Social Scientist. v 24, no. 282-83 (Nov-Dec 1996) p. 50.

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Some Considerations on Rural Investment, Employment, and Consumption in the Post-Reform Period in China

INTRODUCTION The post-1979 period in China has seen two sets of major changes in rural areas: first, a fundamental change in the social relations of production initiated with the switch to the household contract responsibility system from the system of production teams and brigades organised within the communes;

second, in price policy, a large rise in administered farm product prices including foodgrains in 1979, followed by continuing rise in the eighties, commercial crops price deregulation and dual pricing for grain, resulting in relative price shifts favouring commercial crops. These changes were accompanied by a sharp fall in the share of central investment resources devoted to agriculture, which appears to have been only partly compensated by the rise in private investment on the part of peasant households, now taking individual rather than collective investment decisions. A spurt in the agricultural growth rate in the first half of the eighties, has been followed by deceleration in the second half. There have been quite noticeable structural shifts taking place in Chinese agriculture as a result of these policy measures, in the commodity composition of output, in the employment profile, in the sources and distribution of incomes, and in consumption patterns.

In this short paper we propose to focus only on two consequences, of the post-reform policies, the thrust of which has been to introduce substantial elements of private property and private decision making in production and investment, following the dismantling of the Maoist strategy of collective production and investment hitherto regarded as essential for providing a livelihood to every person and meeting the wage goods and raw materials requirements of industrialisation. We will argue that one consequence of the privatization strategy has been to induce cropping pattern shifts in accordance with the increasingly skewed pattern of effective demands, which in turn has precipitated a new problem of basic food security for the relatively deprived. Given the highly unfavourable land-man ratio in China and the

* Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.

Social Scientist, Vol. 24, Nos. 11-12, November-December 1996

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