Rural Development Since 1978: Agricultural Policy

Encyclopedia of Modern China, Volume 3 – Finals/ 6/8/2009 20:08 Page 312

Rural Development since 1978: Agricultural Policy

officials. They more often support one local cadre or another on the basis of common lineage or hamlet, and in turn become the cornerstones of patronage systems, to the benefit of some parts of a village and the detriment of other parts. Family mores have changed considerably since the late 1970s. Whereas during the Maoist period, one of the adult sons normally continued after marriage to live in his parent’s home with his wife and children in what anthropologists call a stem family, daughters-in-law did not appreciate the arrangement. It has now become normal for all sons to establish separate households immediately after their weddings and to give a greater priority to their own conjugal relationship than to their obligations toward their parents. Nonetheless, especially in the poorer regions of the agricultural heartlands, the older people today often bring up their grandchildren, since many of the young couples are away from home year round as migrant workers. SEE ALSO

Household Responsibility System (baogan daohu); Land Use, History of; Population Policy: Birth-Planning Policy.

BIBLIOGRAPHY

Bernstein, Thomas, and Xiaobo Lü. Taxation Without Representation in Rural China. New York: Cambridge University Press, 2003. Bossen, Laurel. Chinese Women and Rural Development: Sixty Years of Change in Lu Village, Yunnan. Lanham, MD: Rowman & Littlefield, 2002. Chan, Anita, Richard Madsen, and Jonathan Unger. Chen Village, from Revolution to Globalization. Berkeley: University of California Press, 2008. Chen Guidi, and Wu Chuntao. Will the Boat Sink the Water? The Struggle of Peasants in 21st-Century China. New York: HarperCollins, 2006. Christiansen, Flemming, and Zhang Junzhuo, eds. Village Inc.: Chinese Rural Society in the 1990s. Richmond, U.K.: Curzon, 1998. Fan Jie, Thomas Heberer, and Wolfgang Taubmann. Rural China: Economic and Social Change in the Late Twentieth Century. Armonk, NY: Sharpe, 2006. Friedman, Edward, Paul G. Pickowicz, and Mark Selden. Revolution, Resistance, and Reform in Village China. New Haven, CT: Yale University Press, 2005. Gao Mobo. Gao Village: A Portrait of Rural Life in Modern China. London: Hurst, 1999. Ku Hok Bun. Moral Politics in a South Chinese Village: Responsibility, Reciprocity, and Resistance. Lanham, MD: Rowman & Littlefield, 2003. Liu Xin. In One’s Own Shadow: An Ethnographic Account of the Condition of Post-reform Rural China. Berkeley: University of California Press, 2000. Murphy, Rachel. How Migrant Labor Is Changing Rural China. Cambridge, U.K.: Cambridge University Press, 2002. Oi, Jean C. Rural China Takes Off: Institutional Foundations of Economic Reform. Berkeley: University of California Press, 1999.

312

Riskin, Carl, Zhao Renwei, and Li Shi, eds. China’s Retreat from Equality: Income Distribution and Economic Transition. Armonk, NY: Sharpe, 2001. Ruf, Gregory A. Cadres and Kin: Making a Socialist Village in West China, 1921–1991. Stanford, CA: Stanford University Press, 1998. Unger, Jonathan. The Transformation of Rural China. Armonk, NY: Sharpe, 2002. Vermeer, Eduard B., Frank N. Pieke, and Chong Woei Lien. Cooperative and Collective in China’s Rural Development: Between State and Private Interests. Armonk, NY: Sharpe, 1998. Yan Yunxiang. Private Life Under Socialism: Love, Intimacy, and Family Change in a Chinese Village, 1949–1999. Stanford, CA: Stanford University Press, 2003. Jonathan Unger

AGRICULTURAL POLICY Rural China has undergone dramatic development since the launch of market reforms in 1978, but many challenges still remain. Starting from Xiaogang village in Anhui Province, agricultural decollectivization, particularly the household responsibility system, abolished collective farming and restored day-to-day farming decisions to rural households. The policy raised farmers’ productivity and pulled millions of them out of poverty during the 1980s. Meanwhile, agricultural decollectivization also released surplus farm labor and stimulated growth of xiangzhenqiye (township and village enterprises, TVEs), which are rural enterprises located in peri-urban areas. Rapid development of the TVEs during the 1980s and early 1990s helped to absorb surplus farm labor and supplemented farming income with wage income. Growth in rural income tapered off in the second half of the 1990s after a robust increase in the first fifteen years of economic reform. Rural development became more challenging after the low-hanging fruits—agricultural decollectivization and development of rural enterprises—had been harvested. Moving forward, China’s central policy makers realized that they needed to make deeper reforms, in the rural credit sector, land ownership rights, and the household registration system. The magnitude of rural savings was as large as three trillion yuan in 2007. Traditionally, rural savings have been channeled to finance urban development and industrial growth, leaving little much-needed capital for the expansion of private rural entrepreneurship. Beginning in 2003, nongcunxinyongshe (rural credit cooperatives, RCCs), the primary credit institutions in rural China, underwent ownership and corporate governance reforms in order to better serve the credit demands of rural residents. Furthermore, the central ENCYCLOPEDIA OF MODERN CHINA

