Market reform in china

Market reforms in China began with the reform of agriculture in 1978, when about 70% of China's labor force were workers employed in agriculture. The main elements of the reform years 1978-1984. there was a transfer of land to individual farmers ("de-collectivization") and the establishment of a two-tier pricing system. First the peasants were able to lease land owned by the state (for 15 years). Under the two-tier system of prices farmers had to sell the set amount of agricultural produce to the state at a fixed price, and all the products in excess of this amount could sell at market prices. In the end, farmers were allowed to sell higher volumes of harvest at market rather than at fixed prices. In 1978, farmers sold only 8% of the products in a competitive market, but by 1990 this proportion had increased to 80%.

De-collectivization and price reform led to increased market incentives and quickly approach the Chinese economy to market agriculture. In response to the stimulus in the form of profits, farmers, individuals have increased their productivity by replacing labor of peasants machines, the transition to a more valuable species of crops and the development of new land. In the 80 years of China's agricultural production has increased substantially. Equally important is the fact that as a result of higher productivity in agriculture were freed labor, which have been used in rural areas located in the private production company called urban and rural enterprises.