ABSTRACT
The passing of Mao finally enabled economists of the People's Republic of China finally to publicly discuss the signs of system failure. Economic reform had become an irresistible political necessity. Nothing less than a 'drastic readjustment' of the entire system was needed. The grafting of capitalism began in the countryside, where 80 percent of the population resided, with the reintroduction of material incentives into agricultural production. This was accomplished via the Communist Party's inauguration in December 1978 of a program of rural reforms that began with decollectivization. Rural reforms began as experiments in select provinces but were quickly expanded throughout China. Another important post-Mao reform was the development of an increasingly dynamic non-state-owned economic sector, collective and privately-owned businesses and industries that began to proliferate in the countryside, towns and cities. The persistence of the state economy also marks the limits of Deng Xiaoping's reforms.
