CHAPTER 5

CHINA

INTRODUCTION :

China's is one of the most exciting cases of reform. It went through various phases and study of the reform process is likely to be highly instructive in learning appropriate lessons and designing guidelines for future reforms for other countries. In Asia, China's land reform provides a contrasting model to that of Japan and is thus worthy of an indepth study. The Study depicts the reform process and the way it changed the condition of the pre reform China in respect of production relations and growth of agricultural productivity, thus inducing changes in the rural economy and providing the base for an overall thrust of national development. In what follows we discuss the pre-reform situation and then proceed to discuss the reform processes

from the Initial stages to the present time,

PRE-REFORM CHINA :

In pre-liberation china the rural scene was one of mass poverty and skewed

distribution of land ownership, (Buck'') Table No. 5.1gives the land distnbution pattern

in pre-liberation China,

TABLE 5.1

Land distribution amongst rural classes in various regions of China 1937.

No. of Percent (million Percent Mean holding per families hectares) household (ha.) (million he.)

1, Landlords 2,4 4 44,0 50 18,2 2. Rich peasants 3,6 6 15,5 18 4.3 3, Middle peasants 12.0 20 13.0 15 1.1 4. Poor peasant & agricultural labourers 42.0 70 14.4 17 0.3

Source : (From H. Marchisio as cited in King2)

1, Buck John Lossing, 1956 - Land utilisation in china, New York, Paragon Book reprint corporation. 2. Russell King, "Land reform : a world survey", London, G, Bell and Sons ltd 1977 (from H Marchisio) page 255.

81 Since communist takeover in 1949, mral China has gone through a number of vigorous and quick institutional changes which have profoundly affected her whole agrarian (set up) and made it radically different from what it was before

CHINESE COMMUNIST PARTY AND ITS LAND REFORM POLICY :

The was founded in 1921 in Shanghai. The growing peasant union locally abolished the Landlord class. The CCP made a coalition with kuomingtang in 1924 to tackle the problem of warlordism. In 1927 peasant unions covered a membership of 4.5 million people in Hunan and Hopei only. Sun Yat Sen's policy of land to the tillers' could not be implemented. CCP's land policy, as expressed in the manifesto of the Second National Congress, mainly stressed the abolition of pnvate property and nationalisation of land. The peasantry and peasants associations formed the hard core of Mao's revolutionary movement. There was a split within the party and Chiang Kai-Shek tried to crush the CCP. But the result was favourable w

CCP. Repression forced them to take shelter in the country side where they came into more close contact with the rural proletariat.

From 1928 to 1934 party's land reform policy comprised the following elements :

(Klein)3.

(1) confiscation of landlord's property and conciliation. (2) nullification of contracts bearing high interest rates. (3) abolition of feudal taxes. (4) egalitarian land redistribution.

But actual implementation of these policies varied in different parts of the country depending on the prominence of rightist or leftist elements. In 1934 the Red Army was

forced to move to Yenen from South Central China. This established communist sway

over the areas by its methods of indoctrination and education. After this long march the

party restated its land policy allowing private property to the extent the person could

cultivate personally and also the imposition of low and progressive land tax. As the

majority of landowners were anti-Japanese the party stopped its policy of confiscation

in order to meet the crises of war with the help of the landlords dunng the Sino-

Japanese War.

1 n Kloid, "Tho Iniul rofnrm pnlirios nf r.hino«;o cnmrr,uni<;f party" in7R in4R n hrinf economic analysis, Agncultural history, 35(2), pp 59-64, 1961

i\2 The party revised its policy regarding payment of rent and interest as follows:

(1) 25 % reduction on rent.

(2) no advance collection of rent.

(4) rate of interest fixed at 1 and 1/2 % per month.

(5)When total payment of interest reaches the original amount - payment of further interest is excused and only the capital is to be repaid.

(6)lf interest is paid upto twice the original amount, payment of both capital and interest is to be excused.

After the war, the party, however, resumed its policy of confiscation of land of large

landlords. Mao-Tse-Tung described the party policy as follows : to rely on poor

peasants, co-operate with middle peasants, eliminate the feudal system of exploitation

in a planned, discriminate manner, and develop agricultural production" (Mao)^. The

primary aim was to destroy the economic and social power of the landlords and win

over the masses.

In 1949 CCP got complete power. It faced simultaneously the problem of stabilizing

the economy and building a new structure of agriculture and industry. As a first attempt

to build the base it aimed at eradicating the landed and compradore classes and

launched the land reform act of 1950.

LAND REFORM LAW OF 195Q :

CCP's basic philosophy was to accept land reform not as an affair of the state or

government but reform of land as per the need of the peasants and for the peasants.

Land Reform law of 1950 was the preliminary step to achieve this aim. This law was

simple comprising 5 sections with a total of 40 articles ; (Wong)^-

Table No. 5.2 shows the nature of this law.

4. Mao Tse Tung, "Selected works of Mao tse Tung", vol 5, Foreign language press, Peking, 1977. 5. J.L. Wong, "Land reform in the Peoples Republic of China", Praeger, pp 99-109, New York, 1073 .

83 Table No. 5.2 : Nature of 1950 Law

Sections Articles

General principles 1 Confiscation, requisition of land 8 Distribution of land 6 Treatment of Special land problems 12 Organisational methods for carrying out agrarian reform 7 By laws 6

40

BROAD OUTLINE OF THE LAW AND CATEGORISATION OF RURAL POPULATION :

Confiscation and requisition were used as more or less synonymous terms representing only a difference in political treatment. While expropriating the property of persons or organisations not regarded as "class enemies" of the people the term requisition was used instead of expropriation.

Mao's idea was not to attack more than 10 % of rural population at a time. The party's principle was to "depend upon the poor peasants, consolidate the middle peasants, and neutralise the rich peasants".

