Jun 24

Prices in the Mao era – a peasant’s view

Written by Buxi on Tuesday, June 24th, 2008 at 8:06 pm
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The vast majority of Chinese favor and support the “opening up and reform” period started in 1978. But many are also very nostalgic for the Mao era, a time when equality was guaranteed, a time when socialism in China was far more than just a hypothetical. One simple example is translated below.

This article has been spread around numerous Chinese forums, actual origin not clear. (原贴)

I was born in 1954, in a village in Shandong province. I have a sister, and our parents are also peasant farmers. I want to start by talking about the prices of agricultural goods, starting with wheat as an example. From 1970 – 1980, the market price for wheat was: 0.35 RMB/shijin (ed: 0.5 kg), later growing to 0.35 RMB/shijing. The cost of things didn’t really change, it was very stable during this period. So the problem I want to discuss is, when a farmer sells a half kilogram of wheat on the market, what can he do with that money?
When my younger sister enrolled in first great in 1970, she only need to pay 0.30 RMB. At the time she only paid book fees, there were no other miscellaneous fees, a true “one fee system” (ed: which is what China has been trying to return to in recent years). When classes started and books were issued, the two texts “Language” and “Arithmetic” had a set price of 0.28 RMB total. So, the extra two cents paid when enrolling were returned to each student. These 0.28 RMB was the total amount of tuition due for the entire semester. So, based on the prices at the time, a farmer only needed to sell 0.8 shijin of wheat.

Let’s take a look at other expenses: diesel fuel used for irrigation and tractors was priced at 8 cents per shijin. In other words, one shijin of wheat could bring back 4.38 shijin of diesel oil. Bus tickets were five cents RMB, meaning one shijin of wheat gave us seven trips on the bus. Most parks at the time were also free, and even the ones that charged money didn’t ask for more than five cents RMB. Watching movies at the theater, a movie ticket cost ten cents, meaning if a farmer sells a shijin of wheat, they could watch 3.8 movies.

At the time, the market price for an egg was four cents. Someone once roughly calculated: if you raised a hen, the eggs from that hen was enough to pay the schooling fees for two students. And that’s not unreasonable; tuition fees through middle school for my sister and I were basically covered by the hens raised my mom. The money from these hens, other than paying for our school fees, were also enough to pay for the family’s oil/salt/soy sauce/vinegar/tea and other basic necessities.

Now, let’s look at agricultural prices in today’s reform/opening up period. What can selling a shijin of wheat do for us? How many students can a hen put through school? I assume everyone has an account book in their own hearts (ed: I unfortunately don’t…), so I won’t bother listing it out one by one. Based on this comparison, it’s not hard to draw a conclusion: who is it that’s depressing the cost of agricultural goods!? Who is it that’s sacrificing the farmer’s interests?! Things should be very clear.

Finally, I want to emphasize: at the time farmers had to turn in “patriotic grain” (ed: grain taken from the harvest as tax), and farming taxes weren’t yet eliminated (ed: as they were a few years ago), but the burden on peasants at the time were much easier than what it is today! Although we didn’t have the things and money that we have today, but at least the peasants were really the country’s masters!

Based on what I’ve seen online and the people around me, a majority of average laobaixing are really nostalgic for the Mao Zedong era, because although that era was “poor”, but we felt fortunate, stable, and we lived for a goal. There are many reasons for this: idealism, very little exploitation, don’t have to put up with officials and the wealthy, and everyone was equal.

But really, were the laobaixing in the Mao era really that “poor”?

Anyone above the age of 40 lived through that period. During the Mao Era, people in the cities enjoyed free health care, universal health care, government-provided housing. Tuition for elementary school and middle school was very low, and university tuition wasn’t only free, students even received a stipend from the government. How much are these benefits worth in today’s prices? I took a rough guess at estimating it, might be too accurate, but you can use it as reference.

– Health care: using a random city’s 2004 costs as the standard, every person’s average medical costs every year is 1434 RMB. If we assume 4 people per household, that translates into 4302 RMB per household. People born in 1964 have a life expectancy of 75.85 years, so this translates into a total expenditure of 75.85×4320 = 435046 RMB.

– Education: using a random city’s 2004 costs as the standard, every household’s average expenditure on education is 5510 RMB. Over 75.85 years, this translates into 417934 RMB.

– Housing: In the 80s, average urban-dwellers had a housing space of 3.6 square meters. If we calculate at a cost of 3000 RMB/m2, and if every household lives in 1.3 homes, that translates into 56160 RMB.

All three things added together, that adds up to 909140 RMB! That is, the total amount of benefits an average family would’ve enjoyed over their life-time would’ve been equal to almost a million RMB!

Household income: using a random city’s 2004 standard, employed people had average income of 10009 RMB, and average subtracting average living costs, had savings of 5800 RMB. Every household consists of 1.6 workers, and each worker works an average of 35 years over the course of their life. So, total lifetime savings for an average family is 324800 RMB.

