ABSTRACT
This chapter provides an overview of the operating mechanisms in agriculture prior to the reform. It discusses the effects of the reform in agriculture on production, resource allocation and income distribution. The chapter presents problems which substantially impair the further development of agriculture examined and finally possible countermeasures also are referred to. The beginning of economic reform arose from the farmers' attempts to change the egalitarian income distribution system. The People's Communes were set up during the 1950s with the aim of helping to establish a centrally planned economy in China through a forced collectivisation in rural areas where agriculture always played a predominant role in the economy. In addition to the unprecedented agricultural development which occurred during the economic reform, various problems have also emerged. Agricultural modernisation means a manifold increase in output of farm products through employing high quality of physical capital which embodies new technical knowledge and less labour, which is capable of using modern inputs.