The expropriation and distribution of property (by CCP) followed a differential treatment of classes. The administrative council in "three documents" classified the people into following groups. a) Landlord - All those who owned land, but did not engage themselves in essential labour and derived their income wholly or mainly from exploitation of others through rent, usuary, hiring of labour etc. b) Rich peasants - Those who owned abundant land and engaged in essentialor supplementary labour, but relied upon the exploitation of others for a major part of their income.

c) Middle peasants - Those who had sufficient land either by ownership or by

tenancy and earned their income entirely or mainly from their own labour.

5. J.L. Wong, "Land reform in the peoples republic of china". New york praeger, 1973,

pp 99-109. d) Poor peasants - Those who owned little land and more often than not hire themselves out for others to supplement their income.

Farm or agricultural labourers - All those who owned little or no land, and depended completely or mainly for their livelihood on the sale of their labour power.

There was no clear demarcation between these classes. According to Article 31 of this law, the distinction was to be made on the basis of democratic estimation and by methods of self assessment and public discussion,

But at the time of actual execution of the law a lot of confusion and trouble arose in determining the exact class-status of different people. All the properties of the landlords including land, drought animals, farm implements and surplus grain and surplus houses in the country were expropriated under the law. Rural properties

belonging to ancestral shrines, temples, churches, schools, organisations and other

public bodies were also requisitioned. When the land rented out by the rich peasants

exceeded the amount tilled by them, then with a permission of the peoples' or

provincial government that land should be requisitioned. The land thus collected would

be distributed free of charge to the landless peasants. Land and other properties of the

middle peasants were to be protected from infringement.

IMPLEMENTATION OF THE LAW :

After passing the reform laws the central government handed over all responsibilities

of implementation to provincial or regional governments of greater administrative

areas. The administrative units under each region were the Hsien (county level) and

Hsiang (rural district level).

Land reform committees were established at various levels from greater Administrative

areas down to Hsian (county). These committees were semi- representative bodies at

the county level but higher up they functioned like government departments. Below the

county level there were Peasant Associations or Mass organisations formed on a

voluntary basis with membership open to agricultural labourers, poor peasants, middle

peasants, rural handicraftsmen and the impoverished intellectuals in the rural areas.

The integration of these peasant associations into the government machinery was the

root-causo of succosstui implomontation of land reform Peoples' tribunals (composed by judges from county and elected representatives of mass organisations) helped the committees in legal matters.

Kampu or cadres were the sinew of the land reform programme. They were the mam link between the party and the peasants association. The bulk of the cadres came from the positive elements of the peasantry, and had a party, army or government background. They were used by the party in "thought moulding process' among the peasants by making themselves easily accessible to the peasants (taking no remuneration). They built up friendly ties with the peasantry via the Santung or three together method, working with them without remuneration, eating with them and sleeping under the same roof with them. On the party side they had to be conscious about their duty of indoctrinating the masses. The agricultural reform law and other regulations had considerable leeway for interpretation and this required great cautiousness of the cadres in explaining the laws in their proper spirit. The cadres also took part in kung-sheu or make shift courts for making mass trials. There was shortage of cadres according to need hence often new cadres were trained by a three weeks

crash training programme. CCP deliberately sent urban intellictuals to participate in

land reform programmes.

Hence, to remould the thought building process of the cadrers "they were sometimes

reinforced by motley group of professors, teachers, students, writers and workers".

ACTUAL FIELD OF APPLICATION OF 1950 LAW :

The law was first introduced in northern China and by the end of 1952 a large area of

land covering 310 million people came under its sway. About 700 million mou (1 mou =

1/6 acre) of land was distributed among 300 million peasants who constituted 60-70 %

of nations agricultural population. The landed properties of 10 million landlords were

expropriated.

86 RESULT OF THE REFORM LAW :

Chinese land reform is accepted as the largest land reform experience. Neariy 65 % of

Chinese rural population was involved in the process of redistribution of expropnated

land.

The most striking feature about the Chinese reform was its pragmatic nature In its long

history of involvement with land reform, the CCP was always inclined to treat the

theoretical issues and policy polemics as secondary and subordinate to the down to

earth problem of implementation.

But the contempt for formalism was not without its costs. Excesses were inevitable at

the first stage as the Chinese government relied on mass mobilization techniques to

carry out land reforms. The sequencing of land reform was considered a necessity.

First step was to conform to the principle of peasant ownership with peasant power

The application of the law was not uniform. Its progress was slow in the central

Kwantung area and in areas where regionalism or localism was deeply present The

law did not cover the pastoral border regions of china.

The process of egalitarian land distribution resulted in the decrement of farm size The

average amount of land received was 0.13 hectares varying between a mean of 0.5

hectares and 0.1 hectares in different regions. Per capita holding was approximately 2

mou or 1/3 of an acre after reform whereas it was 3.5 mou durir>g the 1930's. Land

distribution resulted in a larger farm population, each farmer owning a smaller but

independent land unit. As land distribution became more equal, the individual holdings

became less economic and less viable than before.

Agricultural production showed a modest upward trend after land reform but this

recovery was independent of the land distribution. Actually the economy was returning

to normalcy after the disruptive forces of flood, and war (of 1930). Restoration of

political order, maintenance of price stability, reopening of rural urban trade channels

and repair of damaged irrigation facilities contributed to this recovery. Total cultivated

area also increased in this period from 97,881 thousand hectares in 1949 to 107,919

thousand hectares in 1952. Actually shortage of animals and equipment, removal of

main -.ourr.n nf r.apilMl with thn romovnl of tho landlord class, and the rn-^tnctpd

n? employment of labour in land by the affluent class for fear of political ostracism and possible higher reclassification in the social ladder squeezed agricultural productivity.

