In memory of Wan Li, Chinese market reformer and the agricultural reform in 1980s

William Hongsong Wang

On July 15, 2015, Wan Li, a Chinese market reformer in the 1980’s and former Chairman of the Chinese National People’s Congress died at the age of 99, Xinhua News Agency reported.

Like many Eastern countries, China’s market reform was started not by politicians and common people who have a clear theoretical background about free market knowledge but by those who believed that the free market could work better than a centrally-planned system. Wan Li was on of them. After serving in the Chinese Communist Revolution and suffering during the Culture Revolution, top leaders in the Communist Party like Deng Xiaoping, Hu Yaobang, Zhao Ziyang, and Wan gradually acknowledged that the Soviet central planning system was destructive to China. In an effort to escape the disaster and poverty of the Soviet system, these leaders decided to implement market reforms for the country.

After the Cultural Revolution ended in 1976, Wan was nominated in 1977 as the Communist Party of China’s 1^st Secretary and Governor of Anhui Province, one of the major agricultural provinces in China. After the devastation of the Cultural Revolution and the centrally-planned system, farmers in Anhui Province were poor, hungry, and inefficient which caused a steep decrease in agricultural productivity. Wan recalled, “In the first year when I arrived in Anhui, only 10% of the production terms had the minimum level of food to eat.” [1]

Before and during the Cultural Revolution, all of the lands, agricultural tools and harvest belonged to the government. Farmers were not allowed to eat the agricultural productions on the farms they were cultivating. Many times as the local government had to do greasiness in Cultural Revolution (If the local bureaucrats wanted to get promotion or praise from their seniors, its’ better for them to report huge political and economic movements to attract attention from their bosses even these plans were totally infeasible), impractical agricultural plans were demanded that made it impossible for farmers to feel incentivized to do their work, provide goods, and earn money. Many farmers died from starvation, and many were executed or punished for not obeying the bureaucrat’s orders by eating the harvest from their own land.

Seeing this as a serious situation, Wan didn’t forbid farmers in Anhui Province from implementing agricultural reform. In the spring of 1978, to resist drought and extreme poverty 18 farmers in Xiaogang Village of Anhui Province began disobeying central plans from senior officials by farming for their own needs and the needs of the local free market in order to make a living. They separated the public farms amongst every individual. All of these individuals were responsible for their own farms and crops and tried their best to grow agricultural products based on their market information. Of course, it was illegal at that time but people there were so hungry that if they didn’t enact the reform themselves, they would not have survived.

This organic spontaneous reform was growing in many villages in the Anhui Province because farmers found that planning their “own” lands could help them earn more money and eat more food which were better than waiting for centrally-planned orders. The economic situation in these rural areas changed rapidly in just a few months after the new free market tests. That year, the farming team of Xiaogang Village’s total grain output was 66.5 thousands kilograms, which was equivalent to the sum of the total food production from 1966 to 1970; total production of oil (mainly groundnut) was 17.5 thousands kilograms, which was equivalent to the sum in whole past 20 years. Due to the development of production, total income of the people in Xiaogang Village was over 47,000 Chinese Yuan, which was 400 Yuan per person and was 18 times higher than the previous year. [2] Famers called this new agriculture institution as “household responsibility system” (包產到戶). This  agricultural reform started the famous Chinese “Reform & Opening up" nowadays.

At this time, the reform was becoming a hot political argument in the Communist Party of China (CPC) itself. Some local politicians allowed farmers to do market reform but some did not because they didn’t want to take the risk of losing their jobs or being put in jail for enabling reform without the permission of China’s political leadership. After hesitating for a few months against widespread resistance to deregulation reform among top leaders in the Chinese government, Wan publicly supported the agricultural reforms occurring in the Anhui villages.

Used with the permission of the Central Committee of CPC, other parts of China’s rural areas gradually started doing the household responsibility reform, which allowed every family of farmers to be responsible for their own profit or loss on agricultural production. [3] The result of the reform was so obvious. The year-on –year growth rate of gross agricultural production of China was 8.6% in 1979. The grain production was 33.12 million tons, which was also 8.6% higher than in 1978. The total grain yield increase in 1978 and 1979 was 49 millions tons, which never happened after the establishment of Communist Regime in 1949. [4]

Seeing the obvious result of the agricultural reform, China’s top leaders Hua Guofeng and Deng Xiaoping, who were taking a wait-and-see approach to the situation, finally decided to support the reform in the end of 1979. In 1980, Deng Xiaoping made a speech about that, “After we have introduced more flexible policies in rural areas, the result of the Household Response System was so obvious, which was changing the villages who had adopted the system. … The majority of the production teams in Fengyang County, Anhui Province who adopted the new system has totally changed their economic situation.” [5]

At the same time, it was quickly promoted to other provinces over the next few years and resulted in rapidly expanding agricultural production. In 1982, growth rate of the gross agricultural production was 33.4% higher than in 1978; growth rate of oil crops was 126.5% higher than in 1978; the growth rate of per capita income of Chinese farmers was 102.2% higher than in 1978. [6] In 1982, the market reform in agricultural industry was finally made legal through the approval of Chinese Central Government and was officially named termed the Household Responsibility System.

