Since we adopted some economic measures recently, I must say the overall situation has improved a little. This is not to say that our production has expanded in any way, only that our readjustment effort has begun to yield results. The shortage of food, clothing and other daily necessities cannot be covered overnight, but as long as we continue our efforts in line with the readjustment policy, we will be able to overcome the difficulties and bring about an early turn for the better.
We must set about restoring agricultural production if we want to overcome difficulties and bring about a fundamental turn for the better in the financial and economic situation. If we fail in agriculture, there will be no hope of success in industry, and the shortage of food, clothing and other daily necessities cannot be filled up. Restoring agricultural production calls for a series of policies, two of which are primary. One is to arouse the peasants' enthusiasm for increased agricultural production, so that they will produce more grain and restore the growth of cash crops. The other is to have industry support agriculture.
In 1957 the grain yield amounted to 195 million tons, and 145 million tons last year. I cannot say for sure whether it will reach 150 million tons this year, since the weather has not been favourable. Some places suffered from floods and others from drought. All things considered, the grain yield this year will not be lower than last year's, but even if it reaches 150 million tons, it will still be 45 million tons short of the 1957 level. We must try to find ways to restore grain production within a certain period of time and, on the basis of increased grain output, restore the production of cash crops.
It seems to me that the problem of agriculture must be solved mainly through changes in the relations of production. This means arousing the peasants' initiative. At present there are still a few rural people's communes across the country that maintain commune ownership. Since the people there are unwilling to break them up, let them remain as they are. Other communes have production brigades as their accounting units, whereas even more communes have production teams as the accounting units. In some places where production teams form the accounting units, new situations have appeared, such as fixing farm output quotas for each household, holding households fully responsible for the farmland they work, and implementing the principle of ``five unifications''. It looks as though more than 20 per cent of the production teams have, in various forms, fixed output quotas for each household, so this is no trivial matter. The Party Central Committee will study answers to this question at the meeting to be held this coming August. We now have the policy of ``letting a hundred schools of thought contend''. A question of this importance should be open for discussion in line with that policy to let everybody offer suggestions so that answers can be found in the end.
As to what kind of relations of production is the best mode, I'm afraid we shall have to leave the matter to the discretion of local authorities, allowing them to adopt whatever mode of production that can facilitate quickest recovery and growth of agricultural production. The masses should also be allowed to adopt whatever mode they see fit, legalizing illegal practices as necessary. These are all tentative ideas, not final decisions, so they will not necessarily come to pass in future. When talking about fighting battles, Comrade Liu Bocheng often quotes a Sichuan proverb -- ``It does not matter if it is a yellow cat or a black cat, as long as it catches mice.'' The reason we defeated Chiang Kai-shek is that we did not always fight in the conventional way. Our sole aim is to win by taking advantage of given conditions. If we want to restore agricultural production, we must also take advantage of actual conditions. That is to say, we should not stick to a fixed mode of relations of production but adopt whatever mode that can help mobilize the masses' initiative. At present, it looks as though neither industry nor agriculture can advance without first taking one step back. Can you not see this? Is agriculture not now taking a step backwards? Are communes not taking a step backwards? The accounting unit has regressed from the commune through the production brigade to the production team, because only by stepping back can they go forward. At present, it is necessary to fully arouse the masses' initiative and tap their potential. The first step is to revive the production of grain, to be followed by cash crops. At the same time, we should gradually restore supplies of farm implements and draught animals. All this represents readjustment in the relations of production, and for us it is a test. Of course, our entire Party should hold a common view and be of one mind. For example, in order to keep the production team as the basic accounting unit, we shall have to convince the masses and strengthen the ranks of cadres. This is one possibility. Another possibility would be to legalize the practice of fixing farm output quotas for each household. These are all just ideas; as for what measures should actually be adopted, the entire Party, including the Central Committee, is now considering the matter. We must soberly deliberate these questions now. We failed to give them enough consideration in the past, rashly placing the entire country under a unified plan. In some cases, instead of giving full consideration to the different conditions and particular circumstances of different areas, we jumped to conclusions and made everyone do the same thing. As I have mentioned on other occasions, we have had too many movements, launching a movement for each and every undertaking, and all of them were nationwide in scope. It seems that they have not worked out successfully. In some cases we had no choice but to launch a movement, as, for example, the agrarian reform movement. However, even that movement was carried out with different methods at different stages.
Everything I have discussed above has to do with the policies to be adopted in the rural areas, all of which are designed to help peasants harvest more grain, plant more trees and raise more farm cattle. The peasants will be fairly happy, when they can retain more grain for their own use and turn over more to the state. Generally speaking, we must consolidate the collective economy of the country, that is, consolidate the socialist system. This is our fundamental orientation. Of course, we must also solve specific problems arising in our work and leadership. In the rural areas we have to readjust the relations of production at the grass-roots level and recognize the need of diversified modes of production. In my own opinion, it may be better to have diversified modes.
