The Rural Organization

The Agricultural Reform in China

By Lisa 2009.11.23

The RuralThe Rural EconomyEconomy

I.I. Rural OrganizationRural OrganizationII.II. Agriculture: Output, Inputs and TechnologyAgriculture: Output, Inputs and Technology

III.III. Rural Industrialization: Township and Village Enterprises (TVEs)Rural Industrialization: Township and Village Enterprises (TVEs)

Content for today

1.1The Chinese Village1.1The Chinese Village

1.2Agricultural Collectives1.2Agricultural Collectives

1.2.1 Features of the Agricultural Collectives1.2.1 Features of the Agricultural Collectives

1.2.2 Discussion of Collectives1.2.2 Discussion of Collectives

1.2.3. The Agricultural Policy Environment of the Collectives: “Grain 1.2.3. The Agricultural Policy Environment of the Collectives: “Grain

First”First”

1.3 The Second Revolution in the Countryside: Rural Reforms, 1979-19841.3 The Second Revolution in the Countryside: Rural Reforms, 1979-1984

1.3.1 Production Surges in the Wake of Rural Organizational Change1.3.1 Production Surges in the Wake of Rural Organizational Change

1.3.2 The Side Effect of Reform: Rural Public Services Decline1.3.2 The Side Effect of Reform: Rural Public Services Decline

1.4 The Emergence of Rural Land Markets1.4 The Emergence of Rural Land Markets

Ⅰ Rural Organization

The Chinese The Chinese Village Village

In the developed areas around large cities, what were originally separate villages now merge into a dense landscape of suburban industrialization and urban sprawl.

Nearly every Chinese farmer lives in a village, which has been the dominant form of organization for as long as records exist.

In remote areas, village size dwindles, settlements may consist of only five or six houses, and there are a few areas where farmers live in individual farmsteads.

Some villages known as single-lineage villages are composed entirely of households with the same surname.

Maonan Ethnic Minority lives in single-lineage villages

Village is not just a location but an organizational form The national government promotes the

idea of the administrative village, which should have a “village committee” to serve as a rudimentary institution of self-governance and to carry on some of the functions of the agricultural collectives that were dismantled in the early 1980s. Administrative villages may incorporate several natural villages or hamlets, and there are also villages where no village committees function.

Villages vary enormously in their level of modernization and connection to the outside world.

Rural Village in Guangdong

Dang Jia Village, Han City, Shanxi

Agricultural CollectivesAgricultural Collectives

After 1949, the Chinese government gradually added a new organizational structure on the traditional base-- the organization of farmers into collectives, which took over responsibility for agricultural production from individual households. From the mid-1950s to the early 1980s, the collectives were the dominant rural institution.During the heyday of the socialist economy, the primary role was always to organize agricultural production, but collectives were also organizations for the delivery of services and goods that had previously not been available in the countryside. Moreover, they were inevitably instruments for the extension of state political control into the countryside.

AgriculturalAgricultural CollectivesCollectivesFeatures of the Agricultural CollectivesDiscussion of CollectivesThe Agricultural Policy Environment of

the Collectives: “Grain First”

Features of the Agricultural CollectivesThere were three basic characteristics of the

collectives:1. The land was pooled and worked in common

Ownership of the land was transferred to “the collective”, meaning the residents of a given village. Individual farm households kept ownership of their homes and a few farm animals, and they also retained control of “private plots”. All other productive assets were owned by the collective.

Features of the Agricultural Collectives

2. The collective served as the basic accounting unit Each able worker was assigned a daily job by the collective, and

labor was coordinated. With the income derived from sale of the harvest, the collective paid off debts incurred to buy inputs and set aside money in a number of collectively controlled funds( for public welfare or accumulation). Only after these costs were paid and set-asides were deducted did the collective calculate the net income that was available to be distributed to households. Households received income both in primarily food grain and in cash.

Table 1 Changes in the organization of agriculture ( *basic accounting unit)

Natural units

1956-1958

1958-1959 1962-1981 1982-present

Standard marketing

area-market town

Commune * (over 5000 households)

Commune (2000

households)

Township (3000

households) government

and economic

cooperation

Large village

Agricultural

producers cooperati

ve*

(100-250 household

s)

Brigade (200

households)

Village

Small village or

neighborhood

Team Team * (30 households)

household household

household household household*

3. Net income was distributed to households on the basis of work points.

Individuals earned “work points” that were entered into account over the course of the year as the work was done. At the end of the year after the harvest , the total net income of the collective was computed and divided by the total number of work points. Only then did the collective members learn the value of a work point.

