INDUSTRIALIZATION AND CHINA'S RURAL MODERNIZATION

Transcription

1 INDUSTRIALIZATION AND CHINA'S RURAL MODERNIZATION

2 STUDIES ON THE CHINESE ECONOMY General Editors: Peter Nolan, Lecturer in Economics and Politics, University of Cambridge, and Fellow and Director of Studies in Economics, Jesus College, Cambridge, England; and Dong Fureng, Professor, Chinese Academy of Social Sciences. Beijing, China This series aims to analyze issues in China's current economic development, and to shed light upon that process by examining China's economic history. It contains a wide range of books on the Chinese economy past and present. The series includes not only studies written by leading Western authorities, but publishes translations of the most important works on the Chinese economy produced within China. It intends to make a major contribution towards understanding this immensely important part of the world economy.

3 Industrialization and China's Rural Modernization Dong Fureng Honorary Director of the II/stitl/te of Ecol/omics Chil/ese Academy of Socilll Sciel/ces

4 CI:l Dong Pureng 1992 Chapler 6 CI:l The World Bank 1992 Softcover reprint of the hardcover 18t edition 1992 All righls reserved. No reproduclion, copy or Iransmlssion of Ihls publlclilion may be made whhoul wrillen permission. No paragmph of Ihls publlcallon may be reproduced, copied or Imnsmilled save whh wrillen permission or in accordance whh Ihe provisions of Ihe Copyrighl, Designs and Palenls Act 1988, or under the terms of any licence permilling limited copying issued by the Copyright Licensing Agency, 90 TOllenham Coun Road, London WI P 9HE. Any person who does any unauthorised actin relation to this publication may be liable to criminal prosecution and civil claims for damages. First published in Oreat Britoin 1992 by THE MACMILLAN PRESS LTD Houndmills. Basingstoke. Hampshire R021 2XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Llbmry. ISBN ISBN (ebook) DOI / First published in the United States of America 1992 by Scholarly and Reference Division. ST. MARTIN'S PRESS. INC. 175 Finh Avenue. New York. N.Y ISBN Library of Congress Cataloging-in Publication Data Fureng. Dong Indusirill1i1.11tilln und Chinu's ruml modernization I Dong Fureng. p. cm. Includes bihliographical references (p. ) and index. ISBN I. China-Industries. 2. Rural dcyclopmcnt-chlna. 3. Chlna -Economic pollcy I. Title. HC427.T (jc CIP \

5 To my parents and wife

6 Contents Foreword Preface Acknowledgements ix xi xiii 1 The Dual Economic Structure Industrial structure Demographic distribution and employment structure Agricultural labour productivity Surplus agricultural labour Agricultural income 9 2 The Rural Economic System and Agricultural Modernization, The land system Collectivization 14 3 The Traditional Socialist Industrialization Strategy and Agricultural Modernization, Basic points of the traditional socialist industrialization strategy The role and adverse effects of the traditional strategy in changing the dual economic structure 26 4 The Contract Farming System and Rural Modernization since Reform of the people's commune system Rural modernization and the contract farming system The constraints on rural modernization imposed by the responsibility system Summary 42 vii

7 viii Contents S Transformation of the Traditional Socialist Industrialization Strategy 4S 5.1 Basic changes The significance for rural modernization of the changes in the industrialization strategy 49 6 Growth of the Rural Non-Farming Sector and Rural Modernization S3 6.1 The development of the non-farming sector in rural areas Two models for the development of the non-farming sector The role of rural non-farming industries in promoting rural development 65 7 Issues Involved in the Development of the Rural Non-Farming Sector Financing the non-farming sector Energy and raw materials Technological progress The gaining of information and technological know-how The market for rural non-farming products The influence of tradition Coordinated development of farming and non-farming operations The social cost of developing the non-farming sector 94 8 Conclusion 99 Notes 101 Bibliography 105 Index 107

