Because of the reliance on the government providing and distributing food and resources and their rapid depletion due to poor planning, starvation appeared even in fertile agricultural areas.
Mao and his supporters contended that the "liberal bourgeoisie " and " capitalist roaders " continued to dominate society, and some of these so-called dangerous elements were present within government, even the highest echelons of the Communist Party.
Following Hu's resignation, the leadership engaged in an intense debate over the future course of the reforms and how to balance the need for efficiency and market incentives with the need for government guidance and control.
Normal market mechanisms were disrupted, agricultural production fell behind, and people exhausted themselves producing shoddy, unsellable goods.
The role of the central commune administration was greatly reduced, although it remained the link between local government and agricultural producers and was important in carrying out activities that were too large in scale for the production brigades.
Within any given city, enterprises ranged from tiny, collectively owned handicraft units, barely earning subsistence level incomes for their members, to modern, state owned factories, whose workers received steady wages along with free medical care, bonuses, and an assortment of other benefits.
The march to socialism seemed to go along reasonably well with the dictates of industrial development. For example, roughly 75 percent of the grain grown in China was consumed by the families that produced it, with the remaining 25 percent being distributed to the other regions that required it.
China responded by sending waves of troops south, in what became known as the People's Volunteers in order to disassociate them from the PLA.
Such actions can be understood against the background of the experiences of the capitalists in the previous few years. Chiang Kaishek andNationalist troops fled to Taiwan in April People were free to relocate around the country and to marry who they wished; many forms of sexual inequality were removed including inheritance by sons only.
For example, certain cardinal Confucian ideas still influence the relationship between the rule of law and rule of virtue, the relationship between order and rules, and the relationship between social networks and development.
For example, all the capitalists in a given trade such as textiles would parade together to CCP headquarters to the beat of gongs and the sound of firecrackers.
As of the interest rate charged on such loans was still too low to serve as a check on unproductive investments, but the mechanism was in place.