Local governments in poor areas were the first to permit and even
support HRS reform. The central government changed its position
gradually in response. At the party's Third Plenum in December 1978,
the official position was still that production teams were to remain the
basic unit of production management and accounting. Any change to
this was strictly prohibited. Despite this stance, in September 1979 the
government started to allow experiments with 'special management
systems'. In September 1980, it further permitted the adoption of various
forms of output contracting (to groups, labour and households). The
HRS, however, was only allowed as an experiment in poor areas. It was
not until January 1982 and the first 'No. 1 Document' that the HRS was
officially adopted as a policy and implemented across the nation.3 The
document confirmed that the HRS as well as the public ownership of