8 Foreword The Chinese economy, like the economies of many developing nations, has a dual structure. Changing this structure and making rural modernization possible requires a two-pronged approach: reforming the rural economic system, and promoting industrialization. China's experience in its attempt to bring about rural modernization has been mixed. This book discusses the impact of China's economic system and the traditional socialist industrialization strategy on the rural modernization process. It analyzes the transformation of China's economic structure during two historical periods to 1978, and 1979 onward. The Chinese rural economy is undergoing profound change, thanks to a series of structural reforms and a new development strategy introduced in Of these changes, the rapid growth of the non-farming sector has been as viewed as especially conducive to modernizing rural life and phasing out the traditional dual structure. The non-farming sector has followed, in the main, two development models. One is based on publicly-owned industries, and the other on privatelyowned ones. Heated debates are still going on as to which development model is the more suitable. The author offers his opinions, derived from the surveys that he has conducted in the Chinese countryside. Transforming the dual economic structure by developing the non-farming sector in rural areas has given rise to many interesting issues for academic research. This book deals with those which the author regards as being of paramount importance.. A number of conclusions are drawn at the end. First, a structural reform is essential in developing the rural economy, although no reform will succeed unless it is welcomed by the rural residents, or prove able to increase their initiative and improve their economic situation. ix

9 x Foreword Second, agricultural modernization is conditional on industrial progress. Instead of victimizing agriculture and the interests of farmers, the national industrialization strategy ought to generate an increase in rural income and a coordinated development of agriculture and industry. The development of the non-farming sector, as a major aspect of rural modernization, also deserves support from the urban economy. Third, the expansion of the rural non-farming sector may involve diverse development models, and this could lead to a number of problems arising which merit serious attention. These cannot be resolved at a stroke by administrative prohibitions, but only step-by-step as the rural economy develops. DONG FURENG

10 Preface Development economics, which examines economic issues in developing countries, is a branch of economic studies which has emerged since the Second World War. This subject is of special significance to China in the light of the problems it has encountered during its modernization drive. However, as China has a huge population and vast territories, its experience has differed from that of other developing countries. In addition, since 1949 China has been practising a socialist system, which has posed its own peculiar obstacles to economic development. However research on China's economy is of great value to development theory, and can be used to test the viability of various theories in development economics. The findings of such studies will enrich and advance development economics. China's economic development has long been my particular area of interest, and since 1979 I have focused my studies on the reform of past develop~ent strategies. My research has been inspired by foreign development theories and investigations in the developing countries of Asia, Africa and Latin America. The topics included in this book are selected from the work I have carried out since 1979, and they focus on two main aspects. First, drawing on the experiences of some countries and regions in the selection of their development strategies, I review, from a historical viewpoint, the costs and benefits of the traditional socialist industrialization strategy, which was implemented in China for nearly 30 years prior to I' identify both the necessity of a transition from the old economic strategy and the basic characteristics of the new one, as well as the preconditions and difficulties of the transition. Second, the study of China's rural economic development is of particular importance to the national economy as a whole, and constitutes a prominent part of the overall strategy. Rural xi

11 xii Preface development is one of the most thorny problems in choosing a strategy. Since 1979 China's rural economy has changed tremendously. In the process, a series of problems have cropped up which still await solution. My own views on these questions were formed following my investigations and research in the rural areas in which different approaches had been tried. It is my hope that this book will be of some help to readers in understanding China's economic development, especially the rural economy. The book deals with much-discussed issues in development economics through analysis of China's experience, which offers an important example for other developing countries. Whether or not my arguments are convincing, I hope they will be useful to readers in providing a wider background against which to advance theories in development economics, and in providing them with some new ideas. DONG FuRENG

12 Acknowledgements Chapter 6 ('Growth of the Rural Non-Farming Sector and Rural Modernization') is the draft of my lecture given at the Economic Development Institute of the World Bank. In condensed form it has been published as part of the EDI Policy Seminar Report Series. I am grateful to the World Bank for allowing permission to include the whole text of this article in this book. I am indebted to the following who helped make this paper possible: Mr Yin-Kann Wen and Mr D'Silva (EDI) were instrumental in transforming my idea for the paper into a reality. Mr Wen oversaw the whole process. Mr D'Silva edited the paper to publishable form. Messrs Suman Berry, Jacques Croisnier and David Davies (EDI), Professor Samuel Ho (University of British Columbia), and Mr Alan Gelb, Mrs Rapeepum Jaisaard and others in The World Bank offered many useful suggestions; Mr Chin-Hao Kung and Mrs Betty Ting (World Bank) translated the paper from Chinese into English. I am also obliged to my friends in Wenzhou, Suzhou and Wuxi who offered me materials and data for this book. lowe much to Dr Peter Nolan, whose idea it was to attempt such a book. Mr Zhang Xiaogang translated the book from Chinese into English. I wish to express my gratitude to my wife, Liu Ainian, who has assisted me in my research in many ways. DONG FuRENG xiii