TNAG-2293-FCO40-3305-Official-visits-from-Hong-Kong-to-China-1991 — Page 90

Rural Economic Reform

· 40

6.

In 1978, it was

difficulties.

economic reform in the rural areas as its first priority.

recognized that more than 200

million people in the rural areas still confronted great

Consequently, the Government started

7.

peoples

First, it had been concluded that the system of

communes, which resulted in relatively low levels

of production, was not the most

present situation.

appropriate for the

Consequently, the present contract

system between the state and farmers was established.

Between 1978 and 1984, there was great progress in

agricultural production, and China became self-sufficient

in grain supply.

there were moves to develop both

8.

Secondly,

planned

certain

and free markets.

free to

as

a

After farmers had sold a

percentage of, say, grain to the state, they were

sell their own products on the free market and,

consequence, were given greater incentives.

However, in such a huge country as China, planning had to

exist if

problems were not to result. It was necessary

for the Government

to

give overall guidance regarding

but,

within this framework, the

to

produce.

The city government

agricultural production

farmers had freedom

would draft contracts

in the autumn with the farmers

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