Industrialization and China’s Rural Modernization

The dual structure of developing economies, namely the coexistence of modern industry in urban areas with traditional agricultural practise, as Sir Arthur Lewis, among others, has pointed out, is also true of post-1949 China. The changes which have taken place in China’s economy and structure, although drastic, have not yet removed this basic characteristic.¹

Theorists tend to stress the role that the system plays in the development of an economy. In practice, developing countries are required to remove all sorts of systematic or institutional barriers to their progress, be these economic, political, social or cultural. New economies are able to evolve more easily when old institutions are replaced, as has been shown in many case studies, including the Chinese experience which has demonstrated that transformation of a system cannot be achieved in one fell swoop, but rather is a continuing process.

Industrialization is defined here as the process which turns all sectors of an economy away from primitive manual labour towards the use of modern technology. However the word may suggest an older and narrower concept, and it is nowadays replaced by the more appropriate term ‘modernization’ which, although it cannot be said to have a universally accepted definition, does connote a wider range of activities. The application of genetic engineering in agriculture is part of agricultural modernization, but it could hardly be called industrialization.

China began its systematic reform of the People’s Commune system in the winter of 1978. In the process, the so-called production responsibility system was implemented across the nation. This at first assumed many forms, but eventually the system by which production targets were contracted out to rural households became prevalent. The new farming system covered 96.6 per cent of the nation’s farming households by the end of 1984, and only 0.2 per cent of the former production teams had failed to develop any form of production responsibility system.¹

As discussed earlier, the traditional industrialization strategy did aid agricultural modernization, but it also caused a series of problems. It has been necessary to re-examine the gains and losses brought about by the strategy and make appropriate readjustments. Shifts in policy have taken place since 1979 and are still going on.

China’s policy of developing rural industry and other non-farming sectors was first introduced in 1958, along with the introduction of People’s Communes. At that time development focused on the simple processing of local farm produce (for example, rice and flour milling, beancurd making, oil pressing, noodle making, and so forth), handicrafts (woven straw pads and baskets, ginned cotton, and so forth), the manufacture and repair of farm tools (hoes, sickles, wheels, and so forth) and the processing of local industrial resources (iron, coal, charcoal, limestone, tile making, brick making, fertilizer, power generation, and so forth). These industries were operated on a small scale, using outdated techniques. They utilized local raw materials to meet the demands of local commune members. Very few factories used materials brought in from outside, nor did they manufacture for the external market. Very few non-farming activities took place in People’s Communes, other than the above industries, which were owned by the communes, and no private operations were permitted.

A great many issues need to be addressed during the development of the non-farming sector in rural areas. This is true in areas both where non-farming industries are well underway and where non-farming operations have yet to be developed. What follows is a discussion of some of the issues involved.

This book has concentrated on the development of the non-farming sector and the modernization of China’s rural areas, and in particular on the changes which have taken place since 1979. Below are some conclusions.