Chinese Economists on Economic Reform - Collected Works of Du Runsheng

Du Runsheng, China Development Research Foundation

• Publisher: Taylor & Francis
• Year: 2013
• eBook ISBN: 9781135080785
• Edition: 1
• Topic: Social Sciences
• Subtopic: Ethnic Studies
• Index: Social Sciences

This book is part of a series which makes available to English-speaking audiences the work of the individual Chinese economists who were the architects of China's economic reform. The series provides an inside view of China's economic reform, revealing the thinking of the reformers themselves, unlike many other books on China's economic reform which are written by outside observers.

Du Runsheng (1913-) has made major contributions to policy making on land reform, rural development and science policy. Politically active from the 1930s, when he served as a guerrilla leader fighting Japanese aggression, and in the 1940s, when he was involved in the War of Liberation (1945-49), he has held many Chinese Communist Party posts. He was secretary-general of the Chinese Academy of Sciences in the late 1950s, responsible for drafting the 1961 policy document which urged respect for intellectuals. Attacked and persecuted during the Cultural Revolution (1966-76), he was for most of the 1980s in charge of research on rural economic reform and rural development strategies.

The book is published in association with China Development Research Foundation, one of the leading economic and social think tanks in China, where many of the theoretical foundations and policy details of economic reform were formulated.

1
On a responsibility system for agricultural production^*

(September 14, 1980)

1

The main subject of this draft document is a responsibility system that emphasizes ‘contracting production down to the household level.’ The document was drafted by the State Agricultural Commission on behalf of the Central Committee of the Party. It is called, Several issues on further strengthening and improving the responsibility system for agricultural production.

We absolutely must adhere to a socialist orientation, but at the same time we need to take actual conditions as our starting point, connect with farmers, respond to their needs in order to guide them in a forward direction. When we allow the contracting of production to be done at a household level, we should take local conditions into account and not have a blanket policy, ‘one knife trying to cut through all.’ We need to change mistaken practices that for years were the norm and that were divorced from the masses. At the same time, we cannot reject and indiscriminately criticize everything, adopt yet another rigid approach. For example, we must differentiate between this policy and ‘capitalism,’ just as we differentiate between egalitarianism and socialism. We cannot rely exclusively on political struggle to resolve all economic issues. Coercion or forceful measures in dealing with farmers are forbidden; we must persuade, educate, and use economic motivation.

With regard to cadres, we must encourage them to emancipate their minds and think more broadly. They should dare to explore, conduct surveys, study things in a new light. Nobody should be taken to task for speaking his mind; both sides of any issue should be considered.

2

The draft clearly states that the unshakeable foundation for realizing ‘modernized agriculture’ is the collective economy [i.e., collective ownership of the land].

3

In confirming the direction of collectivization, the draft does not deny that our experience in this regard is far from mature. We still need to find ways to manage collective economies that embody the principle of ‘distribution according to work’ so that we get away from the old problem of ‘no more pay even if you work more, and no reward for working better.’ We still need to figure out how to motivate commune members to really care about the collective economy. Many aspects may be addressed by undertaking all kinds of trial projects and different kinds of experimentation.

Encouraged by the spirit of the ‘11th Third,’ cadres and ‘the masses’ throughout the country have been liberating their way of thinking, carrying out bold experiments, and doing a great deal in setting up production responsibility systems. Statistics are not yet complete, but data on this year’s wheat harvest indicates that 90 percent of production brigades across the country have established production responsibility systems of one form or another.¹ Among those, quota-based labor contracting accounts for 55 percent, while contracting production quotas to individual groups accounts for 25 percent. Other forms of responsibility systems include contracting production quotas to individual laborers as well as to individual households. Since June, ‘household contracting’ has gained momentum, and preliminary figures show that this form accounts for about 20 percent and is now spreading toward the central areas of the country. As a result, different points of view have come to the fore.

In fact, the range of things being debated over the past two years applies to far more than just this one issue. Debate on ‘production responsibility systems’ has begun to question the structure of people’s communes. Many theoretical and practical issues have been raised that deserve attention. Issues include, for example, whether or not a unification of ‘government and commune’ in the same system is appropriate. Does ‘publicly owned’ mean the same thing as ‘collectively owned,’ and is it inevitable that a ‘collectively owned system’ will transition to a system of ‘ownership by the whole people’? Will it be a ‘transition to one system,’ or will it be a ‘merging of two systems’? How should we handle the question of ‘individual economies’ [private business] serving as supplementary to the State economy? These past two years have seen the most vital thinking on the rural front since the very founding of the country. And we should encourage this.

