THE COURSE OF CHINA’SRUR AL REFOR M

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTEsustainable solutions for ending hunger and poverty

THE COURSE OF CHINA’SRUR AL REFOR MDu Runsheng

Cover Design: Joan K. Stephens (USA)

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

The International Food Policy Research Institute (IFPRI®) was established in 1975. IFPRI is one of 15 agricultural research centers that receives its principal funding fromgovernments, private foundations, and international and regional organizations, most ofwhich are members of the Consultative Group on International Agricultural Research.

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Du Runsheng held the post of secretary general, Rural Work Department, in

the Chinese Communist Party (CCP) Central Committee at the time the

nation was founded. Concurrently he was deputy director of the Agriculture

and Forestry Department of the State Council. After the Third Plenum of the

11th Central Committee of the CCP (1978), he held the post of director,

Rural Policy of the CCP Central Committee, and director of the Rural

Department, Research Center for Rural Development (RCRD), State Council,

where he was mainly responsible for China’s rural economic reforms and

development policy research. Du was often asked by the leadership to draft

rural-related policy documents for the Central Committee of the CCP and

the State Council. He worked in particular on the drafting of

“No. 1 Documents,” which were issued continuously for five years by the

CCP Central Committee, and which made outstanding theoretical and

practical contributions, deepening rural economic reform and

setting up the rural household contract responsibility system

that advanced the market reform of the rural economy.

THE COURSE OF CHINA’SRURAL REFORMDu Runsheng

REFORM WASFACILITATED BY CRISIS

For more than 20 years after the victory of theChinese Revolution, radicalism was ascendantand private ownership of land was illegal. Thepeasantry became estranged from the land, sothat when the Cultural Revolution ended,China’s economy had been placed in difficultyand an agricultural crisis induced. Thepopulation had grown, and food was in shortsupply. Per capita grain production neveraveraged much above 300 kilograms. Of the800 million peasants, 250 million were impov-erished. The nation as a whole could notachieve self-sufficiency in grain and requiredmassive imports.

A turning point took place in 1978 with theThird Plenum of the 11th Central Committee ofthe CCP, which reestablished the emancipationof the mind, the intellectual approach ofseeking truth from facts, and the materialistphilosophy proposition that practice is the solestandard of truth. It acknowledged thatsocialism means development of the productiveforces, moving together toward wealth. Thepolicy of making class struggle the key link wasabolished, and the focus of Party work shiftedto modernization. All of these changesliberated people from the previous ideologicaland institutional environment, providing thepossibility of founding a new environment andnew institutions.

Over the 30 years following the founding of thenation, an unfair pattern of holding resourceshad arisen, fostering the rise of vestedinterests. These interests tended to be conser-vative, holding back reform in the name of

socialist ownership. The system itself sufferedfrom inertia. Institutional economics speaks ofinstitutional “path dependencies.” The Chinesesystem had been following its accustomed pathfor a long time, and these conservativeinterests wanted to keep following it. Theyfeared that order would fall into chaos if theyleft the old track. And the equation of socialismwith the system of public ownership, which hadbeen in existence for so long, was decisive.Then peasants in Yongjia County in the regionof Wenzhou, Zhejiang, and in Fengyang County,Anhui, seeking to end their food shortages,implemented a policy of contracting collectiveland to families. Because it violated what MaoZedong had advocated, contracted productionoperated by peasant households had been aforbidden practice.

When I first proposed the household responsi-bility system (HRS), I was criticized as follows:Chairman Mao had been dead only a few years.Supporting the HRS, a system he opposed,meant forsaking his principles. This was thesevere environment that reform faced at first.Our support of the HRS, of institutionalinnovation, and of transformation of the agentsof the rural microeconomy would inevitablyinvolve adjusting a number of interests. Toavoid risk, it was necessary to carry out trialsfirst. Also, the HRS could not move ahead onits own. It had do so in connection with otherinstitutions and be realized in the course ofreforming the institutional environment as awhole. But this institutional reform is notsomething that could be accomplished in onefell swoop. To carry out reform, a strategy ofgradual advance was unavoidable.

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1 For more information about this period, see Kathleen Hartford, “Socialist Agriculture Is Dead, LongLive Socialist Agriculture! Organizational Transformations in Rural China,” in Elizabeth J. Perry andChristine Wong, eds., The Political Economy of Reform in Post-Mao China (Cambridge, MA: HarvardUniversity Press, 1985).

