The early years of the program were designated as the “readjustment period” during which the main imbalances should be corrected and a basis should be laid for a well-planned modernization campaign. Hua Guofeng's ten-year schedule has been discarded, although many of its elements have been retained. The main objectives of the readjustment process were to expand exports rapidly; overcome major deficiencies in the transportation, communications, coal, iron, steel, building materials and electricity sectors; and correct the imbalance between light and heavy industry, increasing the growth rate of light industry and reducing investment in heavy industry. Agricultural production was stimulated in 1979 by a more than 22% increase in prices paid for the purchase of produce.
The most successful reform policy, the contractual liability production system in agriculture, was introduced by the government in 1979 as a way to increase incomes in poor rural units in mountainous or arid areas. Such a system allowed individual farmer families to work on land in exchange for delivering a definite amount of produce to the collective at a set price for profit. This arrangement created strong incentives to reduce production costs and increase productivity and, after its introduction, was adopted by agricultural units in all types of areas. Agricultural production was also stimulated by the establishment of farmer-free markets in urban and rural areas, allowing “specialized families” to operate on a profit-making basis, and devoting their efforts to producing a scarce good or service.
