The gross value of agricultural output in the People's Republic of China increased as much in the eight years from 1978 to 1986 as it did in the 21 years from 1957 to 1978. In per capita terms, the average annual rate of growth rose from 0·4 per cent to 4·8 per cent, the most rapid growth for any comparable period since 1949. How was this dramatic turnaround achieved?

Despite 35 years of political turbulence and social change, a constant feature of China's employment situation has been its overwhelming agrarian orientation. In 1952, 88 per cent of China's total work force lived in rural areas, and 95 per cent of these individuals worked in agricultural jobs, primarily farming. By 1986, 74 per cent of the country's work force were considered rural, yet still an overwhelming 80 per cent of these individuals were engaged in agricultural pursuits. Few countries have experienced as rapid a growth as China has over the past four decades, yet maintained an employment structure so closely tied to the soil, the seasons, and the sun.

The economic and institutional framework against which trends in crop production under the government of Deng Xiaoping must be considered, is vastly different from that which existed throughout the Mao era. In a word, Deng replaced a system of planned production and supply by one in which market demand became the main determinant of the level and structure of agricultural production. Under Mao Zedong, maximizing the physical output of key agricultural products was the basis of agricultural policy. Centrally identified priorities – based on “national need” – were reflected in targets for the output, sown area and yield per hectare of individual items. These mandatory targets were to be fulfilled by the collective farms (the production teams of the communes) which were the basic organizational units of Chinese agriculture. Similarly, the disposal of farm output was determined by the central plan. For production teams, therefore, decision-making was relatively simple and followed the sequence of production, harvesting and procurement, all according to plans laid down by the government. Cost accounting was rudimentary. It was not, in any case, geared to the promotion of “economic efficiency.” If production costs rose-for example, as a result of an increase in the multiple cropping index directed by the government – the peasants bore the burden, as they were the residual claimants in the distribution of income by the production teams.

One of the officials in charge of drafting China's agricultural policies, Du Runsheng, divides the reform of her agricultural system into two major stages: the first from 1979 to 1984, and the second from 1985 to the present. In the first stage, China dismantled the people's communes, established an “individual farm” system, and scrapped many governmental controls. The tasks for the second stage, according to Du Runsheng, are the formation of markets for farm produce, rural money, rural labour, and for rural land “usage rights.”

One of the most dramatic changes in rural China in the post-Mao era has been the abrupt increases in peasant incomes and consumption since 1978. These were deliberately brought about by an overall reorientation in economic policy which aimed at improving peasant incentives, so as to boost farm output and ease the agricultural supply constraint on industrialization – the government's long-run goal. The new development strategy has already resulted in a considerable modification of the Soviet-style agriculture-industry dichotomy, in favour of the Chinese peasants.