Bureaucrat to Entrepreneur: The Changing Role of the State in China's Grain Economy

The pursuit of efficiency, on the one hand, and the desire for low-priced, abundant food for urban consumers on the other, has led China's reformers to undertake a series of erratic policy swings in the course of managing the nation's grain economy. Although some analysts have recognized the deleterious effects of such inconsistent policies on long-run economic development, political and economic considerations have until recently prevented policy makers from deepening reforms of China's grain economy. While government leaders permitted free market commodity trade as part of a dual-track pricing strategy, the leadership never advocated sweeping liberalization of grain markets during the 1980s. Instead, planners directed a vast network of bureaucratic agents to procure, store, transport, process, and sell grain in an effort to preserve the government's influence over the economy. Especially when market forces were seen to be causing price instability, leaders relied on employees in China's parastatal marketing agencies to play a leading role in controlling the scope of market activity and moving goods to key sectors and regions. Such actions frequently were taken to protect urban residents in inland cities. The strategy also was designed to put pressure on deficit regions to increase investments in agriculture by threatening to deny them grain shipments.