THE CAUSE OF REFORMMUST STRIVE TO REDUCERESISTANCE

All land and labor resources in China were heldby hundreds of thousands of people’scommunes. On its appearance, the HRS policyshook the people’s communes to the core. Thisassault on communal ownership was sure toencounter enormous resistance. The greater theimpact, the greater this resistance would be.Hence, to promote the HRS and ward off itsearly demise, resistance to it had to be reducedas much as possible and facilitation boosted.

Three measures to reduce resistance wereconceived: First, the reform would not initiallycall for abandoning the people’s communes, butrather would implement a production responsi-bility system within them. This approachenabled many who would have opposed thechange to accept it.

Second, the responsibility system could take anumber of forms, among which the populacecould choose. One did not impose one’s ownsubjective preference on the populace butrespected its choice. Later, it seemed that themasses were bent on choosing the householdcontract form. A popular saying to explain thesystem was “Household contract—keep straighton and don’t turn back, hand over enough to thestate, keep enough in the collective; whatever isleft over is your own.” The ideas were easy tounderstand, and the interest allocations wereclear. The idea of letting the populace choose foritself also paid off in terms of checking thefeasibility of reformers’ initial positions.

Third, the reform began in a limited region,where it received popular support, and thenwidened step by step. In the spring of 1979, thenewly established National AgriculturalCommission convened a conference with theseven major agricultural provinces in Beijing’sChongwenmen Hotel to discuss the responsi-bility system issue. Anhui was alreadyexperimenting with the HRS, but five of theseven provinces at the meeting disagreed withAnhui’s approach. When CCP General SecretaryHua Guofeng held a Politburo meeting to hearthe report, he spoke of how Hunan villagersexchanged labor to help each other everysowing season or harvest, and he supportedpersisting with the collective approach. But heexpressed approval for solitary households inmountainous areas, for whom collectiveactivities were difficult, to adopt the HRS. TheCentral Committee relayed the “Summary ofDiscussions on Rural Work Questions” from theNational Agricultural Commission’s Party group,which continued to stipulate that “there will beno HRS” and “there will be no dividing the landto go it alone.” Although people in areas withsolitary households were not given explicitpermission in the document to carry out theHRS, it was not forbidden either; theywould not be subject to criticism andstruggle or corrected coercively.Once transmitted, the authori-zation of this document byHua Guofeng opened a smallwindow for the HRS.1

In 1980 the windowgrew wider. At thattime, those regions

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with severe rural poverty became a heavyburden on the state. More provinces weremoving from grain self-sufficiency to graindeficits, and fewer provinces had grainsurpluses. The state held a long-term planningconference, and Yao Yilin, then director of theState Planning Commission, raised with me thequestion of how to reduce the problem of foodshortages in impoverished regions. I suggestedtrying the HRS. If the peasants could solve thefood problem themselves, they would no longerdepend on purchased grain. Once land wascontracted to a farmer, he could depend on hisown land for food. Yao Yilin thought this madesense and reported as much to Deng Xiaoping,who agreed and declared, “Hardship regionsare allowed to carry out the HRS. If it turns outto be mistaken and they come back in, it’snothing special. Rich regions that have enoughto eat do not need to start right away.”

In 1980, after the central leadership wasreorganized on a collective basis, the topcentral leaders, including Deng Xiaoping and HuYaobang, consistently supported allowingdifferent areas to adopt different forms of theagricultural production responsibility system. It

was then proposed to divide them into threetypes of areas: impoverished areas would

carry out the HRS; advanced oneswould adopt specialized contracts

with wages linked to output;and intermediate regions

could freely choose. In theautumn of 1980, the top

leadership held aconference of Party

Committee first secretaries of major provincesand cities to discuss the responsibility system,producing the “No. 75 Document,” namely“Some Problems in Further Strengthening andImproving the Agricultural ProductionResponsibility System.”2 The tests had provedinstantly effective. By the second year theimpoverished areas had food to eat, and otherareas too saw increased production. These factsconvinced most people and opened the way forrural reform.

