Agricultural Economic Transformation (1957-1980s)

Key Insight

Agricultural policies before 1978 led to economic stagnation, characterized by low grain procurement prices for urban populations, strict internal passport controls preventing rural-to-urban migration, and glacial rural income growth of only 1 percent annually in real terms from 1957 to 1978. Per capita grain production remained static at approximately 300 kilograms between 1955 and 1978, while oilseed output, essential for cooking, declined by about a third. By 1978, the rural population's share of the national total had increased to 82 percent, higher than in 1958, underscoring the uniformly negative consequences of these restrictive policies.

Between 1978 and 1983, the fundamental basis of the agricultural economy was transformed by the 'household responsibility system.' This innovation originated secretly in an Anhui village where farmers dissolved their collective and divided farmland into individual plots, quickly spreading across the province. Local party secretaries, notably Wan Li and Zhao Ziyang, recognized this popular revolt against an oppressive system and promoted the land-to-the-tiller reform. Initially, the December 1978 party plenum raised agricultural prices and allowed collective management experiments but still condemned private farming; however, by 1980, Zhao Ziyang as premier and Wan Li as vice premier successfully implemented a national policy to disband communes and return to family farming, completing this transition for virtually all agricultural collectives by the end of 1982.

The adoption of family farming resulted in spectacular improvements in agricultural output and farm incomes. By 1984, grain output surpassed 400 million tons, a one-third increase in just six years, while oilseeds and cotton production sustained annual growth rates of 15 percent, and meat production grew by 10 percent annually. Rural per capita income more than doubled between 1979 and 1984, and rural family cash savings rose from virtually zero to 300 renminbi by 1989. These rapid gains continued throughout the 1980s, driven by crop diversification, new technologies, and a threefold increase in both chemical fertilizer use and farm machinery, including pumps, small tractors, and food processing equipment, between 1978 and 1990.