The Reform of Agricultural Marketing in China Since 1978

With the proclamation of Document 1, 1983, reform of marketing became one of the major targets of agricultural policy in China. This official emphasis on the need to liberalize the marketing system was, however, little more than a confirmation of a process which was already taking place. The initial reforms of labour management and prices in 1978 had led to a decentralization of economic authority to the household level. The commune system was in decline and the number of small-scale free markets was increasing rapidly as peasants took advantage of their new-found freedom to trade their surplus production as they wished. Responding to the economic stimulus offered by the new structure of prices and to the organizational flexibility offered by the decentralization of management, some households began to plan at least part of their production for sale on the market, there by initiating a process of specialization and commercialization. Once begun, this process fed backwards into production by encouraging further specialization and diversification and forwards into marketing by stimulating the emergence of longdistance trade carried out by specialist merchants and traders. In effect, the free market began to act as an engine of economic change, shaping both the structure of agricultural production and employment and the network of new economic linkages through the emerging hierarchy of market centres.