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Assess the role of household responsibility system in contributing to China

economic development since 1978.


Since year 1978, China began to make major reforms to its economy. In 1979,
Deng Xiao Ping modified the agricultural system and introduced the Household
Responsibility System. The government raised agricultural procurement prices
and allowed farmers to produce from private plots. Impact was immediate as it
lifted large number of peasants out of poverty. By 1984 more than 99% of
production units had adopted the HRS. The results from the reforms were good,
agricultural production increased the huge stagnating rural economy was
revitalized and the government gained more support and had political stability.
However, not all of the successes as some only have short term effects.
The HRS permitted authorities to dismantle the collectively farms, which was
stagnant and caused the rural income to lag far behind those of city dwellers and
leading to an increase in rural income as a result of rising agriculture production.
The farmers were allowed to make earnings from their own produce thus it
spurred the farmers to increase their efficiency and productivity as it would mean
more profits for them as well. As such, productivity rate was high and the rural
economy began to prosper because farmers had abundant surplus to sell in the
markets. This had lifted many farmers out of poverty and boosted the rural
economy after being stagnant for so long. This further exemplifies Dengs slogan
whether it is a black cat or a white car, as long as it catches mice it is a good
cat. Deng wanted the most pragmatic approach for the nation, and thus
because this system helped the rural economy, it is a good cat. Grain
production actually increased from less than 300million tons in 1979 to
414million tons in 1985. This solved the food security issue for the government
and ensured political stability as it proved the government ability to secure food.
However, as the farmers diversified their output into handicraft industry, animal
husbandry and others, leading to a fall in grain production. Because the system
allowed farmers to choose what they wanted to plant, the farmers switched to
planting crops that would bring in the most profits to them thus neglecting the
planting of basic and unprofitable crops such as grain. The diversified grain
production to other higher profit returning agricultural products such as fruits,
vegetable and cut flowers. As such there was no food security in the rural areas,
and hence this threatened the political stability of China too. In addition, the
government has initially assumed that the peasants would turn their wealth into
investments to boost productivity. However, the government has miscalculated
as farmers spent their expenses on luxury goods instead of spending their profits
on making the investments that will raise productivity such as machinery. The
urban reforms also attracted the peasants to leave the rural areas and search for
better living standards in the urban areas; it meant that the productive forces of
peasants were no longer available for the plotting of farms. This is a long term
disadvantage as lowered productivity would adversely affect the rural economy
which slowed down Chinas economic growth as a whole. Also, few foreigners
invested in the rural areas and thus the FDI of these areas fell. As a result, the
problem of food security surfaced because of the HRS and the government then
increased the grain prices to boost production and year 1995 to saw the
introduction of Grain Bag Responsibility System Despite the increase in
agriculture production, the interventions were proved to be too costly for the
state as subsidies were enormous. The HRS did solve the food security issue for
China but all was done at a huge price.

Another success of the HRS is the revitalization of Chinas huge stagnating rural
economy as the increase in agriculture production generated wealth, leading to
the rise of TVEs. The implementation of the of the HRS led to the increase in
Township and Village Enterprises (TVEs). This increased authority of local
government officials and plant managers in industry thereby permitting a wide
variety of private enterprise in services and light manufacturing. Since the
economic reforms began, the township and village (TVE) sector the Chinese
industry has grown explosively and has become one of the main driving forces of
the national economy. The HRS diversified the rural industrial ventures and gave
birth to many enterprises. Number of enterprises increased as they entered all
sectors of the economy, the textiles to consume durables. Thus, the growth of
the rural economy was boosted. With political and social stability, FDI increased
as foreign investors were attracted to set up businesses in rural areas of China.
This led to the increase in economic productivity, therefore accounting for the
success of the HRS. However, despite the contributions to the overall economic
growth, HRS still has its drawbacks. Most rural industries rely on cheap labour
rather than machinery. This results in low levels of productivity and low product
quality. The initial HRS success quickly plunges as the central government fails to
retain their development in the rural area. Agriculture production falls
dramatically due to the over reliance on increasing complex policy such as the
agriculture price support to influence rural output. Corruption by country officials
add on to the piling discontent. In order to extinguish the raising unhappiness,
CCP allows election of village leader in the rural area. Although this happens at
the grass root level, but it open the first door of freedom in China, exposing CCP
ideology void. Furthermore, it also exposed the government fear of mass
demonstration which could jeopardize her rule. And true enough, in 1989 mass
protest on call for economic reforms and democratic reforms almost
compromised CCP rule.
The HRS in the rural reform is successful in strengthening CCP in the initial stage
and raised support for CCP. As agriculture production in 1980 surge from
320millions to 407millions in 1984, the CCP manage to ease the demand of food
supply from the 1billion populations. The Chinese disgruntle is further dissolved
by the success of HRS which led to the development of private and town sectors.
As more peasants free themselves from poverty, demonstration against the
Central government significantly dropped. The idea of signing land contract with
the farmers, flourish the free market also contribute to the growing Chinese
market. The wealth generated in turn allows CCP to reduce her piling domestic
problem and strengthen her rule. However, in the long run, the implementation
of the HRS also resulted in a disgruntled countryside. Because of the HRS, many
east coast peasants have moved into labour intensive, high-value farming,
producing more profitable products for domestic consumption and export.
However, vast number of peasants, especially in central and north-east China,
has seen their agricultural income decline in recent years. This resulted in the
income disparity between the coastal regions and the central areas of China,
causing the people at the countryside to be utterly dissatisfied with the
government. The existence of regional disparity is still present, and thus coupled
with the unfairness of the policy the people living at the countryside often rebel
against this injustice hence, this shows that welfare of the people living in rural
areas was neglected in the long run when the HRS was implemented.
The HRS is considered a huge success as the limitations that comes along with it
could be dealt with. Although the HRS resulted in the insecure amounts of grain
products, the government is quick enough to implement the Grain bag Policy to

act as a solution. Though the successes of HRS seems to be wearing off, the
reform is still herald as the foundational reforms that ultimately starts Chinas
economic transformation. The limitation of the HRS will not be a threat to Chinas
economy if the government continues to drive the various policies that will act as
s solution to these problems. Thus, the HRS is a huge success as it raises the
confidence in driving future economic reforms and boasted Chinas economy as
well.
The hukou reforms have done little to solve the problems associated with rural
migration to Chinese cities