A Brief History of Baochan Daohu

In this blog post, I summarize the history of Baochan Daohu, the household responsibility system, as detailed in the 1996 book “How Farmers Changed China” by Zhou Kate. In a follow-up blog post, I will also cover the emergence and evolution of markets as described in the same book.

The book’s central thesis is that rural farmers and not the party elite were the main driving force behind’s China’s rise from the ashes of the civil war mid-20th century to a world-leading economic power. While I’m not the right person to judge the accuracy of the thesis, I want to share some of the insights from the book about grassroots Chinese entrepreneurship within the environment of early communist rule.

Before Communism

Before the communist victory in the Chinese Civil War, most Chinese people were self-sufficient for their daily needs. Chinese families ran independent family farms that provided daily food and sometimes surpluses which were traded in the village. They generally avoided centralized structures for organizing everyday life. This open class system was around for thousands of years.

Tonggou Tongxiao (统购统销)

Following the victory in the civil war,  the Communist Party of China (CPC) took control of the country. It began to organize food production through agricultural and land reforms (1950-1953), which removed the family from the nexus of local organization and decision-making.

The CPC installed loyal cadres as party representatives to run the villages. The cadres executed agricultural reforms to create a more equal land distribution and increase food production. The reforms included the formation of farming cooperatives (communes and later production teams), which brought together small farmers to share resources and increase efficiency. This replaced the family unit as the organizer of food production.

Most importantly, while the state allocated land for farmers’ use, it denied them ownership and control. Before the farmers could even start enjoying the fruits of the land reform, their autonomy was further reduced by the introduction of Tonggou Tongxiao, or the Public Grain Procurement System.

统购统销 (tǒnggòu tǒngxiāo) = unified purchase and sale

Under the Tongou Tongxiao, the government required farmers to sell their grain at a fixed price to the state. No private merchants were allowed to deal with grain. This ensured the state had enough grain to feed the urban population and the army. The government also used the proceeds from selling surplus grain on international markets to fund industrialization and other development projects.

Through a business model lens, one could say the state forced input prices to stay low while selling industrial goods at a high price (jiandaocha). The surplus value (800 million yuan between 1953 and 1978) extracted from the market was used for industrial development.

剪刀差 (jiǎndāochā) = price scissors

The local farmers communicated with the party via the local cadres. Thus the local cadres had enormous power over the local population. They were sometimes referred to as tuhuangdi (土皇帝, tǔhuángdì) or local emperors.

When faced with the difficult situation of lack of control of your destiny and the feeling of oppression by the local party cadres, why not simply move for better opportunities?

In the mid-1950s, many farmers left their villages to find city work. Since cities were unprepared to deal with such an influx of migrants and the state needed the farmers to produce the grain for food, the state issued four documents to stop the flow of rural-urban migration. This system is known as Hukou.

户口 (hùkǒu) = household registration system

Hukou & Danwei (户口 & 单位)

The Hukou system, also known as the Household Registration System, is a system of household registration to register and identify individuals based on their residence.

Under the Hukou system, every individual is registered in a specific location, either rural or urban, depending on their family’s registered location. This registration determines their access to public services such as education, healthcare, social welfare, and housing.

The Hukou system divides the population into two categories: rural and urban. Rural residents are often excluded from many of the benefits of urbanization, such as access to better-paying jobs, social welfare, and education. They are often subject to discrimination in urban areas. Effectively, it made the Chinese village become a closed society.

With an urban hukou, one received Liangpiao (food rationing coupons). People without this coupon, such as rural migrants, couldn’t buy food in the city. Without an urban hukou, one couldn’t get housing in the city. Rural migrants had to get a letter of introduction from their commune cadres to stay in a hotel.

粮票 (liáng piào) = ration card

Urbanites also had a Danwei or registration for the urban work unit. The danwei linked a person to a place of work in the city. Under the danwei system, workers were not only employed by their workplace but were also provided with social welfare benefits such as housing, medical care, and education by their workplace. In addition, workers were expected to participate in political activities and study sessions organized by their danwei.

单位 (dānwèi) = work unit

The Danwei provided job security or, as it was often referred to: Tiefanwan (铁饭碗, tiěfànwǎn) or an iron rice bowl.

The polarity of the Chinese society, with, on the one hand, the cadre-bound farmers who were obliged to produce grain for the state and, on the other hand, the subsidized urbanites who received plenty of support from the state, was fertile ground for the eventual changes.

Baochan Daohu (包产到户)

Baochan Daohu is the practice of turning grain production over to the household. While many credit Deng Xiaoping with the introduction of the practice, in the book Kate Zhou argues that this transition involved an unplanned struggle between the farmers and the state that started decades before the official party policy.

包产到户 (bāochǎn dào hù) = household responsibility system

The book breaks down four phases of baochan daohu.

  • Phase 1: 1956-1957
  • Phase 2: 1961-1962
  • Phase 3: 1967
  • Phase 4: 1977-now

To recap the status quo: the agricultural reforms placed land under collective ownership, transferring it from the household to the local party cadre. The party cadre was responsible for managing food production and meeting the central government’s quotas. Families became members of the production team, brigade, and commune. Food distribution was according to the work points earned, ultimately dependent on the cadre’s decision-making.

