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is still only a beginning. We must see to it that within two or three years the Shensi-Kansu-Ningsia Border Region and the Liberated Areas in the enemy's rear are completely or largely self-supporting in grain and manufactured goods, and even have a surplus. We must achieve still greater successes in agriculture, industry and trade. Only then can we regard ourselves as having learned more about economic work and as having learned to do it better. In places where there is no improvement in the living conditions of the troops and the people, where the material foundations for the counter-offensive remain unstable and agriculture, industry and trade stagnate or even decline instead of expanding year by year, it is evident that the personnel of the Party, government and army have not learned how to do economic work, and great difficulties will undoubtedly be encountered.

    There is one point I must again bring to everybody's attention, namely, that our ideas should be adapted to our immediate environment. Our immediate environment is rural; it would seem that nobody has any doubt on that score, for who does not know that we are living in the countryside? Yet actually, that is not the case. Many comrades do not understand the countryside at all, or at any rate not profoundly, although they live there and imagine they understand it. They do not proceed from the fact that our environment is the countryside, which is based on individual economy, cut up by the enemy and involved in guerrilla warfare, and the result is that their handling of political, military, economic and cultural problems, or of Party matters and the workers', peasants', youth and women's movements is often incorrect or only partially correct. They approach rural affairs from an urban viewpoint and often run their heads against a brick wall because they draw up many inappropriate plans subjectively and enforce them arbitrarily. In recent years our comrades have made much progress, thanks both to the rectification campaign and to the failures they have met with in their work. But we must still take care to adapt our ideas fully to our environment before we can obtain results in every field of work and do so quickly. If we truly understand the fact that the rural base areas in which we find ourselves are founded on individual economy, cut up by the enemy and involved in guerrilla warfare and make it the starting point in everything we do, then the pertinent question is, how do our results, which may seem slow and unspectacular, compare with the results of taking some other starting point, for instance, the urban viewpoint? Far from being slow, they are actually quite fast. For if we were to start from the urban viewpoint

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and depart from our present-day realities, the question would be not of getting fast or slow results, but of running into endless snags and getting no results at all.

    Clear proof of this fact is provided by the great success of the present form of the army and civilian production drive we have promoted.

    We want to hit the Japanese aggressors hard and make preparations for seizing the cities and recovering our lost territories. But how can we attain this aim, situated as we are in a countryside founded on individual economy, cut up by the enemy and involved in guerrilla warfare? We cannot imitate the Kuomintang, which does not lift a finger itself but depends entirely on foreigners even for such necessities as cotton cloth. We stand for self-reliance. We hope for foreign aid but cannot be dependent on it; we depend on our own efforts, on the creative power of the whole army and the entire people. But how do we go about it? By launching large-scale production campaigns simultaneously among the troops and the people.

    Since we are in the countryside, where manpower and material resources are scattered, we have adopted the policy of "unified leadership and decentralized management" for production and supply.

    Since we are in the countryside, where the peasants are scattered individual producers employing backward means of production and where most of the land is still owned by landlords and the peasants are subjected to feudal rent exploitation, we have adopted the policies of reducing rent and interest and of organizing mutual aid in labour to heighten the peasants' enthusiasm for production and to increase the productivity of agricultural labour. Rent reduction has heightened the peasants' enthusiasm in production and mutual aid has increased the productivity of agricultural labour. I have obtained data from various places in northern and central China, all of which show that after rent reduction the peasants take much greater interest in production and are willing to organize mutual-aid groups like our labour exchange teams here, in which the productivity of three persons now equals that of four in the past. That being the case, 90 million people can do as much as 120 million. There are also instances of two persons doing what used to require the effort of three. If instead of coercion and commandism, which are self-defeating because of their quest for quick results, we adopt a policy of patiently persuading people by setting them good examples, then it will be possible for the majority of the peasants to be organized into mutual-aid groups for agricultural

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and handicraft production in the next few years. Once such production groups become the usual practice, not only will output increase and all kinds of innovations emerge, but there will also be political progress, a higher educational level, progress in hygiene, a remoulding of loafers and a change in social customs, and it will not take long before the implements of production will be improved, too. With all this happening, our rural society will gradually be rebuilt on new foundations.

    If our cadres carefully study this sphere of work and most energetically help the rural people develop campaigns for production, there will be a plentiful supply of grain and other necessities in the countryside within a few years, and we shall be able not only to keep up the war and cope with crop failures but also to maintain a large reserve of grain and other necessities for future use.

    We should organize the army units and the government and other organizations as well as the peasants for production.

    Since we are in the countryside, which is constantly ravaged by the enemy and involved in protracted war, it is imperative for the army units and the government and other organizations to engage in production. And it is possible for them to do so because the guerrilla fighting is scattered over a wide area. Besides, the troops and government personnel in our Shensi-Kansu-Ningsia Border Region are very numerous in proportion to the total population, and they will go hungry if they themselves do not engage in production, while on the other hand the people will go hungry if too much is taken from them and the burden is too heavy for them to bear. These are the reasons why we are resolved to launch a large-scale production campaign. Take the Shensi-Kansu-Ningsia Border Region, for instance. The annual requirements of the army units and the government and other organizations total 260,000 tan (here 1 tan equals 300 chin ) of husked grain (millet), of which they get 160,000 from the people and produce the rest themselves; if they did not engage in production themselves, either they or the people would go hungry. Thanks to our production campaigns, we are free from hunger, and in fact the troops and the people are quite well fed.

