The People’s Republic of China had, for a long time between the mid-1950s and early 1980s, a socialist rural economy run by rural communes and collectives. A typical collective team/brigade was of the size of a village, while a commune often corresponded to a town. These institutions managed collective agricultural and industrial production as well as provided free or low cost education and health care to millions of rural residents. The record of achievements under the collectives was very impressive. Food production increased considerably, and the growth rates of grain and cotton yields were significantly higher than the post-reform agriculture.1 The collectives also mobilized rural labor to build a large number of long-term infrastructure such as reservoirs. The effective irrigated area increased from 27 million ha in 1957 to 45 million ha in 1980.2 This was not all. Almost every village had a primary school and some local medical service provider (known as the barefoot doctors). On the national level, the literacy rate increased from 61.9% in 1953 to 76.5% in 1982 and the life expectancy increased from 35 years in 1949 to 65 in the mid-1970s.3

In the early 1980s, China started dismantling its rural communes and collectives. The post-Mao leadership believed the rural collective institution was a major obstacle for the capitalist oriented reform they were launching at the time. In just 4-5 years, the country finished its’ nationwide decollectivization campaign and the farmland, as well as other collective assets, were divided into individual families. There was still the collective ownership of land on paper, but de facto private ownership has gradually been established.

The dominant narrative on this process, supported by both the Chinese authority and the mainstream academia, argues that the collectives suffered from inefficiency and the decollectivization reform brought a huge improvement in productivity. At the same time, they argue that the decollectivization reform was a people’s bottom-up movement and the peasants loved it. It is no wonder why the mainstream liked the story so much. One easily sees the holy trinity here: individual free choice, spontaneous order, and economic efficiency.

However, a close examination suggests a very different picture. My recent book From Commune to Capitalism shows that decollectivization did not have much positive impact on production and a lot of the output increase can be explained by increasing fertilizer input among others. The reform was very far from a bottom-up people’s movement. It was coercively implemented by the central leadership and there was no “choice” at all.

The reform virtually destroyed much of the legacy from the commune era such as affordable education and healthcare. Since there was no collective support for these essential spending, people sometimes have to squeeze their own food consumption to pay for those bills. No to mention that the atomized peasants lost their political significance in the Chinese politics. Overall the political and economic status of peasants deteriorated remarkably in recent decades.

It is important to see how the rural decollectivization facilitated the development of capitalism in China. The breaking of the Maoist communes provided the momentum of capitalist reform, the “success” of this reform gave legitimacy to the post-Mao leadership, and eventually, the newly created “surplus” rural labor from a much weakened rural economy became the reserve army for the new capitalist urban economy. It is indeed a great success for the new capitalist class. In essence, the rural reform arguably constitutes the economic and ideological basis of the current economic model in China. That is also the reason why the mainstream puts it in a sacred position and portrays it with all the good words from the neoliberal preaching.

Although the rural reform facilitated capitalist growth in the urban economy, agriculture itself remained non-capitalist for a long time. When the reform started in the 1980s, the leadership assured people that this would not lead to capitalism. For more than a decade since the mid-1980s, the Chinese countryside was mainly occupied by small household production with very limited land concentration and wage employment. Many people would agree that China has seen a rapid transformation from a traditional socialist economy to a capitalist one in the last 40 years. Most of the discussions, however, focus entirely on the urban sector. Often people think and talk about the countryside as if it is “the other”, isolated from the broader social change.

In fact, capitalist relationships are growing in China’s rural economy. Although this development up to now has been restricted mostly to cash crops and animal products, the overall trend is crystal clear. According to my estimates, the number of rural wage laborers increased from negligible in 2000 to about 40 million in 2014.4 In a number of important industries, capitalist farms have already became dominant. For example, the top 0.2 percent (900 thousand) pig farms (more than 100 slaughtered per year) slaughtered more pigs than the bottom 95 percent (46 million small households) combined.5

This capitalist development was a logical step following decollectivization. With peasants’ differentiation in their business operation, the well-to-do ones eventually get more land from others and start employing workers. The rural economy is not in a very good shape, and people often find it hard to make a living from cultivation alone. In fact, nowadays, more than half of rural families’ income comes from the wage labor outside their family agricultural production. The Chinese government, again, played an active role in this process. It explicitly encourages the formation of “family farms”. This does not mean the average small family operation, rather it refers to US style large capitalist farms.

If the formation of a small production rural economy in the 1980s helped the development of capitalism, the current capitalist development may not be such good news to the Chinese capitalists. For years, the Chinese government and scholars boast of a unique rural economy serving as a reservoir for the economy. When the urban capitalism is doing great, the countryside provides cheap labor and resources; and if the economy has a crisis, the unemployed urban workers can easily go back to their country home and continue working in the family agriculture. What a populist dream, though it was partly true for about two decades after decollectivization. Now with millions of wage labor in the rural economy, the much capitalist countryside can no longer easily absorb the unemployed or other shocks from the urban economy.

As a summary, the decollectivization and subsequent capitalist transition has profoundly changed the Chinese economy and politics, but not for the better. Many other severe problems such as food insecurity and heavy pollution are also connected to the agrarian change in the last four decades. Overall, capitalism is losing its legitimacy in China and everywhere in the world. As we have seen above, the rural economy which has helped the Chinese capitalism in the 1980s is also turning its back, I believe we are witnessing the final stage of the whole capitalist drama.


* Zhun Xu is assistant professor of economics at Howard University. His book From Commune to Capitalism: How China’s Peasants Lost Collective Farming and Gained Urban Poverty was recently published by Monthly Review Press.

1) For example, grain yield grew at 2.79 percent per year between 1956 and 1980, and grew only 1.32 percent per year between 1984 and 2008 after the rural reform finished in 1984. Data are from Ministry of Agriculture. (2009). Xin Zhongguo Nongye 60nian Tongji Ziliao (Agricultural Statistics of China’s 60 Years). Beijing: Zhongguo nongye chubanshe.

2) Xu, Z. (2017). Decollectivization, collective legacy, and uneven agricultural development in China. World Development, 98, 290-299.

3) Ibid.

4) Xu, Z. (2017). The Development of Capitalist Agriculture in China. Review of Radical Political Economics, 49(4), 591-598.

5) Ibid.