Comment

China’s rural private sector While the basis for China’s rural food supply system lies with collective production and state distribution of foodgrains, private sector activities have continued to play an important if secondary role in the direct self-provisioning by households of non-staple foodstuffs. The main areas of private activity are the cultivation of private plots, the rearing of poultry and livestock, and some handicrafts.

The major shift in economic policy and management which has occurred since 1978 aims to stimulate the rural economy by raising economic incentives to producers in the collective sector and through an expansion and liberalization of household private sector activities. While generally welcomed in the West, the policy changes have led to some speculation about two fundamental questions: is the collective structure of China’s rural economy breaking down?; and, will the encouragement of private sector activities not worsen the distribution of income at the local level?

The view that socialism is breaking down in the countryside is based on two considerations. First, the current encouragement to collectives to organize production and incentive schemes at lower levels within the production teams through the creation of work groups, work squads or even the cultivation of collective land by households. This is in contrast to the long run theory of Chinese rural development which requires a progressive raising of the level of collective ownership, management and unified accounting. Second, the expansion of private plots for household use and the enhanced role of the households private activities in livestock (especially hog) production, handicrafts and trade at rural fairs, is seen by some as a threat to the collective system, through competition for labour, and through the encouragement of capitalist and individualistic aspirations and motives.

Against this view it may be argued that the current policy shifts involve no change in the level of ownership of land (even private plots are collectively owned - they may be reallocated or withdrawn from individual households in furtherance of, for example, national population strategy). Similarly, the reduction in collectively cultivated land is unlikely to proceed very far in view of the reliance of the state grain procurement agencies on collective cultivation. The present modest changes are in line with the official view that grain production has been given undue emphasis in the past.

Regarding inequality, there is a widespread assumption that an expansion and liberalization of the rural private sector will worsen the distribution of income. In the long run this is doubtless correct: house- holds with entrepreneurial flair and thriving private activities will accumulate, building up a strong lobby for continued liberalization. In the short run, and in the context of a modest change, the arguments are less clear. Little is known about the distribution of private sector activities and whether they typically strengthen or reduce inequalities arising within the collective sector for variations in the ability of different households to provide labour for collective production.

John G. Gray Food Supply Analysis Group

Queen Elizabeth House Oxford, UK

FOOD POLICY February 1982