Features of the Agricultural Collectives

Discussion of CollectivesCollectives were used to attain three types of

objectives: economic, social and political.The primary economic objective was organizing

agricultural production. It is clear that the collectives failed. It was hard to coordinate tasks among 30-40 households, and there were no economies of scale in most types of agricultural production, thus collectives were unable to improve efficiency by organizing larger units.

Collectives were able to mobilize resources and increase total inputs available for production.

Collectives were also a convenient way to organize nonagricultural activities.

The Agricultural Policy Environment of the Collectives: “Grain First”Collectives were generally forced to respond

to pressures to give priority to grain production. “Grain First” policies were exemplified by the slogan “take grain as the key link” ( 以粮为纲 ) especially during the Cultural Revolution.

Strategy emphasized compulsory procurement of grain from the peasantry at a state-set low price, as an implicit tax, making the peasantry indirectly pay much of the cost of industrialization drive.

Assignments for presentation 2009.11.30 Rural industrialization: Township and

Village Enterprises (TVEs) Diverse regional models of TVE

development Responding to different regional

conditions, TVEs developed in different patterns in different parts of China. Each pattern or model provides information about the forces shaping Chinese rural development.

A. The Southern Jiangsu (Sunan) ModelB. The Wenzhou ModelC. The Pearl River Delta Model

The Southern Jiangsu Model

Southern Jiangsu, or Sunan for short, is the relatively prosperous and developed area of the Yangtze Delta around Shanghai, an area that has been among the most economically advanced regions of China for centuries. There the dominant model of TVE development was one in which the township and village governments and collective ownership maintained the leading role. This model developed in areas of southern Jiangsu where TVEs flourished early, beginning in the early 1970s. TVEs began developing while the collective system was still firmly in place in the countryside. As TVEs expanded, the collectives maintained control, even when collective system declined elsewhere. Because of the longer history and greater capital resources in these areas, TVEs tend to be much bigger, more capital-intensive, and more technologically sophisticated than TVEs in other parts of the country.

The Wenzhou ModelThe town of Wenzhou is only about 300 kilometers

south of southern Jiangsu, on the coast of the neighboring province of Zhejiang, but it has a very different geographical setting, and it evolved a very different model of TVE development. Rugged and fairly remote, Wenzhou was quite removed from the urban influences so important in southern Jiangsu. From the beginning of its explosive growth, Wenzhou’s economy has been based on private ownership. Firms in Wenzhou were initially tiny, based on individual households, and specializing in modest articles of daily use. Wenzhou is a very special place, with a long cultural tradition of entrepreneurship and spectacular economic growth in the past 25 years.

The Pearl River Delta Model In the Pearl River Delta- the region between Hong Kong

and Guangzhou that is the core of the Southern Coast macro region. TVEs developed rapidly under the stimulus of foreign investment. This model was pioneered by Hong Kong businessmen who had grown up in the delta and returned to their home villages to start cooperative businesses. In these transactions, village leaders acted as managers of village assets, leasing land, signing contracts for export processing and coordinating labor and social issues. As in the Southern Jiangsu model, nearby urban businesses and local governments both played an important role. Production grew rapidly in large factories. In the Pearl River Delta, however, factories were usually export-oriented manufacturers of light, labor-intensive products.

References Byrd, William, and Qingsong Lin, eds. (1990). China’s Rural

Industry: Structure, Development and Reform. New York: Oxford University Press.

Che, J., and Qian Yingyi (1998). “Insecure Property Rights and Government Ownership of Firms.” Quarterly Journal of Economics, 113(2), May, 467-96(30).

Chen, Hongyi (2000). The Institutional Transition of China’s Township and Village Enterprises: Market Liberalization, Contractual Form Innovation and Privatization. Aldershot: Ashgate.

Chang, Chun, and Yijiang Wang (1994). The Nature of Township-Village Enterprises. Journal of Comparative Economics, 19(3): 434-52.

Dong, Xiao-yuan, Paul Bowles, and Samuel P.S. Ho (2002). ‘The Determinants of Employee Ownership in China’s Privatized Rural Industry: Evidence from Jiangsu and Shandong’. Journal of Comparative Economics, 30: 415-37.

Qian Pingfan (2003). “Development of China’s Industrial Clusters: Features and Problems.” China Development Review 5: 4(November), pp. 44-51.

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