FIRST FIVE YEAR PLAN AND THE LEAD TOWARDS COLLECTIVIZATION 1953-57

After relieving the society from the shackles of feudalistic oppression, the stage was set for other institutional changes. Traditional sources of credit were eliminated. In the preliminary stage the development strategy was urban based. State investment policy favoured industry over agriculture and agricultural sector was decapitalised to some extent. The first five year plan was designed to accelerate industrial development. (Li-

Fu-Chun6)Though the agricultural sector was provided with 8% of state capital investment (as compared to 58% to industry and 19% to transportation and communication) a high target was fixed for its contribution to the national developmental plan. The 23% increase in agricultural output during the plan period was high enough in view of the resource constraints facing the economy of that period.

Agriculture was to supply food and other wage goods to the growing urban labour

force and provide exportable surplus to pay for imported foreign equipment and

technology. The main savings of this plan period was extracted from the agricultural

sector. Thus the first five year plan relegated agriculture to the role of subserving

industrial growth by contributing the maximum surplus, which was to be generated with

as little feedback as possible. This is in conformity with the pattern of the growth

model in USSR. It appears during this period China followed Russian example.

However the reforms already underway during the period had considerable impact on

land distribution pattern in China. Some of the results are shown in Table No. 5.3. It

may be seen from this table that percentage of crop area held by big landlords and

rich farmers reduced drastically after reform, and percentage of crop area held by

middle farmer increased significantly after reform. Similariy the percentage of land

owned by poor peasants increased. Very little, however, was gained by landless

labourers.

6. Li-Fu-Chun, "Report on the first year plan" 1953-1957, in Robert R Bowie and John K Faribank (eds), "Communists China, 1955-1959 ; document with analysis," Harivard University Press, Cambridge, MA, 1962.

nn TABLE No.5.3 Some results of land reform in China (1949-52)

% of house share of crop after Average crop After holds area before reform area owned Reform reform % before reform china

1. Landlord 2.6 23% 2.1% 116.10 11.98 2. Rich peasants 3.6 17% 6.4% 35.3 26.30 3. Middle peasants 35.5 30.2% 44.8% 15.84 18.53 4. Farm labourers others 0.9 0.0% 4.6% 6.25 12.14

Source : Peter Steven^ : The development of Chinese agriculture 1950-59 (World Development July 1975, p. 459).

Liao Kai Lung^ (1955) summarises the Chinese reform formula in the following way :

1) Transitional phase of semi-socialist agricultural cooperative was to avoid drastic resistance of peasants towards co-operativization.

2) Multi-stage arrangement was adopted to avoid the shock in the socialist transformation.

3) As the industrial base was not strong enough to support technical reform, social

reform was to precede technical reform.

4) The policy of restriction and gradual elimination of the rich peasantry instead of their

outright liquidation.

Though land reform resulted in a fairiy even distribution of land holding, remaining

inequality together with the great density of farm population, left less than half an acre

of farm land per capita for the poorest three deciles of the mral population pressing the

need for co-operation.

In the subsequent years of the plan period the transformation of agriculture passed

through the following stages. A gradual transition from individual farming to mutual aid

teams in 1953-55. An upsurge in the formation of lower co-operatives in 1955-56 and

the formation of higher co-operatives in 1956-57.

7.Peter Steven, "The Development of Chinese agriculture -1950-1959", Worid Development, July, 1975. 8, Lio-Kai-Lung, "Socialist Transformation in China", Peking, 1955, China Youth Publishing House.

89 The process is summarised by Shue in following way. After establishing order and a political support base in the country side through land reform the CCP gradually extended its control over the peasantry and restricted free market economy through taxation and trade and finance policies. Through these policies the CCP restructured the economic environment of country side to make collectivization materially more attractive to the peasants (Shue^).

THE NEED FOR COLLECTIVISATION :

Liu postulated that the collectivization drive was to be started only after 70-80% of the peasants attained the status of rich peasants. But Mao was of the opinion that agriculture should be transformed in the shortest time possible otherwise time-lag will create sufficient capitalist economic forces to supress socialism. Mao feared that the evident non-viability of poor peasants' farms would lead to future polarisation. Mao advocated collectivization to prevent this trend and also to solve the peasants' poverty problem.

Collectivization would prevent the rampant growth of capitalism in the countryside and also check the falling trend of agricultural output. Even the difficulty of grain collection would be minimised and collection process of agricultural taxes would be simple

through collectivization.

Economically collectivization was considered the "most perfect method to proceed

towards socialism". Politically the resort to collectivization was considered not only

feasible but also desirable to consolidate the worker peasant alliance. The aim was to

achieve common prosperity for all.

THE ECONOMY UNDER COLLECTIVIZATION :

The internal party document listed four stages of growth of collectivization in Chinese

farming on December 1951 :

1. the temporary mutual aid team,

2. the permanent mutual aid team,

3. the elementary, semi-socialist co-operative and

4. the advanced producers co-operative or collective.

9. Viviens Shue, "Peasant - China", , University of California Press, Beri

90 The quadripartite division was convenient for organising production and capital construction work at whichever level was called for by the required scale of work. It also facilitated the transmission of technological innovation from central research institute to the villages.

The mutual aid teams were started just after the completion of land reform. Their main objective was to overcome the economic difficulties of the poor and middle peasants.

A peasant family with surplus labour but with insufficient tools, implements, drought

animals etc was to exchange its labour with the farming materials of other families who were in position of sufficient fanning material but needed labour. The household

economy remained a crucial part of agricultural organisation under the collectives. By

this method an alliance was made between the rich and poor peasants whose joint

support was essential for government at the eariy stages of co-operativization. Slowly

the rich peasant were isolated without hampering their incentive to production until the

formation of higher co-operatives.

