Rural industrialization in China: From backyard furnaces to township and village enterprises

East Asia

Volumn 17, Issue 3, 1999, Pages 61-87

  Zhang, Zhihong ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

INDUSTRIAL DEVELOPMENT; INDUSTRIALIZATION; RURAL AREA; RURAL DEVELOPMENT;

CHINA;

EID: 0033491466     PISSN: 10966838     EISSN: None     Source Type: Journal    
DOI: 10.1007/s12140-999-0023-y     Document Type: Article

References (63)

1. 1. Rawski Tom 1996 How Fast Has Chinese Industry Grown? World Development Report 1996: From Plan to Market Oxford University Press Oxford 51 51 There are debates over the real growth of TVEs. See, for instance, Tom Rawski, “How Fast Has Chinese Industry Grown?” World Bank Policy Research Working Paper No. 1194, 1993. The World Bank put the estimated annual growth of TVEs at about 25 percent from the mid-1980s to the mid-1990s (World Development Report 1996: From Plan to Market, Oxford: Oxford University Press, 1996, p. 51). Official statistics published in Zhongguo xiangzhen qiye nianjian (China Township and Village Enterprise Yearbook, hereafter referred to as CTVEY, Beijing: Nongye chubanshe, various years) indicate an annual growth of about 30 percent during this period. The author's own estimate using China's industrial producer price indices suggests that the real growth of TVEs between 1987 and 1993 was in the neighborhood of 22 percent a year (“Industrialization and Energy Use: An Empirical Study of China's Township and Village Enterprises,” Ph.D. Dissertation, University of Pennsylvania, 1997).
2. 2. Kate Xiao Zhou Lynn T. White 1995 Quiet Politics and Rural Enterprise in Reform China Journal of Developing Areas 29 no. 4 461 461 Deng revealed his surprise during a conversation with Yugoslavian visitors on June 12, 1987: “Generally speaking, our rural reforms have proceeded quite rapidly. Farmers' enthusiasm has been aroused. The biggest achievement—one which by no means did we anticipate—was the development of township and village enterprises. They are a new force suddenly coming to the fore (yijun tuqi)” (CTVEY 1978–1987, op. cit., (Beijing: Nongye chubanshe, various years p. 659. Also see People's Daily (overseas edition), June 13, 1987, cited by Kate Xiao Zhou and Lynn T. White III, “Quiet Politics and Rural Enterprise in Reform China,” Journal of Developing Areas, vol 29 (1995), no. 4 p. 461, and Deng Xiaoping's Fundamental Issues of Present-Day China, cited by Barry Naughton, Growing out of the Plan: Chinese Economic Reform, 1978–1993 (Cambridge: Cambridge University Press, 1995), p. 344. Naughton, however, argues that Chinese policymakers had anticipated and, indeed, planned for the emergence of TVEs back, in 1979 (ibid., p. 148), By showing his surprise, “Deng is here eager to put his own ‘spin’ on the reform process” (ibid., p. 344)
3. 3. Dennis Anderson 1982 Small Industry in Developing Countries: A Discussion of Issues World Development 10 no. 11 913 948 10.1016/0305-750X(82)90034-1 See Dennis Anderson, “Small Industry in Developing Countries: A Discussion of Issues,” World Development, vol. 10 (1982), no. 11, pp. 913–948; Samuel P.S. Ho, “Economic Development and Rural Industry in South Korea and Taiwan,” World Development, vol. 10 (1982), no. 11, pp. 973–990; and S.K. Rau, Rural Industrialization: Policy and Programmes in Four Asian Countries (Tokyo: Asian Productivity Organization, 1985).
4. 4. Zhang Yi 1990 Zhongguo nongcun gongyehua de daolu Renmin ribao chubanshe Beijing 4 5 (The Road to Rural Industrialization in China) Zhang Yi, ed., Zhongguo nongcun gongyehua de daolu (The Road to Rural Industrialization in China) (Beijing: Renmin ribao chubanshe, 1990a), pp. 4–5.
