After the Central Committee of the CPC held a conference in Chengdu, Sichuan Province, in March 1958, a mass movement was launched to combine small agricultural producers' cooperatives into large ones. Mao Zedong supported the movement. In August of the same year, the combined cooperatives were named people's communes. In the same month the Political Bureau of the Central Committee held an enlarged meeting in Beidaihe, Hebei Province, at which it adopted the "Resolution on Establishing People's Communes in the Rural Areas". As a result, people's communes were quickly established throughout the country without any preliminary experimentation. The communes were large, owned most of the means of production, performed administrative functions as well as managing economic affairs, and took charge of all industrial, agricultural, commercial, educational and military undertakings. In general, one township was one commune, but in some cases, a whole county was a commune. Within the communes management was highly centralized, rich and poor production teams were brought to the same level, wealth was equally distributed and the property of production teams and individual commune members was requisitioned without compensation. The drive for communization spread. After the winter of 1958, and especially after the spring of 1961, the CPC Central Committee and Mao Zedong introduced policies to govern the people's communes and corrected a number of mistakes. But they failed to change the excessive centralism and egalitarianism that prevailed in the communes. Accordingly, the initiative of the peasants and the productive forces in the rural areas were still hobbled.

After the Third Plenary Session of the Eleventh CPC Central Committee (see note 3), the system of people's communes was gradually changed in the course of the reform of the rural economic structure. In October 1983, in accordance with the Constitution of the People's Republic of China, which stipulated that township governments should be established, the CPC Central Committee and the State Council issued the "Circular on Separating the Functions of Government from Commune Management and Establishing People's Township Governments". By the end of 1984 this work was basically completed throughout the country, putting an end to the system of people's communes.