Chapter 69 Incremental Reform: An Industrialization Movement Started by Peasants

From 1978 to the following 15 years, almost none of China's most important economic events took place in cities, but in the vast countryside outside the "city walls".This is the most incredible and fascinating part of this round of economic transformation.Millions of farmers without any industrialization education rose from the grasslands and became the "gravediggers" of the planned economy. The impetus for change comes from the land.The people's commune system, which has been implemented for more than 20 years, has firmly tied farmers across the country to the land. The disadvantages of "big pot rice" are clearly evident, and the agricultural efficiency is so low that farmers cannot survive. In 1978, Anhui Province, a major grain-producing province, experienced drought in the spring, and the province’s summer grain production was greatly reduced. The farmers in Xiaogang Village, Fengyang County were desperate, and were forced to contract production on a household basis.The dry contract system was very effective. In the second year, Xiaogang Village achieved a bumper harvest. For the first time, it paid public grain to the state and repaid the loan.With the strong support of Wan Li, then Secretary of the Anhui Provincial Party Committee, Xiaogang Village’s large-scale dry contract experience was spread throughout Anhui overnight. The government also began to implement household contracting.The French Enlightenment thinker Montesquieu once said: "The low yield of the land is not mainly due to the fertility of the land, but whether the residents enjoy freedom." This statement was confirmed again in China in 1978.

Household production contract is a negation of the people's commune system.As a matter of fact, as early as 1961, Anhui Province had carried out the joint production household responsibility system of "subcontracting cultivated land according to the labor force and recording work points according to the actual grain production". This experiment was strongly opposed by Mao Zedong, and Zeng Xisheng, Secretary of the Provincial Party Committee, agreed Deng Zihui, head of the Ministry of Rural Industry, who contracted production on a household basis, was dismissed successively for "making serious mistakes in direction". Seventeen years later, the experiments in Anhui and Sichuan are still being questioned to varying degrees within the party. Zhejiang Province, which is adjacent to Anhui, did not begin to implement the household contract responsibility system until 1982.Deng Xiaoping resolutely supported household production contracting, and repeatedly promised that "the joint production contract responsibility system will remain unchanged for 50 years." In 1984, the No. 1 document of the Central Committee of the Communist Party of China proposed that "combined production contracting shall remain unchanged for 15 years." In 1994, the Central Committee of the Communist Party of China and the State Council issued "Several Policies and Measures Concerning Current Agricultural and Rural Economic Development", proposing that "after the expiration of the original farmland contract period, it will be extended for another 30 years".

"Returning" the land to the peasants through the contract system is an incomplete land reform that does not touch the nature of the land and sows the seeds for future land disputes.However, in the 1980s, this reform was very effective and solved the food problem once and for all. Since then, China’s reforms have gone through several twists and turns, but there has never been a food crisis.Another major effect is that household contracting frees farmers from the shackles of the land. In the southeast coastal areas where there is a serious shortage of land and the concept is relatively advanced, a large number of idle people begin to "overflow" from the land. Under the bondage of the ticket economy , They were unable to enter the city, so they "washed their feet and went to the fields", and began to "ignite fires in villages and smoke in every village" outside the city, engaging in various non-agricultural industries.These very rudimentary industrial workshops were called commune and brigade enterprises in the early days, and later called township enterprises, that is, the revival of the private economy after its "extinction" in 1956. The general planned economic system has implemented "ant-biting dike"-style erosion and destruction.

Township and village enterprises are all deployed in "food and clothing" and other livelihood industries, which is also the weakness of the state-owned economy characterized by heavy industry investment.Almost all the techniques of the farmers were "stolen". Many technicians in state-owned factories drank tea and read newspapers in the factory during the day. Sunday Engineer".The equipment and raw materials in the state-run factories were resold to the countryside, and even the brands were leased and sold to township enterprises at very low prices. The food, clothing, and bicycles produced by farmers cannot enter the state-run distribution system constructed by Chen Yun and others.The annual Guangzhou Commodity Fair is the most important commodity trading conference in the country. Many private entrepreneurs later recalled: "We were not qualified to enter the fair, so we used three methods. The third is to set up a stall outside the meeting place and build an illegal meeting place.” The third method has given birth to the so-called professional market, that is, farmers build various professional trading places in some remote rural areas or urban-rural areas. , such as button market, woven bag market, food market, etc.In Zhejiang Province, there were more than 3,000 such professional markets at one time, with an average of 30 in each county. Most of them have not been approved by the government, and they are often expelled and confiscated.Around these professional markets, related professional factories have been nurtured due to active transactions, forming a "two-wheel drive" industrial structure and a "one site, one product" block economic model.

With the expansion of production and trade scale, township and village enterprise owners began to have financial needs.According to the financial policy at that time, all banks were not allowed to issue loans of any nature to private enterprises. In September 1984, Fang Peilin, who worked as a mail room worker in a state-run hospital, set up the first private bank in New China - "Fangxing Bank" in Qianku Town, Cangnan County, Zhejiang Province.However, the bank was shut down by the local Agricultural Bank after only one day of opening. Since then, private finance has been forced to go underground, and a very large, mole-like underground financial market has been born.The discriminatory policies of state-owned banks against private enterprises have lasted for decades. In November 2010, Standard Chartered Bank released the "White Paper on the Financing Ecology of Small and Medium-sized Enterprises in China", pointing out that more than 40% of private enterprises have never received Almost all small and medium-sized enterprises are forced to "short-term loans and long-term investments" and rely on underground financiers.

In an environment of extensive management and lack of legal protection, the private economy still develops surprisingly.By the end of 1986, the total number of township enterprises had grown to 15.15 million, with a labor force of nearly 80 million, and a total industrial output value of 330 billion yuan, accounting for 20% of the GDP. , Chinese peasants built a new industrialization system outside the city which is extensive and reckless but strong. In June 1987, when Deng Xiaoping received the delegation from Yugoslavia, he said: "The biggest gain we did not expect in the rural reform is the development of township enterprises, which suddenly emerged to engage in various industries, commodity economy, and various industries. Small businesses have sprung up suddenly. This is not the achievement of our central government... This is something that I personally did not expect, and neither did many comrades. It is such a sudden effect."