Lecture notes, lecture 9 - The household responsibility system in China PDF

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The household responsibility system in China...

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The Household Responsibility System in China’s Agricultural Reform: Atheoreitical and Emprical Study Introduction & Background Overview -

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The emergence and eventual prevalence of the household responsibility system, which replaces the production team system as the unit of production and income distribution, has brought about dramatic changes in China's rural areas since 1979 After the collective movement in the 1950s, China's agriculture was organized under the production team system for about 20 years. In this system, workers were accredited with work points for the jobs that they performed every day. At the end of a year the net team income, after deductions for state taxes, public welfare fund, and so on, was distributed according to the work points that each one accumulated during the year In all these systems, work points were supposed to reflect the quality and quantity of work provided by each worker. However, due to the nature of agricultural production, it is extremely difficult to supervise agricultural work.5 A peasant, in general, received fixed work points for a day's work regardless of the quality or quantity of his work. Egalitarian income distribution was the result of such a compensation scheme. Consequently, the incentive to work was low, and productivity was stagnant

Post MAO -

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After the chaos of the Cultural Revolution and the death of Chairman Mao, China's moderate leaders started to reconsider the rural policies the Chinese leaders recommended sweeping changes in rural policies.6 Important, distinct elements of these changes include diversification of the rural economy, product specialization and crop selection in accordance with regional comparative advantages, expansion of free markets, and a marked rise in government procurement price Nevertheless, toward the end of 1978 a small number of production teams in Anhui province, located in areas that were frequently victimized by flood and drought, first secretly and later with the blessing of local authorities began to try out the system of contracting land, other resources, and output quotas to individual households. A year later these teams brought in yields far larger than those of other teams Seeing this remarkable effect, the central authorities conceded the existence of the household responsibility system but required that it be restricted to the poor agricultural regions, mainly to the hilly, mountainous areas and poor teams where people had lost confidence in the collective system.9 However, this restriction was not effective, and rich regions welcomed the household responsibility system as enthusiastically as poor regions.'0 It thus spread rapidly to many parts of China. Full official recognition of the household responsibility system as universally acceptable was given in late 1981. By the end of 1983, almost all the households in China's rural areas had switched to the new system of farming." It is worth emphasizing that the household responsibility system was worked out among farmers, initially without the knowledge and approval of the central government. It was generated through the efforts of peasants themselves and spread to the other areas because of its merits; it was not imposed by the central authority, unlike many other institutional changes that occurred in the last three decades. In short, the shift in the institution of Chinese agriculture was not carried out by any individual's will but evolved spontaneously in response to underlying economic forces

http://www.jstor.org/stable/pdf/1566543.pdf?acceptTC=true

Township & Village Enterprises in China’s Sustainable Development in China -

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China’s rural industry stated in the 1950s. In the year before 1978, when the Chinese government adopted the policy of rural reforms, the rural industry had only experienced limited development Since 1978 China has conducted rural reforms characterised by implementation of a household responsibility system in agricultural production and liberalisation of rural markets This has brought great opportunities to the development of rural industry

DEVELOPMENT -

Farmers gained the rights to make their own decisions; this enabled them to conduct business activities beyond agricultural production Second, rural reforms have accelerated the development of agricultural production and farmers income, which provided a necessary base for non-agricultural business The rural reforms greatly increased the agricultural productivity and released a large number of rural labour forces from agricultural production

Prevention of migration -

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With the persistence of many restrictions preventing farmers from migrating and finding permanent works in the cities, the rural industry became the best choice for farmers to make a better use of their resources and increase their income As a matter of fact, 1978 marked a turning point for a rapid and sustained development of China’s rural industry Due to the own natures of rural industry and also the macroeconomic situation Between 1978 and 1997, the number of TVE workers rose from 28.26 million to 130.50 million. With equating GDP rising from 13.3. billion RMB to 2074.0 billion RMB in this same period

Structural Radjustment period (1989-991) -

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This was a period of China’s major economic adjustment. After years of rapid economic development, serious structural problems emerged in this period. So the central government strenghed its control over the national econpomy and accerlerated the process of economic structural adjustment As a result, the loans for TVE were depressed and many new construction projects were cut. A large number of TVE with low efficiency and heavy pollution were closed down This caused the average growth rate of TVE in this period to fall by 42% Nonetheless, to overcome the macroeconomic difficultuies, TVEs had to strenghenm their management, improve the quality of theior products, adopt more advanced technologies and try to explore overseas market As a result of this adjustment, the internal structure of TVE was greatly improved and most TVEs became more competitive

The increasing importance of TVE in China

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TVE were first established to increase the income of farmers. But with their unexpected rapid development, the contributions of TVE can be seen in almost every aspect of the economy

An important component of the national economy -

After two decades of rapid development, TVE has assumed an important place in the national economy. The GDP of TVE reached 2074 billion Yuan in 1997, which accounted for 27.7% of the national GDP The taxes paid by TVE totalled 152.6 billion Yuan, 20% of the national total Now the activities have taken a larger share of the economy in many fields. The production of TVE have taken a share of 40% for concrete, 43% for food and drinks, and 80% for clothes in the total economy

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