The traditional system of mutual help was reestablished under a new title. Mutual aid

team comprised three to six households, who were combined to work on common

tasks during the peak seasons. As titles to land was acknowledged under this system,

it got easy acceptance among he peasants and socialism in its embryo form was

introduced in an imperceptible way. By 1952 the membership of the team increased

(6-10) and these were organised on a permanent basis for one year. Permanent

teams co-ordinated agriculture with subsidizing occupations like handicrafts, livestock

rearing, forestry etc.

In this team the system of payment on the basis of total work points secured by

peasants was prevalent. Payment was made after yeariy harvest on the basis of point

slips. In addition members also got interest money for the implements or cattle

contributed by them to the common pool of the team. In 1953, semi-socialist or

elementary producers co-operatives emerged, comprising 20-40 households. By this

method, land (the means of subsistence of the farmers and the most important factor

of agricultural production) was transferred to public utilisation along with other

implomotUa, Tho members' earning was composed of two parts (i) romunoralion for

91 their contribution to the co-operative pool and (ii) remuneration for quantity and quality of labour rendered in the productive process. Though organised in the beginning on the principle of voluntary association and sharing of mutual benefit, its goal was to reduce the peasants'attachment to land and convert all factors of production into common property. The intention was to decrease the amount paid by way of remuneration for factors deposited in the common pool by stages until private

ownership is completely abolished under the full fledged collectives. These collectives

or advanced producers co-operatives comprised 100-200 households. The progress

in co-operativization was considerable upto the fonmation of these collectives. In 1953

39.9% households were organised in Mutual Aid Teams and 0.2% in 14,000 co­

operatives. In June 1954 114,000 co-operatives comprising 2.0% of household

developed, thereby surpassing the official target of 35,800. By March 1955 this

number increased to 633,000 having 14.2% of peasant households under its sway. In

the mean time the inherent compulsion behind the co-operative movement created

certain amount of opposition among the peasantry. This feeling of apathy resulted in a

fall in agricultural output. The system of expropriation of other inputs with negligible or

no compensation led to a shortage in livestock population due to their widespread

slaughter. The peasants' position deteriorated further due to heavy floods and

excessive grain acquisition by the government which encroached upon the portion

reserved for food, seed and fodder.

Chinese government readjusted its policy to suit the need of the peasants. It excluded

all grain from taxation and procurement quota was cut upto 40% of previous target. In

the spring of 1955 the state declared the "three fix' policy. The nonmal yield, the quota

of compulsory purchase and state supply of grain to the peasants were to remain

unchanged for a long period thereby removing the peasants' feeling of insecurity.

THE STRATEGY OF PARALLEL DEVELOPMENT :

So long agriculture was thought to be capable of financing industrial growth and this in

turn was expected to lead to technological progress in agriculture. The basic need

was to create a great upsurge in the agricultural output at a substantial high rate. This

92 great leap in agriculture was explained by Chou-en-lai as consisting of an annual increase of 15% or more in agricultural output.

Technical and institutional reforms were already in progress in the agricultural sphere under the 12 year plan (1956-67) for promoting this rapid agricultural growth. But soon the leaders realised that the crux of the problem lay in the unbalanced increase in investment in the industrial sector and emphasis was placed on bringing up the lagging investment in the agricultural sector.

A strategy for parallel development of agriculture and industry, of large and small plants, of traditional (based on labour intensive technology) and modem (based on capital intensive technology) sectors was adopted. Massive man power was considered conducive rather than a hindrance to development. Labour power was converted into capital. For this purpose utilisation of highly labour intensive techniques in agriculture, large scale investment in irrigation dams were combined with

programmes of soil conservation, afforestation and organisation of small industrial

workshops.

THE DEVELOPMENT OF COMMUNES :

f\/lao reintroduced a new form of co-operativization to win over the temporary stalemate

in the movement.

For the successful implementation of the policy of "walking on two legs" (or

simultaneous development of both traditional and modem sectors) a new organisation,

was evolved on the basis of the resolution taken on 29th August 1958. In Mao's own

words, it was "better to set up peoples communes" because "their advantages lie in

the fact that ihey combine industry, agriculture, commerce, education and military

affairs. This is convenient for leadership." The first commune was established in

Honan. Massive effort was made in amalgamating the existing 740,000 collectives in

communes. Within a short period of four months 99% of the njral population was

organised into 26,000 communes.

In a commune, hsiang level government organisation and agricultural co- operatives

were merged together into a single entity. Even the last vestiges of private property

9J were abolished. Table No.5.4 gives an idea of progress in organisation of advanced farming in china during 1950-60.

TABLE No. 5.4

The Development of Organised Farming in China, 1950-1960

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960

Mutual aid team 2.71m 4.23m 8.03m 7.45m 9.93m 7.15m * - - . .

No.of house­ holds (000) 11570 191961 45364 45637 68478 60389 * - - -

Co-operat­ ives - 129 3634 15053 114165 633213 685321 * - -

No.of house-

holds(OOO) - 2 57 273 2285 16881 15109 * - -

Collectives - - 10 15 201 529 311935 7000000 740000 -

No.of house- holds(OOO) - - 2 3 12 41 97422 115000 123000 - Peoples' Communes No. 26000 24000 24000

Total Peasant Households (000) 105536 * 113683 116325 117331119201 120000 121500 123250 * *

- = nil or negligible, * = data unavailable

Source : L. Lichnowsky''0 : "Agricultural policy in since 1949 FAO,

Monthly Bulletin of Agricultural Economics and Statistics 11(10) 1962.p5.

The basic organisation of a commune consisted of three levels :-

1) The commune, 2) production brigades, 3) production teams.

10. L. Lichnowsky, "Agricultural Policy in Mainland China Since 1949", FAO Monthly Bulletin of agricultural Economics and Statistics 11(10), 1962.

