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Xinhua: 'Full Text' of Communique of Fifth Plenum of
17th CPC Central Committee
• “The plenum agreed that the Central Military Commission (CMC) of the Communist Party of China (CPC) be augmented to include Xi Jinping as a vice-chairman.”
Small Group DiscussionTransition: Mao Era to Reform Era
• Define legitimacy
• What were the bases of regime legitimacy?– 1950s? – 1960s? – After Mao’s death?
4
Impetus for Reform (critical juncture)
• Crisis of political legitimacy• Communist utopia? Economic stagnation
– Per capita household expenditures • increased only 2.2% 1952-75
– 1975 per capita consumption of • Grain, cooking oil, meat lower than in 1950s
– Poverty increasing
• Nationalism (wealthy/strong China)? Demonstration effect/challenge of East Asian “tigers”– South Korea, Taiwan, Hong Kong, Singapore
5
Impetus for Reform
• Inefficiencies of planned economy– extensive development strategy exhausted (using more and more inputs to produce output growth)1950s
• each 2.5 元 in additional inputs generated a 1 元 increase in output
1970s• each 5.5 元 in additional inputs generated a 1 元 increase in
output
• Sought efficiencies of market economy– therefore, turned to intensive development strategy (using a given amounts of inputs more efficiently to produce
output growth)
6
• No blue print for reform “groping for stepping stones while crossing the river”
摸着石头过河• Tolerance for experimentation
Experimentation as Policy Approach
9
Agricultural Reform
• Initial policy opening– 3rd Plenum of 11th
Central Committee (Dec ’78)
– marked the beginning of the “reform era”
10
Agricultural Reform
• 3rd Plenum of 11th Central Committee• Primary source document
– “Decision on… Accelerating Ag Development”– Re-introduce price incentives:
• Increase price paid by state for compulsory grain procurements from peasants by 20%
• Increase price paid by state for above-quota grain procurements by 50%
11
Agricultural Reform
• Initial policy opening – Did NOT envision de-collectivization
– Addressed local crises• Local crisis in Anhui (Wan Li, provincial party secretary)
Household responsibility system in farming (i.e., de-collectivization)
– Evaluated experiment with household responsibility Successful became official policy
– Fully implemented by 1983 • Wan Li became head of State Agriculture Commission
12
Agricultural Reform
• Note nature of policy process– No “blueprint”– Local experimentation allowed
• If considered to be successful,
• Then implemented on a wider scale
– “Seek Truth from Facts”
13
Agricultural Reform
• Tremendous early success– Improve quality of life
(rural and urban)
– Increase rural incomes
– Decrease poverty
14
Positive implications of ag reform
legitimacy--improved living standards, rural incomes
• 1979-83– rural per cap income incr’ed 70% (almost doubled in 4
yrs)
– % of rural pop w/ food intake of <2200 cals/day decr’ed from 31% to 13% (cut in half)
15
Implications for transition from ag to industry
(stay tuned for next class)
Ag reform • Revealed surplus labor
– For alternative employment in industry
• Increased household savings– For alternative investments in industry
Develop rural industry 2nd major success
Short Discussion:Chinese “peasants”/“farmers”
• Think back to Perry’s analysis of Chinese peasants– “Rational peasants”?– What does it mean to make rational choices? – Are they “rational maximizers”?
• If so, what are they maximizing?
– Are the “peasants” of the late 19th C analytically the same as the “peasants of the late 20th C?
17
Problems emerge after 1984
Budget burden• High grain prices paid to farmers are a burden on
the state budget, because state still subsidizes grain price paid by urban residents
• Policy reaction: slow down price increases
Weak incentives for farmers• Farmers shift OUT of grain production
19
Other incentive problems for farmersInsecure land tenure
• Initial responsibility contracts only 1 year
• Later extended (according to official policy)– Extended to 3 years (early 1980s)
– Extended to 15 years in some places (1984)
– Extended to 30 years (1995); allow transfer of land-use rts
– May be extended to 70 years (2008); allow land to be used as collateral for bank loans
• Extensions NOT implemented in places – Why?
» Cadres reallocate to reflect changes in household size (land as social safety net for farm families)
» Cadres allocate land to meet grain/tax quota burden
20
Results of insecure land tenure
disincentive for farmers to invest in• infrastructure—irrigation
• long-acting fertilizer
Declining yields in agricultural output
21
Other problems in agriculture sector
Tax/fee burden on peasant households• To pay for local schools, roads, etc.
(rural sector largely “self financing”)
• Led to significant rural unrest
Rural/urban inequality• Per capita urban incomes now 3x rural incomes
• Among most unequal in the world
22
Addressing problems in agriculture sectorHu Jintao/Wen Jiabao regime puts new
attention on rural development • Abolish rural fees (2001), ag taxes (2005)• Increase fertilizer subsidies• Increase intergovernmental fiscal transfers to rural
areas – to finance basic infrastructure (significant increase by
2004)– to finance rural teachers’ salaries – still not enough to finance rural development
» takings of farmers’ land w/out adequate compensation
» a new source of revenue for local officials» a new cause for protests by rural residents
“New socialist countryside” top priority of 11th FYP (2006-2010)
23
Ag and WTO: Crisis or Opportunity?
Ag tariffs fell to avg 17% by 2004– Liberalize imports of major ag commodities– Grant foreigners rts to import/distribute ag
products
25
WTO
China NOT competitive in grain• Grain: land intensive; China: land scarce
• Import grain
China competitive in other ag products• Labor intensive comparative advantage
– Animal husbandry—pork, chicken
– Horticulture—flowers, fruits, vegetables
– Aquaculture—fish farming
– Processing of ag products—processed foods
26
Positive implications of ag reform
legitimacy--improved living standards, rural incomes
• 1979-83– rural per cap income incr’ed 70% (almost doubled in 4
yrs)
– % of rural pop w/ food intake of <2200 cals/day decr’ed from 31% to 13% (cut in half)
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