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China Readjustment and Recovery: "Agriculture First," 1961-65
Faced with economic collapse in the early 1960s, the government
sharply revised the immediate goals of the economy and devised a
new set of economic policies to replace those of the Great Leap
Forward. Top priority was given to restoring agricultural output
and expanding it at a rate that would meet the needs of the growing
population. Planning and economic coordination were to be revived-
-although in a less centralized form than before the Great Leap
Forward--so as to restore order and efficient allocation of
resources to the economy. The rate of investment was to be reduced
and investment priorities reversed, with agriculture receiving
first consideration, light industry second, and heavy industry
third.
In a further departure from the emphasis on heavy industrial
development that persisted during the Great Leap Forward, the
government undertook to mobilize the nation's resources to bring
about technological advancement in agriculture. Organizational
changes in agriculture mainly involved decentralization of
production decision making and income distribution within the
commune structure. The role of the central commune administration
was greatly reduced, although it remained the link between local
government and agricultural producers and was important in carrying
out activities that were too large in scale for the production
brigades. Production teams were designated the basic accounting
units and were responsible for making nearly all decisions
concerning production and the distribution of income to their
members. Private plots, which had disappeared on some communes
during the Great Leap Forward, were officially restored to farm
families
(see Importance of Agriculture Recognized;
Planning and Organization
, ch. 6).
Economic support for agriculture took several forms.
Agricultural taxes were reduced, and the prices paid for
agricultural products were raised relative to the prices of
industrial supplies for agriculture. There were substantial
increases in supplies of chemical fertilizer and various kinds of
agricultural machinery, notably small electric pumps for
irrigation. Most of the modern supplies were concentrated in areas
that were known to produce "high and stable yields" in order to
ensure the best possible results.
In industry, a few key enterprises were returned to central
state control, but control over most enterprises remained in the
hands of provincial-level and local governments. This
decentralization had taken place in 1957 and 1958 and was
reaffirmed and strengthened in the 1961-65 period. Planning rather
than politics once again guided production decisions, and material
rewards rather than revolutionary enthusiasm became the leading
incentive for production. Major imports of advanced foreign
machinery, which had come to an abrupt halt with the withdrawal of
Soviet assistance starting in 1960, were initiated with Japan and
West European countries.
During the 1961-65 readjustment and recovery period, economic
stability was restored, and by 1966 production in both agriculture
and industry surpassed the peak levels of the Great Leap Forward
period. Between 1961 and 1966, agricultural output grew at an
average rate of 9.6 percent a year. Industrial output was increased
in the same years at an average annual rate of 10.6 percent,
largely by reviving plants that had operated below capacity after
the economic collapse in 1961. Another important source of growth
in this period was the spread of rural, small-scale industries,
particularly coal mines, hydroelectric plants, chemical fertilizer
plants, and agricultural machinery plants. The economic model that
emerged in this period combined elements of the highly centralized,
industrially oriented, Soviet-style system of the First Five-Year
Plan with aspects of the decentralization of ownership and decision
making that characterized the Great Leap Forward and with the
strong emphasis on agricultural development and balanced growth of
the "agriculture first" policy. Important changes in economic
policy occurred in later years, but the basic system of ownership,
decision-making structure, and development strategy that was forged
in the early 1960s was not significantly altered until the reform
period of the 1980s.
Data as of July 1987
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