How Important is Agriculture in China's Economic Growth?

China has achieved spectacular growth since 1949. Rapid growth in the nonagricultural sectors has been assisted by massive resource transfers out of agriculture. Prior to economic reforms before 1978, agriculture was heavily taxed by the state to subsidize urban and industrial development. Economic reforms since 1978 have reduced the burden on agriculture, but lack of state investments still remains a constraint on its development. This paper demonstrates how agriculture has contributed to China's economic development using both empirical data and a cointegration analysis. Two important conclusions are drawn. First, although agriculture's share in GDP declined sharply over time, it is still an important force for the growth of other sectors. Second, the growth of non-agricultural sectors had little effect on agricultural growth. This was largely due to government policies biased against agriculture and restriction on rural-urban migration.