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Agriculture in China's modern economic development
Book Reviews
Agriculture in China's Modern Economic Development, Nicholas R. Lardy, ix + 275 pp., 1983, Cambridge University Press, Cambridge, £22.50 hardback During the thirty-five years since the establishment of the People's Republic, it was only in 1984 that China for the first time announced that she had achieved a surplus in food grain production. This piece of news has made reading the book by Lardy even more interesting because, as the author points out, there have been several paradoxes in Chinese agricultural development. The first puzzle is that despite there being few industrial inputs used in farming and little evidence of technological change, growth in agriculture was rapid in the period between 1953 and 1957; yet the rate of growth of cereal production from the mid-1960s to 1977-78, according to the author" was no more rapid than (or even somewhat below) the pace of development in the period of the First Five Year Plan, although considerable investments have been made in water control, chemical fertilizer industry, and independently developed high-yield short-stalk rice strains had been widely disseminated and cultivated. The second paradox is that during the years between the mid-1950s and mid-1970s, despite a doubling of per capita national income, chronic malnutrition and rural poverty were persistent. The third paradox, however, was even more puzzling because it was Mao who led a Party which promised to improve the welfare of the peasantry, yet in retrospect, as the author argues, the Party had become so overburdened by its own bureaucracy that the Cultural Revolution was started as an effort to reduce its inefficiency and inertia. But it was also in those years that the stultifying hand of the bureaucracy was strengthened not only to inhibit but also to further undervalue agriculture, leaving a large proportion of China's rural population still suffering from poverty. In resolving these paradoxes, the author believes that the key lies in the relationship between the Chinese peasantry and the state. The basic premise is that it was the state policies, rather than changes in organization in farming, which shaped and affected the growth of agricultural output and productivity, and the trends in peasant income and consumption. The study examines firstly the role of agriculture in China's development strategy. It suggests that although in principle Mao recognized the critical role of agriculture's financial contributions to industrialization, his subsequent policies on agricultural development were, in practice, primarily extractive rather than developmental. At least, Mao sought to develop agriculture mainly through organizational changes instead of heavy state investments. Further, in order to accelerate industrial development, the high level of state investment expenditures in this sector were financed largely through direct and indirect taxes on agriculture. Such preferences of organizational changes, according to the author, helped to promote vastly the increased role of the bureaucracy in Chinese farming which subsequently had the most dire consequences.
For one thing, state budgetary expenditure and investment in agriculture were modest relative to the large share of national income originating from agriculture. Further, with the combination of a price policy which imposed a significant indirect burden on the farm sector, cropping patterns have been distorted. This led to the declining efficiency of resource use and, since high implicit taxes
389
were imposed on many transactions with the state, few resources were left within the farm sector. These policies have at least encouraged or even compelled the pursuit of local self-sufficiency in food grains; and the gains from specialized production based on local comparative advantage were squeezed out. Other policies of population and migration also have exacerbated rural poverty. The author argues that since birth control efforts were neglected in rural areas (especially in those minoritypopulated regions), and because outmigration from rural areas is prohibited, the welfare standard of the rural population actually went down when population grew. Finally, tax and procurement policy in many cases, at least until 1979, aggravated poverty in China's rural areas despite the impression that such policies were to be progressive, and aimed at raising the standard of living of China's poorest rural residents. The author suggests that by the late 1970s, however, such policies were increasingly less rational. The procurement policy had become a burden for the poorer production units in that not only were they struggling to meet their tax and basic quota delivery targets, but some of them even had to buy grain from the state at the same time. While the deliveries to the state were for taxes, purchases were at the procurement price. Such transactions consequently depressed peasant income and consumption significantly. The book argues that agricultural growth in China since 1978 should not be attributed primarily to changes in organization - - that is, changes in incentives offered in the various forms of responsibility systems, as well as changes in prices, markets and cropping patterns. It was the policies which aimed at reducing prices for agricultural inputs, increasing state investment in agriculture, liberalizing private marketing, and increasing intra- and interregional specialization which could eventually offer the greatest hope for a long-term sustained agricultural growth. Written with great clarity, the author has researched carefully and thoroughly a panorama of sources. He has made available a wealth of information that is especially valuable in drawing our attention to the often flawed vision which ignores persistent chronic rural poverty in China. The theoretical positions of the book are cogently organized and intelligently presented, and the arguments were both stimulating and convincing. In view of the fact that the standard of living in most rural areas has changed dramatically, particularly since 1983 when the new rural policies were firmly implemented, this book should prove an excellent source to understand the transformation and prospects of agricultural growth in China. D A V I D F U - K E U N G IP
University of Queensland Australia
Upland Landscape Change: a Review of Statistics. A. Woods, Countryside Commission, 1984, available from Countryside Commission, Publications Despatch Department, 19 Albert Road, Manchester M19 2EQ, U.K. The past decade has seen a great awakening of public and academic interest in the well-being of the British countryside. Pronouncements on the destruction of landscapes,