THE CENTRALCOMMITTEE’S FIVE“NO. 1 DOCUMENTS”In late 1981 the Central Committee held anational conference on rural work. Soon afterthe meeting, the Central Committee’s No. 1Document for 1982 (namely the conferencesummary) was drafted and officially affirmedthat management of the land by peasanthouseholds under the contract system wouldreplace unified collective management by thepeople’s communes. HRS, after 30 years of beingproscribed, henceforth became centralgovernment policy. Reactions from the populaceand cadres were excellent. Party Secretary HuYaobang said that the rural work documentshould again be placed “No. 1” the next year. Forthe next five years, the Central Committee’s No.1 Documents were all devoted to agriculturalissues.3 Topics for investigation were arrangedearly in the year, the findings were summarizedin the autumn, and the document was draftedin the winter and sent out early the next year.

2 See http://news.xinhuanet.com/ziliao/2005-02/04/content_2547020.htm. 3 Whereas these policy documents had in the past been numbered chronologically each year, in

1981 the Central Committee began to use the label “No. 1 Document” to show that a policy wasa top priority. After five years, the Committee retuned to a chronological numbering system, andthe label “No. 1 Document” indicated no special priority.

“By

the second

year, the

impoverished

areas had food to

eat, and other areas

too saw increased

production. These facts

convinced most people

and opened the way for

rural reform.”

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The first No. 1 Document, issued in 1982,pointed out that HRS was a legitimate policyreform and that this practice, along with otherreforms, had been warmly welcomed by thepopulace and taken up nationally. This reformwas the self-perfection of the socialist system;it was different from the private farming of thepast and was not something to oppose, likecapitalism. Public ownership of land and othermeans of production would be unchanging fora long time to come, as would the responsi-bility system. At the time peasants in manyregions were worried, given that rural policyhad been very changeable in the past (theGuangdong peasants were afraid of “relaxationin the first year, tightening up in the second,eating the words in the third”). They were alsoconcerned it was a temporary, “expedient”measure. Hence the phrase “unchanging for along time” had the greatest impact on people’sminds, and it was said that the No. 1Document gave the peasants a “sedative.”

Another main point of the document was itsrespect for people’s choices: the populace wasallowed to choose freely to suit different areasand conditions. Why it was not imposed as aunified solution? As recognized by institutionaleconomics, forming a stable system must be aprocess in which the populace chooses foritself. This process includes different sides inmutual dialogue that leads to coordination andintegration, according to the requirements ofthe interests and political pursuits of each side.Given that the Party wanted to give thepopulace a free choice, we did not need to turnthis practice into a law of the state for thetime being. We had to treat the law as theoutcome of a social choice and eventuallyprovide legal guarantees in the form of law. We

needed to allocate one or two years to promotethis change in society, and later it wouldbecome a national law. Such a process wouldhelp the country absorb the advantages of bothpublic ownership and individual management.The document also proposed sorting out thefield of distribution, bringing unifiedpurchasing and marketing within the reformagenda, and carrying on the reform of the pricesystem at a steady pace. It also re-endorsedthe development of diversified management ofthe rural economy and enterprises run bycommune and production brigades. It proposedthe new concept of specialized households,encouraging individuals and the private sectorto engage in specialization and growth, andsetting up a professional division of labor. Formore than 20 years long-distance trading hadbeen forbidden, as had privately operated orcontractual procurement, in essence restrictingthe circulation of resources. The first No. 1Document was rich in content, but moreimportantly, it abolished the forbidden area ofHRS in the name of the Central Committee.When delivered to the Central Committeeleaders for examination and approval, DengXiaoping said after reading it, “I completelyagree.” Chen Yun told his secretary to make aphone call, saying, “I’ve read this document. It’sfine and will be supported by the cadres andpeople.”

After its release, HRS spread nationwide,liberating both land and labor. In 1978, China’sgrain yield was approximately 300 billionkilograms. Over more than 20 years of collec-tivization, the state purchased between 30 and35 billion kilograms of grain annually. Thelatitude for state procurement was so smallthat even if the state increased procurement by

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only 10 percent, peasants were not able tomeet their grain rations. With system reform,grain output increased to 400 billion kilogramsby 1984. At the same time, the value of grossagricultural output grew by 68 percent and thepeasants’ average income per person grew 166percent. This achievement, which attractedworldwide attention, convinced cadres whoheld opposing views and unified the waypeople thought.

Closely following this reform, the comparativeadvantage of plentiful labor was enhanced byallowing the countryside to establish industryand commerce. The sudden appearance of newrural enterprises, together with foreign andprivate firms, formed a large non-stateeconomic bloc, rectifying the overly simplifiedeconomic form that was a weakness of thepublic ownership system, and opening hugenew sources for growth in peasant incomes.These changes inspired confidence andimpelled economic reform throughout thenation.

