China's move toward reform has been traced to an agreement among farmers in Xiaogang to secretly subdivide their common farmland in December 1978, after which the production of grain increased dramatically.

[5][2] During the Great Leap Forward, the Chinese Communist Party made a series of economic reforms, where the most disastrous of them was the collectivization of the administration of private property, especially, the rural lands.

They agreed to break the law at the time by signing a secret agreement to divide the land, a local People's Commune, into family plots.

The new leadership under Deng Xiaoping was looking for ways to reform China's economy and the discovery of Xiaogang's innovation was held up as a model to other villages across the country.

The secret signing of the contract in Xiaogang is widely regarded by historians and media as the beginning of the period of rapid economic growth and industrialisation that mainland China has experienced ever since.