Classification and Fragmentation Under Communism

This article reexamines state-society relations in early 1950s China by analyzing the Chinese Communist Party’s (CCP) interactions with Shanghai’s private business community. Drawing on archival records and memoirs, it argues that the CCP did not merely tolerate private enterprise for pragmatic reasons but actively fragmented the business circle by its own needs and criteria. Entrepreneurs were classified and treated according to their political affiliations, economic utility, and perceived loyalty, leading to individualized survival strategies rather than collective resistance. This targeted differentiation enabled the CCP to selectively co-opt elite collaborators while marginalizing small and mid-sized business owners, thereby dismantling the capitalist class without resorting to widespread coercive violence. By fragmenting and co-opting business elites, the CCP concentrated its political efforts and achieved its objectives in Shanghai with relatively low political and administrative costs.