The 12th National Party Congress was held inSeptember 1982. In his Work Report, HuYaobang stated on behalf of the CentralCommittee that the various forms of theproduction responsibility system established inrecent years in the countryside had liberatedthe productive forces and needed to bemaintained for a long time. They could only begradually improved on the basis of people’spractical experience; in no way should they berashly changed against the wishes of thepeople, nor should they be reversed, he said.Reporting to the Fifth National People’sCongress on behalf of the State Council,Premier Zhao Ziyang reaffirmed that theoutput-linked contract system “effectively

displays the superiority of the socialisteconomic system in rural China in the presentstage.”

In the same year, to consolidate and expand onthe achievements of rural reform, in a speechwritten for the 12th National Party Congresson “Historic Shift in Rural Work,” I gave anaccount of how household output contractingand household work contracting could embodythe unification of public and private benefitsand of near-term development and the distantgoal of modernization. I said that the peasantsrequired the present policies to be stabilized sothat they could do well for several years andthat I hoped the Party and the governmentcould accept this request. It would help thepeasants to escape the difficulties of their self-sufficient economy, by allowing them toproduce commodities, to increase their cashincome, and to seek their own all-arounddevelopment.

I gave another speech entitled “Policy MustContinue to Bring Things to Life.” While visitingFujian, I had toured a chicken hatchery where14 people had each invested 2,000 yuan. Theworkshop was 100 square meters and hatched1.2 million chickens annually. Nearby there wasa state farm, also with a chicken hatchery,where they had invested several hundredthousand yuan, but hatched only 500,000chickens per year. I used what I had seen toshow that at China’s stage of economicdevelopment, keeping up economic growth andachieving overall benefits would be verydifficult if investment depended only ongovernment (central, or town and village) andif making a living depended on compensationaccording to work alone in this kind ofsimplified economic structure.

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I argued for a basic structure of coexistence ofa variety of economic forms, with publicownership in charge. I also argued forpermitting distribution according to the factorsof production invested, in addition to distrib-uting income to citizens according to theirwork. That is, people should receive dividendsaccording to the capital, land, and technologyinvested, in order to encourage them toincrease savings and investment to make up forthe shortage of state investment. I raised theseissues in view of some disagreements frombelow about, for example, whether to allowprivate purchase of tractors and cars, operationof long-distance transport, and formation ofpartnerships to build fishponds with dividendspaid according to stock held.

Here is an anecdote: A leading cadre in Hubeionce drove after a private tractor driven by apeasant. When he caught up with him, heblamed the peasant, saying, “If I hadn’t beenchasing you in a car, you might have gottenaway.” The peasant replied, “Right! You know acar is faster than a tractor, I know a tractor isfaster than an ox cart—so how come you canbuy a car, but I can’t buy a tractor?” Theleading cadre couldn’t answer. Party andgovernment cadres claimed that tractors wereproducer goods, so they could only be publiclyowned and could not be bought privately.Hence the No. 1 Document for 1983 (namely“Some Issues in Current Rural EconomicPolicy”) proposed a further goal to strive for:the “Two Shifts and Three Bits.” The two shiftswere to shift agriculture from economic wholeor part self-sufficiency to comparatively large-scale commodity production and to shift fromtraditional to modern agriculture. All levels ofleading cadres in the Party and various

government departments were supposed tomake every effort to achieve three “bits”: a bitmore liberation of ideas, a bit bolder reform,and a bit more realistic attitude, to help speedup the two shifts.

In 1983 the pace of rural reform accelerated,and the changes it caused in economic lifebecame more obvious. Household contractingspread to virtually all villages, and ruralworkers were liberated from their state ofbeing left unused, as the approaches tocommodity production were actively expanded.The marketed proportion of agriculture grewfrom the 51.5 percent of previous years to 59.9percent. Output value reached 275.3 billionyuan, an increase of 129.9 billion yuan, or 90percent, over 1978 levels.

In 1984 we proposed freeing up channels fortrade so that competition could boostdevelopment. Whereas the first two No. 1Documents had tried to solve problems of themicromanagement of agriculture and ruralindustry and commerce, in this case the targetwas fostering market mechanisms.

