Several years after the founding of the People’s Republic of China (PRC), far-reaching changes to the newspaper industry were mandated. The present study examines the formation of the Communist newspaper circulation system 1949-1954, in light of the newspaper industry and business administration: What was the face of newspaper distribution in China in 1949? What was to be Communist Chinese official policy on newspaper circulation? How did newspaper circulation in China change during early communist rule, etc.? Under the Nationalist Chinese government, newspaper circulation in China was a competitive dog-eat-dog world. It was controlled by large private brokers, so-called “newspaper bullies,” in the large urban areas. The PRC brought the circulation of printed matter under absolute control for propaganda purposes. Under the Administration of Journalism plan, the “Circulation by Post” policy was implemented in 1950. Starting with government-owned newspapers, newspaper circulation departments were liquidated. Government post offices ran newspaper circulation. The “Circulation by Post” policy was fully implemented within five years and private brokers died out by 1954, since the income from circulating the few private-owned newspapers tolerated by the authorities was too little to sustain business. From then on, the government post office was the only newspaper circulation agency in mainland China till 1985. The newspaper circulation system in mainland China was changed radically from 1950. This case helps us to understand how commerce and industries were quickly brought under the control of the Communist Chinese government during the “New Democracy” period. Moreover, it is helpful in clarifying some neglected areas in Chinese newspaper history because attention is usually paid to editorials, editing and news-reporting, not to sales and management.