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China INTERNAL TRADE AND DISTRIBUTION
Agriculture
Agricultural products were distributed in three major ways in
China during the 1980s. They were either retained by the household
(now the primary production unit) for distribution among its
members, procured by the state, or sold in free rural or urban
markets.
Approximately 63 percent of the population was located in rural
areas, where the majority of the people worked in agriculture and
rural industries. Under the
responsibility system (see Glossary)
for agriculture instituted in 1981, the household replaced the
production team (see Glossary)
as the basic production unit.
Families contracted with the economic collective to farm a plot of
land, delivered a set amount of grain or other produce and the
agricultural tax to the state, and paid a fee to the collective.
After meeting these obligations, the household was free to retain
its surplus produce or sell it in free markets. Restrictions on
private plots and household sideline production were lifted, and
much of the production from these was also sold on free markets
(see Post-Mao Policies;
Planning and Organization
, ch. 6).
Distribution of food and other agricultural goods to urban
consumers, industry, and rural areas deficient in food was carried
out primarily by the state and secondarily by producers or
cooperatives. The state procured agricultural goods by means of
taxes in kind and by purchases by state commercial departments
(state trading companies) under the Ministry of Commerce. The
agricultural tax was not large, falling from 12 percent of the
total value of agricultural output in 1952 to 5 percent in 1979. In
1984 the number of agricultural and sideline products subject to
state planning and purchasing quotas was reduced from twenty-nine
to ten and included grains, edible oil, cured tobacco, jute, hemp,
and pigs. In 1985 the system of state purchasing quotas for
agricultural products was abolished. Instead, the state purchased
grain and cotton under contract at a set price. Once contracted
quotas were met, the grain and cotton were sold on the market at
floating prices. If market prices fell below the listed state
price, the state purchased all available market grain at the state
price to protect the interests of producers. Vegetables, pigs, and
aquatic products sold to urban, mining, and industrial areas were
traded in local markets according to demand. Local commercial
departments set the prices of these goods according to quality to
protect the interests of urban consumers. All other agricultural
goods were sold on the market to the state, to cooperatives, or to
other producers. Restrictions on private business activities were
greatly reduced, permitting peasants as well as cooperatives to
transport agricultural goods to rural and urban markets and
allowing a rapid expansion of free markets in the countryside and
in cities. The number of wholesale produce markets increased by 450
percent between 1983 and 1986, reaching a total of 1,100 and easing
pressure on the state produce distribution network, which had been
strained by the burgeoning agricultural production engendered by
rural reforms. In 1986 free markets, called "commodity fairs,"
numbered 61,000 nationwide.
Once food was procured and transported to urban areas, it was
sold to consumers by state-owned stores and restaurants. In the
mid-1980s food items were also available in free markets, where
peasants sold their produce, and in privately owned restaurants. As
noted previously, the prices of pigs, aquatic products, and
vegetables were determined by local authorities according to
quality and demand; prices of other products floated freely on the
market. Except for grain, edible oil, and a few other rationed
items, food items were in good supply.
Industrial goods used in agricultural production were sold to
agricultural units in the 1980s. Local cooperatives or state supply
and marketing bureaus sold most agricultural producer goods,
including chemical fertilizers and insecticides, to households at
set prices. The state also offered preferential prices for
agricultural inputs to grain farmers to encourage grain production.
Households were permitted to purchase agricultural machinery and
vehicles to transport goods to market. In order to ensure that
rural units could cover the costs of the increasing quantities of
industrial inputs required for higher yields, the government
periodically reduced the prices of the industrial goods sold to
farmers, while raising the procurement prices for agricultural
products. In the mid-1980s, however, the price gap between
agricultural and industrial products was widening to the
disadvantage of farmers.
Data as of July 1987
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