5. 5. Zhang Yi 1990 Zhongguo xiangzhen qiye lishi de biran Falü chubanshe Beijing (China Township and Village Enterprises: Historical Inevitability) See Zhang Yi, Zhongguo xiangzhen qiye lishi de biran (China Township and Village Enterprises: Historical Inevitability) (Beijing: Falü chubanshe, 1990b); and Zhongguo xiangzhen qiye jianxin de licheng (China Township and Village Enterprises: The Course Filled with Hardships) (Beijing: Falü chubanshe, 1990c).
6. 6. Liu Liangyu 1995 Dui woguo nongcun gongyehua fazhan jieduan de sikao Nongye xiandaihua yu nongcun gongyehua chengshihua Nongyebu nongye zhengce yanjiuhui Beijing (Reflections on the Development Phases of China's Rural Industrialization) Liu Liangyu, “Dui woguo nongcun gongyehua fazhan jieduan de sikao” (Reflections on the Development Phases of China's Rural Industrialization) in Nongye xiandaihua yu nongcun gongyehua chengshihua (Agricultural Modernization and Rural Industrialization and Urbanization), (Beijing: Nongyebu nongye zhengce yanjiuhui, 1995).
7. 7. Zhongguo nengyuan tongji nianjian, 1991 (China Energy Statistical Yearbook, 1991) (Beijing: Zhongguo tongji chubanshe, 1992).
8. 8. Zhang Yi 1990 Zhongguo xiangzhen qiye lishi de biran Falü chubanshe Beijing (China Township and Village Enterprises: Historical Inevitability) Zhang Yi (1990c), op. cit..
9. 9. Strictly speaking, rural industries during the pre-reform period included non-state enterprises run by communes and production brigades (CBEs) as well as state enterprises administered at the county level.
10. 10. Zhang Yi 1990 Zhongguo xiangzhen qiye lishi de biran Falü chubanshe Beijing 22 22 (China Township and Village Enterprises: Historical Inevitability) Zhang Yi (1990c), op. cit.,, p. 22.
11. 11. Carl Riskin 1978 China's Rural Industries: Self-reliant Systems or Independent Kingdoms? The China Quarterly 73 77 98 The share of fertilizer output from local small plants in national total rose from 12 percent in 1965 to 60 percent in 1971. See Carl Riskin, “China's Rural Industries: Self-reliant Systems or Independent Kingdoms?” The China Quarterly, no. 73 (March 1978), pp. 77–98. It should be noted that most of the small and medium-sized fertilizer plants were administered at the county level rather than at the commune level.
12. 12. Feng Liu Marc Ross Shumao Wang 1995 Energy Efficiency of China's Cement Industry Energy 20 no. 7 669 681 10.1016/0360-5442(95)00002-X The average annual output of rural cement plants was 12,000 tons, compared with 62,000 tons for local plants and 553,000 tons for large plants. See Feng Liu, Marc Ross, and Shumao Wang, “Energy Efficiency of China's Cement Industry,” Energy, vol. 20 (1995), no. 7, pp. 669–681.
13. 13. Jon Sigurdson 1977 Rural Industrialization in China Harvard University Press Cambridge, Mass. See Jon Sigurdson, Rural Industrialization in China (Cambridge, Mass.: Harvard University Press, 1977).
14. 14. Dwight Perkins 1977 Rural Small-Scale Industry in the People's Republic of China University of California Press Berkeley See Dwight Perkins, ed., Rural Small-Scale Industry in the People's Republic of China (Berkeley: University of California Press, 1977).
15. 15. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 145 146 Naughton, op. cit., pp. 145–146.
16. 16. Sigurdson 1977 Rural Industrialization in China Harvard University Press Cambridge, Mass. 34 34 In the scheme developed by Sigurdson (op. cit., p. 34), backward-linked industries include those providing agricultural inputs, construction materials, and consumer goods, whereas forward-linked industries encompass agro-, forestry-, and minerals-based industries, handicraft industries, and services.
