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peasants, and were demarcated as rich peasants by straining the point. They said that their not serving in the army was disadvantageous to us. They said moreover that demarcating “producing rich peasants” engaging in slight exploitation as middle peasants would cause the middle peasants to produce without fear and is beneficial to production. It may be seen from this that the peasants are not satisfied with having a large number of people demarcated incorrectly as landlords or rich peasants. They consider that this is making too many enemies and their own strength is thus weakened, and it endangers the development of production. This is a very correct way of looking at things. It must be pointed out here that I am raising the question of the incorrect determination of class standing at Hsinghsion’s Tsai-chiaai only as an example. It can be affirmatively stated that in other villages of the Shansi-Suiyuan Area in Northwest, there is sure to be quite a number of cases of the sort as incorrect determination of class standing that took place in Tsai-chiaai, to cases more or less similar to this. All leading comrades engaging in agrarian reform work must seriously examine this question of determining class standing, and publicly and definitely rectify mistakes they have committed. Even if only a single person is determined incorrectly, this must nevertheless be rectified. Such criterions of determining class standing as were employed at Tsai-chiaai are incorrect. But what, after all, is the correct criterion for determination of class standing? This is the first thing we must clarify. There is only one criterion for demarcating class standing: that is, determine the various classes according to the various relationships of people to the means of production. The only criterion for demarcating classes is the various relationship of exploiter and exploited produced by the possession or lack of the means of production, how much and what are possessed and how they are employed. Who are Rich, Middle and Poor? What are the means of production? The means of production in industry are factories, machinery, raw materials and other capital. The means of production in agriculture are land, ploughing animals, agricultural implements, houses, etc. The only criterion for demarcation of rural classes is the various relation- ships of exploiter and exploited produced from the possession or lack of land, ploughing animals, agricultural implements, houses and other means of production, how much and what is possessed, and how they are employed (tilling himself, hiring labour or renting out). Based on the above criterion, it is very easy to differentiate between the various class standings in October - 2018 the rural areas. The principal class standings in the rural areas can in general be demarcated follows: (1) Those who possess much land, do not labour themselves, specially relying on exploiting the peasants’ land rent, or concurrently engage in usury, profiting without working, are landlords (2) Those who possess much land, ploughing animals and farm implements, participate themselves in the principal labour, and at the same time exploit the hired labour of peasants, are rich peasants. China’s old-type rich peasants are strongly feudal in nature. Most of them concurrently engage in usury or rent out a portion of the land. On the one hand, they labour themselves, thus being similar to peasants and on the other hand they engage in feudal or semi- feudal exploitation, thus being similar to landlords. (3) Those with land, ploughing animals and agricultural implements, labouring themselves and not exploiting or only slightly exploiting other peasants are middle peasants. (5) Those not possessing land, ploughing animals or agricultural implements, selling their own labour power, are farm labourers. The principal class standings in rural areas should in general be demarcated thus. But should all those who rent out land or hire full-time labourers be dealt both as landlords or rich peasants without exception? There are exceptions, too. For example, those who have lost labour power like widows, orphans, cripples and invalids may be permitted to rent out their small plots of land. Others like doctors, primary school teachers and workers, whose families have a little land and cannot concurrently till it because of their employment and who can just maintain themselves, also cannot be considered as landlords and rich peasants although they rent out their land or hire others to till it. Aside from these, there are some other complex circumstances which must be stipulated in detail. The things spoken of here are some of the most typical conditions. How to differentiate between rich peasants and middle peasants is a question which must be dealt with very carefully. Speaking in general, middle peasants do not exploit others, but [even] those [who do] both only slight or incidental exploitation, should still be considered middle peasants. On this question, the Central Committee of the Chinese Communist party recently decided to adopt a policy more liberal than in 1933. This is those engaging in slight exploitation (such as hiring others to herd cattle or sheep hiring part-time labourers, or labourers on a monthly basis, or even one full-time labourer or so; perhaps renting out a little land or lending out small loans), the income from which does not exceed 25 per cent of their gross income are still considered middle peasants. This is more lenient than the 5