Developing commodity production requires freetrade and fluid factors of production likecapital, land, and labor, and these ideascame into conflict with governmentpolicy. In the preceding 20 years asystem of unified and fixedstate purchases had beencarried out in thecountryside. Besidesmandatory statepurchase of threeitems (grain, cotton,and oil), this systemalso applied to

“Thetwo shifts

were to shiftagriculture

from economicwhole or part self-

sufficiency tocomparatively large-

scale commodityproduction and to

shift from traditionalto modern agriculture.”

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another 132 items, including live pigs, eggs,sugar, silk thread, silkworm cocoons, yellow-bluish dogbane, flue-cured tobacco, and aquaticproducts, which were purchased by assignment(that is, purchased amounts were subject toquotas, but at a relatively fair market price). Itincluded virtually all agricultural supplementaryand local products. For many items purchasedby assignment, the quantity purchasedaccounted for more than 90 percent of theultimate output. In fact rural product transac-tions were monopolized by the public sector.The mobility of capital, land, and labor wasinstitutionally limited by public ownership ofthe means of production and by the organi-zation of people’s communes, as well as by theenforced separation of city and countryside.

Following a thorough investigation, the CentralCommittee Rural Policy Research Department,which I directed, put together a writtensuggestion proposing a Central Secretariatconference to discuss this problem. Besidesdescribing the situation, we stated that to helprural people develop commodity production andclimb out of poverty, the rural economyurgently required relaxation of government

monopolies, controls, and other regulationsthat had formed over many years and

that were preventing peasants fromentering the market. Specifically,

we suggested the following: (1) The period of land

contracts should beextended to 15 years,

during which paidtransfer of land use

rights should bepermitted. (2) Thefree flow of rural

private funds should be allowed, combining thecooperative joint stock system with the buying ofstock to earn dividends. (3) The peasants shouldbe allowed to go to the cities to seek work, dobusiness, and run enterprises and to beresponsible for procuring their own grain rationat market prices. (4) Private individuals shouldbe allowed to run enterprises and hire staff andmanagement. (5) State-operated businesses andstate-operated supply and marketing cooperativesshould gradually open up to market transactions,withdraw from their market monopolies, changetheir form of service, and return supply andmarketing cooperatives to private operation.

Most of the leading comrades in attendanceexpressed support. Of the proposals, items 1, 2,and 3 passed without objection. Item 5 calledfor a reform of trade, marketing and sales, andfinancial agencies to occur all in one step witha reconsideration of the state monopoly onpurchase and sale of grain. In the first steptoward item 5, nearly all mandatory purchaseswere abolished, with only the grain, cotton, andoil monopolies retained. On the question ofemployees in item 4, Hu Qiaomu raised theissue of how to deal with party members whowere also employers. After discussion there wasstill no consensus, and a conclusion proved hardto reach. It was agreed by all that issues thatwere unclear could be laid aside for later reviewand handling. This was also a new policy. In thepast, firms of eight or fewer employees wereruled not to be capitalist, whereas trials wereimplemented for firms of more than eightpersons. After the meeting Deng Xiaoping wasasked for instructions, and he said, “Don’t beeager to set limits. Look at it again after threeyears.” All of these principles were to form thecontents of the No. 1 Document for 1984.

“[Leadingcadres andgovernmentdepartments]were supposed tomake every effort to achieve the three‘bits’: a bit moreliberation of ideas, a bit bolder reform, and a bit more realisticattitude.”

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In 1985 the tasks were to adjust productionstructure and abolish unified purchasing andmarketing. With simultaneous reform of therural economy’s microeconomic managementagencies and macroeconomic marketenvironment, China had seen fast growth ofagricultural production in 1984. Regardingfood grain, that topmost of top priorities, thesituation changed from “when you hold grain,your heart feels no pain” to “grain supplieshigher, but hard to find buyers.” Following anobservation trip to the country with HuYaobang, I concluded that the cheapness ofgrain was hurting the peasantry. On the basisof the existing structure of agriculturalproduction, it was impossible to carry out thetask of doubling their income, and a newproduction structure needed to be built. Themain issue was that reform of the agriculturalprocurement system lagged behind the newrequirements for rural economic development,causing various provinces to want to guaranteethe area sown to grain and obstructingpeasants’ arrangements for cultivation to meetthe needs of the market. For example, evenHainan proposed being self-sufficient in grain,when in fact planting tropical cash crops,which could be exchanged for imported grainthrough foreign trade, would have been moreworthwhile and more popular with thepeasants. Increasing production of some goodsfor foreign exchange in China’s southern regionand bringing in grain from outside the regionwould help the North raise its grain yield andincrease its income. Then the two regions couldboth make the most of local conditions.