17. 17. Carl Riskin 1971 Small Industry and the Chinese Model of Development The China Quarterly 46 245 273 10.1017/S0305741000010687 See Carl Riskin, “Small Industry and the Chinese Model of Development,” The China Quarterly, no. 46 (April/June 1971), pp. 245–273, “Intermediate Technology in China's Rural Industries,” World Development, vol. 6 (1978), no. 11/12, pp. 1297–1312; Sartaj Aziz, “The Chinese Approach to Rural Development,” World Development, vol. 2 (1974), no. 2, pp. 87–91; Sigurdson, op. cit., Rural Industrialization in China (Cambridge, Mass.: Harvard University Press, 1977). Perkins, op. cit., Rural Small-Scale Industry in the People's Republic of China (Berkeley: University of California Press, 1977) and Christine P.W. Wong, “Rural Industrialization in China: Development of the ‘Five Small Industries’,” Ph.D. Dissertation, University of California at Berkeley, 1979, and “Intermediate Technology for Development: Small-Scale Chemical Fertilizer Plants in China,” World Development, vol. 14 (1986), no. 10/11, pp. 1329–1346.
18. 18. Perkins 1977 Rural Small-Scale Industry in the People's Republic of China University of California Press Berkeley 252 252 Perkins, op. cit., pp. 252, 255.
19. 19. The number of industrial TVEs is about 7.6 million with a labor force of 79 million people.
20. 20. See “Regulations on Certain Issues Regarding the Development of Commune and Brigade Enterprises (Draft for Trial Implementation)” issued by the State Council, July 3, 1979 (CTVEY 1978–1987, op. cit. Beijing: Nongye chubanshe, various years).
21. 21. Perkins 1977 Rural Small-Scale Industry in the People's Republic of China University of California Press Berkeley 1 1 The Chinese term, xiangzhen qiye, literally means township and town enterprises, but it has become a generic term to refer to rural enterprises established by township and village governments, joint-households, and individuals in rural areas. Unlike some former rural small-scale industries (as mentioned by Perkins, op. cit. p. 1), xiangzhen qiye does not include county-level state-owned enterprises. There are several English terms referring to xiangzhen qiye, but TVE seems to have gained widespread acceptance.
22. 22. See Document no. 4 of the State Council issued in March 1984 (CTVEY 1978–87, op. cit. Beijing: Nongye chubanshe, various years).
23. 23. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 53 53 Per capita production of grain increased from 318 kilograms (kg) in 1977–79 to 376 kg in 1983–85, whereas per capita production of edible oil, meat, and cotton experienced even faster growth during these time periods: from 5.4 kg, 9.3 kg and 2.2 kg to 12.3 kg, 15.1 kg, and 4.8 kg, respectively (Naughton, op. cit., p. 53).
24. 24. Haiyan Du 1990 Causes of Rapid Rural Industrial Development William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 47 62 Because of population growth and redeployment of farmland for other uses, between 1952 and 1977, farmland per rural capita decreased from 3.29 mu to 1.85 mu (1 mu =1/15 hectare). See Du Haiyan, “Causes of Rapid Rural Industrial Development,” in William A. Byrd and Lin Qingsong, ed., China's Rural Industry: Structure, Development, and Reform (Oxford: Oxford University Press, 1990), pp. 47–62.
25. 25. Haiyan Du 1990 Causes of Rapid Rural Industrial Development William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 47 62 Ibid..
26. 26. Haiyan Du 1990 Causes of Rapid Rural Industrial Development William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 47 62 Ibid.. It should be noted that income from farming grew much less rapidly than from non-farming activities. Between 1978 and 1986, for example, the structure of farmers' income experienced considerable changes: income from farming declined from 85 to 63 percent, while income from non-farming activities increased from 7 to 27 percent. See Dong Fureng, Industrialization and China's Rural Modernization (New York: St. Martin's Press, 1992), p. 68.
27. 27. Haiyan Du 1990 Causes of Rapid Rural Industrial Development William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 55 56 Once TVEs are established and well developed, the flow of capital is often reversed. TVEs in turn provide capital for the agricultural sector in purchasing equipment, building infrastructure, and even subsidizing the sale of agricultural produce (Du in Byrd and Lin, op. cit., pp. 55–56).
28. 28. Haiyan Du 1990 Causes of Rapid Rural Industrial Development William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 47 62 See Du in Byrd and Lin, op. cit.. for local policies in two case-study counties.
29. 29. See supplements to the 1981 tax regulations by the State Council (Document no. 47, March 1982) and Ministry of Finance's tax regulations issued in September 1983 (CTVEY 1978–1987, op. cit. Beijing: Nongye chubanshe, various years).
30. 30. See Ministry of Finance, Document no. 103, March 1984 (CTVEY 1978–1987, op. cit. Beijing: Nongye chubanshe, various years).
