DP2824 China's Great Leap: Forward or Backward? Anatomy of a Central Planning Disaster

Author(s): Mark Yuying An , Wei Li , Dennis Tao Yang

Publication Date: June 2001

Keyword(s): Agricultural Crisis , Central Planning , Grain Procurement , Industrialization , Resource Diversion , Work Capacity , China

JEL(s): O14 , Q18

Programme Areas: Transition Economics

Link to this Page: www.cepr.org/pubs/dps/DP2824.asp

The Great Leap Forward (GLF) disaster, characterized by a collapse of grain output, and the associated famine in China between 1959 and 1961, can be attributed to a systemic failure in central planning. Encouraged by unrealistic expectations for agricultural productivity gains from collectivization, the government switched to an accelerated and infeasible timetable for industrialization. Consequently, it diverted massive amounts of agricultural resources to industry and imposed excessive grain procurement burdens on peasants, leaving them with insufficient food to sustain labour productivity. Grain output fell sharply at the onset of these policies and started to recover gradually when the policies were reversed. Official data and our supplementary survey data support the theoretical prediction regarding the dynamic progression of the disaster. They also show that over 80% of the decline in grain output is attributable to the policies of excessive procurement and resource diversion.