○  The Collectivizationa and De  ○

y leader. Little accumulation and shirking made countryside widely fall into poverty , rare rural region had good conditions to develop industry or to improve commerce, infrastructures went worse, productivity sank quickly. The most serious crisis for agricultural collectivization happened between 1959 and 1961. GNP decreased from 213.8 billion Yuan in 1958 to 180.0 billion Yuan in 1962, with an average annual reduction of 15.1% in gross industrial production value and an average annual reduction of 19.3% in gross agricultural production value from 1958 to 1960. Owing to the serious shortage of food, a great famine took place in the whole country and at least 30 million residents died (Tan, 2000). Discontent with such system broke out, in some areas, peasants didn’t want to relied so heavily on orders from above and made so little allowance for local conditions or local initiative. The severe crisis forced the Party to adjust their policies. From 1961 on, commune functions were reduced to administration and co-ordination, production team was confirmed as the basic unit of accounting, certain production decision making was delegated to production teams, which were allowed to retain some income to overcome problems of egalitarianism; households again allowed to have small private plots and sidelines for planting vegetables, and a limited opening markets for transaction between urban and rural areas. However, these adjustments didn’t mean to change the system of people’s commune, but only to prevent peasants from rebel. From 1966 to 1976 China suffered the disaster of Cultural Revolution , there were large institutional swings took place in this period, in which co-operative moved from small to large and from team to brigade to commune again, local free markets, sidelines and private plots was prohibited again, and political factors had a great influence on production decisions.
In late 1970s, after the Leader Chairman Mao passed away, the requirement for improving

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