Electronic copy available at: http://ssrn.com/abstract=1909120

Encyclopedia of Modern China, Volume 3 – Finals/ 6/8/2009 20:08 Page 313

Rural Development since 1978: Agricultural Banking

bank began to liberalize the rural financial sector in 2007 by issuing licenses for the establishment of private township-andvillage banks and credit companies as part of its efforts to restructure the rural credit market.This market liberalization was a turning point in the rural financial sector. Since 1978 farmers have enjoyed user rights to land though the ownership rights still formally reside with the collectives. The lack of property rights was not an issue in the 1980s, but it has prevented farmers from making long-term investment in the land, reducing the ecological sustainability of the farmland. Rural land issues are a constant source of social clashes between peasants and local government officials. As urbanization and industrialization proceed rapidly in China, land in this densely populated country has risen tremendously in value. Local government officials convert farmland to industrial and commercial uses in order to sell them to real estate developers and industrialists for lucrative prices. These transactions often are conducted without proper public consultation or compensation to the peasants whose livelihoods depend exclusively on farmland. Thousands of land-related rural protests are staged annually, manifesting the serious sociopolitical implications of ambiguous land ownership rights. Nonetheless, if the central government were to allow for private ownership of farmland, economic downturns and layoffs from urban industries may leave no social safety net for many migrant workers. Because farmland is the only life support for rural residents, the issue of privatizing land ownership is treated with extreme caution by central policy makers in China. After nearly three decades of reforms, 70 percent of the country’s population (900 million people) still resides in the countryside. To lift the living standards of the large rural population, the central policy makers know they need to allow some rural residents to migrate to the cities. The household registration (hukou) system that divides the population into rural and urban and binds them to their places of birth has been relaxed gradually during the 1990s to allow rural residents to find jobs in urban factories. However, with the sluggishness in global demand that began in 2008, many factories in the coastal cities have closed down and laid off migrant workers. The ability of the cities to absorb migrant workers is being challenged for the first time since the launch of reform in 1978. Hence, sustainable rural development in China remains a key policy challenge. SEE A LS O

Township and Village Enterprises.

BIBLIOGRAPHY

Byrd, William, and Qingsong Lin, eds. China’s Rural Industry: Structure, Development, and Reform. New York: Oxford University Press, 1990.

Jinqing Cao. China Along the Yellow River. Trans. Nicky Harman and Huang Ruhua. London and New York: RoutledgeCurzon, 2000. Nyberg, Al, and Scott Rozelle. Accelerating China’s Rural Transformation. Washington, DC: World Bank, 1999. Ong, Lynette. The Political Economy of Township Government Debt, Township Enterprises, and Rural Financial Institutions in China. China Quarterly 186 (2006): 377–400. Zhou, Kate Xiao. How the Farmers Changed China: Power of the People. Boulder, CO: Westview, 1996. Lynette H. Ong

AGRICULTURAL BANKING Agricultural banking provides essential banking services to about 800 million rural residents living in western and central China as well as peri-urban locales in the eastern coastal region. For the period beginning in 1978, agricultural banking in China can be divided into banking for retail consumers and policy banking for state agricultural procurement. Retail banking serves the credit demands of rural households, individual household businesses (getihu), and small and medium-sized enterprises in rural areas, whereas policy banking provides loans to enterprises specializing in state agricultural procurement. The Rural Credit Cooperatives (RCCs) or nongcunxinyongshe, which collectively account for more than an 80 percent share of total rural deposits and loans, are the backbone of household finance in rural China. Owing to their monopoly position in rural China, the RCCs are critical to lifting household income, stimulating the growth of small and medium-sized enterprises. Beginning in 1979 the central government required the RCCs to report to the Agricultural Bank of China (ABC) (zhongguo nongye yinhang). For a decade-and-a-half the credit cooperatives functioned as the state bank’s grassroots branches and were required to place low-interest-yielding reserve at the bank. This resulted in historic financial losses at the RCCs. Their relationship with the ABC was formally severed in 1996 as part of the central government’s move to restructure the rural financial system around three institutions entrusted with distinctive tasks: the ABC for commercial loans, the Agricultural Development Bank of China (ADBC) (nongye fanzhan yinhang) for agricultural policy loans, and the RCCs for household finance. The credit cooperatives were managed indirectly by the central bank between 1996 and 2003. Since 2003 they have been managed by the provincial unions (shenglianshe), which are effectively controlled by the provincial governments. Provincial unions are the bodies managing all credit cooperatives that exist within the provinces. They are strictly administrative organizations that do not take savings or issue loans.

ENCYCLOPEDIA OF MODERN CHINA

Electronic copy available at: http://ssrn.com/abstract=1909120

313