By Jin Sanlin

Research Report Vol.21 No.3, 2019

Since the People’s Republic of China was founded 70 years ago, the urban-rural relation has gone through constant adjustment and evolution, during which we have not only transformed the dichotomous structure that’s common in developing countries in general, but also formed and reformed the China-specific urban-rural dichotomous system. Urban and rural areas in China were in serious dichotomy before the reform and opening-up; their development was planned in a coordinated way after the 16th CPC National Congress and integrated after the 17th; and the 19th CPC National Congress vowed to establish sound systems, mechanisms and policies for urban-rural integration. The urban-rural dichotomy has been gradually eliminated through reform and development.

I. Formation of Urban-rural Dichotomy in China

When the People’s Republic of China was founded, the new regime urgently needed the agricultural sector to provide the primitive accumulation for industrial development in order to concentrate all resources on industrialization. Therefore, it successively rolled out the system of unified purchase and sale of agricultural products, household registration system and people’s commune system, and kept enhancing relevant policies till an urban-rural dichotomous system with Chinese characteristics eventually took form.

1. Establishing a unified purchase and sale system of agricultural products and forming a dichotomous merchandise market

In 1951, the nation began to implement unified purchase of cotton yarn, followed by food in 1953 and other commodities later, until most of the agricultural products were included in the scope of unified purchase. Meanwhile, the ration system was implemented in mining and urban areas. The unified purchase and sale system realized state monopoly of agricultural products and replaced the market mechanism of commodity exchange between urban and rural areas.

2. Establishing the household registration system and seeing dichotomy in population and labor market

To keep the rural population from blindly rushing to cities, China promulgated the Household Registration Ordinance of the People’s Republic of China in 1958, which specified two types of household registrations - “rural registration” for rural residents and “non-rural registration” for urban residents. The Ordinance stipulated that residents with rural household registration were not allowed to move to cities without a formal permit by the government. Since then, all kinds of benefits were linked with the household registration system, which therefore became the central part of the urban-rural dichotomous system.

3. Establishing the people’s commune system and seeing dichotomy in public resource allocation and grassroots governance

To promote agricultural development, China began to advocate agricultural cooperatives in 1953. In August 1958, the extended meeting of the political bureau of CPC Central Committee passed the Decision to Form People’s Communes in Rural Areas, which caused a surge of the people’s commune movement across the country. As a self-sufficient organization with economic independence, people’s commune not only organized production and distribution among farmers, but also undertook rural infrastructure construction, provided for rural households enjoying the five guarantees, carried out public services such as cooperative medical care, and performed social management functions. In the meantime, people’s commune also had the social independence of being able to solve all its own problems without seeking external help. The separate urban and rural governance began to take form.

In this period collective ownership replaced farmers’ private ownership of land. In September 1962, CPC Central Committee officially passed the Work Regulations on People’s Communes in Rural Areas (draft revision) generally known as the “60 rural regulations”, which established the collective “group-based three-tiered ownership”. It is clarified that “all land operated by a production group belongs to the group” and “all forests, water surfaces and grassland owned by the collective belong to the production group if that’s more beneficial”. This secured the production group’s position as the land owner in the system of “collective ownership”.

II. Gradual Elimination of Urban-rural Dichotomy since the start of Reform and Opening-up

The reform in rural areas lifted the curtain on China’s overall reform. Although the elimination of urban-rural dichotomy wasn’t regarded as the chief goal in the early period of reform, it was eliminated gradually over the following 40 years, which could be roughly divided into three stages.

The first stage (1978-2002) focused on integrating the urban-rural merchandise markets.

The integration of urban-rural merchandise market was reflected in three aspects.

First, liberalize urban and rural fairs and promote merchandise flow between urban and rural areas. From 1979 to 1983, the government resumed and developed rural fairs and liberalized urban ones, enlarged the scope of commodities in the market and allowed farmers and vendors to transport and sell goods. Especially after the State Council lifted the restriction on long-distance merchandise transportation and sale in 1984, fairs expanded from local regions and became an important channel of the flow of goods between urban and rural areas and between different regions.

Second, abolish unified purchase and sale, but resume market-based trade of agricultural products. The No.1 central government document in 1985 explicitly abolished the policy of unified purchase and sale of agricultural products that had been practiced for 32 years, including abolishing unified purchase of food and cotton products and gradually abolishing the purchase by state quotas of agricultural and sideline products. From then on, the circulation of agricultural products was no longer restricted by the original division of work but could be directly conducted through multiple channels. Meanwhile, their price was deregulated step by step. These reforms turned farmers into relatively independent producers and replaced planned pricing with market-based pricing of agricultural products, thus stimulating the development of rural market and connecting rural commodity economy with the urban one.

Third, develop township enterprises and lay the material foundation for integrating urban and rural commodity markets. After the 1980s, township enterprises sprung up rapidly as a new force thanks to the government’s encouragement, not only providing a lot of jobs for surplus rural labor and increasing income for rural households, but also providing sufficient consumer goods for urban and rural areas to meet diverse consumer needs. The end of the period of material shortage laid the foundation for deregulating the agricultural product market.

...

If you need the full text, please leave a message on the website.