To restore agricultural production we must also solve problems concerning the relationship between urban and rural areas. More city dwellers mean more grain to be collected from the peasants, which will make it difficult for us to restore agricultural production. For example, ten million more city dwellers would require an additional 2 million tons of grain; 20 million more would mean 4 million tons; 30 million more, 6 million tons. It appears that each person could have only some 15 kg a month when 6 million tons of grain is shared by 30 million people. Actually, this is an immense amount, since there are only three hundred or so counties across the country which are comparatively rich in grain.
Two factors put pressure on the peasants for grain supplies, one of which is the urban population. So, we must try to reduce the population in the cities. Last year it was reduced by more than 10 million people, and if it can be reduced by another 20 million or more this year and next, we shall have an urban population the same size as that of 1957. The cadres in production brigades and teams under the communes constitute the other factor squeezing the peasants for more grain. There is a considerably large number of such cadres. If we tackle the problem from the structural angle, cutting back a large number of these cadres, the strain on the peasants will be eased accordingly. If the peasants had more grain on hand, they would have enough feed to raise pigs, and the amount of draught animals would gradually increase since they would not be dying in such great numbers. Of course, this also involves the relations of production. For example, how would draught animals be raised -- mainly privately or collectively?
By tackling the problem from the structural angle, I mean altering the present relationships among the commune, production brigade and production team. But how? The Party Central Committee has discussed this question many times, and comrades from provincial Party committees still hold differing views. Most of them are in favour of actually abolishing the brigade. Except for exercising leadership, formulating plans, checking on work and issuing general calls, neither the commune nor the brigade is in charge of money or grain, nor would they administer trade when supply and marketing co-operatives are set up in future. At present hundreds of people are fed with public grain in each commune, so this is a formidable problem. In fact, given the size of its working personnel, the scope and nature of its work, and its tasks, a commune is a large township as it used to be and should be now, and the commune committee can serve as the township people's committee. We think only one cadre will be enough for the brigade, who should take part in production and will not be paid by the peasants, instead receiving a subsidy from the state. This is one approach. Another is to fix the amount of subsidy for the village to pay the cadre as was done before. In future, a couple of brigades could merge into a village with a village head, a Party branch secretary and a clerk. The clerk would receive a subsidy from the state for his work points. This will not only serve considerably to reduce the amount of grain taken from the peasants, but also improve the relations between the Party and the masses, which is the greatest advantage.
In short, we should solve the problem of the relationship between urban and rural areas by reducing the urban population, which is a major policy, and by readjusting the structures of the commune, the production brigade and production team, which constitutes another major policy. We should help peasants gradually improve their living standards. This will in turn arouse their enthusiasm for production and bring about hope for the recovery and development of agriculture.
Another policy to help effect a recovery in agriculture is to have industry render more support to agriculture. First, industrial production in the service of agriculture cannot be reduced and must be increased, and we need to solve the problems in industrial production. Take farm machinery, for example. Although we have exerted great efforts in this regard for many years, we have not found satisfactory ways of manufacturing farm machinery and tools suited to different local conditions. In another example, although the state has spent a lot of money on water conservation projects in recent years, irrigation has yielded little result. Now we have to rebuild the existing water conservation facilities and dig wells in some places. In addition, in the production of fertilizers, we should find out what kind of chemical fertilizer is suited to which place. In short, industries in support of agriculture cannot be cut back and must be run well. Second, industrial production should be geared to people's needs for food, clothing and daily necessities so as to reduce the burden on agriculture. We can gradually solve the clothing problem, for example, with the help of industry. In 1957 we decided to import the technical data and equipment for manufacturing vinylon, but that decision was held up somehow. If vinylon factories were set up, they would help alleviate the strain on the supply of cotton and could exchange vinylon for peasants' cotton. This exchange might then spur on agricultural production. If we can help meet the need for clothing in this way, we can help meet the needs for food and other daily necessities in the same way.
To restore agricultural production, we must also solve the problem of market and commodity prices. Markets must be managed properly. The Central Committee has decided to have supply and marketing co-operatives set up everywhere in the country. If run well, these co-operatives can not only facilitate trade but also help organize and promote production, increase market supplies, and enable peasants to earn more income.
In short, we shall have no hope of success unless we make every effort to arouse the initiative of the masses, including both peasants and city dwellers. It appears that we can find a way to rehabilitate the national economy in a comparatively short time. We should work hard to bring about a fundamental turn for the better in our financial and economic situation within five years, that is, during the Third Five-Year Plan period, or sooner.
(Excerpt from a talk to all the comrades attending the Seventh Plenary Session of the Third Central Committee of the Chinese Communist Youth League.)