Transcript What are TVEs in rural China?

What are TVEs in rural China?
BY NISAL WEERAKOON AND LEWIS TELFER
What are TVEs?
 Township and Village Enterprises
 Officially started in 1958 as Commune and Brigade
Enterprises under during the Great Leap Forward
 ‘TVEs’ started in the 1980s during the economic
reforms
Why were TVEs created
 Role was to aid in change from SOEs to market
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oriented under jurisdiction of local government
Aim was to generate ‘decent’ pay in rural areas and
slow rural-urban migration
Originally there were barriers restricting TVEs to
agriculture
When barriers were lifted (mid-1980s),
diversification started (cement production, tourist
sites)
Allowed farmers to branch out and gain better
incomes as well as the TVEs gaining better profits
Advantages of TVEs
 The ability to transform control over assets into
income without becoming privatised
 Profits of enterprises could be used for whole
community
 Facilitated channelling of funds to local govt
 Most studies show that TVEs are more effective
than SOEs
 Better flexibility and autonomy
 Greater focus on financial objectives
 Special ties with the state sector
Figures (1)
 28 million employment
which peaked at 135
million in 1996
 28 million employment
which peaked at 135
million in 1996
 In Jiangsu and
Shangdong (both
eastern) provinces
TVEs in these provinces
employ 30% of rural
workforce
Figures (2)
 Average employment of a TVE is 6 people but large ones
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have 10000s
TVEs account for 30% of GDP (2007) and play a crucial
role in poverty alleviation
They have put back 200 billion yuan into the
modernisation of agriculture
TVEs allocate inputs more efficiently than SOEs
From 1979 to 1991 TVEs total factor productivity grew 3
times as fast as SOEs
Major polluting sectors are dominated by TVEs (cement
production, etc.)
Sixth of China’s total emissions produced by TVEs (2007)
Current situation
 After mid-1990s situation changed
 Official discrimination for TVEs and official
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preference for foreign-owned enterprises
1993 to 2003- 30% of TVEs gone bankrupt
Local officials forcefully removed weak TVEs
Collectively-owned TVEs now more prosperous than
private-owned TVEs
Rural industries more tied to local govt and
community
‘Industrial clusters’ of small, competing and
cooperating businesses to form a chain