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Economic planning in China was pioneered by Kao Kang, Chairman of the North-East Administrative Area in the early days of the Communist régime, who controlled the region formerly known as Manchuria. This was the region which the Japanese had developed into China's foremost centre of heavy industry. It came under Communist rule before most of the country and as early as 1949 the North-East Financial and Economic Commission had made a rough plan for rehabilitating its industry. Two years later a regional planning commission was established.

The purpose of this article is to describe the developments in rural trade following on the formation of the rural people's communes in 1958, but first it is necessary to say something about the events leading up to the situation in the summer of that year. This topic has been treated by the author at greater length elsewhere. A brief summary of certain points must, however, be made in order to sketch the background of the present subject.