In 1978, Anhui Province was suffering a severe drought, and many farmers couldn't make ends meet. In order to increase crop production, 18 farmers in Xiaogang Village, Fengyang County signed a secret compact on November 24; in it, they allocated to specific households the fields in the village that had been held collectively. The compact also implemented a "production household compact responsibility system", whereby each farmer household would manage production, allocation, and operations of their own fields. Each farmers only need to hand over a certain amount of agricultural products to the state; the rest would be kept by the farmer to do with what they will. However, this practice violated the official land policy at the time (that is, the people's commune system, in which land was collectively owned and managed in a unified manner). The villagers lived in fear that they would be imprisoned.

Only a year after the compact's household responsibility system had been put in place, grain production in the village had increased significantly. Wan Li, who was First Secretary of the Anhui Provincial Party Committee at the time, spoke highly of this and promoted it throughout the province. Deng Xiaoping expressed his support; the Chinese Communist Party (CCP) Central Committee also issued the notice "On Further Strengthening and Perfecting the Agricultural Production Responsibility System" in September 1980, which affirmed the socialist nature of the household compact responsibility system. From that point on, the household compact responsibility system spread rapidly throughout China. Xiaogang Village was also called "the first village for agricultural Reform and Opening Up".

References: [央視網("China Central Television")(Chinese)] (http://m.news.cctv.com/2016/06/23/ARTIQJRrSuDdEMjOrZ8GyNiW160623.shtml); [BBC中文網("BBC News Chinese Edition")(Chinese)] (https://www.bbc.com/zhongwen/trad/china/2015/07/150715_wanli_profile); [中共中央黨史和文獻研究院("Party History and Literary Research Institute of the CCP Central Committee")(Chinese)] (https://www.dswxyjy.org.cn/n1/2021/0514/c437209-32103313.html)