of workers in management embodies the Party’s principles of running enterprises well by relying on the working class. This takes various forms. In addition to the above-mentioned staff and workers’ representatives conference, workers take part in the management of the routine work of the production groups. As a result of workers participating in management, the centralized leadership of enterprises can be put on a more extensive mass basis, management by administrative personnel and by the masses can be closely integrated and management can better meet the need for the development of production, thus giving it a constant forward impetus.

At the same time, through participation in management, workers can be further tempered; they are enabled to master production skills and continuously raise their level of class consciousness as well as enhance their organization ability and learn the work of management. In this way, the workers’ role as masters in their own house can be brought into fuller play in socialist construction and in the life of the state as well as in the management of industrial enterprises.

Close Co-operation Among Leading Cadres, Technical Personnel and Workers

The close co-operation among leading cadres, technical personnel and workers of industrial enterprises to study and solve problems of production technique and management is a practical application of the Party’s mass line in the period of socialist construction. Putting into operation technical policies, technical measures, methods of management, and so on, to develop production, involves a series of complex problems. To arrive at the correct decisions and implement them in every respect requires a high level of political and class consciousnes and a good knowledge of economic affairs, natural science and techniques. Consequently, it is necessary to rely on the initiative and creativeness of the workers, technical and administrative personnel, and to pool their knowledge and experience in the course of practice. Close co-operation among leading cadres, technical personnel and workers is a good way to do so.

This method not only stimulates the initiative of the broad masses but also brings into play the initiative of the technical staff—those who are technically better qualified as well as those who are not so highly qualified. It also furthers the integration of politics with techniques, politics with professional work, the leading personnel with the masses, theory with practice, and popularization with the raising of standards, thus swiftly lifting the workers’ technical and theoretical levels and furthering the ideological remoulding of intellectuals. In this way, it will be possible gradually to lessen the difference between mental and physical labour, and to develop science and technology more swiftly.

By means of staff and workers’ representatives conferences, of cadres taking part in physical labour and workers taking part in management, and of co-operation among leading cadres, technical personnel and workers, industrial enterprises are enabled to develop, under centralized and unified leadership, political democracy and democracy pertaining to matters relating to production and technique and economic affairs.

To foster political democracy is to insure that the masses of staff and workers have the right to struggle against all that is contrary to Party or estate policies, or which violates law and order, and that every staff member and worker has the right to criticize cadres at cextain meetings. This helps to raise the class conciousness of staff and workers, adjust internal relations and strengthen internal unity.

To promote democracy in matters pertaining to production and techniques is to draw in the broad masses to take part in the management of production and technical matters, to co-ordinate management by the masses with that by administrative personnel, to mobilize staff and workers to discuss production plans and important problems of production and technique and to go in for technical innovations in a big way.

To develop economic democracy is to have workers participate in management and business accounting work. Fully fostering political democracy and democracy in matters pertaining to production and technique, and economic democracy will stimulate the initiative of staff and workers and achieve the aim of strengthening unity, consolidating discipline, improving management and developing production.

Rules and Procedures

Another important problem in managing industrial enterprises is the necessity to change in a revolutionary spirit those rules and set procedures of industrial enterprises which have got out of step with reality, or have become irrational, and to adopt new rational rules and procedures and perfect them.

No modern industrial enterprise can do for a moment without rules and set procedures. All those which accurately reflect the objective laws governing the production processes of an enterprise serve to bring into play the initiative and creativeness of the masses and help promote the development of the productive forces. Those which do not accurately reflect the relations of man to man in productive labour and which violate objective laws of productive operations, shackle and hinder the development of the productive forces. The Party’s Central Committee has pointed out: “Standing rules and procedures not conducive to the growth of productive forces will be constantly upset by new creations of the masses during the movement [to oppose waste and extravagance and conservatism]. We must study modestly the creations of the masses, and revise original rules and procedures according to the needs of development and the tests in practice by the masses. Those which really restrain the growth of the productive forces and can be readily revised, must be immediately amended.”5

Socialist industrial enterprises must change irrational rules and set procedures and at the same time conscientiously abide by those which are rational; only thus can production and management be carried on in a normal way in industrial enterprises and the growth of production be continuously promoted.

The adoption or discarding of any rule or procedure should be governed by the principle of “from the masses, and back to the masses,” and therefore based on the practical experience of the masses. Only those creations of the masses which have been repeatedly tested, appraised, proved in practice and confirmed as successful should be included in the rules and set procedures. Rules and procedures should be continuously improved and perfected in the course of practice. However, for a given period there should be a certain degree of stability. The adoption or discarding of important rules and procedures must have the approval of the higher leadership of the departments concerned.

In this way, production and management of industrial enterprises can be carried out in a more orderly manner, more smoothly and, through the actual practice of production and management, we can continuously recognize and master new laws of production and management, continuously overcome old forces of habit, and really become the masters of rules and procedures.


1 Message of greetings delivered by Comrade Liu Shao-chi on behalf of the Central Committee of the Communist Party of China at the Eighth All-China Congress of Trade Unions (Dec. 2, 1957).

2 “On Strengthening the Party Committee System,” Selected Works of Mao Tse-tung, F.L.P., Peking, 1961, Vol. IV, p. 267.

3 Lenin; “All Out for the Fight Against Denikin!”, Selected Works in two volumes, F.L.P.H., Moscow, 1952, Vol. II, Part 2, p. 242.

4 Directive of the Central Committee of the Chinese Communist Party Concerning Participation in Physical Labour by Leading Functionaries at All Levels (May 10, 1957).

5 Directive of the Central Committee of the Chinese Communist Party Concerning the Movement of Opposing Waste and Extravagance and Conservatism (March 3, 1958).

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