As is borne out by history, the general line for the transition period set forth by our Party was entirely correct.

12. During the period of transition, our Party creatively charted a course for socialist transformation that suited China's specific conditions. In dealing with capitalist industry and commerce, we devised a whole series of transitional forms of state capitalism from lower to higher levels, such as the placing of state orders with private enterprises for the processing of materials or the manufacture of goods, state monopoly of the purchase and marketing of the products of private enterprise, the marketing of products of state-owned enterprises by private shops, and joint state-private ownership of individual enterprises or enterprises of a whole trade, and we eventually realized the peaceful redemption of the bourgeoisie, a possibility envisaged by Marx and Lenin. In dealing with individual farming, we devised transitional forms of co-operation, proceeding from temporary or all-the-year-round mutual-aid teams, to elementary agricultural producers' co-operatives of a semi-socialist nature and then to advanced agricultural producers' co-operatives of a fully socialist nature, always adhering to the principles of voluntariness and mutual benefit, demonstration through advanced examples, and extension of state help. Similar methods were used in transforming individual handicraft industries. In. the course of such transformation, the state-capitalist and cooperative economies displayed their unmistakable superiority. By 1956, the socialist transformation of the private ownership of the means of production had been largely completed in most regions. But there had been shortcomings and errors. From the summer of 1955 onwards, we were over-hasty in pressing on with agricultural co-operation and the transformation of private handicraft and commercial establishments; we were far from meticulous, the changes were too fast, and we did our work in a somewhat summary, stereotyped manner, leaving open a number of questions for a long time. Following the basic completion of the transformation of capitalist industry and commerce in 1956, we failed to do a proper job in employing and handling some of the former industrialists and businessmen. But on the whole, it was definitely a historic victory for us to have effected, and to have effected fairly smoothly, so difficult, complex and profound a social change in so vast a country with its several hundred million people, a change, moreover, which promoted the growth of industry, agriculture and the economy as a whole.

13. In economic construction under the First Five-Year Plan (1953-57), we likewise scored major successes through our own efforts and with the assistance of the Soviet Union and other friendly countries. A number of basic industries, essential for the country's industrialization and yet very weak in the past, were built up. Between 1953 and 1956, the average annual increases in the total value of industrial and agricultural output were 19.6 and 4.8 per cent respectively. Economic growth was quite fast, with satisfactory economic results, and the key economic sectors were well-balanced. The market prospered, prices were stable. The people's livelihood improved perceptibly. In April 1956, Comrade Mao Zedong made his speech On the Ten Major Relationships, in which he initially summed up our experiences in socialist construction and set forth the task of exploring a way of building socialism suited to the specific conditions of our country.

14. The First National People's Congress was convened in September 1954, and it enacted the Constitution of the People's Republic of China. In March 1955, a national conference of the Party reviewed the major struggle against the plots of the careerists Gao Gang and Rao Shushi to split the Party and usurp supreme power in the Party and the state; in this way it strengthened Party unity. In January 1956, the Central Committee of the Party called a conference on the question of the intellectuals. Subsequently, the policy of "letting a hundred flowers blossom and a hundred schools of thought contend" was advanced. These measures spelled out the correct policy regarding intellectuals and the work in education, science and culture and thus brought about a significant advance in these fields. Owing to the Party's correct policies, fine style of work and the consequent high prestige it enjoyed among the people, the vast numbers of cadres, masses, youth and intellectuals earnestly studied Marxism-Leninism and Mao Zedong Thought and participated enthusiastically in revolutionary and construction activities under the leadership of the Party, so that a healthy and virile revolutionary morality prevailed throughout the country.

15. The Eighth National Congress of the Party held in September 1956 was very successful. The congress declared that the socialist system had been basically established in China; that while we must strive to liberate Taiwan, thoroughly complete socialist transformation. ultimately eliminate the system of exploitation and continue to wipe out the remnant forces of counter-revolution, the principal contradiction within the country was no longer the contradiction between the working class and the bourgeoisie but between the demand of the people for rapid economic and cultural development and the existing state of our economy and culture which fell short of the needs of the people; that the chief task confronting the whole nation was to concentrate all efforts on developing the productive forces, industrializing the country and gradually meeting the people's incessantly growing material and cultural needs; and that although class struggle still existed and the people's democratic dictatorship had to be further strengthened, the basic task of the dictatorship was now to protect and develop the productive forces in the context of the new relations of production. The congress adhered to the principle put forward by the Central Committee of the Party in May 1956, the principle of opposing both conservatism and rash advance in economic construction, that is, of making steady progress by striking an overall balance. It emphasized the problem of the building of the Party in office and the need to uphold democratic centralism and collective leadership, oppose the personality cult, promote democracy within the Party and among the people and strengthen the Party's ties with the masses. The line laid down by the Eighth National Congress of the Party was correct and it charted the path for the development of the cause of socialism and for Party building in the new period.