The article highlights that during the first five-year plan period from 1953-57, Chinese Communist policymakers pursued the Soviet Union strategy as practiced by general secretary of the communist party Joseph Stalin for economic development with local adaptations. However, given the vastly different factor endowments of Mainland China in the fifties as compared to the Soviet Union of the twenties, Chinese planners were forced to modify significantly their original approach. They thus evolved a new strategy for the second five-year plan from 1958-62, based on intensive utilization of underemployed labor combined with promotion of technological dualism, as a means of maximizing the rate of economic growth. The new model comprised of communes that extended to incorporate the notion of rapid development of a national economy. According to this concept, the state would concentrate the preponderant bulk of its investment resources on the development of the modern sector. This is a sector with a high reinvestment quotient, with practically all of this reinvestment to be channeled into continuing growth of itself. At the same time, the diversion of output from the modern to the rural sector is to be minimized. Therefore, the expansion of the rural sector was to be made a function of its own output and investment.