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Post–1978 Rural Economic Policy and Peasant Income in China

Published online by Cambridge University Press:  17 February 2009

Lee Travers
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Extract

Per capita peasant income in China rose only 0·5 per cent per year over the two decades prior to 1978. Rural income growth was not only slow, it also lagged far behind the 1·7 per cent per year rate of the urban sector, which had started from a higher base. In December 1978 participants at the Third Plenary Session of the 11th Central Committee of the Chinese Communist Party ratified major policy changes designed to increase peasant income substantially. These and ensuing changes have raised the profitability of agriculture and altered production and marketing patterns. Before evaluating the magnitude and sources of income growth it will be useful to outline the major policy changes.

Type
Research Article
Information
The China Quarterly , Volume 98 , June 1984 , pp. 241 - 259
Copyright
Copyright © The China Quarterly 1984

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References

1. 1956 peasant income is given in Guangming ribao (Guangming Daily), 7 February 1981, p. 1. An inflation adjustment is in Linzhuang, Zheng, “Nongye xiandaihua yu nongye shengchan xiaolu” (“Agricultural modernization and agricultural production efficiency”), in Zhongguo shehui kexue (Chinese Social Science), No. 2 (1981), pp. 3–16Google Scholar. The 1956 urban income and dependency data are in Weidade shinian (Ten Great Years), (Beijing, 1959), p. 191Google Scholar, and Zhongguo gongnongye pingheng fazhan wenti (Problems in the Balanced Development of China's Industry and Agriculture) (Beijing, 1958), p. 110–11Google Scholar. A deflator, and 1978 income and dependency ratios are in Tongjizhu, Guojia (State Statistical Bureau) (ed.), Zhongguo tongji nianjian 1981 (Statistical Yearbook of China, 1981), (Beijing: Zhongguo tongji chubanshe, 1982), pp. 403, 421Google Scholar.

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9. Bingkun, Li, “Zhongguo nongcun sheyuan jiating fuye” (“Household sideline enterprise of China's peasants”), in Zhongguo jingji nianjian 1982, pt. V, p. 20Google Scholar; Hong, Ma (ed.), Xiandai Zhongguo jingji shidian (Economic Handbook for Contemporary China), (Beijing: Zhongguo shehui kexueyuan chubanshe, 1982), p. 120Google Scholar; “Dangzhongyang, guowuyuan fachu tongzhi yaoqiu jiji fazhan duo zhong jingying” (“Central Committee of the Chinese Communist Party and the State Council notice requesting active development of sideline activity”), in Renmin ribao, 4 June 1981, p. 1.

10. Siqian, Zhang, “1980 niande Zhongguo nongye” (“China's agriculture in 1980”), in Zhongguo jingji nianjian 1981, pt. IV, pp. 13–14Google Scholar.

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12. Aggregate figures are available for income distributed by collective, and for direct wage compensation of peasants by collective enterprise (Tongjizhu, Guojia (ed.), Zhongguo longji nianjian 1981, p. 195Google Scholar; Table A3, p. 253. The sum of these is compared to the per capita collective income figure multiplied by the number of peasants participating in collective distribution (Table 1, p. 244; Table Al, p. 252. This method may fail to capture distribution through, for example, the welfare system, but sources of collective income outside of the normal distribution channels do not seem significant.

13. Norma Diamond raises the interesting question of whether commune members working off communes are now being paid directly instead of through the commune. If so, the shift in income between collective and “other” sectors misrepresents the relative growth of income by type of work.

14. The cash income component was adjusted for inflation using the consumer goods price index (Table A4, p. 253). 1978–81 consumption in kind, based on the adjusted total incomes, was found by fitting the following equation to the sample survey data: consumption in kind = A + B (net total income). The resulting equation is: consumption in kind = 44·18 + 0·1781 (net total income). Adjusted values were then substituted, in kind consumption estimated, and inflation adjustments made in cash income.

15. See Table B6, p. 257.

16. Tongjizhu, Guojia (ed.), Zhongguo tongji nianjian 1981, p. 199Google Scholar; Yang, Ling, “Lun wo guo nongyede shangpinhua” (“On the commercialization of Chinese agriculture”), in Caljing yanjiu (Financial Research), No. 3 (1981), p. 33Google Scholar.

17. See Table B6, p. 257.

18. See Table B5, p. 256.

19. Using 1978 as a base year, these figures are deflated assuming that the rate of inflation has been the same for both urban and rural groups. The main reason for the lower rural inflation figures reported in the SSB annual reports is the near zero inflation in agricultural producer goods, which make up nearly a quarter of rural retail sales. Here we are considering only consumer goods, and it seems appropriate to use a common deflator for both sectors.

The nongcun, or rural, category of retail sales over-estimates sales to peasants, as not all rural residents are peasants. Peasants, of course, sometimes buy commodities in urban areas. The net effect of these offsetting biases is unclear.

20. Table 4 does not compare total consumption, as it does not include services or consumption in kind. If adjustments for these factors, and price differences, were made, total consumption across sectors would show less difference. Peasants purchases of retail goods will increase at a much faster rate than total peasant income because the marginal rate of retail purchases from income is far above the average rate.

21. This includes both urban and rural populations (Shiyong, Gui, “Cong yiqie wei renminde sixiang chufa, tongchou anpai shengchan jianshe he renmin shenghuo” (“From the viewpoint of serving the people, simultaneously arrange productive investment and people's livelihood”) in Zhongguo jingji 1982, pt. IV, p. 80Google Scholar).

22. Or that the production system is producing goods desired in rural areas but not urban. In either case the command system is effecting the redistribution, it is not simply a matter of increased relative income in rural areas.

23. Tongjizhu, Guojia (ed.), Zhongguo tongji nianjian 1981, pp. 395 and 397Google Scholar.

24. Jianhe, Zheng, “Tan jiage butie wenti” (“A discussion of price subsidy problems”), in Jianghan luntan (Jianghan Forum), No. 5 (1982), p. 18Google Scholar.

25. Liangshibu yanjiushi, p. 48.

26. See Table 6, p. 248.

27. Tongjizhu, Guojia (ed.), Zhongguo tongji nianjian 1981, p. 192Google Scholar.

28. Ibid.

29. National income figures for agriculture, deflated by the agricultural purchase price index on a 1978 base, were used to derive the growth rate (Tongjizhu, Guojia (ed.), Zhongguo tongji nianjian 1981, p. 20 and 403Google Scholar). Gross output, valued in 1970 yuan, has averaged a 5·6% rate of growth over the same period (Tongjizhu, Guojia (ed.), “Zhongguo jingji tongji ziliao xuanbian,” pt. VIII, p. 9Google Scholar).

30. Renmin ribao, 20 June 1981, p. 1.