    With the exception of grain, clothing and bedding, government and other organizations in the Border Region are self-supporting in most of their needs and some units are entirely self-supporting. Many units are partially self-supporting even in grain, clothing and bedding.

    The achievements of the army units of the Border Region are even greater. Many are entirely self-supporting in grain, clothing, bedding and every other essential, that is, they are 100 per cent self-supporting

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and draw nothing from the government. This is the highest standard, the top grade, and it has been attained gradually over a period of several years.

    This standard cannot be adopted at the front, where fighting has to be done. There a second and a third standard may be set up. The second standard requires that except for grain, clothing and bedding, which are supplied by the government, self-sufficiency through production should be achieved in the following items: cooking oil (0.5 liang per person per day), salt (0.5 liang per person per day), vegetables (1-1.5 chin per person per day), and meat (1-2 chin per person per month); the purchase of fuel, office supplies and miscellaneous items; subsidies for education and health; expenditures for the cleaning of weapons and for the provision of tobacco, shoes, socks, gloves, towels, tooth-brushes, etc.; these items amounting in all to some 50 per cent of the total expenditure. This standard can be gradually attained in two or three years. In some places it has already been attained. This standard may be adopted in the stable base areas.

    The third standard applies to outlying districts and to the guerrilla zones where 50 per cent self-sufficiency is not possible but 15-25 per cent may be. Reaching this standard is good enough there.

    In short, apart from those in exceptional circumstances, all army units and government and other organizations must engage in production in the intervals between fighting, training or work. In addition to using such intervals for collective production, they should organize some of their personnel specifically for production, assigning them to run farms, vegetable gardens, pastures, workshops, small factories, transport teams and co-operatives, or to grow grain and vegetables in partnership with the peasants. In our present circumstances, every organization or army unit should establish its own "domestic economy" to tide over the difficulties. Unwillingness to do so is a characteristic of loafers and is disgraceful. To stimulate production we should also institute a system of individual bonuses, graded according to the quality of the work, for all who participate in it directly. Further, as the effective way of pushing the work forward, the head of each organization must assume responsibility and personally take part, and must apply the method of linking the leading group with the masses and the general call with particular and specific guidance.

    Some people say that if the army units go in for production, they will be unable to train or fight and that if the government and other organizations do so, they will be unable to do their own work. This is

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a false argument. In recent years our army units in the Border Region have undertaken production on a big scale to provide themselves with ample food and clothing and have simultaneously done their training and conducted their political studies and literacy and other courses much more successfully than before, and there is greater unity than ever within the army and between the army and the people. While there was a large-scale production campaign at the front last year, great successes were gained in the fighting and in addition an extensive training campaign was started. And thanks to production, the personnel of the government and other organizations live a better life and work with greater devotion and efficiency; this is the case both in the Border Region and at the front.

    Thus it can be seen that in the context of guerrilla warfare in rural areas, those army units and government and other organizations which undertake production for self-support show greater energy and activity in their fighting, training and work, and improve their discipline and their unity both internally and with the civilians. Production for self-support is the outcome of our country's protracted guerrilla war and this is our glory. Once we master it, no material difficulty can daunt us. We shall grow in vigour and energy year by year and become stronger with every battle; we shall overwhelm the enemy and have no fear of his overwhelming us.

    Here another point must be called to the attention of our comrades at the front. Some of our recently established areas are fairly rich in material resources and, counting on this, the cadres there are unwilling either to economize or to engage in production. This is very bad, and they are bound to suffer for it later. Wherever we happen to be, we must treasure our manpower and material resources, and must not take a short view and indulge in wastefulness and extravagance. Wherever we are, from the very first year of our work we must bear in mind the many years to come, the protracted war that must be maintained, the counter-offensive, and the work of reconstruction after the enemy's expulsion. On the one hand, never be wasteful or extravagant; on the other, actively expand production. Previously, in some places people suffered a great deal because they did not take the long view and neglected economy in manpower and material resources and the expansion of production. The lesson is there and attention must be called to it.

    As regards manufactured goods, the Shensi-Kansu-Ningsia Border Region has decided to become completely self-supporting in cotton,

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cotton yarn, cotton cloth, iron, paper and many other things within two years. We must grow, manufacture and supply whatever is not produced here or is produced only in small quantities, and must not depend on the outside at all. The whole task is to be accomplished by the public, private and co-operative enterprises. For all items, we demand not only quantity but also quality, that is, they must stand wear and tear. The Border Region Government, the Joint Defence Headquarters of the Eighth Route Army and the Northwest Bureau of the Central Committee of the Party are absolutely right in giving close attention to these matters. I hope that the same thing will be done in all places at the front. In many places it is already being done, and I wish them success.

    In our Border Region and the other Liberated Areas, it will take another two or three years for us to learn every branch of economic work. The day when we grow all or most of our own grain, manufacture all or most of our own goods and thus are completely or mainly self-supporting and even have a surplus will also be the day when we have mastered every branch of economic work in the countryside. After we have cleared the cities of the enemy, we shall be able to take up new branches of economic work. We must exert ourselves and learn, because China depends on us for her reconstruction.