China's First Capitalist Village

How 18 Starving Farmers in a Small Village Changed China Forever

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The small village of Xiaogang located in the eastern Anhui province, while seeming relatively unremarkable, is, in reality, subject to the utmost importance and notoriety in China’s economic development so much so that in the past 4 decades it has been visited by 3 separate presidents of china. Even on average days, people all over china visit Xiaogang to learn about its history.

In December of 1978, 18 farmers of Xiaogang village signed a household contract using the most traditional and straightforward method at the time, with the 18 fingerprints of the farmers. The contract was drafted by the vice-captain of Xiaogang’s production team, Yan Hongchang. This contract’s purpose was to divide the communally owned farmland into family-owned plots of land. Due to these law-breaking farmers (at the time) Xiaogang became the catalyst of China’s rural reforms that helped to bring up millions of people out of extreme poverty.

However, this act of dividing communal farmland at the time could have been seen by some authorities as defiance against the socialist system, which could lead to the death penalty. The 18 farmers knowingly signed the contract with full awareness of this risk, but due to starvation and desperation, they simply had no choice.

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Signatures at the bottom of an agreement to implement Yan Hongchang’s proposed rural reform on Nov. 24, 1978

Under the contract, plots of farmland were to be run by a household instead of the forced collective farming system used previously. With this new system, after the mandatory quota was given to the state and the commune, the farmers could then keep any surplus yield for themselves. This meant that the harder the farmers worked, the more they earned. The farmers of Xiaogang became the first sign of a market-driven economy in communist china. It is said that as a result of the newfound enthusiasm of the new system, anyone that could walk helped out with the farming, including the elderly, and that they would wake up early and work as late as they could.

Thus, yields from the fields skyrocketed from 10,000kg in 1978 to 65,000kg in 1979, which exceeded the total yields of the past 5 years combined. The income per capita also grew over sixteen-fold from around 3USD to 50USD.

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The Farming Pioneers

Xiaogang’s success story had caught the attention of China’s former leader Deng Xiaoping, who had just come into power and was looking for ways to revolutionize China’s economy. He then soon officially validated Xiaogang’s innovations, which resulted in the small village becoming the model for the nation and changing China’s history forever.

The residents of Xiaogang are incredibly proud of their history, with the contract with 18 fingerprints can be seen in the town square, in government-built memorial halls, and even in restaurants all across the village. However Xiaogang had failed to capitalize on its first-mover advantage, and over time other cities and towns began to outclass the village.

Xiaogang is now seen as not realizing its potential as the first village to enact land reforms in China. This was due to Xiaogang’s remote location, making many aspects of the land undesirable or unsuitable for industry, as well as the transportation inconvenience. However, in recent years Yan Yushan, Yan Hongchang’s eldest son, has worked to build new entrepreneurial and start-up opportunities within Xiaogang.

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Present day Xiaogang, China

Although Xiaogang’s modern importance continues to fade, it cannot be denied that the small village and the 18 farmers 40 years ago have played an integral part in Chinese history and the economical development of China.