Agriculture in China's Modern Economic Development, Nicholas R. Lardy, ix + 275 pp., 1983, Cambridge University Press, Cambridge, £22.50 hardback During the thirty-five years since the establishment of the People's Republic, it was only in 1984 that China for the first time announced that she had achieved a surplus in food grain production. This piece of news has made reading the book by Lardy even more interesting because, as the author points out, there have been several paradoxes in Chinese agricultural development. The first puzzle is that despite there being few industrial inputs used in farming and little evidence of technological change, growth in agriculture was rapid in the period between 1953 and 1957; yet the rate of growth of cereal production from the mid-1960s to 1977-78, according to the author" was no more rapid than (or even somewhat below) the pace of development in the period of the First Five Year Plan, although considerable investments have been made in water control, chemical fertilizer industry, and independently developed high-yield short-stalk rice strains had been widely disseminated and cultivated. The second paradox is that during the years between the mid-1950s and mid-1970s, despite a doubling of per capita national income, chronic malnutrition and rural poverty were persistent. The third paradox, however, was even more puzzling because it was Mao who led a Party which promised to improve the welfare of the peasantry, yet in retrospect, as the author argues, the Party had become so overburdened by its own bureaucracy that the Cultural Revolution was started as an effort to reduce its inefficiency and inertia. But it was also in those years that the stultifying hand of the bureaucracy was strengthened not only to inhibit but also to further undervalue agriculture, leaving a large proportion of China's rural population still suffering from poverty. In resolving these paradoxes, the author believes that the key lies in the relationship between the Chinese peasantry and the state. The basic premise is that it was the state policies, rather than changes in organization in farming, which shaped and affected the growth of agricultural output and productivity, and the trends in peasant income and consumption. The study examines firstly the role of agriculture in China's development strategy. It suggests that although in principle Mao recognized the critical role of agriculture's financial contributions to industrialization, his subsequent policies on agricultural development were, in practice, primarily extractive rather than developmental. At least, Mao sought to develop agriculture mainly through organizational changes instead of heavy state investments. Further, in order to accelerate industrial development, the high level of state investment expenditures in this sector were financed largely through direct and indirect taxes on agriculture. Such preferences of organizational changes, according to the author, helped to promote vastly the increased role of the bureaucracy in Chinese farming which subsequently had the most dire consequences.
For one thing, state budgetary expenditure and investment in agriculture were modest relative to the large share of national income originating from agriculture. Further, with the combination of a price policy which imposed a significant indirect burden on the farm sector, cropping patterns have been distorted. This led to the declining efficiency of resource use and, since high implicit taxes
389
were imposed on many transactions with the state, few resources were left within the farm sector. These policies have at least encouraged or even compelled the pursuit of local self-sufficiency in food grains; and the gains from specialized production based on local comparative advantage were squeezed out. Other policies of population and migration also have exacerbated rural poverty. The author argues that since birth control efforts were neglected in rural areas (especially in those minoritypopulated regions), and because outmigration from rural areas is prohibited, the welfare standard of the rural population actually went down when population grew. Finally, tax and procurement policy in many cases, at least until 1979, aggravated poverty in China's rural areas despite the impression that such policies were to be progressive, and aimed at raising the standard of living of China's poorest rural residents. The author suggests that by the late 1970s, however, such policies were increasingly less rational. The procurement policy had become a burden for the poorer production units in that not only were they struggling to meet their tax and basic quota delivery targets, but some of them even had to buy grain from the state at the same time. While the deliveries to the state were for taxes, purchases were at the procurement price. Such transactions consequently depressed peasant income and consumption significantly. The book argues that agricultural growth in China since 1978 should not be attributed primarily to changes in organization - - that is, changes in incentives offered in the various forms of responsibility systems, as well as changes in prices, markets and cropping patterns. It was the policies which aimed at reducing prices for agricultural inputs, increasing state investment in agriculture, liberalizing private marketing, and increasing intra- and interregional specialization which could eventually offer the greatest hope for a long-term sustained agricultural growth. Written with great clarity, the author has researched carefully and thoroughly a panorama of sources. He has made available a wealth of information that is especially valuable in drawing our attention to the often flawed vision which ignores persistent chronic rural poverty in China. The theoretical positions of the book are cogently organized and intelligently presented, and the arguments were both stimulating and convincing. In view of the fact that the standard of living in most rural areas has changed dramatically, particularly since 1983 when the new rural policies were firmly implemented, this book should prove an excellent source to understand the transformation and prospects of agricultural growth in China. D A V I D F U - K E U N G IP
University of Queensland Australia
Upland Landscape Change: a Review of Statistics. A. Woods, Countryside Commission, 1984, available from Countryside Commission, Publications Despatch Department, 19 Albert Road, Manchester M19 2EQ, U.K. The past decade has seen a great awakening of public and academic interest in the well-being of the British countryside. Pronouncements on the destruction of landscapes,