9^ The team was the unit for labour organisation, the brigade for production and the commune for overall administration. The household economy remained a cmcial part of agricultural organisation for most part of the duration of the commune. The leaders of the commune were elected by the members. The commune acted as the basic unit of government in the countryside, coordinated the wori< of the production brigades,

undertook major projects that required large inputs of capital and labour, provided a

variety of services to the brigades and teams including education, health, welfare,

culture etc. The communes were not uniform in size, varying according to their

number of members and the total area covered by the communes. The commune

living pattern was guided by the five together system (worthing, eating, sleeping,

studying and drilling together).

Commune refectories, nurseries, tailor teams and laundries were established to free

female labour from household work. Even mass dining halls were opened to remove

the system of private rationing.

The commune's gross revenue after deduction of cost and depreciation was divided

under the following heads :

1) food expenditure for members

2) the welfare fund (not to exceed 5%)

3) accumulation fund.

Communes followed a double method for labour payment :- 1) Supply system and 2)

monthly wages. According to the supply system food material was supplied to labour

according to need by the states grain rationing schedule without any reference to the

wori< done. Communes were governed by the principle of democratic centralism.

Decisions on major actions were to be taken after popular discussions and

consultations with the masses.

Some amount of private ownership for personal use was allowed. Larger portion of

labour's share was distributed through wage system.

95 THE PERIOD OF RETREAT :

From 1959 - 1961 China experienced bad weather and as a result agricultural production had a decreasing trend. Mao adopted an eight-point charter to boost agriculture. This included soil improvement, increased application of natural fertilisers, irrigation facilities, seed selection, close planting, pest control, field supervision and introduction of improved farm implements.

Disillusionment accompanied the bad han/ests. Whatever may be the controversy about the root cause of depression in agricultural sphere the per capita food consumption fell from 2200 calories to 1850 calories and malnutrition was widespread.

Agricultural policy was again modified to suit the need of the day. Emphasis was laid on the agricultural sector and grain production was stressed for providing subsistence.

Use of local fertiliser was advocated and hog cultivation was practiced on a wider scale.

Recourse to mechanisation was gradual. Mechanisation was started on a moderate

scale in 1959. Aim was to attain complete mechanisation by 1970. Inspite of all these

efforts the downward trend continued in agriculture. The impact of crop failure for

three successive years after this resulted in economic crisis.

A process of adjustment was initiated. In the commune system, the team was

established as the basic accounting unit. The guiding principle for remuneration was

changed. Labour payment was made according to ability (ie. as per quantity and

quality of work) and not according to need. Private plots were increased to 7% of the

commune land for grain cultivation and 15% for fodder cultivation.This drastic change

of policy virtually neant the abolition of communes by 1961. This was an obvious

retreat from agreat leap forward.

Differences of opinion developed among the leaders. The swinging nature of success

of CCP's policy at different point of time was the outward expression of the

prominence of Lio's ideas over Mao.

Efforts to counteract this trend resulted in the in 1966. The idea

behind this movement was to purge the party of Mao's opponents and also of capitalist

elements. Mao's seizure of the party machinery in late 1965 mari<;ed the beginning of

nn this revolution. In 1966 the party committee was reshuffled. Gradually this movement spread throughout the suburban communes through the red guards. However the party was cautious on account of its previous experience of crisis in the agncultural sphere, it kept the movement under control so that the han/est was not disturbed leading to fall in agricultural production. But the adverse impacts could not be fully averted. The movement slowed down the production performance resulting in further deterioration of private initiative.

CRITICAL VIEW OF COLLECTIVIZATION :

The ordeal with collectivization made two things clear:

1) The agricultural sector or the peasantry can not and should not be an instnjment for socialist industrialisation. Though collectivization was assigned to play a cmcial role in socialist development strategy, the project could contribute neither to socialist industrialisation nor to socialist transition of the countryside.

2) The Marxist idea of the superiority of large scale collectivized agriculture over individual peasant farming should be reconsidered. "Experiences, have shown that agriculture is fundamentally different from industry in that organising wori

Thus for socialist development in the countryside, a dogmatic conceptualisation about superiority of collectivized approach was criticised and formulation of an alternative

appropriate strategy was discussed.

Need for transformation in the operating mechanism in agriculture was felt. (Zhu Lingl^) The 13th National Congress of Chinese communist party presented the basic guidelines for a changed economic operating model. State should withdraw from direct involvement in micro level operation. Mari

11. Fichael Ellman, "Collectivization, Convergence and Capitalism ; Political Economy in a divided worid.", London, Academic Press, 1984. 12. Zhu Ling, "The Transformation of the Operating Mechanisms in Chinese Agriculture", The Journal of Development Studies, January 1990, Vol.26, No.2

q? The planner would gradually introduce a set of economic levers instead of the traditional administrative measures, to control the agricultural sector thus diverting the backward subsistence economy into a modem commercial commodity economy.

Several measures were adopted to aid agricultural growth process. These included slackening of administrative controls, enlarging private plots, encouraging household sideline production and offering more scope for utilizing this production in mral martlets.

Towards the end of seventies communes were dismantled, farmers were permitted to keep individual plots (but not the right to buy and sell land) and farming decisions were more and more decentralised. But only marginal improvement in the performance of production and enhancement of private initiative was observed.

After autumn session of the 11th central committee of the communist party of China in

1978, which introduced the new systems of contract responsibility, production was boosted, and this generated new incentives and mari

onwords, prices of farm inputs were reduced and prices for grain and other crops paid

by the state were raised in several, steps, in margins of 20-60% and more, reversing

the trend of declining incomes for farmers. The costly policy of grain as a main link

was replaced by measures of diversification.

