At the end of the 1970s China was a predominantly agricultural, rural community. Eighty per cent of China’s vast population lived in the countryside and the number of people employed in agricultural pursuits was about 300 million. That only 40 per cent of national income in 1979 (Lardy, 1983, p. 1) originated in the agricultural sector largely reflected Communist China’s preference for industry over agriculture, although Lardy (1983) refers also to the land constraint, which had generated diminishing returns to labour in agriculture.
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