That means the benefits every family would have received is 2.8 times what they actually earn! Even if you work your entire life, it still wouldn’t be worth more than the benefits provided during the Mao Zedong era! Is the Mao Zedong era really that poor? If it was that poor, why were laobaixing enjoying such advantages?

And when Chairman Mao passed away, our country had no internal or external debt!

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15 Responses to “Prices in the Mao era – a peasant’s view”

  1. WillF Says:

    What the article doesn’t mention is that there were shortages of nearly everything during that period. The reason things were so cheap was due to government subsidies, which made things affordable to nearly everyone but provided no incentives on the supply side, which (as always) led to a shortage. The problems that existed in Mao-era China were typical of other Communist countries even in the best of times.

    I feel for the plight of the poor in China. But the idea that things were materially better under the socialist economic system is absurd. Perhaps the argument can be made that people didn’t want as much back then, so they were more satisfied, happier, or whatever. But they most certainly didn’t have as much, and had no opportunity to get more.

    It’s important to remember that the origins of gaige kaifang are found in the countryside, where frustrated farmers began to ignore state planning schemes and successfully increased yields as a result.

  2. Nimrod Says:

    I agree with WillF, but there is nonetheless something interesting here. The reform and opening caused a repricing of everything to market, and not necessarily based on need or social good. On the one hand, it made things like refrigerators and TV’s (for instance) available. When they weren’t available, whether due to shortages or technological deficiency, these items essentially had a cost of infinity! On the other hand, it made things like medical care, education, and social safety net cost a lot more, because these things actually are quite valuable, even if they are needed by everybody. At the turn of the century, China was pushing even further on the wave of “chanyehua” (产业化, i.e. turning … into a business, monetizing) of all kinds of things, not only education and medicine but say, scientific research. That’s going too far. Many people saw a need to turn back, so that was the background that generated the kind of recoil seen in this post.

  3. snow Says:

    The piece certainly calls for reflection on the three decades of gaige kaifang. No one in a clear mind would embrace “poor socialism,” which we once were, as an ideal society. The issue at hand is that not all that practiced by the western/developed capitalist countries are valuable, useful enough to be held as ultimate models in China’s case. In fact some of them are repeatedly proven pitfalls or problematic causing social ills and social inequality. And not all that didn’t work well in Mao time are necessarily trashes. Shouldn’t the government and liberal elites who campaigned for all-out westernization be responsible for the staggering gap between rich and poor and bankruptcy of public social welfare, a typical capitalist disease, in China today?

  4. FOARP Says:

    One often hears people say that such welfare elements as free healthcare, education etc. are impossible in modern China given China’s poverty – but this is clearly not true. Today Chinese central and local government together dispose of something like 31-33% of Chinese GDP, it would be relatively simple for the government to increase its take to 40-45% without overly burdening the economy and use the extra revenue to pay for education and basic health care. Sure, it might slow growth a bit, but spending on healthcare and education is hardly wasted.

  5. Buxi Says:


    Well, to play devil’s advocate here, spending on health care (in the minds of those running the reforms) would be wasted, because it would shrivel up potential commercial operators and the development of a market economy in health-care. Like many Western countries, China is trying to figure out the right solution for health-care in the present environment, and it’s really not that simple.

    I don’t want to defend the lack of education spending, except to say that the Chinese government finally seems to be getting it right now. (I get the feeling the original post is an older one, especially since it mentions “2004 prices”. Post-2004, the cost of education in rural China, or even for migrant workers in urban China, has changed dramatically.)


    I hope that what we’re doing is not a true “capitalist disease”, but only a passing phase. Transition periods are always the worst, because they often have the disadvantages of the old and new systems, together. But as long as we still remember the positive effects of what socialism provided… I really hope it will act as a brake for out of control capitalism.

    Back to the original post, I think the analysis on housing costs is way off, of course. The kind of homes that we lived in 30 years ago couldn’t cost 3000 RMB/sq meter in the modern economy, especially if we didn’t have any appliances, cars, or even bicycles. And chicken eggs wouldn’t pay for computer access for school children, today.

    In a lot of ways, I’m really grateful the reform period started in 1978… although I certainly wish it had started earlier (maybe 1878). If we waited any longer, I don’t know if China would have any chance of catching up in the digital revolution/knowledge economy.

  6. FOARP Says:

    @Buxi – Yes, and a lot of other evils might follow an increase in state spending (inflation etc.). I suppose the government has at least committed to making primary education free in the countryside, but this is far from the kind of cradle-to-grave coverage that the poorer folk of China would like – but then the tax burden for such a welfare state wouldn’t fall on them.

  7. WillF Says:

    China may be interested in learning from the health care experiences of other Western nations, such as Canada, UK, France, etc. These might guide its judgment on how to devise workable and affordable health care and education systems. But note that none of these countries ever operated under a system like the socialist one under Mao. I agree that the current state of health care and education in rural China is unacceptable. But the answer isn’t to revert to the days of barefoot doctors; rather, the answer lies in learning from systems that have managed to coexist with market economics for years.