HOUSEHOLD RESPONSIBILITY SYSTEM :

The first experimental forms of household responsibility were introduced as emergency

measures to relieve poor, in remote mountainous areas. The success and popularity of

this organisational system, under which the peasants became motivated to work

harder and more effectively - because their individual efforts were linked to their final

output - led to a rapid extension of the new institution all over China. The individual

family is the basic production unit under the household responsibility system. The

household makes a contract with the collective (owner of land) to fann a plot of land, to

care for a part of the woods or to herd a flock. In return the household will have to

meet the contracted procurement quota, pay the agricultural tax and a fee to the

collective fund. The surplus over these requirements is retained by the households and

they can sell this production for a higher above quota price to the state or in the open

market

98 Early in 1985 the state abolished the 30 years old system of compulsory procurement quotas, state marketing and price control of many commodities. Contracts were made with the families based on a quota system (30% for grain or 40% for cotton) of the production at fixed prices. The price of the produce not included in these contracts would be allowed to float according to market demand. The state would use its stock to regulate supply and demand. That could even lead to paying temporarily lower prices to the farmers and stimulate a change of the product mix.

In 1984 land contracts, which were originally limited to only two or three years, were consequently extended to 15 years or more. This would assure the farmers that they would be able to enjoy the fruit of their investment (in labour or capital). Longer contract period was the prerequisite for more long term planning by the individual households. In document number 1/1985 of the central committee of the communist party of China, encouragement was given to families to increase their investment and to diversify their production. Under this new policy, households were given the right to

sublet their contracts to their neighbours, to facilitate the concentration of land in the

hands of the more skilled farmers, to reduce the amount of strip farming and to enjoy

economies of scale by specialising in grain or other commercial crops.

Collectives were still endowed with several farm wori

undertaking works for infrastructural development including irrigation management and

capital construction for the sake of convenience. (Bernstein''^)

13. Thomas P. Bernstein, "Local Political Authorities and Economic Reform", Observations from two countries in Shandong and Anhui, 1985, Paper presented for presentation aat the conference on Mari

99 The households belonged to two categories : families with land contract were termed agricultural households and families going to other business like manufacturing, service trades, commerce or building and artisan trades were called specialised households. Both agricultural and specialised households were allowed to have additional labour assistants. The specialised households were encouraged to pool their efforts and join into partnership companies or joint ventures between one or more households and co-operatives and the state. By the end of the 1984 some 25 million families, about one seventh of all rural households had become specialised households. The specialised households and their associates were supposed to absorb the growing number of unemployed and underemployed in the future.

To plug rural urban migration small mral townships with industry, commerce and service trades were created. Some 90,000 small townships developed within a period of 3 years after the dissolution of peoples' communes.

The direct responsibility system replaced 23,000 of the 54,000 state owned industnal enterprises in 1986 absorbing 4% of the total non agricultural labour force, Neariy

2900 small state owned enterprises had been either released or contracted out to individuals or collectives.

Some sort of social security was guaranteed to distress families who lacked all means

of self support by dealing with them as 'hardship household'. They were placed under

five guarantee system' and were given food, clothing, housing, medical care and basic

expenses from the collectives.

GENERAL APPRAISAL :

The basic strength of Chinese reform lies in its original approach. Its psychological

drive to convince the peasants that they can initiate development on their own not

relying on the twin clutches of outside expertise and aid is a unique experiment. The

method of investing in human capital rather than in costly foreign technology and the

policy of simultaneous development of traditional and modem sectors desen/e special

attention.

inn The whole process of development was arranged in a sequence. Institutional transformation was to pave the way towards egalitarianism. After institutional reorganisation exhausted its potential for increasing production following the formation of the communes, the basic developmental strategy shifted to technological progress.

The pragmatism of Chinese reform finds expression in its superior technique of informal and personal approach and less reliance on elaborately codified legal regulations. When people having a stake in landed property have power over the implementation machinery - a vast time lag occurs between the passing of the law and its practical orientation. But in the case of China the peasantry inspired with enthusiasm (by the teaching of party cadres) took a direct and vital part in quick and successful implementation of these reform laws.

The planning machinery was based on a dual approach to all problems - centralised

and mass approach. The centralised part laid stress on five unifiers (eg. unified

understanding, unified policy, unified plan, unified direction and unified action) and

gave directions, promoted effective co- ordination and provided safeguards against

prominence of local interests over the interest of the whole country. The plan

sanctioned by the planning commission was appraised by the local representatives

and respective ministry. Hence democracy was correlated with centralism and freedom

with discipline.

Another point of superiority of the Chinese experience was its element of flexibility.

Chinese authorities realised that insistence on equilibrium at each and every phase

would only result in holding back the dynamic elements in the economy. They

accepted disturbances as normal phenomena in the usual growth process, and tried to

reach a new balance by bringing up the lagging sector rather than restraining the

progressing sector. In the early years of collectivization, the

movement unleashed fanatical enthusiasm and energy, and with highly optimistic

economic planning aimed to satisfy the need for breaking all production record and

thus creating a balance between the progressive industrial sector and backward

agricultural sector.

ini China's success was due to an all round approach towards thegrowth process.

Chinese government adopted a package of concrete measures to counteract all unfavourable forces working against agricultural growth. During the first stage of development there was a shift of population from the rural sector towards the urban areas due to insecure employment conditions (arising out of agricultural reorganisation). Continuation of this migration would have created unbalanced regional development and added to hazards of urbanisation. Chinese government launched a double barrelled attack to curb this tendency. New hopes for rural employment were generated with the establishment of rural industnes. These

industries had the additional advantages of being organised on a lower-capital-output

ratio having a shorter gestation period and also the ability to raise industrial

consciousness among the rural population. On the other hand the government

imposed restriction on population movement by regulation of employment and housing

changes and by population registration. By the policy of "Hsia-fang' (sending down to

the countryside) urban migrated peasants and other people were sent back to the

countryside, thus controlling fresh outflow of population towards urban centres. The

social system achieved maximum feasible social justice while at the same time

providing scope for increased consumption and economic incentive. Chinese rural life

was far better after 1949, as abject poverty disappeared and peasants were better

protected from famine, flood and disease than in most underdeveloped countries.