4

With its large and densely populated land mass, and with its uneven development, China’s agriculture inherently has to have a diversified structure. For this reason, the structure of China’s socialist collective economies must also be diversified. Premature determination of what forms economic organization should take, and especially determining these things in too subjective a manner, is not only detrimental but impossible. Only through diversifying can we find appropriate structures, and, when we settle upon structures, they will still be diversified structures.

Diversification will include some forms that are appropriate to areas that have relatively high productivity and some forms that are simply in transition in areas of lower productivity. Marxism never rejected the need to use forms of organization, as well as forms of struggle, that were appropriate to the needs of people and the level of development. Those could be lower levels of organizational structure and also diversified forms. Given the very nature of transition, such forms are unstable. Their ‘nature’ is not yet fixed, and they can always be improved upon. Some regions moved forward too quickly in the past [in moving toward idealized socialist structures], to the extent that people could not keep up. These places now need to modify their path, and even make an about-face in some cases, in order to galvanize the masses before moving forward again. In the end, this will help us to achieve our final goal.

In the very early stage of collectivization, we used mutual aid groups and other semi-socialist forms that were ‘jointly operated’ and based on private ownership. The ‘general line’ [policy] for the transitional period was set forth in 1953. The pace of collectivization accelerated at the end of 1955. Some places wanted to ‘reach heaven in a single bound,’ turn self-sufficient farmers into members of advanced cooperatives straight away. Today, the masses are voluntarily moving a step backward [in this process], only in a different way.

Over this past year, one could sum up what people wanted as follows. First, pay for work should be linked to output. Second, the scope of operations should be smaller, go from production team to group, to household and to individual. ‘To household’ means returning to household-based operations.

5

What is the ‘nature’ of this process of contracting production quotas to individual households, that is, is it of a ‘socialist’ nature or not? It is a responsibility system under a socialist economy. We confirm that the land is still collectively owned and certain links are maintained with collective operations, though to different degrees. Contracting all responsibilities down to the level of the individual household, total contracting, means that the household operates independently and is fully responsible for its own profits and losses, but the household is still linked to a collective through the ‘cheng-bao contract.’ It remains part of the collective economy. This is different from the former style of self-sufficient farmer. It should be regarded as a mode of operation undertaken in the context of a socialist society, namely a form of responsibility system.

There are differing views on this subject that we can leave to be resolved in the future through actual practice.

6

The draft brought out the idea that, in contracting production at the level of individual households, different regions, communes, and production teams should take locally appropriate approaches. In remote mountainous areas and poverty-stricken areas that have long relied on the ‘three dependencies,’ and in places where the collective economies are in such bad shape they cannot survive, production may be contracted to the level of individual households. In more normal situations, production quotas may be contracted to specialized groups or specialized teams. [Note: the three dependencies means that rural communities ‘depend on’ the State for ‘resold grain’ (that the State ‘sells’ back to the producing entity in cases of dire necessity), for loans to carry out production, and for relief aid for daily survival.]

Nationwide, there are 5.066 million rural accounting units. Based on the 5.04 million accounting units for which there are figures, 16 percent have an average [annual] income per commune member of less than RMB 40. Another 27 percent have an average [annual] income of less than RMB 50, and 38 percent have an average [annual] income of less than RMB 60. At an income of RMB 50, there is nothing left after expenses are deducted for food and fuel. As for per capita grain rations, 19 percent of the dry farming areas get less than 150 kilograms per person while 18 percent of the paddy rice areas get less than 200 kilograms per person. With an average of 159 people in each product ion team, what we are talking about here is 151.48 million people who are subsisting at the minimum level. About 60 percent of the poorest production teams, with an annual per capita income of less than RMB 40, are in the nine provinces and regions of Yunnan, Guizhou, Henan, Shandong, Gansu, Ningxia, Inner Mongolia, Fujian, and Anhui. These account for 20 percent of the rural population. First, these places are poor. Second, their collective economies have no appeal, and the farmers have no confidence in the system. Third, at the leadership level all kinds of measures have been tried to change things, but there seems to be no inherent engine for change and nothing has been achieved. When introducing various forms of responsibility systems, this status quo should be taken into account. Contracting production down to the level of individual households should not be the only method for resolving fundamental issues of food and clothing, but it should help motivate people. When the masses put more into their labor and more into tending their fields, they will no longer have to rely on the State for resold grain and aid relief. When collective economies aren’t doing well, people lose enthusiasm, and when that happens, collective economies get worse. It’s a vicious cycle. To break it, contracting production quotas to individual households can be a fairly good option. Surveys indicate that output greatly increases after implementing the system. It may have some negative side effects, but these can be mitigated by guidance in how the system is implemented. In the places noted earlier, those communes and production teams that have been operating well should further improve their operations.