  8. Buxi Says:

    I have quite a few family members in the medical field in China. (And my wife is a doctor-to-be in the United States.) My impression is that things have improved somewhat in China, but it’s almost by accident… I’m not convinced anyone up on top has a real clear strategy for how the health system should look in 10 years, which is a huge problem compared to the expertise in other field.

    There’s a big cultural issue here too. In the “old China” days, doctors in China were often paid on the basis of actual success. You healed someone; if you failed, you wouldn’t expect a cent. In the modern market economy, it doesn’t work like that. If a hospital spends a week trying to save a critically ill person, it will accumulate huge costs in equipment, compensation for skilled workers… no developed country I’m aware of can find a way to just ignore those costs. So, this leads to so much conflict and anger, with the families of patients attacking doctors a very serious issue.

    I don’t know. I’m glad health insurance has improved in the last 2-3 years, I’m glad the mainland is opening up investment to foreign hospitals (especially Taiwan, which went through a similar development path)… but I’m still not optimistic on the near term about health care in China. A long way to go.

  9. Nimrod Says:

    I moved my reply comment to sun bin from the other post, since it seems more relevant here:

    sun bin wrote

    But Guardian is a rarity these days, being a traditionally “left-winged” paper sympathetic to the socialists(?), i think. (and many people still assocaite China with socialism!!!, despite the fact that it is as capitalistic as the US)

    I’ve heard Chinese people remark that Canada or European countries are more socialist than China, that they are the true socialist countries and China is a fake one.

    On whether China is socialist or capitalist, I’d say China has a split personality right now. Some say it’s a capitalist paradise — the tired “example” people like to use is the vending of Mao paraphernalia at tourist places. It’s true that there is rampant capitalism going on at this point for growth, and most people are well enamored with the benefits of the market, but I’d argue that China isn’t a capitalist country, certainly not by ideology, and may never be one by ideology.

    Let’s put aside the fact that the government is obviously still very much involved in everything and just look at people. As WillF points out, because of its recent history, China still has memory of socialism, and maybe that translates into a socialist conscience deep down. I think it does. One should remember that reform and opening is a rejection of ideology for pragmatism (whatever works), not a rejection of socialist ideology for capitalist ideology. There is a difference. Now how things will actually turn out I don’t know. But because of the socialist conscience, I think (or at least hope) China has a higher chance of implementing or re-implementing the kind of beneficial socialist programs (like in Europe or Canada) that would never fly in the US.

  10. WillF Says:

    China definitely has more of a “serve the people” attitude towards governance than the US does (we have more of a “help us with what we can’t do ourselves, but otherwise leave us alone” attitude). I think universal health care will definitely catch on in China eventually. As for the particular cultural aspects of health care, such as not paying unless you’re cured, that shouldn’t be an issue if nobody actually pays directly for services, but rather through taxes. Of course, medical professionalism (keeping doctors’ motivated to do the job right) may be an issue, but it shouldn’t be too bad so long as doctors as a profession maintain their strict code of ethics and responsibility.

  11. Buxi Says:

    I think universal health care will definitely catch on in China eventually.

    I really doubt that. The current trends seem to indicate China might move towards universal health-care insurance, but *not* with the government controlling hospitals and health-care providers. In other words, one-payer system (similar to what Hillary Clinton once proposed), but not one-provider.

    Are there any Western nations that have successfully done that? My only exposure to Canada and Western Europe’s health system (thanks to the probably biased Michael Moore movie) tells me in those countries, the government controls the supply of health services.

  12. FOARP Says:

    @Buxi – That’s pretty much only the case in Canada, where private hospitals are disallowed, all other countries that I know of allow private medicine to function alongside their national health systems. The main problem is that in some countries public money may not be spent in a private hospital.

  13. WillF Says:

    @Buxi – I’m sorry I wasn’t clear. I meant that universal health care in some form – universal insurance or otherwise – will reach China eventually. The reason I say this is because most advanced economies have some form of universal health care (with the notable exception of the US), and given the historical role of government in China as a service provider as well as a protector, I would expect that China would eventually adopt some form of universal health care, though probably not in the near future.

    My hunch is that the government’s focus on raising per-capita GDP will gradually curb down as the country approaches upper-middle income levels. The closer China gets to becoming “moderately wealthy”, the weaker the GDP-is-paramount logic will become. Public pressure for social services such as health care will increase. Rather than adopt the US health care model (which is widely disliked here among health care professionals and experts), China will probably look to one of the other developed nations as a reference, or create its own system. At the same time, the supply of doctors and the quality of health care will probably have increased, which would make such a system technically feasible. Of course, this is all speculative.

  14. Buxi Says:


    Ah, put in such a moderate and considered way, I can’t disagree with you at all. Very well said, insightful, and I think accurate.


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