Abstract As a result of the repeated failure of his revolutionary efforts, Sun Yat-sen decided to borrow from the Soviet Union’s successful experience. But his advocacy of a total revolution by the whole people was essentially contradictory to the proletarian revolution of Soviet Union. After the Guomindang (KMT) reorganized and began to admit members of the Chinese Communist Party, they gained considerable power within the KMT and were able to influence its political line, which gave rise to an eruption of ideological contradiction. Within the KMT, controversies erupted between the left and the right, and in society conflicts emerged between merchants and workers. By this time Guangdong merchants were already in a state of discontent with the revolutionary government, because they had been subjected to a range of severe harassments stemming from levies imposed by both the government and visiting armies. After its reorganization, the KMT headquarters established peasants’ and workers’ bureaus, but lacked any corresponding merchants’ bureau. Its propaganda and policy were biased toward the peasantry and workers to the neglect of merchants, which caused the latter to suspect the KMT of promoting communism. As far this point is concerned, the conflict between merchant militia and the government was based on both ideological differences and practical fears. As well the left and the right within the KMT and the CCP all engaged actively in the conflict, in a struggle for revolutionary leadership. The right cultivated thepower of merchants and promoted party organizational reform, while the left established an additional bureau of merchants in its fight against the right. The establishment of this bureau by the KMT headquarters was on the one hand a measure to pacify merchants in the wake of the conflict with merchant militia, while on the other hand it implied a conflict of revolutionary line. However, although the left established a merchants’ bureau, it had no clear plan as to how to define the status of merchants in a revolutionary program based primarily on the peasantry and workers. Not until the second plenary conference of national representatives of the KMT, was a merchants’ movement adopted as party policy. But owing to the fundamental contradictions between the two ideologies and revolutionary lines of the KMT and the CCP, the issues surrounding merchants were to constantly reappear without resolution.