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• 210 mill agricultural households – 1/3 of global total • Rural poverty still an issue – gap persists between rural & urban incomes • http://news.bbc.co.uk/1/hi/world/asiapacific/2834433.stm Some rural issues • Agriculture – 1 of the 4 “modernisations” within China (industry, technology, science) • 1st area to be reformed – concerns about food security • Grain prices raised by 20%; input prices lowered • Farmers’ incomes increased – incentive to raise productivity (remember BBC documentary) • Rural collectives – guaranteed tenure rights for 30 yrs – confidence to invest & manage land more effectively • Rural economy revitalised – confidence to challenge corrupt cadres Land Reform • Pre-1949 – land held by absentee landlords • Post 1949 – communal ownership under guidance of state • Deng – private enterprise encouraged – land ownership needed to be addressed • 1983 consensus – commune system (20-30 families) ceased • Household responsibility system (end of collectives) – 3-5 yr contract to farm land, later 15 yrs, now 30 yrs • Non-land assets auctioned off or managed under contract – rapid growth of small businesses – new entrepreneurial class (“Newsnight” film) TVEs – rural industrialisation • Town & Village Enterprises • Backbone of China’s economy • Rural industrialisation encouraged to reduce risk of migration to urban areas (backwash effects) • 1988 – 100 mill surplus farm workers (1/3 rural workforce) • 1995 – 150 mill “ “ “ “leave the land but not the countryside; enter the factory not the city” • Mainly manufacturing units • Originally rural collectives • Rely heavily on local govt intervention – Guanxi is very significant. • Guanxi – the art of using personal contacts. In China winning trust & building relationships come first; transactions come second (transactions costs). Kinship & university in common creates strong bonds. Indebtedness is honoured & repaid. Seen by West as potential for corruption. Will it last? • TVEs are v important for local govt income – provision of services. • 1996: • 23 mill rural enterprises • 135 mill workers • 23% GDP • 44% Gross Ind Output • 35% export earnings • • • • • • • • • • • Small restaurants Distribution Theme parks Soft drinks Clothing Furniture Bike repair shops Cement Mining equipment Travel agents Engine manufacture Some private firms • • • • • Wholesale & retail – 47% Transport – 16% Manufacturing & industrial -14% Personal services – 11% Lodging & restaurants – 8% Issues • Rapid rise in productivity slowed in 1980s • Inheritance rights – farmers who want to migrate try to hold on to land but leads to low productivity • TVEs get most of credit for investment from cadres • Farmers find it hard to get loans for modernisation • Urbanisation means much agricultural land is built over http://news.bbc.co.uk/1/hi /programmes/newsnight/7 727839.stm