In 1980, Wan was nominated as one of the vice-premiers of China who continued to support the agricultural reform, market reforms in urban areas and Emancipating of Minds Movement. In 1988, Wan was nominated as the Chairman of National People’s Congress (NPC) to continue to play the role of a reformer in China. However, after the Tian’anmen Square protests of 1989 and the house arrest of Wan’s ally, former General Secretary of CPC Zhao Ziyang, Wan stopped discussing topics related to political freedom such as the liberty of free speech and the democratic reform in China. But instead, as the President of NPC, he devoted more of his time to the legalization of free market activities until his retirement in 1992.

From a libertarian and economic science perspective, comments on politicians should be made unprejudicedly. For promoting liberty, the correct issues Wan Li did for China was to allow spontaneous reform in Chinese rural area even though he was taking a high risk of losing his political future (in the late 1970s and 1980s, market reform was still an unwelcomed and dangerous issue in political agenda and many top CPC leaders were against that), [7] support other market reform and thought liberalization in 1980s, especially devoting more time on passing the laws for protecting market orders when he was in the position of the Chairman of the Standing Committee of the National People’s Congress. Regretfully, Wan Li didn’t do his best to avoid the casualties in Tian’anmen Square protests of 1989 and the further thought liberalization after 1990s. After Wan’s visiting for foreign countries, on May27th, 1989, he made a statement showing his support on Deng Xiaoping’s decision on using force to suppress the student movement in Tian’anMen Square which was different form his former support on Zhao Ziyang, who sympathized on student movement. [8]

What we can learn from Wan Li and the agricultural reform?

What can the current CPC leaders should learn from Wan? Leadership can learn to be more courageous with market reform initiations for China. What we see is, in the last 30 years, free market reform gives more Chinese an opportunity to take their own responsibility on their own life, liberating their entrepreneurship to create more goods and ideas for exchanging and improving different people’s life. What we also see is, the remaining part of central planning system, such as the economic monopoly of state-enterprises, too many administrative examinations and approvals for opening private sectors or non-profit mutual help organizations are disrupting different individual Chinese to seek for their own dream and happiness, which also influences the stability of Chinese societies. As the new Chinese leaderships have admitted for many times, market reform should be continued and they are really doing this such as cancelling many administrative examinations and approvals for private business. [9] Besides, it’s also necessary to deregulate the non-profit mutual help group to let the self-governing function among different individual be smoother which could also help government to reduce the burden on governing. And for Chinese people, they should learn from the courage from the 18 farmers in Xiaogang Village and trust that they themselves can take care of themselves much better than government and gradually understand the benefit from market process by themselves.

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Notes:

[1] Wan, Li (2009) How did the agricultural reform start? Beijing: Guangming Online. Available: http://www.gmw.cn/02sz/2009-02/01/content_919690.htm [Accessed: 25 August 2015]

[2] Yi, Jing (2008) The change of people and land in Xiaogang Village. Beijing: People’s Daily Online. Available: http://house.people.com.cn/GB/98384/99155/99181/8174533.html [Accessed: 25 August 2015]

[3] Deng, Xiaoping (1994) The Selected Works of Dang Xiaoping (Volume II). Beijing: People ‘s Publishing House, pp 315-317.

[4] Yao, Yilin (1980) Report on the Work of the Government (1980). Beijing: the Central People’s Government of the People’s Republic of China. Available: http://www.gov.cn/test/2006-02/16/content_200778.htm [Accessed: 25 August 2015]

[5] People’s Daily Online (2004) The household responsibility system opened the door for agricultural reform. Beijing: People’s Daily Online. Available: http://www.people.com.cn/GB/shizheng/8198/36907/36908/2732004.html [Accessed: 25 August 2015]

[6] Griffin, Keith (1987) The structural reform and economic development of Chinese rural area. Hong Kong: The Chinese University Press, pp.222-224.

[7] In 1980s, Chinese leadership was separated into two camps. One is for the innovationists leaded by Deng Xiaoping, and Hu Yaobang, Zhao Ziyang, Wan Li, and son on were the members of it who supported market reform and a certain degree of political reform such was the freedom of speech and more political election; another is for the conservatives leaded by Chen Yun, Li Xiannian and so on, who supported central planning economy with only a few factors related with economic regulation and strongly disagreed with political reform. After the stepping down of the former Chairman of the Central Committee of CPC, Hua Guofeng in 1981, Deng Xiaoping totally became the most powerful leader of China. But as Chen Yun and Li Xiannian also had a strong influence in the party, the market reform was disrupted by the conservatives many times. More information see: Zhao, Ziyang (2009) Prisoner of the State: The Secret Journal of Premier Zhao Ziyang. New York City: Simon & Schuste, pp.91-94.

[8] Zhao, Ziyang (2009) Prisoner of the State: The Secret Journal of Premier Zhao Ziyang. New York City: Simon & Schuste, pp.8-14.

[9] More in formation about Chinese market reform, see Zhang, Weiying (2015) The Logic of the Market: An Insider’s View of Chinese Economic Reform. Washington, DC: Cato Institute.

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William Hongsong Wang is a researcher from the Shalom Institute and has graduated with a masters degree of Austrian Economics from the Universidad Rey Juan Carlos in Spain (King Juan Carlos University).

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