Deng’s Veggie Patches and Workshops – Rural and Urban Decollectivisation and the ‘Open Door’

A “rural household responsibility system” was first tested then introduced nationally. This took the peasants back effectively to where they were with Mao’s initial reforms. Farmers were again allocated land according to the numbers of mouths to feed and numbers of able ‘toilers’ in immediate households on a household basis. Management of many formerly collective village assets such as fish ponds, orchards, chicken and pig farms, trucks and small factories was contracted to ‘specialist households’. Anything produced from this land above a state quota (compulsorily sold to the state) could now be marketed privately and private markets appeared. This Decollectivisation process took place from 1978 to 1982.

Units of ‘Surplus labour’ to requirements in the countryside (people) were now also permitted to seek their fortunes in the growing cities (more on the social effects of this style of urban development in a later post).

The final cosmetic change occurred from 1982 to 1985 and that was the change of names of units of production from things like brigades and communes to the more politically neutral ‘township’ and ‘administrative village’ respectively.

The Decollectivisation in the cities was necessarily a little more complex as factories tended not to be as neatly divisible as most plots of farmland. Managers were now permitted to make profits and decide for themselves to a greater extent how that profit was to be used. As I mentioned earlier they were also now in charge to a large extent of the incentives they could offer to their employees and were also now encouraged to study the ‘sciences’ of management and business. Labour contracts were introduced.

‘Joint-ventures’ (with limited foreign business components) began to be legalised and then promoted. A local fully private sector also began again to be gradually permitted more and more. This started in 1981 with a limit of eight employees. The limit was removed in 1988.

Special Economic Zones (SEZs) were set up to promote business development (certain established coastal cities were also treated as SEZs). Most were strategically located near the potential investment sources of Hong Kong and Taiwan. Special SEZ incentives enticed foreign investment (and technology) to the zones (tax breaks and minimised labour costs on offer). The first four SEZs (Shenzhen, Zhuhai, Shantou and Xiamen SEZs) were opened for business in 1979. Hainan Island followed. Fourteen coastal cities (Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nanjing, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai) followed in 1984. 100% foreign ownership was permitted in SEZ-located businesses from 1986.

Priority development areas such as Hainan Island, Pearl River Delta Zone, the Yangzi Delta Region, the Minnan Delta and Huaihai Economic Regions, the Liaodong and Shandong Peninsulas, the Shanghai Economic Zone and the North China Industrial Energy Zone and export processing zones such as Chengdu, Guangzhou, Shenzhen, Xiamen, Wuhan, Hunchun, Dalian, Tianjin, Beijing and various sectors on the Yangzi Delta and Shandong Peninsula were also announced.

Overall Deng tipped the economic balance relatively in favour of the countryside with these far-reaching reforms while the SEZs provided more opportunities for corruption to flourish.