Rural Non-agricultural Development in Post-Reform China: Growth, Development Patterns, and Issues

BEFORE 1979, central planning and government regulations bound the Chinese peasants tightly to the land, and cultivation, particularly grain production, had priority over all other activities. Non-agricultural activities, when they were permitted to develop, were viewed not primarily as a way of changing the rural economy but as a way of supporting agriculture by providing it with modern material inputs (e.g., fertilizer, electric power, agricultural implements). Thus, during the Cultural Revolution decade, the government promoted the development of rural industries to achieve local self-sufficiency in the industrial inputs needed by agriculture but discouraged if not prohibited the development of other non-agricultural activities, even when they were organized collectively. In consequence, while there was considerable growth in the rural non-agricultural sector prior to 1978, it was also economically inefficient in the sense that much of the expansion was in the producer goods industries where rural China did not have a long-term comparative advantage. In the early 1980s, as part of a new rural development strategy, the government's policy towards rural non-agricultural development changed. The new policy was described by the slogan leave the land but not the countryside, enter the factory but not the city (ii tu bu 1i xiang, jin chang bu jin cheng) -i.e., peasants would remain in the countryside but