Under the present socialist system, land, natural resources, and most industrial enterprises belong to the state. Between 1949 and the late 1970s, the government encouraged or specified various forms of cooperative or collective management and organization of agriculture, industry, and services. Land reform was completed in the Han areas by 1952, and somewhat later among the minorities. During land reform, household landholdings, draft animals, and tools were essentially equalized. Between 1952 and 1954, households were encouraged to pool their labor and production tools into mutual aid teams of four or five households. These organizations were voluntary, as were the initial agricultural cooperatives (sometimes referred to as lower-level agricultural producers cooperatives) that began to form in 1954. Payment to member households was based on a combination of labor input and ownership of productive resources. However, by 1956 villagewide collectives (higher-level agricultural producers cooperatives) became obligatory and compensation shifted to labor input alone. After 1958, villages (renamed "brigades") were incorporated into units averaging twenty villages, known as People's Communes. Each brigade and its component teams organized daily work tasks and had some autonomy in developing sideline industries and determining pay rates, but most major decisions were made by the commune or higher levels of government. The commune center was usually located in a market town; after 1966, the local free markets were abolished and did not resume until the late 1970s. The commune center usually included a middle school, a small hospital and outpatient clinic, a few small factories and repair services geared to serving agriculture, postal and banking services, and state-owned shops serving local needs. Commune cadres (officials and technicians) were usually assigned from elsewhere and were salaried by the state. During the years of the Great Proletarian Cultural Revolution (1966-1976) brigades were restricted in their economic activities and the general conditions in the countryside failed to improve.
During these years of experiment with various forms of collective work in agriculture, there was some growth of the urban centers. The rural population fell from close to 90 percent in 1949 to 80 percent in 1961. But in the late 1950s, the government began to strictly supervise movement from the rural areas into the cities. State control over urban job assignments, housing, ration cards, and residence permits limited rural migration into the cities. At the same time, millions of urban youth volunteered or were assigned to work in the countryside in order to ease urban population pressures.
Since the late 1970s there have been a number of important changes, starting with the reopening of the free markets for foodstuffs and small homemade goods in the rural and urban areas. The government allowed some of the sent-down youth to return to the towns and cities. In the early 1980s, the state encouraged the dismantling of the collective system in the countryside, leaving the timing and procedures to local decision. Households can now contract for land and other productive resources, retaining most of the profit for themselves. The authorities encourage peasants to develop new enterprises, either on a household basis or in cooperation with others. Average income has risen rapidly. A parallel development in the cities is the emergence of free-market entrepreneurs who provide a wide variety of goods and services. Travel and transport restrictions have eased. There is also permanent population movement: by the mid-1980s less than 70 percent of the population could still be counted as rural, because of the growth of established cities and new towns. By 1986, there were at least forty cities with populations over one million, not including suburban counties under city administration. Other urban growth comes from the organization of five Special Economic Zones and a number of Development Zones, where the state welcomes foreign investment and joint ventures. Wages, living conditions, and the general quality of life are much higher in these new zones.
Since 1980, the standard of living has been rising rapidly in inner China. However, in the areas inhabited by the various national minorities the rise has been much slower. In terms of per capita income, Tibet, Ningxia, Xinjiang, Gansu, Yunnan, and Guizhou rank lowest in income and consumption of goods. This situation has only recently begun to change, with the development of trade across national borders with the countries of the former Soviet Union or with mainland Southeast Asia and the Middle East.
In recent decades, China's economic development was slowed by population growth. This problem led to recent measures that attempt to limit urban families to one child and rural families to two. There is some flexibility in the policy: for example, a rural couple that has two daughters will usually be allowed to try again in hopes of having a son. Penalties for having additional children vary locally; they include fines, docking of wages, withdrawal of free medical care, and/or refusal of admission to state-run nurseries and kindergartens. For successful peasant families or free-market entrepreneurs these economic penalties are no hardship. Most of the national minorities are still exempted from the restrictions on family size but are being encouraged to practice birth control. The birthrate nationwide dropped to around 20 or 21 births per 1,000 people in the late 1980s.
Increased foreign contacts through trade, tourism, and scholarly exchanges have had a visible impact on people's lives, particularly in the cities and their immediate environs. Western styles of clothing and house furnishings have become popular, along with modern conveniences like color televisions, stereo tape recorders, compact-disc players, refrigerators, and washing machines. Popular music has been affected by rock music and Western classical music; modern dance now finds an audience in the cities, the graphic arts show a strong European influence, and some of the popular writers of fiction or drama have been influenced by contemporary European-American literary traditions. Even foreign foods such as bread and dairy products find a market, and restaurants serving foreign foods are increasingly popular. Western political and economic ideas, other than those of the Marxist school of thought, are also finding support among the intelligentsia. There has been some liberalization of the political system since the late 1970s, with elections for delegates to the National Peoples Congress and local representative bodies. However, the control of the society by the Communist party remains strong, and political dissent continues to be viewed as a threat to national security.