HIST363: Global Perspectives on Industrialization

The architects of this "readjustment" of the national economy were the senior party officials, Chen Yun and Li Xiannian. Both men argued for a reduction of the urban workforce and for the import of grain in order to restore the balance between urban consumers and net grain producers in the countryside. Chen in particular believed that the uncontrolled growth of the urban population had been the major reason, not only for the enormously destructive Great Leap Famine, but also for smaller disruptions to the grain supply in 1953, 1954 and 1957.¹⁷

Fewer consumers entitled to urban ration cards would mean reduced pressure on the state to extract grain from the countryside to feed the cities. Not only would this rebalancing increase the number of agricultural workers, but crucially it would also reduce the overall amount of grain needed for the country as a whole, since much smaller rations were provided to rural residents than those with an urban household registration were entitled to. Along with population transfers, Chen also argued for the restoration of plots of land for private household use within the structure of the People's Communes. In many places, these had been abolished during the collectivist fervour of the Great Leap, and Chen believed that reintroducing them would allow those who were sent back from the cities to be self-supporting.¹⁸

Taking into account the volume of agricultural production and the number of urban consumers of trade grain, Chen estimated in 1962 that 20 million people needed to be sent back to the countryside from the cities and towns (chengzhen). Recent migrants who had come to urban areas during the Great Leap became the main target of the "downsizing" policy. In total, 26 million people were moved to the countryside between late 1960 and 1963.¹⁹ Table 8.1 outlines the reduction in the workforce of the state-owned enterprises (also known as "ownership by the whole people"): 8.7 million in 1961 and a further 8.6 million in 1962. By contrast, the number of workers in collectively-owned enterprises, where entitlements were more restricted, actually increased slightly during those years.

Attempts to assess the exact effect of Chen and Li's recovery plan on the urban population are complicated by the fact that statistics from the period almost invariably include within the category of urban residents, segments of the suburban population that were actually engaged in agricultural production. Taking this statistical anomaly into account, it seems probable that non-agrarian urban residents never constituted more than 20 percent of the Chinese population during the Mao era, although within this low percentage, the reforms do appear to have had a significant effect. The non-agrarian urban population's proportion of the national total decreased during the 1960s, from 14 percent in 1964 to 12.9 percent in 1968; a figure it did not exceed until after Mao's death in 1976.²⁰

The government effectively capped the population of the towns and cities, limiting the number of people who were entitled to food rations, welfare and non-agrarian jobs. The leadership of the CCP had learnt important lessons from the famine.

These measures alone, however, were still not sufficient to stabilize the food supply system in the post-famine years. Reform had to be coupled with immediate relief via grain imports. As Chen Yun argued: "If we import grain, we can take less from the peasants, stabilize their attitude towards production, and raise the enthusiasm of the peasants for production. If we take two or three years to develop agricultural production, the problems of the internal market can be solved".²¹ Between 1961 and 1965, China imported on average five million tons of grain each year; net imports stood at around 4.18 million tons per annum.²²

Rather than being sent to famine-hit rural areas, this grain was used to supply Beijing, Tianjin, Shanghai and Liaoning. All four areas were part of the urban supply system administered directly by the central government, and the imports therefore constituted a form of indirect famine relief, reducing the burden on peasants to meet grain quotas and allowing more grain to remain in the villages. By opting for this method of relief, the government avoided imported grain passing through the hands of rural officials, thereby reducing the risk of fraud and misappropriation. From 1962, quotas for grain procurement had stabilized enough to bring rural communities out of famine. Strict enforcement of the household registration system helped maintain the balance between agricultural production and urban consumption.

Table 8.1 Total number of employees in state-owned and collectively-owned enterprises, 1960–1965 (all figures in millions)

Although the austerity policies and downsizing of the urban population were necessary, they nevertheless had a deleterious effect on morale in the cities. Little is known about how ordinary people reacted to the programme of downsizing, or about differences in responses between rural and urban China. It seems safe to say, however, that many would have agreed with the words of one worker in Shaanxi: "The capitalists call it going bankrupt, we call it stopping production. The capitalists call it firing, we call it being sent down. The capitalists call it unemployment, we call it [workforce] reduction. In any case, we have no jobs and it is still the same as in capitalist countries".²³

Work units throughout China were given quotas for reducing their workforce. Some urban residents tried to avoid being sent back to the countryside by petitioning the local government. Most petitioners argued that they were sick, pregnant or had to provide care for dependent family members, while others threatened to commit suicide if they were not allowed to remain in the cities.²⁴

The fact that targets for staff reductions were generally met suggests that these strategies tended to be ineffective. The central government's ability to enforce a large-scale population transfer hard on the heels of the famine crisis reflects the remarkable capacity of the early PRC state.

Little research has been carried out into how the arrival of returnees from the cities affected the villagers who had stayed behind. In contrast to the "sent-down youth" of the Cultural Revolution, many people who were hit by the downsizing of 1962 and 1963 were recent migrants who had left the countryside only a few years earlier and had remained familiar with agricultural production. They were not strangers in their home villages. Nevertheless, it remains an open question as to whether the returnees were welcomed as additional labour power or seen as competitors for scarce food. What is certain, however, is that the countryside finally recovered under the influence of the CCP's new policies.

To achieve this recovery, the government sacrificed its push for rapid industrialization, which prior to 1961 had been primarily driven by imports of foreign technology financed by exports of grain. The state also raised the price it paid for grain to incentivize production, but in order to keep the peace in urban areas, the sale price remained stable. The losses from what was effectively a massive subsidy programme would be a burden on the state's budget for the next two decades.²⁵