31. 31. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 152 152 Naughton, op. cit., p. 152.
32. 32. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 150 150 Ibid., p. 150. Profitability=(profit+tax)/total capital.
33. 33. Zhang Yi 1990 Zhongguo xiangzhen qiye lishi de biran Falü chubanshe Beijing 19 19 (China Township and Village Enterprises: Historical Inevitability) Zhang Yi 1990c, op. cit., p. 19.
34. 34. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 155 155 Naughton, op. cit., p. 155.
35. 35. Dong 1992 Industrialization and China's Rural Modernization St. Martin's Press Dordrecht 68 68 Dong, op. cit.. Also see Peter Noland and Dong Fureng, ed., Market Forces in China: Competition and Small Business—The Wenzhou Debate (London: Zed Books Ltd., 1989).
36. 36. Dong 1992 Industrialization and China's Rural Modernization St. Martin's Press Dordrecht 56 65 See Dong, op. cit.,, pp. 56–65, for a discussion of the advantages and disadvantages of the two models.
37. 37. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 156 157 See Naughton, op. cit., pp. 156–157.
38. 38. Liu Xiaoxuan 1995 Guoyou qiye yu feiguoyou qiye de chanquan jiegou jiqi dui xiaolü de yingxiang Jingji yanjiu 7 11 20 (The Ownership Structure of State-Owned Enterprises Versus Non-State-Owned Enterprises and Its Impact on Efficiency) See Liu Xiaoxuan, “Guoyou qiye yu feiguoyou qiye de chanquan jiegou jiqi dui xiaolü de yingxiang,” (The Ownership Structure of State-Owned Enterprises Versus Non-State-Owned Enterprises and Its Impact on Efficiency), Jingji yanjiu (Economics Studies), no. 7 (1995), pp. 11–20.
39. 39. Xiaolin Pei 1996 Township-Village Enterprises, Local Governments and Rural Communities: The Chinese Village as a Firm during Economic Transition Economics of Transition 4 no. 1 43 66 See Xiaolin Pei, “Township-Village Enterprises, Local Governments and Rural Communities: The Chinese Village as a Firm during Economic Transition,” Economics of Transition, vol. 4 (1996), no. 1, pp. 43–66.
40. 40. In fact, many village leaders in China are democratically elected; they do not receive salaries from the state, but are compensated by the village.
41. 41. Theoretically, a collective village enterprise is owned by all villagers, although they do not explicitly hold shares in it.
42. 42. Pei 1996 Township-Village Enterprises, Local Governments and Rural Communities: The Chinese Village as a Firm during Economic Transition Economics of Transition 4 no. 1 43 66 Pei, op. cit. “.
43. 43. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 149 151 Naughton, op. cit., pp. 149–151.
44. 44. CTVEY 1978–1987, op. cit. Beijing: Nongye chubanshe, various years.
45. 45. CTVEY 1994, op. cit. Beijing: Nongye chubanshe, various years.
46. 46. Naughton 1995 Growing out of the Plan: Chinese Economic Reform, 1978–1993 Cambridge University Press Cambridge 154 155 For this reason, Naughton (op. cit., pp. 154–155) observed that “urban and rural industry are complementary, rather than being substitutes for one another”.
47. 47. Zhang Shuguang 1993 Guanyu diqu jingji chayi biandong de lingyizhong jieshi Jingji yanjiu 9 19 26 (An Alternative Explanation of the Changes in Regional Economic Disparity) See, for example, Zhang Shuguang, “Guanyu diqu jingji chayi biandong de lingyizhong jieshi” (An Alternative Explanation of the Changes in Regional Economic Disparity), Jingji yanjiu (Economics Studies) no. 9 (1993), pp. 19–26; Christopher Findlay, Andrew Watson, and Harry X. Wu, ed., Rural Enterprises in China (New York: St. Martin's Press, 1994); and Yang Kaizhong, “Zhongguo quyu jingji chayi biandong yanjiu” (A Study of the Changes in Regional Economic Disparity in China), Jingji yanjiu (Economics Studies) no. 12 (1994), pp. 28–33.
48. 48. Xiaolu Wang 1990 Capital Formation and Utilization William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 222 242 Wang Xiaolu, “Capital Formation and Utilization”, in Byrd and Lin, op. cit., Du Haiyan, “Causes of Rapid Rural Industrial Development”, in, pp. 222–242.
