The First Five-Year Plan began in 1953 and was planned to end in 1957. The primary focus of the First Five-Year Plan was to stimulate a high rate of growth. This would be accomplished in part by initiating a change from the agrarian economy, which China had historically been, to one that was built more on heavy industries and technology. Knowing that such a large change would not be possible overnight, the First Five-Year Plan set goals so that Mao and other government officials could evaluate the success of the plan and determine how to best move forward.

The First Five-Year Plan closely followed what Stalin had done in working to industrialize the USSR, as it was clear that that was the only way to become the world leader that Mao wanted China to be. To do this, the Chinese government had to heavily invest in the necessary facilities, education, and tools. They also opted to follow the plans that the Soviets had used to quickly remodel their society and ownership. This meant further reliance on the Soviets to help draft the plan to expedite these changes. Among the changes, farmers and those who worked the fields were formed into collectives. The state now owned much of the land and held the reins to all future economic spending and planning.

After the plan began, China quickly found itself facing many problems that it had not anticipated. By the end of the First Five-year Plan in 1957, it was apparent that the Soviet model would not work in the much more agrarian China. They were even further behind the technologies of the time than the Russians had been. It did not help that they had a problem to face that Russia did not, as China had many more people to look over than the USSR did. Since the government of the PRC faced unique problems to their country, the solutions to them could not be modelled after the methods used by the Soviets.

To succeed in their vision for China, the government realised that they needed to have a much larger scale of national industrialisation. The USSR was willing to help China accomplish this, but they only agreed to provide financial aid through loans that would have to be repaid at set times. This meant that the Chinese government needed to convert all of its financial institutions and businesses into state-operated endeavours. Both credit policies and the nation's taxes were rewritten to strongly discourage businesses from being run as private companies, and when the First Five-Year Plan ended, there were no longer any private companies within the entire country.