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The state's role in the mid-1980s was chiefly to plan production and manage resources. Among state institutions at the national level, the Ministry of Agriculture, Animal Husbandry, and Fishery was primarily responsible for coordinating agricultural programs. Other central bodies of importance in agricultural policy matters included the State Economic Commission; the State Planning Commission; the ministries of commerce, forestry, and the chemical industry; the State Statistical Bureau; and the Agricultural Bank; and various academies and institutions that conducted research on agricultural science, agricultural economics, and related subjects.

Between state institutions at the national level and the townships and villages at the base of the administrative hierarchy were various provincial-level, prefectural, and county-level government organs that also administered programs, including some agricultural research and extension activities. Some 2,000 county-level units coordinated programs and enforced policies with the economic cooperatives and households in their jurisdictions. County-level units sometimes operated their own chemical fertilizer plants or other factories producing basic agricultural items, and they helped direct the allocation of the materials produced to peasant farmers.

Some agricultural production occurred on state farms where workers received regular wages, like factory workers. State farms were mostly found on the fringes of the main agricultural areas, especially on newly reclaimed land and particularly in the northeast, where they nevertheless accounted for only about 4 percent of total cultivated land.

Most of the economic activity in rural areas took place within the context of collectively and privately owned enterprises. Economic cooperatives, enterprises, and households were guided by their own self-sufficiency requirements, pursuit of profits, and compliance with annual economic plans. Forces of self-sufficiency continued to play an important role in decision making, especially as farm households allocated resources to ensure their own food grain rations. The pursuit of profit traditionally had been a driving force in rural areas, and although this energy had largely been curbed in the past, in the 1980s farmers were encouraged to seek profits.

The state drafted annual economic plans that were passed down through administrative channels to assist local cadres. Operators of farms and other enterprises reviewed the plan targets, which guided them to make proper economic decisions. The state has used both direct and indirect methods to affect decisions. In past decades cadres decided what would be produced, what production techniques were to be employed, and how output was to be distributed on the basis of annual plans. Indirect controls, such as prices and interest rates, became more important after 1980. Different combinations of the forces of selfsufficiency , profits, and state plans affected decision making for a given product in a given year. For example, in 1985 cotton farmers were told via state plans how much area to plant in cotton, whereas farmers received no state plans to sow fields with melons; rather, they planted melons in the hope of increasing profits.

The state continued to control the economic behavior of farm households, economic cooperatives, and enterprises through powerful political and administrative mechanisms in the late 1980s. The first of these mechanisms was the more than 83,000 township governments, which were responsible for civil and military affairs, public security (police), family planning, and statistics. Village committees numbered more than 940,000 and were subordinate to townships. Although they were not formal government institutions, they maintained public order, managed welfare services, and oversaw water conservancy projects. Probably the most powerful entities on the local level were Chinese Communist Party committees in townships and the subordinate party branches in villages. More than 20 million rural party members staffed posts and headed committees that supervised all aspects of rural life. They coordinated relations between party, government, and economic entities, and they ensured that party policies were followed. They nominated candidates to administrative posts and approved applications for military service, jobs, and opportunities for higher education (see Rural Society , ch. 3; The Cadre System , ch. 10).

The second mechanism--control of marketing functions--gave the state powerful tools to influence agricultural decisions. As in other centrally planned economies, the state was responsible for organizing and directing a major part of the flow of resources between sectors. It could achieve this using a variety of means, including prices and markets as well as direct controls. It needed to balance the needs of various sectors for input such as fuel, cement, timber, and machinery (as well as the needs of consumers in both rural and urban areas) in trying to meet its goals (see Structure and Operation of the Economy; Living Standards , ch. 5). The government procured grain and other agricultural products from the peasants to supply urban areas and food-deficient regions with subsistence and to provide raw materials for textile and other light industries. Part of the required amount was obtained simply as a direct tax. The proportion obtained from taxes declined over time, however, and the tax in 1984 was less than 3 percent of the value of total production. The remainder was obtained through purchases by state procurement agencies.

In the period from 1957 to 1978, the state raised prices for agricultural produce while lowering the prices of basic items such as fertilizer and fuel used in agricultural production. This was necessary to promote the use of more fertilizer and fuel to obtain greater production and to provide incentives for the production and sale of agricultural commodities.

As a third mechanism, the state exercised considerable leverage in rural affairs through its control over credit and agricultural production supplies. The state owned and controlled some 27,000 agricultural banks that served rural areas and provided production loans. Agricultural banks also supervised the activities of more than 42,000 credit cooperatives that provided banking services for cooperatives and rural households and provided production and consumer loans to customers. The state controlled banking activities through administrative regulations, loan policy, and interest rates. The state regulated delivery of fertilizer, machinery, and fuel through its marketing channels. In addition, government control of water and electricity supplies provided the state with an important lever to induce farmers to comply with political policies and economic plans (see table 12, Appendix A).

Finally, local governments possessed considerable influence in local affairs because they delivered social welfare services. Economic cooperatives and peasant households were not likely to engage in activities that could lead to diminishing supplies of social services. Rural families desired and increasingly felt entitled to medical, education, welfare, and cultural benefits. Villages competed to have these facilities located within their boundaries, not only to have more convenient access to their services but also to take advantage of the employment opportunities they afforded.

Data as of July 1987

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