49. 49. The definition of “total income” of an enterprise differs slightly from “gross output value.” The former includes income from an enterprise's operations and sales, while the latter measures its total material output in monetary terms.
50. 50. Findlay Christopher Watson Andrew Wu Harry 1994 Rural Enterprises in China St. Martin's Press Dordrecht Findlay, et al., op. cit. ——
51. 51. Findlay Christopher Watson Andrew Wu Harry 1994 Rural Enterprises in China St. Martin's Press Dordrecht 84 84 In terms of output by ownership, the share of private enterprises in the central and western region is notably higher than in the eastern region. In 1988, for instance, private enterprises (excluding JHEs) accounted for 17 percent of the total TVE output in the eastern region, compared with 39 percent in the central and western region (Findlay, et al., op. cit. —— p. 84).
52. 52. Findlay Christopher Watson Andrew Wu Harry 1994 Rural Enterprises in China St. Martin's Press Dordrecht Findlay, et al., op. cit. ——
53. 53. Jan Svejnar Josephine Woo 1990 Development in Four Counties William A. Byrd Lin Qingsong China's Rural Industry: Structure, Development, and Reform Oxford University Press Oxford 63 84 Jan Svejnar and Josephine Woo, “Development in Four Counties”, in Byrd and Lin, op. cit., Du Haiyan, “Causes of Rapid Rural Industrial Development”, in, pp. 63–84.
54. 54. Dong 1992 Industrialization and China's Rural Modernization St. Martin's Press Dordrecht 68 68 Dong, op. cit..
55. 55. See speech by He Kang, Minister of Agriculture, delivered at the National Working Conference on TVE Exports, December 14, 1987 (CTVEY 1978–1987,op. cit.) Beijing: Nongye chubanshe, various years
56. 56. A landmark for instituting the export-oriented strategy was the National Working Conference on TVE Exports held in December 1987. With the State Council's approval, a leading team, which consisted of Ministries of Agriculture, Economics and Trade, and Finance, the State Economic Commission, the Agricultural Bank, and the Bank of China, was set up to oversee the establishment of a “trade-industry-agriculture” joint export production base (CTVEY 1978–1987, op. cit.). Beijing: Nongye chubanshe, various years
57. 57. Runsheng Du 1995 Thomas R. Gottshang Reform and Development in Rural China St. Martin's Press Dordrecht Du Runsheng, Reform and Development in Rural China (ed. by Thomas R. Gottshang) (New York: St. Martin's Press, 1995).
58. 58. Yang Yongzhen 1995 Sustaining China's Remarkable Exports and Growth Performance Garnaut Ross Sustaining Export-Oriented Development Ideas from East Asia Cambridge University Press Cambridge Yongzhen Yang, “Sustaining China's Remarkable Exports and Growth Performance”, in Ross Garnaut et al., ed., Sustaining Export-Oriented Development Ideas from East Asia (Cambridge: Cambridge University Press, 1995).
59. 59. CTVEY 1995, op. cit. Beijing: Nongye chubanshe, various years, pp. 297.
60. 60. CTVE 1997, op. cit., Beijing: Nongye chubanshe, various years, p. 141.
61. 61. Zweig David 1991 Internationalizing China's Countryside: The Political Economy of Exports from Rural Industry The China Quarterly 128 716 741 David Zweig, “Internationalizing China's Countryside: The Political Economy of Exports from Rural Industry” The China Quarterly, no. 128 (1991), pp. 716–741.
62. 62. Due to the negative impact of the Asian financial crisis, China has revised its economic growth target to 8 percent for 1998. With one-third of its GDP coming from TVEs, the govemment is counting on the TVE sector to increase its output by 18 percent in 1998. See People's Daily (overseas edition), September 26, 1998.
63. 63. In March 1992, the State Council endorsed the promotion of “sustained and healthy development” of TVEs: “The development of TVEs is an integral part of building socialism with Chinese characteristics. It is the only way of promoting prosperity of rural economy, raising famers' income, advancing agricultural mechanization, and developing the national economy” (CTVEY 1994, op. cit.Beijing: Nongye chubanshe, various years, p. 109).,