Illiteracy dropped from 90% in 1949 to 5% in 1971. China's schools and technical

institutes were making possible the blending of modem science and traditional

peasants' wisdom, of theoretical and practical work, which presented China's most

original and important contribution to the elimination of rural unemployment. Health

care obtained highest priority with the Chinese government. Government achievement

in this field was summed up by the American analyst Leo Orieans. According to his

estimation there were about 150,000 doctors in Western medicine, 172,000 midwives

and 100,000 pharmacists in 1966,

102 Communesprovided health and social service. Against the payment of a small annual subscription every commune member was entitled to free medical care rendered mainly by part time barefoot doctors who received a six month town hospital training and work outside surgery hours.

As stated before China's vast population was regarded not as an excess burden but as an enormous asset and the source of capital formation. The resource needed for this process of converting labour into capital was contributed by the agricultural sector.

APPRAISAL OF INSTITUTIONAL REFORM :

The main aim of collectivization was to solve the twin problems of socialist transformation :

1) socialist industrialisation, 2) socialist transformation of the countryside.

But discussion about achievement of collectivization is full of controvesy. On the positive side collectivization was credited with efficient farming and rational distribution of land and labour. The growth value of agricultural production rose from 48.4 billion yuan in 1952 to 60.4 billion yuan in 1957 (in 1952 fixed price) (Hamxian'''* 1985).

Beginning in 1957, the increased production moved in accordance with the nse in the

percentage of marketable agricultural products. In keeping with this, the income in the

agricultural sector also increased substantially. But these official versions were not

supported by various writers who claimed that the outcomes of collectivization were far

below the goal prescribed by planners. (Ellman''5, Nolan''^).

Collectivization achieved more equitable class stmcture and reduced property related

income differential but population related income differential persisted even after

collectivization (Sehran''^). The method of categorization (into rich, middle, poor

peasants etc.) antagonised substantial number of middle and rich peasants and

14. Hanxian, "Economic Changes in Rural China", New Worid Press, Peking, 1985. 15. Michael Ellman, "Socialist Planning", Cambridge University Press,Cambridge, 1979 16. Peter Nolan, "Collectivization in China : Some Comparison with USSR", Journal of Peasant Studies, 1976, Vol. 3. No. 2. 17. Peter Schran, "The Development of Chinese Agriculture - 1950-1959", IL, University of lllinais Press, Urbana,1969.

103 reinforced the totalitarian tendency within the party and the state. This undermined the democratic possibilities inherent in the co-operative organisation (Seldenl^).

Opinions differed about the process of initiation of collectivization also. Several authors considered the process politically well prepared and continuous (Roderick''9, Shue^,

Bernstein^O). Collectivization was the culmination of years of change in the mral economic environment and of shifting political stmcture in the villages. About two thirds of Chinese peasants had previous experience with some form of elementary producers co- operative. Hence a majority of peasants did not have collectivization thrust upon them as a totally novel revolution (Bemstein20).

Originally CCP declared a policy of gradual socialisation. During 1955, however, a recourse to rapid collectivization was taken. Various authors did not accept Mao's explanation for this changed process. As the government was perfectly capable of extracting grain from countryside even before collectivization justifying its quick introduction for easing grain collection procedure was not right (Benedict^''). Actually after collectivization, while production rose, the extraction rate declined in both relative and absolute terms and Mao admitted this first in his article on the ten great relationship. Again recourse to collectivization was not justified even as an antidote for repolarisation. The problem (of so called repolarisation) was used only to negate the reality of middle peasants majority, in order to continue the class stmggle in the

countryside.

8. Lio-Kai-Lung, "Socialist Transformation in China", China Youth Publishing House, Peking, 1955, 18. Mark Seldon, " Co-operative and Collective Formation in Chinese Countryside", in "The Transition to Socialism in China", Seldon and Victor Lippit (eds), Armonk, NY, 1982, M.E. Sharpe. 19. Mac Farquhar Roderick, "Origins of Cultural Revolution", 2, The Great Leap Forward 1958 - 1960, Columbia University Press, New York, 1983. 20. Thomas P. Bernstein, "Leadership and Mass Mobilization in the Soviet and Chinese Collectivization Campaign of 1929 - 1930 and 1955 - 1956, a comparison", China Quarteriy, 1967, No. 31 (July/September). 21. R. Stavis Benedict, "The Impact of Agricultural Collectivization on Productivity in China", In R. A. Francisco, Betty, A. Laird and Roy D. Laird (eds), "The Political Economy of Collectivized Agriculture", a comparative study of communist and non- communist systems, Pergamon Press, New York, 1979.

10^ Collectivization was considered the means for suppressing the defects in CCP's policy.

Paris H Chang22 (1978 Chap I) and Kang Chao23 (1970 Part I) advocate the thesis that the outcome of intra party conflict on development strategy v^as decisive in the decision to collectivize. Other authors thought quick collectivization was introduced as a corective measure to overcome the drawback of an overambitious 5 year plan The high targets and slow growth of agricultural production between 1954 and 1955 concerned contributed to a great extent to the decision to accelerate collectivization.

Grain crisis in autumn 1954 and in summer 1955 and continuous slow grov4h in agricultural production adversely affected the credibility of the high targets fixed by party for future industrial growth.

The party had two options to tackle this crisis of confidences. One was to reduce the scale of the 1st 5 year plan and the other was to go for quick collectivization

(Walker24).

Criticism was levelled against the actual operation also. Instead of concentrating on the devlopment of productive forces and accelerating the economic organisation of

socialism, emphasis was laid on party organisation. The economic system was

rendered rigid and inflexible for restrictions imposed on the commodity money

relationship. The state regulated the market operations of food grains by the

mandatory quota system. Farmers or their collectives in areas of producing more than

subsistence needs were obligated to sell a portion of the surplus at below market

quota prices. The state also undertook direct dealing in selling grain at quota pnces in

deficit areas.

