Document Type

Master's Culminating Experience

Publication Date



China’s rural reform is composed of two parts - changing the old agricultural system and gradually establishing the market mechanism. The agricultural reform is characterized by the adoption of the household responsibility system. The goal of the rural reform is first to achieve effective allocation of labor and land, and second to realize equity and efficiency in rural earnings distribution.

The old agricultural system over-emphasized equality but ignored efficiency. It aimed to keep full employment and a standard wage. This gave rise to an income distribution characterized by the principle “everybody has a share in eating from the same big communal pot”, which means that food, income, housing, etc. are evenly distributed to everyone no matter how much one contributed and how well one performed. In fact, rewarding all workers equally regardless of their performance was unbearably inequitable, and eventually dampened peasants’ enthusiasm and motivation to acquire skill and education needed in a technologically progressive society.

The market-oriented reform is to create conditions for the goal of achieving economic efficiency and social equity. These conditions include an incentive system, which can stimulate better performance from all individuals participating in agriculture; fast and flexible response to market demand; and the enforcement of personal responsibility.