In other regions, about 20 percent of production teams can be regarded as fairly solid while the rest are fair to middling. If the masses in these regions do not want to contract production quotas to individual households, they should not be forced to do so. The strong suit of the ‘solid’ and the ‘fairly solid’ production teams is that they hold the dominant share of agricultural resources in the country. They have an overwhelming percentage of the RMB 80 billion in publicly held reserve funds, and they hold the lion’s share of nation’s 700 million mu of irrigated land and 180 million horsepower worth of farm machinery. This economic strength has a certain attraction for commune members. If the scale of production is too large to implement contract systems, it can be divided up. Teams should adopt responsibility forms that are appropriate to large-scale production (such as contracting production quotas for certain parts of the labor – in other words, using division of labor – and farm field management linked to output). As much as possible, methods should be adopted that address practical problems. There are all kinds of problems, and people should be proactive in finding solutions. If the masses are spontaneously contracting production quotas to individual households, they should be actively guided – they should not be obstructed, but they also should not be left to drift along on their own.

7

Production communes and teams that have contracted production down to individual households account for about 20 percent of the nationwide total so far. This is a rough estimate, not to be taken as a firm figure. Some production teams should not introduce this system or should be allowed not to do so. Those that should not introduce this system but have introduced it must not be arbitrarily corrected. There are others that should introduce but have failed to do so. In order not to set up confrontational situations with the masses, people should be allowed to choose on their own. An appropriate form of guidance should be offered if the masses in certain places want to proceed. The right moment should be selected for such guidance; it should not be forced. Stabilizing the overall situation and improving the overall outlook is the main goal. In terms of specifics, guidance should be tailored to different regions and different categories so as to prevent things from drifting along. Letting things drift along can lead to damage.

8

One major policy consideration must be addressed in the course of discussing production responsibility systems. How do we treat the individual laborers who operate independently in rural areas? As long as socialist public ownership remains dominant, rural areas should also allow the existence of diverse other forms of ownership. A whole series of policies should be worked out to deal with issues in this regard. The work is going to have to be done gradually over the course of future reforms.

Notes

* This is the author’s speech at a meeting convened by the Party Central Committee and attended by the first secretaries of the party committees of all provinces, autonomous regions, and centrally administered municipalities. After this meeting, the CPC Central Committee issued the Notice on Printing and Distributing the Several Issues on Further Strengthening and Improving the Responsibility System for Agricultural Production (namely the Central Document No. 80–75). This document was drafted by the former State Agriculture Commission on behalf of the Party Central Committee, and this speech was an explanation of the draft text.

1 The diverse forms of production responsibility systems at the time can be roughly classified into two major categories: contracting with remuneration linked to output and contracting with remuneration unlinked to output. Contracting with remuneration unlinked to output mainly refers to the piece-rate labor contracting for quota remuneration, namely quota-based labor contracting. In general, a production team contracts its farm work to working groups or individuals according to farming seasons. After tasks are fulfilled according to qualitative, quantitative, and time requirements, the production team gives them work points according to their quotas. If remuneration is linked with output, the main form at the time is contracting production quotas to individual groups. In general, a production team fixes land, labor, farm animals, and farm tools to working groups and contracts the three targets of output, labor, and production cost to these groups. After tasks are fulfilled, the contracted portions are handed over to the production team for unified distribution, and the production team gives them production cost and work points according to set targets. While contracting production quotas to individual groups, some places contract production quotas to individual laborers or households, hence the forms of contracting production quotas to individual laborers or households. Some other places contract farm field management responsibilities to individual persons with remuneration linked to output, which is called the farm field management system with remuneration linked with output. Land contracting also takes diverse forms. In places where division of labor is undeveloped and planting is a predominant occupation, land is generally contracted to individual persons on an equal basis. Some other places also contract grain ration farm field according to the number of persons and contract responsibility farm field according to the number of laborers. In places that have certain forms of division of labor and relatively more items of production, they contract production quotas according to the lines of specialization, namely the output contracting system based on specialized division of labor or the specialized contracting system with remuneration linked to output. In distributing labor fruit, some places contract all responsibilities for individual households, in which distribution based on work points is abolished. This is commonly called contracting all responsibilities for individual households. In other words, the contractor retains earnings and surplus products after handing over a certain amount in kind or in cash to the collectives and fulfilling the task of selling products to the state according to the terms set between the contractor and the collective economic organization.

