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China Post-Mao Policies
When the party leadership began to evaluate progress in the
agricultural sector in the light of its campaign to move the nation
toward the ambitious targets of the
Four Modernizations (see Glossary),
it noted disappointing failures along with some
impressive gains. Furthermore, even though per capita grain
production increased from the depressed levels of the early 1960s,
output stagnated in the 1975-77 period, so that in 1978 per capita
production was still not above average levels of the 1950s.
Production of other major crops grew even more slowly. The
leadership decided in 1978 to thoroughly revamp the rural economic
system.
Top government and party leaders decided to dismantle the
people's commune system and restructure it into a new rural system-
-the township-collective-household system--consisting of five
parts: local government, party, state and collective economic
entities, and households. Whereas the commune system integrated
politics, administration, and economics into one unit, the new
system was designed to have separate institutions handle specific
functions. Townships, the basic unit of government in pre-commune
days, were reconstructed to handle government and administrative
functions. Party committees were to concentrate on party affairs.
Economic collectives were organized to manage economic affairs.
Households were encouraged to sign contracts with economic
collectives.
The reform of the commune system fundamentally changed the way
farmers were motivated to work. Nonmaterial incentive policies,
such as intergroup competitions for red flags, were downplayed.
Egalitarian distribution of grain rations declined, and the work
payment system in effect on and off since the 1950s was scrapped
(see Economic Policies, 1949-80
, ch. 5). Rural cadres adopted an
entirely new scheme to motivate farmers, called baogan
(household production responsibility) system. Under baogan,
economic cooperatives assigned specific plots of land to a family
to cultivate for up to fifteen years. For each piece of land, the
economic cooperative specified the quantity of output that had to
be delivered to procurement stations. The contract also outlined
household obligations, such as contributions to capital
accumulation and welfare funds; the number of days to be
contributed to maintenance of water control systems; and debt
repayment schedules. Output raised in excess of state and
collective obligations was the reward to the household. Families
could consume the surplus or sell it in rural markets as they
wished. Baogan permitted families to raise income through
hard work, good management, wise use of technology, and reduction
of production costs.
While the overall level of investment within the agricultural
sector did not change much during the reform period, substantial
changes took place in investment patterns. National leaders called
for greater investment in agriculture, but actual state
expenditures declined in the first part of the 1980s. Whereas
communes had invested considerable sums in agriculture, the rate of
investment from the newly formed economic cooperatives was far
below the rate before the reform. The revitalization and extension
of the rural banking system (the Agricultural Bank and rural credit
cooperatives) and favorable lending policies did provide a small
but steady source of investment funds for the sector. The major
change, however, was that after 1978 farm families were allowed to
invest funds, and their investment in small tractors, rural
industry, and housing was substantial. In 1983 rural households
invested -Y21 billion (for the value of the
yuan--see Glossary) in
housing compared with -Y11 billion from state sources.
Mao Zedong's policy of self-reliance was relaxed, and his
dictum "grow grain everywhere" was abandoned. Farm households began
to produce crops and animals best suited for their natural
conditions. Excellent cotton growing land in Shandong Province that
had grown grain during the Cultural Revolution returned to growing
cotton. Areas sown with grain crops declined, and areas sown with
cotton, oilseeds, and other cash crops expanded. Reform policies
also reduced major administrative barriers that had limited labor
and capital from moving beyond commune boundaries. Households with
insufficient labor or little inclination to farm were able to
transfer land contracts to families that were interested in
cultivation and animal husbandry. Rural workers were permitted to
shift from crop cultivation to commercial, service, construction,
and industrial activities in rural townships. Capital in rural
areas was permitted to move across administrative boundaries, and
individuals invested not only in their own farm production but also
in business ventures outside their own villages.
The rural marketing system changed substantially in the postMao period. The system of mandatory sales of farm produce to local
state purchasing stations ended, as did state rationing of food
grains, cooking oil, and cotton cloth to consumers. Households with
marketable surpluses had several options: goods could be consumed
on the farm, sold in local markets, or sold to state stations
according to signed purchase contracts. Rural markets disbanded
during the Cultural Revolution were reopened, and the number of
markets rose from 33,000 in 1978 to 61,000 in 1985. Total trade in
these markets increased
from -Y12.5 billion in 1978 to -Y63.2 billion in 1985. Consumers
purchased food and daily necessities in stores run by the state,
cooperatives, and private entrepreneurs and in local free markets.
Coincident with these reforms, the state raised procurement prices
to improve incentives and increase production by farmers. From 1966
to 1982, wheat and rice procurement prices rose by 66 percent,
while oilseed prices increased 85 percent. To avoid urban
discontent over high prices, the state absorbed the increasing
additional costs, and retail prices for these goods remained
constant.
The new policies quickly began to produce results. The gross
value of agricultural output nearly doubled from 1978 to 1985.
Production of grain, oilseeds, cotton, and livestock increased
rapidly in this period
(see Production
, this ch.). Per capita net
income of peasant households rose dramatically from -Y134 in 1978
to -Y397 in 1985, but income inequality increased. The demise of
collective institutions, however, brought decreases in health,
education, and welfare services. Less attention was paid to
maintaining the environment, and some water, soil, and forest
resources were wasted. Despite this, mid-1980s observers opined
that prospects were good for an overall rise in rural prosperity.
Reforms in the late 1970s and early 1980s also swept away
policies and administrative rules restricting business activity.
Old commune production and brigade enterprises were reorganized,
and a host of new firms were founded by economic cooperatives and
citizens. Business activity included manufacturing, mining,
transportation, catering, construction, and services. By the mid1980s the value generated by these enterprises surpassed the value
of output from raising crops and livestock.
Data as of July 1987
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