The Household Responsibility System Reform in China: A Peasant's Institutional Choice

Abstract

Since 1978, the Chinese government has implemented a series of major reforms, including diversification of the rural economy, production specialization, crop selection in accordance with regional comparative advantage, expansion of free markets, and a marked rise in state procurement prices. These reforms have brought about dramatic changes in China's rural areas. However, the most important change was the emergence and eventual prevalence of the household responsibility system (HRS), which restores the individual household and replaces the production team system as the unit of production and accounting in rural areas. After the chaos of the Cultural Revolution, China's moderate leaders started to reconsider China's rural policies. Although the government admitted that solving the labor management problems within production teams was the key to improving productivity and recommended measures to relate rewards to performance more closely, the HRS was considered the reverse of the socialist principle of collective farming and was prohibited (Editorial Board of China Agriculture Yearbook 1980, p. 58). The official position at that time maintained that the production team was to remain the basic unit of production and accounting. Nevertheless, toward the end of 1978, first secretly and later with the blessing of local authorities, a small number of production teams in Anhui Province, which was frequently victimized by flood and drought, began to experiment with contracting land, other resources, and output quotas to individual households.