The private sector has become an indispensable part of Chinese economic growth since its revival from the early 1980s. This raises the issue of the justifiability of the abolition of private ownership by the socialist transformation from 1953. Many Chinese intellectuals now suggest the CCP put an end to New Democracy too early. With new material released since the 1980s, the author argues that the private sector had sharply declined under New Democracy as the Party tried to boost the development of the private economy in default of a market economy. This article substantiates the view that the implementation of the New Democracy policy during 1949–52 was significantly moulding and re-defining the policy goal towards the private economy.