Phase 1: 1956-1957

Following collectivization, farmers pressed for greater autonomy, including the freedom to engage in sideline production and marketing.

The term baochan daohu first appeared in Zhejiang Daily on January 27, 1957. It contained four elements:

  • Baochan daodui: output quotas for the production teams
  • Zeren daohu: each household responsible for the production quota
  • Dinge daoqiu: the output of land was fixed, and anyone responsible for the land would decide how many work points a worker could receive
  • Tongyi jingying: production and distributive decisions were made by the team leaders

This approach spread rapidly in parts of the Zhejiang province. It became known as the la niu tui she movement. However, the political response by Mao to this idea was quick and was framed as a capitalistic idea of a “nouveau riche” farmer. Eventually, the political movement led to an expansion of the collective system in 1958 and gave rise to the People’s Commune

Phase 2: 1961-1962

The Great Leap famine fundamentally changed the relationship between the state and the farmers as the farmers held the local cadres responsible for the famine. This opened the door for a renewed policy towards the rural people and a push for agricultural reforms. In various locations, local cadres experimented with different approaches. Two examples:

  • Sanbao yijiang (三包一奖, sān bāo yī jiǎng) ,or 3 contracts plus reward, was a system where the production team contracted with the production brigade to produce a certain quantity of grain at a certain cost with a certain labor force. Any surplus was retained as a reward.
  • Zeren tian (责任田, zérèn tián), or responsibility land system, was a system where commune members received work points according to the output of the land, and there was unified distribution within the collective.

An important note is that these systems did not provide rural people with freedoms beyond the scope of field management. Crucial decisions about farming were still handled at the brigade level.

The local successes were communicated to the central leadership and were initially met with support. A 1960 emergency directive from the central government called on production teams to have sanbao yijiang. It permitted farmers to have limited private land (5%) to produce sideline products. Deng Xiaoping supported the zeren tian system ~ “no matter whether the cat is black or yellow, the cat is good as long as it can catch mice.”

In July 1962, Mao launched an attack against zeren tian at a party conference. He launched the Socialist Education Movement (1962-1965), stripped provincial leaders supporting zeren tian of power, and forced farmers back to collective farming.

Phase 3: 1967

Farmers took advantage of the chaos of the Cultural Revolution (1966-1967) to press for the expansion of the household and the market. This took the form of civil disobedience and even armed struggle. However, not much is known about the extent of the protests. Many of the demonstrations were organized by a local central figure, allowing the party and local cadres to counter-act with precision.

The organized attempt to force collective farming during the Cultural Revolution was successful.

Phase 4: 1977 – Now

Following the Cultural Revolution, farmers’ resistance to collective farming took a silent but daily form. As the state pressed back against a farmer’s desire for independent agriculture, the movement went underground and on the defensive. Despite the many central government initiatives to increase the growth of grain production through the introduction of modern technology, grain production growth grew at low single digits. It did not keep up with population growth.

Mao’s death in 1976 gave farmers a new opportunity to pursue family autonomy. Unlike the previous attempts, the farmers did not try to organize or make demands from the central governments. Instead, they succeeded by making individual deals with local cadres and giving them more than they expected.

The idea is to incentivize the local cadres to allow family farming. The cadres would receive a significant percentage of the production surplus in return for more autonomy. This bargaining strategy worked best in poor areas where local cadres didn’t live in good conditions.

The combination of the corruptibility of local cadres and unorganized farmer’s individual deals allowed to break the collective dike. While the movement was not organized, baochan daohu spread through informal networks across villages. An important role is played by women whose marriages voiced their preferences.

This form of baochan daohu was different from the three previous versions:

  1. Farmers didn’t ask for land ownership. They didn’t riot. They didn’t fight the local cadres
  2. Farmers didn’t organize. They made individual deals with cadres.

This is a SULNAM: Spontaneous, Unorganized, Leaderless, Non-ideological, Apolitical Movement.

After baochan daohu, the family head again became the dangjiaren (master of his own house).

当家人 (dāngjiārén) = head of family

The response from local and provincial governments was supportive of baochan daohu. However, the support took different forms. Often the governments would initiate reforms that mimic the effect of baochan daohu without formally adopting shared practices.

The response from the central government was not supportive. At the Third Plenum of the 11th Party Congress in 1978, the state specified that baochan daohu was illegal. Note that Deng Xiaoping was deeply involved in drafting the resolution.

It was not until 1981, when Chen Yizi (陈一咨), a research fellow and government adviser, submitted a report about the impact of baochan daohu to the reform leaders, that the central government would consider supporting the practice. The report, titled “The Dawn for the Rural Area, the Hope for China – Report of a Survey on the Implementing of ‘Baochan Daohu’ in the Rural Area in Anhui Province,” provided evidence that baochan baohu improved productivity and the living conditions for all. After reading this report, on May 31, 1981, Deng Xiaoping discussed the “baochan daohu miracle” with a few senior leaders.

Deng and his reform leaders facilitated the spread of baochan daohu in 1983, following the evidence of increased productivity. In January 1983, the central government formally recognized baochan daohu and encouraged its development in rural China.