Towards an Agricultural Economy for China in a New Age: Progress, Problems, Response, and Prospects

Abstract

In the late 1970s, China instituted a series of rural socioeconomic reforms, which, by the end of the first half of the 1980s, had registered astonishing changes. For example, the national value of comparable agricultural output increased on average 9.4% per year 1979-84, nearly three times as fast as the 3.2% annual average for the preceding twenty-six-year period. Meanwhile, as sown area to grains declined by 6.4% (table 1), total grain output increased by more than one third, at an annual rate of 5%. Grain output growth was thus more than twice as fast as the 2.4% annual growth rate in the twenty-six-year period 1953-78. What are the reasons for China's rapid growth? First, a grassroots reform of the rural economic structure has repudiated the commune system and replaced it with the familybased production responsibility system. At present, 99% of production teams and 96.6% of agricultural households have voluntarily adopted da-bao-gan, the most comprehensive form of production responsibility system. This is not to say that a cooperative economy does not suit China, but rather that peoples' communes embodied serious shortcomings. Under the communes, people had virtually no selfdetermination or motivation; the rural economy lacked an engine of growth. Idealized peoples communes became the main bottleneck to rural economic development, and farmers paid the toll. Once the production responsibility system was in place, it transformed the regimented economic structure into one characterized by diversity of output and income sources (table 2). Improvements in the lives of rural people quickly restored their motivation. Because of this huge motivational impact, the production responsibility system has been the main engine for rapid rural growth over the past six years. Second, the production responsibility system has been complemented by price adjustments. Since 1949, periods of crisis in the agricultural sector have been followed by increases in agricultural output price. In aggregate, over the 1960-78 period, crop and livestock prices increased 107.3%, while the total value of agricultural output increased 229.6%; i.e., for every one percent increase in price there resulted a 2.14% increase in output value. By contrast, the six years since 1979, when the prices of eighteen agricultural commodities were increased,1 have seen an increase in the total price index of 22.1% but a (still continuing) increase in output value of 71.4%. Thus, each one percent increase in price has already resulted in a 3.23% increase in output value, a response rate more than 50% greater than during the previous twentyeight years. It can be argued that without the implementation of the production responsibility system, agricultural price increases would not have become such an effective stimulus to