Household Contract Responsibility System With Remuneration Linked To Output

The organization form of agricultural production, created by Chinese farmers in the late 1970s, affirmed by Deng Xiaoping and other central leaders and later implemented throughout the country, was an important reform implemented in the early stages of Reform and Opening-up. After the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China, China's reforms first started in rural areas. 18 farmers in Xiaogang Village, Fengyang County, Anhui Province signed the “Consent Form in Case of Death” and contracted the farmers to manage the land in the village, that is, “farm output quotas fixed by household”, commonly known as “an all-round contract”, that is, “pay enough for the country, keep enough for the collective, and the rest is the farmer's own”, creating a precedent for the household contract responsibility system with income linked to output. The household contract responsibility system created by Chinese farmers combined the unified management of the production team with the household division management, and closely linked the vital interests of the farmers with the output, breaking through the fact that “the farm output quotas fixed by household” was equivalent to the division of fields and the capitalist path. Subsequently, the household contract responsibility system was gradually introduced throughout the country, which resolved the major problem in the rural system, promoted the development of China’s agriculture, and motivated the development of the entire reform and construction. The specific method of the household contract responsibility system is: (1) Contract households to the land. Each contractor pays agricultural taxes to the country, sells products ordered by contracts and submits public reserve funds, public welfare funds and so on to the collective. All other products belong to the farmers themselves. (2) Farm output quotas fixed by household. Output, investment and work points are fixed and the over-produced part belongs to oneself while a drop in production calls for compensation. In practice, most areas adopted the form of contracting households to the land. The implementation of the household contract responsibility system liberated the productivity of China’s rural areas and broke new ground in China’s agricultural development. China’s agriculture has fed 22% of the world’s population with 7% of the world’s arable land, which fully reflects the superiority of socialist public ownership system. The report of the 14th CPC National Congress in 1992 pointed out, “The implementation of household contract production is a great creation of Chinese farmers. As the most energetic, vital, most popular and creative form of responsibility system in rural areas, the household contract responsibility system promotes the development of rural reforms.”

In October 1998, the Third Plenary Session of the 15th Central Committee of the Party spoke highly of the great achievements and rich experience created in the 20 years of rural reform.

They agreed that the implementation of the household contract responsibility system, the abolition of the people’s communes, the breakthrough of the planned economy model, and the development of a socialist market economy had greatly mobilized the enthusiasm of hundreds of millions of farmers, liberated and developed productivity and brought historic changes to rural economic and social development. This great change spurred and promoted the country’s comprehensive reforms, explored a path to building socialism with Chinese characteristics that suits the national conditions and made important contributions to the sustained and rapid growth of the national economy and the maintenance of social stability. The plenary session emphasized that over a long period of time we should adhere to the basic economic system with public ownership playing a leading role and all forms of ownership growing side by side, the management system based on household contract system, combined with unified and household management and the distribution system of performance-related pay playing a leading role, combined with distribution based on production factors.The household contract system not only adapts to traditional agriculture based on manual labor, but also adapts to modern agriculture using advanced science and technology and production means. It has great adaptability and vigorous vitality. We must unswervingly implement the policy of extending the land contract period for another 30 years, and at the same time, we should promptly formulate laws and regulations to ensure the long-term stability of rural land contract and give farmers long-term and guaranteed rights for land use.