2
Some opinions on rural economic policies^*

(February 1981)

From January 1 to 8 this year, I accompanied Comrade Zhao Ziyang on a visit through the three provinces of Hubei, Henan, and Shandong. We toured the five prefectures of Yichang, Jinzhou (the worst-hit disaster area...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Series preface
• About the author
• Author’s preface
• 1 On a responsibility system for agricultural production (September 14, 1980)
• 2 Some opinions on rural economic policies (February 1981)
• 3 The historic transformation in [the Party’s] rural work (September 4, 1982)
• 4 The household contract system linking remuneration to output represents a new development in the rural cooperative economy (November 23, 1982)
• 5 Explanations on some issues regarding current rural economic policies (December 31, 1982)
• 6 Explanation of the CPC Central Committee’s notice on rural work in 1984 (December 18, 1983)
• 7 Several ‘social objectives’ behind developing a rural commodity economy (December 20, 1984)
• 8 Getting rich first, later, and together (December 20, 1985)
• 9 Raise the economic standing of agriculture through reliance on science and technology (April 11, 1986)
• 10 Foreign-oriented development strategy for coastal regions (December 3, 1987)
• 11 Economic development in mountainous areas is a major focus for research (October 1988)
• 12 Reforms in socialist countries must pass the ‘test of the market’ and the ‘test of democracy’ (May 9, 1989)
• 13 The objective of reform: Establish a market economy under socialist conditions (October 1992)
• 14 Cooperative shareholding systems featuring land-to-shares conversion (January 1994)
• 15 Reform of ‘supply-and-marketing’ cooperatives (November 7, 1995)
• 16 Stabilizing the household contract system: How to understand the ‘two leaps’ correctly (January 1996)
• 17 Adhere to strategies that allow for sustainable development (December 11, 1996)
• 18 Contracted family operations should be kept stable for a long time (October 27, 1998)
• 19 Farmers should be ‘free men’ (December 15, 1998)
• 20 Sustainable utilization of water resources (March 11, 1999)
• 21 Use the economy to motivate people, and use democratic politics to unite people (October 1999)
• 22 Historical status of small- and medium-sized enterprises (October 24, 1999)
• 23 Agricultural industrialization and ‘dragon-headed’ [leading] enterprises (November 10, 1999)
• 24 Thoughts on the Wenzhou economic model (May 25, 2000)
• 25 Brief remarks on innovation (July 18, 2000)
• 26 Prospects for and vitality of a ‘mixed economy’ (May 13, 2001)
• 27 Give farmers national citizenship (June 1, 2001)
• 28 Industry must repay agriculture (December 5, 2001)
• 29 Raise the degree to which farmers are represented through organizations (December 6, 2001)
• 30 A recommendation to exempt farmers from taxation (November 9, 2002)
• 31 The non-state-owned economy should be owned and operated by, and for the benefit of, the people (November 11, 2002)
• 32 A nonpublicly owned forest industry (January 22, 2003)
• 33 Systems innovation in rural communities (November 6, 2003)
• 34 Thoughts on poverty alleviation (April 3, 2004)
• 35 Deng Xiaoping and China’s rural reform (August 20, 2004)
• 36 ‘Urbanized towns’ are the result of economic development (August 28, 2004)
• 37 The critical element in our overall planning for urban–rural development: China’s rural migrant workers (February 19, 2006)
• 38 Changing ‘due consideration for equity’ into ‘a concerted focus on equity’ (August 15, 2006)
• 39 Choosing how we go about ‘building a new countryside’ (September 26, 2006)
• 40 Transform agriculture into a ‘knowledge economy’ (February 15, 2007)
• 41 Selecting the proper path for economic development (September 2007)
• 42 Adhere to ‘socialism with Chinese characteristics’ (April 2008)
• 43 New options for economic development (June 3, 2008)
• Main works of Du Runsheng
• Index