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2. Rural Development and Labor Migration: A ProfileThe initiation of rural reform in 1978 is widely regarded as a milestone inChinese development policy, bringing as it did the abolition of the People’sCommune system and the adoption of the Household Responsibility System.Rural reform greatly increased rural household income and acceleratedrural development. The per capita income of rural residents increased by168.9 percent from 1978 to 1985 and the rate of yearly increase reachedas much as 24.1 percent (NBS 2002a, 19). Another important result of thereform was the relaxation of rural laborers’ ties to the land and the transferof growing numbers of rural laborers to non-agricultural sectors or off-farmactivities. From the mid-1980s, rural residents started to open their ownenterprises near or close to villages and townships: the now well-knownTownship and Village Enterprises (TVEs). By 1990 these businesses hadabsorbed about 92.7 million rural laborers, rising to 135.1 million by 1996(NBS 2000, 119). However, there remains a large “surplus” of labor inrural areas. According to some researchers, only 150 million out of 500million rural laborers (see Figure 1) are needed in agriculture, and the other350 million rural laborers should be transferred to non-agricultural sectors.Rural–urban migration has been regarded as one of main ways to achievethis transfer of surplus rural labor.Figure 1. Number of Rural Laborers in China: 1978–2003220Source: NBS 2004, 473.Large-scale rural labor migration was the result of several factors: therelaxation of institutional constraints (including the household registrationor hukou system), unemployment in rural areas, sluggish rural developmentand rural laborers’ own agency (Huang et al., 1997). A remarkable increase