Labour Productivity of Rural Industry: A Cross-Sectional Analysis

The Chinese economy has been growing rapidly since 1979. Real GDP rose by more than 10 per cent per year from 1979 to 1993 (State Statistical Bureau, 1994). Rural reforms1 and trade liberalization are two of the most important factors responsible for China’s economic ‘miracle’.2 These are reflected in rapid growth of rural industrial output and exports: between 1993 and 1994 the contribution of rural industry output to China’s total GNP (US$ 526bn) rose from one-quarter to one-third. In the same period the value of all Chinese exports grew by nearly 32 per cent, to US$ 121bn. The effects of economic reforms and trade liberalization are inter-related as economic reforms have enabled rural industry to take full advantage of trade liberalization. Rural industry exports grew by 40 per cent between 1990 and 1994. By 1994 the value of rural industry exports was 339.8bn RMB (US$ 41bn), or more than one-third of the country’s total exports (People’s Daily, 1995).