The successful agricultural reform carried out in China in the 1970s started encountering mounting difficulties from the mid-1980s, as growth rates dropped and prices increased sharply. This study analyzes the different reform measures introduced in China in the past twenty years, and provides a full analysis of the existing agricultural system. Through careful examination of the political economy and the different policy options, the author argues that China should push forward with its market-oriented reform measures and introduce the rigors of international competition into the agricultural sector.