Everyone was clear on this principle. Theproblem was that the monopoly procurementinstitutions in agriculture had been around for

a long time. Inertia was strong, and changewas difficult. Fortunately, just then thedecision on economic reform emerging fromthe Third Plenary Session of the 12th CentralCommittee was favorable toward recon-structing the urban and rural relationship, andreform of the system of unified procurementand adjustments to the industrial structurewere made central agenda items of the ruralreforms in 1985.

In support of these reforms, we proposed arange of tasks like developing forestry,enhancing transport, supporting ruralenterprises, encouraging technologicalprogress, promoting free movement of talentedpeople, enlivening financial markets, perfectingthe rural cooperative system, strengthening thebuilding of small cities, and developing theforeign trade–oriented economy. The No. 1Document for 1985 was entitled “On 10Policies to Further Enliven the Rural Economy.”

In 1986 we increased investment in agricultureand adjusted the urban-rural relationship andthe industrial-agricultural relationship. In 1985the uniform grain procurement system hadbeen changed to contract purchasing. Beyondthe contract, purchases negotiated with thegovernment changed to market purchases. Of132 agricultural products that had beensubject to state procurement, only silk thread,medical materials, and tobacco stayed thatway, whereas transactions and price setting forthe rest were through the market. This reformwas originally a thorough one with straight-forward goals. Problems arose, however, fromraising the grain purchase price without corre-spondingly raising the price at which it wouldbe sold to city people. Thus the more grainproduction increased, the greater the financial

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subsidy, and massive increases of grain boughtat higher prices created a burden too heavy forthe state finances to bear. Given the state’sinertia in maintaining the distribution ofinterests—and thus in maintaining the superiorstatus of urban non-agricultural groups—thestate sought to lighten its financial burden byreducing the preferential trade terms for thepeasants. The concrete measure was a ruling in1985 to cancel the policy of paying 50 percentmore for the grain procured beyond thecontract amount and to instead purchase allgrain at an increased average price. Although instatic terms “three in the morning and four inthe evening” is no different from “four in themorning and three in the evening,” dynamicallythis change greatly weakened the role of theprocurement policy in stimulating increasedgrain production. The comparative advantage ofsowing farmland with grain dropped, makingthe peasants who had already shed theircollective fetters unwilling to plant more crops.Peasants in Hebei said planting a mou (Chineseunit of land) of wheat was inferior to driving asmall flock: the “two types of households”(specialized and primary households inagriculture production) were no match for theburdens caused by the “three households”(referring to three government agencies:industry and commerce administration,taxation, and public security). Many peasantsbegan to diversify their farming activities, startbusinesses, or leave for the city to work.

The injury to the peasants’ interests wasreflected immediately in reduced supplies ofgrain and other agricultural products, producingfluctuations in agricultural, and especially grain,

production from then on for years. There weredifferent views at that time about whether thissituation was a result of reforms not going farenough or going too far. It was argued that thepotential of the HRS had dried up—hence thefluctuation in grain production. Events were toprove this viewpoint wrong.

After developing for several years, supply anddemand relations in the national economychanged. Restricted by the Engels coefficient,4

the growth of residents’ expenditures on foodwas slow, but market exchanges displayedrising costs for agriculture and the margin fromtrade dropped. In view of this, rural workdeployment at the end of 1985 emphasized“putting the status of agriculture in thenational economy straight.” The top leadership’sNo. 1 Document for 1986 (namely “OnDeployment of Rural Work in 1986”) made acommitment to increase investment inagriculture and water facilities and toguarantee a rise in grain production to 450billion kilograms, starting with the SeventhFive-Year Plan. Part of the income tax turned inby town and village enterprises was assignedfor use in supporting agriculture, stabilizingprices of agricultural inputs like chemicalfertilizer, diesel oil, agricultural chemicals, andmachinery, and guaranteeing that originalsubsidies would not vary. These funds have alsogone to strengthen technical support ofagricultural and rural enterprises and to supportgrain and export commodities, mainly byintroducing new varieties and improving infra-structure. They have also been used toimplement the Spark Program, which supportsthe technological change of rural enterprises by,

4 The ratio of food spending to overall household expenses.

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for instance, designing 100 kinds of completetechnical equipment, establishing 500 demon-stration enterprises, and promoting themnationally after they yielded practical results, aswell as supporting large numbers of technicaltraining and administrative personnel.

