210 mill agricultural households – 1/3 of global total Rural poverty still an issue – gap persists between rural & urban incomes pacific/ stmhttp://news.bbc.co.uk/1/hi/world/asia- pacific/ stm

Some rural issues Agriculture – 1 of the 4 “modernisations” within China (industry, technology, science) 1 st area to be reformed – concerns about food security Grain prices raised by 20%; input prices lowered Farmers’ incomes increased – incentive to raise productivity (remember BBC documentary) Rural collectives – guaranteed tenure rights for 30 yrs – confidence to invest & manage land more effectively Rural economy revitalised – confidence to challenge corrupt cadres

Land Reform Pre-1949 – land held by absentee landlords Post 1949 – communal ownership under guidance of state Deng – private enterprise encouraged – land ownership needed to be addressed 1983 consensus – commune system (20-30 families) ceased Household responsibility system (end of collectives) – 3-5 yr contract to farm land, later 15 yrs, now 30 yrs Non-land assets auctioned off or managed under contract – rapid growth of small businesses – new entrepreneurial class (“Newsnight” film)

TVEs – rural industrialisation Town & Village Enterprises Backbone of China’s economy Rural industrialisation encouraged to reduce risk of migration to urban areas (backwash effects) 1988 – 100 mill surplus farm workers (1/3 rural workforce) 1995 – 150 mill “ “ “ “leave the land but not the countryside; enter the factory not the city”

Mainly manufacturing units Originally rural collectives Rely heavily on local govt intervention – Guanxi is very significant. Guanxi – the art of using personal contacts. In China winning trust & building relationships come first; transactions come second (transactions costs). Kinship & university in common creates strong bonds. Indebtedness is honoured & repaid. Seen by West as potential for corruption. Will it last? TVEs are v important for local govt income – provision of services.

1996: 23 mill rural enterprises 135 mill workers 23% GDP 44% Gross Ind Output 35% export earnings Small restaurants Distribution Theme parks Soft drinks Clothing Furniture Bike repair shops Cement Mining equipment Travel agents Engine manufacture

Some private firms Wholesale & retail – 47% Transport – 16% Manufacturing & industrial -14% Personal services – 11% Lodging & restaurants – 8%

Issues Rapid rise in productivity slowed in 1980s Inheritance rights – farmers who want to migrate try to hold on to land but leads to low productivity TVEs get most of credit for investment from cadres Farmers find it hard to get loans for modernisation Urbanisation means much agricultural land is built over /programmes/newsnight/ stm /programmes/newsnight/ stm