Letting farm families sell their surplus made effort pay. Farm output and rural incomes rose fast in the early 1980s.
Reform began in the countryside. In late 1978 farmers in Xiaogang village, Anhui, secretly divided their collective land among households. The idea spread.
Under the Household Responsibility System, families leased land and delivered a fixed quota to the state. They could sell any surplus on the market. The state also raised the prices it paid for crops in 1979. By the mid-1980s the communes had been dissolved.
Output rose fast because effort now paid. Grain production rose from about 305 million tonnes in 1978 to about 407 million tonnes in 1984. Rural incomes more than doubled.
Township and village enterprises (TVEs) grew rapidly. Owned by local governments, they made consumer goods and building materials. TVE jobs rose from about 28 million in 1978 to about 135 million in 1996.
Rural reform freed workers and savings for industry. Its success also built support for wider reform.
- Xiaogang
- Late 1978: farmers divide land.
- Grain output
- About 305 to 407 million tonnes, 1978-1984.
- TVEs
- About 135 million jobs by 1996.
Worked example: Explaining rural growth
Why did farm output rise so fast?
- Incentive: families kept what they produced above the quota.
- Prices: the state paid more for crops.
- Industry: TVEs gave rural workers new jobs.
- Spread: local success encouraged national adoption.
Watch out for this
Rural reform was planned in detail by the central government.
It began with farmers' own initiative in places such as Xiaogang. The state then approved and spread it after it worked.
Check your understanding
What did the Household Responsibility System allow?
- Families leased land, met a quota and sold their surplus.
- Families bought land outright as private property.
- Communes were made larger.