In setting out the status and function ofagriculture in the national economy, thedocument stressed agriculture’s indispensabilityas an industry that provides food needed by allhuman beings. Moreover, in contemporaryChina agriculture was the physical foundationthat 900 million people depended on forsurvival and development, and thus was alsothe economic bastion of the nation’s socialstability and unity. Yet agriculture was avulnerable industry, hampered by both naturaldisasters and market competition. A suitableenvironment advantageous to its gestation andgrowth, and systems that guaranteed support,needed to be created for it. These wereprecisely the topics in need of more work afterthe problem of micro-level agency had beensolved by the rural reforms.

POLITICAL REFORMADMITS OF NO DELAY

Further reform of Chinese agriculture involvesreform of the urban state-owned economy andof the political system. To use a phrase of thattime, regarding China’s rural reform, all “cheap”methods had been exhausted. If the deepstructure was left untouched, no furtherprogress could be made. For just this reason,the historical mission of the series of No. 1Documents on rural reform was brought to ahalt. China’s rural reforms were by no meanscomplete but had to seek a path of

advancement through the overall reform of thenational economy.

Reviewing more than 20 years of rural reformin China, there were no major deviations, only arelapse in understanding initiated by the June4, 1989, “disturbance.” This temporary blockageto understanding was fortunately unable tochange the institutional foundation of landmanagement by household contract. Allstatesmen in power need to treat food securityas vital to overall stability. The idea that “firstthere must be food to eat, next one must build”had become a consensus for a great manyleading cadres. In the urban reformscommencing in 1984, market adjustmentmechanisms were prepared for introduction. In1984 the system of price setting by the statechanged to a system of price setting by themarket. The Central Committee reexamined thedecision on this matter at the 1987 Beidaihemeeting. But that year saw poor harvests, pricerises, and panic buying in the cities, andpeople’s minds fluctuated. Another factorcausing popular dissatisfaction was widespreadcorruption. Reform of the price mechanism hadto be temporarily put aside.

If we had achieved systems of economicand political democracy on time, thenwhen reform led to an essentialadjustment of interests, societywould have had a strongermental and physical copingcapacity. But in this areaknowledge is easy, andpractice difficult.

In 1992 DengXiaoping traveled tothe South and gave

“Allstatesmenin power

need to treatfood security as

vital to overallstability. The idea

that ‘first there mustbe food to eat, nextone must build’ has

become a consensus….”

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a series of speeches that prevented reformrelapse and made the reform agenda clearer.The new Central Party Committee GeneralSecretary Jiang Zemin visited Anhui,announcing that the family contract systemwould not change. The central governmentmade the decision that contracts for land lastfor 30 years. If needed, this period could beextended further.

There have already been 25 years of ruralreform. How will reform deepen, and how willthe land system be improved? In particular, howcan the family contract system for public landbe perfected, maintaining the intimaterelationship between peasants and the land,while exploring mutual cooperation andstrengthening market competitiveness? Theseare important questions.

Compared with economic reform, politicalsystem reform lags behind. There is a lack ofdemocratic surveillance, which leads to polar-ization and inequitable distribution. The fruits

of reform fall into the hands of the privileged,affecting the income earned by the populace.Moreover, opportunities to own resources areunfairly distributed. The right to control a hugeamount of public property is not accompaniedby adequate surveillance and democratic partic-ipation. In a time of economic transition, thereis an inevitable appearance of working for one’sown interests under the guise of working forthe public, and thus, of the erosion ofresources. Political system reform musttherefore be initiated, carrying forwarddemocracy, implementing the rule of law,respecting the various rights enjoyed by thepeople, and guaranteeing that the masses canequitably enjoy the outcomes of economicrestructuring. Decisionmaking regardingimportant matters touching the interests of thepopulace should be guaranteed to be public,just, and equitable. Therefore, governmentfunction must be regulated by law and a servicegovernment must be established.

Copyright © 2006 International FoodPolicy Research Institute. All rightsreserved. Sections of this document maybe reproduced without the permission ofbut with acknowledgment to IFPRI.Contact ifpri-copyright@cgiar.org forpermission to reprint.

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