Household-responsibility system

Responsibility system (also contract responsibility system or household responsibility system; simplified Chinese: 家庭联产承包责任制; traditional Chinese: 家庭聯產承包責任制; pinyin: Jiātíng liánchǎn chéngbāo zérènzhì) was a practice in China, first adopted in agriculture in 1979 and later extended to other sectors of the economy, by which local managers are held responsible for the profits and losses of an enterprise. This system partially supplanted the egalitarian distribution method, whereby the state assumed all profits and losses.

In traditional Maoist organization of the rural economy and that of other collectivised programs, farmers were given by the government a quota of goods to produce. They received compensation for meeting the quota. Going beyond the quota rarely produced a sizeable economic reward. In the early 1980s peasants were given drastically reduced quotas. What food they grew beyond the quota was sold in the free market at unregulated prices. This system became an instant success, quickly causing one of the largest increases in standard-of-living for such a large number of people in such a short time. This system maintained quotas, and thus the element of socialist societies termed in China the "iron rice-bowl" (in which the state ensured food and employment).

The secret experiment proved very successful. The famous example was that in Xiaogang village, Fengyang county, Anhui province (安徽省凤阳县小岗村), where 18 households signed a contract with local cadres. The cadres secretly allowed farmers to produce by household and if the cadres were punished for this the farmers agree to take care of the families of the cadres. In 1979 similar experiments began in Sichuan and Anhui provinces, both seeing dramatic increases in agricultural productivity. Deng Xiaoping openly praised these experiments in 1980, and the system has been adopted nationwide since 1981.

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