This bureaucratic planning and control led to ineffiency and distortion in normal market

mobility and was blamed as one of the casual factor of natural calamities. The

distributive machinery was also considered inefficient. Two basic methods of

22. Parris H. Chang, "Power and Policy in China", (2nd edition), Pennsylvania University Press, University Pari<, PA, 1978. 23. Kang Chao, "Agricultural Production in Communist China - 1949 - 1965 : Part I", University of Wisconsin Press, Madison, Wl,1970. 24 Konnoth R Walkor, "CollQctivization in Retrospect The Socialist High Tidn of autumn 1955 - Spnng 1956", China Quarteriy, 1968, Vol 26, Apnl- June workpoint assignment were used for income distribution. One was based on evaluating the worker, the other evaluating the work done.

Both presented problems of allocative effeciency, for there was no immediate individual payoff for doing the right thing at the right time. The system lengthened considerably the link between work and income. While putting a big premium on the values of cooperative and collective solidarity, this had a negative impact on work incentive. But collectivization was not an unmixed evil. The post 1978 period thmst in initiative was due to a great extent to the positive development of the collective era. Improvements in the agricultural sector such as the extension of irrigated area, the levelling and terracing of field,the adoption of improvedvarieties of wheat, rice and other grains, the development of chemicalfertilisers and pesticide industries, were the positive gains of

collectivization. But several government policies for controlling food grain production

and prices had considerable negative impact on farm incentives for which

collectivization was made responsible.

CONTRACT VERSUS QUOTA SYSTEM :

The superiority of the contract system over the quota system is also over emphasized.

It is true that it lessened the burden of the state. But in some areas local cadres were

assigned contractual obligation as they were assigned quotas, whereas in other cases

more genuine negotiation occured. Since the statecontinued to set quota and above

quota prices (70% of contract sales used totake place at the latter price) and purchase

targets, the system cleariyembodied a mix of planned and market elements.

There are many reasons for the rapid development of the contract system. On the

grounds of retaining the public ownership system, it defines the rights, dutiesand

profits in the form of a contract, highlights the central idea of seperating administration

from management, and lays emphasis on strengthening freedom of management of

enterprises, thus ingeniously sidestepping the sensitive question of actual ownership.

Since it does not break with the traditional ownership system, or disturb vested

interests, there is no resistance against its introduction and the implementation process

is easier than under collectivization. The new system encourages people to chensh

inB publicproperty as they do their own. But in the long mn it is not the ideal model for enterprise reform, because it neglects the essential issue of ownership.

Secondly if an enterprise suffers losses or goes bankmpt it is still the statewhich carries the responsibility. Thus an enterprise is responsible only fonts profits, but not for its losses.

Thirdly the ownership of property acquired by enterprises is not cleariy defined, clauses of contract and duration of contract are limited, which can easily lead to short term vision in enterprises leaving the long-term security question unanswered.

There must be complete and co-ordinated reforms in all fields to create an environment for the reform of the ownership system. This includes the establishment of a full market

system, for commodities, for the labour force, for capital, real estate, technology, and

imformation. Reform should focus on the system of planning, finance, banking,

investment and wages, strengthening and imposing macro management and clearing

up confusing and unstable elements in economic life to ensure the success of

outcome.

To invigorate enterprises, the relationship between macro readjustment and control and

micro stimulation must be handled property.

It must be admitted that at the present stage gaps exist between rich and poor regions

and rich and poor people. Because of the co-existence of new and old systems,

market structures are still Incomplete, prices are distorted and many loopholes remain

in macro controls which result in unreasonable income inequalities. The government

must therefore resort to economic, legal and administrative measures to strengthen

macro control and to prevent economic polarization.

CONCLUSION :

The reform experiences of China are credited with adaptive qualities. The reformers

have induced changes in the agrarian system to suit the pressing needof a particular

period. The gradual introduction of co-operatives, planning ofa combined agrarian -

industrial structure under the communes and againreinstation of the private household

responsibility to boost initiative are theresults of this amenable policy of the planners.

We have critically discussed the results of these reform efforts in previous section

1 07 Even with a combined structure of commune and household responsibility system

Chinese agriculture still faces problems in maintaining the desired level of agricultural

(particularly foodgrain) production. The question of sustainable development with proper prevention against environmental degradation and boosting of the investment in agrarian sector still remains unsolved,

The new system has some drawback. With the dismantling of communes and establishment of household distribution of land, mechanisation of agriculture becomes difficult. The leasing out system has again emerged as a solution in some areas.

Household responsibility system also faces an acute problem of labour shortage. To deal with these situations on a joint basis other regions have started Village Agricultural

Service Station (Far Eastern Economic Review,17 November, 1994)to supply the scarce resources. These service stationsfunction just like village collectives. These

newly emerging trends need to bestudied more deeply for a long period of time to

accept them as the correctoptions in agrarian restnjcturing.

As a whole the ultimate aim of all reform efforts must be the achievement of social

transformation and emergence of an egalitarian stmcture. The reform in question can

generate social transition of permanent nature if the basic factomnderiying this equality

is the power or leverage of the rural population tomake things happen. Chinese

peasants have acquired this leverage through theirparty-status. Chinese communist

party is peasant oriented. Hence the reforms areable to achieve an egalitarian status

for the peasants.

Hence according to the nature of orientation (peasant orientation) and comprehensive

coverage of the reform extending over the whole of China, Chinesereform is an

authentic one which has directed resources to the rural areas,empowered the poor and

democratised purchasing power thus creating a basis fon-apid industrialization and

contributing to the overall growth of the economy.lt is a comprehensive, socialistic,

egalitarian reform reaching out the remotecomers of mral China and imbibing the

people with the urge for socialtransformation suited to their own need.

inB