adopted the household contract system, its total grain output reached 66,000 kg, four times the average annual output during the previous 10 years.

In September 1980, the Central Committee of the Communist Party of China issued the famous No.75 document, confirming the household contract responsibility system in agricultural production. The household contract responsibility system with remuneration linked to output was then promoted in most rural areas around the country.

Song Hongyuan, Director General of the Research Center for Rural Economy of the Ministry of Agriculture, noted that the household contract responsibility system not only emancipated productive forces and mobilized farmers’ initiatives, but also respected farmers’ creative spirit, which was the inherent impetus for the development of rural reform to achieve new breakthroughs.

The household contract responsibility system created by Chinese farmers increased both their income and agricultural production. Statistics released by the Chinese Academy of Social Sciences (CASS) indicate that from 1978 to 1984, the country’s agricultural output maintained an average annual increase of 7.7 percent. Compared with 1978, China’s agricultural output value in 1984 increased 42.23 percent with constant prices. Farmers’ annual per-capita income rose from 134 yuan ($19.62) in 1978 to 4,140 yuan ($606.15) in 2007, about a 31-fold increase.

Market-oriented approach

Before the reform and opening-up policy was adopted, farmers could not sell grains on the market. Instead, the state made uniform purchases of grain, cotton and other farm produce. After the household contract responsibility system was introduced, farmers produced much more grain and cotton, and the storage depots of the state were full.

In 1985, the state reformed the farm produce purchasing system, abolishing its uniform purchase of grain and cotton and adopted contractually fixed purchase quotas. Anything produced in excess of the quotas could be freely sold on the market. Prices for other farm produce now are determined by market demand and supply.

After 1985, huge amounts of farm produce entered the market, and farmers’ markets came into existence in densely populated areas. In 1992, when the government decided to set up a socialist market economy, the market mechanism for farm produce had already been established, replacing the previous planned economy and playing a major role in regulating the supply and demand of farm produce and the allocation of agricultural resources.

When the rural areas became more market-oriented, many township enterprises emerged, and some surplus laborers began to leave the land and go to work there. In 1987, township enterprises throughout the country employed more than 80 million laborers. Their output value reached 476.4 billion yuan ($69.75 billion), surpassing the total output value of agriculture for the first time. They also formed a new social group called “migrant workers.”

The birth and development of township enterprises not only accelerated the transformation of rural economic structure and introduced a means of industrialization in the countryside, but also provided new ways for farmers to increase their incomes and make significant contributions to the sustained and steady growth of the incomes of Chinese farmers. According to figures released by the National Bureau of Statistics, in the period 1978-2006, the annual salaries of township enterprise employees increased from 308 yuan ($45.10) to 8,369 yuan ($1,225.33), and the proportion of salary income to the total per-capita income of farmers increased from 8.2 percent to 34.6 percent. Since then, township enterprises have served as a major factor for the growth of farmers’ incomes.

The marketization and industrialization of the countryside also sped up the development of small towns in some rural areas. According to CASS figures, in 2007 China’s urbanization rate reached 44.9 percent, 30 percentage points higher than that at the beginning of the reform and opening-up policy.

From cultivated land to forestland

Besides cultivated land, China has more than 160 million hectares of collectively owned forestland, which is an important part of rural resources and involves the interests of more than 400 million farmers.

Like the farmers in Xiaogang Village, in September 1998, the farmers in Hongtian Village in southeast China’s Fujian Province, whose income mainly depended on mountain forests, contracted the collectively operated forestland and hillside fields to households, inaugurating China’s forestland reform.

A Xinhua News Agency report said the contracting of cultivated land and the contracting of forestland were very similar reforms that changed the basic rural land management system and put farmers in charge of land management through contracts.