RETURN TO THE CAGE: MONETARY POLICY IN CHINA'S FIRST FIVE-YEAR PLAN

During China's First Five-Year Plan (1953-1957), a state purchasing monopsony on grain injected sudden, concentrated spurts of cash into the rural economy. Grassroots cadres faced a new problem: peasants with too much cash burning a hole in their collectivized pocket were prone to "spontaneous capitalist tendencies," including high-interest lending, hoarding, and black-market activity. By examining previously unused documents from the Wenzhou Party Committee, this study explores the role of "huilong"-the return flow of cash into the coffers of the People's Bank of China-as a tool of local governance to mitigate such tendencies. Ultimately, the study shows that illicit economic activity was not merely a function of capitalist ideology but was a structural side effect of the planned economy itself. Regional authorities recognized this. Their attempts to curb capitalist behavior reflected a sophisticated appreciation of the perils of excess money and an almost monetarist policy prescription to counter them.