INFORMATION TO USERS This manuscript has beenreproduced from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type of computer printer. The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, printbleedthrough, substandard margins, and improper alignment canadversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, thesewill be noted. Also, if unauthorized copyright material hadto be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand comer and continuing from left to right in equal sections with small overlaps. Each original is also photographed in one exposure and is included in reduced form at the backofthe book. Photographs included in the original manuscript havebeen reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. V·M·I University Microfilms International A Bell & Howell tntorrnatron Company 300 North Zeeb Road. AnnArbor. M148106-1346 USA 3131761-4700 800/521-0600 Order Number 9429641 The political economy of rural reform in post-Mao China Quarnstrom, Glenda Liu, Ph.D. University of Hawaii, 1994 Copyright @1994 by Quarnstrom, Glenda Liu. All rights reserved. V·M·I 300 N. Zceb Rd. Ann Arbor. MI 48106 THE POLITICAL ECONOMY OF RURAL REFORM IN POST-MAO CHINA A DISSERTATION SUBMITTED TO THE GRADUATE DIVISON OF THE UNIVERSITY OF HAWAII IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN POLITICAL SCIENCE MAY 1994 By Glenda Liu Quarnstrom Dissertation Committee: Oliver Lee, Chairperson Harry Friedman George Kent Alvin So stephen Uhalley Copyright 1994 by Glenda Liu Quarnstrom All Rights Reserved iii ABSTRACT Rural economic reforms introduced in China in 1978 have resulted in a rise in incomes for peasants, but the increase has not been evenly distributed. While the Chinese government contends that the present gap between rich and poor is a temporary but necessary stage in the construction of socialism, I investigated whether inequality was an indication of the emergence of social stratification. County level income data from Guangdong and Sichuan provinces was used to assess the impact of rural reform on income inequality. In addition, government surveys were consulted to determine what factors contribute to high incomes. The results were examined from the perspective of political economy analysis. The relationship between income and inequality is complex. Social stratification results from increasing inequality combined with the failure of poverty programs to reach the rural poor and a system of distribution based on efficiency and growth rather than need. iv CONTENTS ABSTRACT. .............................................. i v LIST OF TABLES......................................... vii LIST OF GRAPHS .....•.................•...•............. viii PREFACE. ............................................... ex CHAPTER 1. INTRODUCTION. .....••..•...•.•..•............ 1 "Unfair" Income Gaps: The Chinese position 2 Income Gaps: The Political Economy View..... 10 Methodology. ...........•........•............ 17 Chapters. .................................... 25 CHAPTER 2. POLITICS OF INEQUALITy ...•••.•.•.........•.. 27 Economic Growth, Inequality and Poverty..•... 28 Types of Economic and Political systems..•... 35 Framework for Understanding Social stratification in Post-Mao China........•... 42 CHAPTER 3. RURAL POVERTY IN POST-MAO CHINA •...•.•...... 47 Inequality and Poverty in China.•..•..•..•... 47 "Help the Poor Programs in China" ....•....... 52 Conclusion. .................................. 64 CHAPTER 4. THE PRS AND ROOTS OF REFORM .........•....... 68 The Pre-socialist Economy.•.•......••........ 68 The Revolution 1921-1949 .....•............... 77 The Maoist Period.....•..••.....•..•......... 80 The Post-Mao Reforms, 1978-Present.......•... 88 Benefits of the PRS............ • . • . 92 Problems II ••••••• 94 The PRS: Implications for Rural Society..... 97 Conclusion. ................................ .. 106 CHAPTER 5. RURAL REFORM IN GUANGDONG •••.••...•..•...... 109 Special Characteristics of Guangdong Province 111 Overseas Chinese•.•.•.••.•.••..•............. 119 Foreign Investment and Trade.•............... 125 Income Inequality in Guangdong •.............. 128 Programs to Address Rural Poverty.....•...... 134 conclusion. ................................ .. 140 v CHAPTER 6. RURAL REFORM IN SICHUAN 143 sichuan in Historical Perspective.•.......... 145 Post-Mao Reforms............................. 156 Income Inequality in Sichuan................• 163 Rural Poverty: Fengjie County.............•• 168 Programs to Address Rural Poverty 174 Foreign Investment•••.•••....•.......•......• 176 Peasant Income Inequality: Sichuan and Guangdong Compared•.•......•............... 177 Conclusion 179 CHAPTER 7. CHINA IN THE '90S..•........................ 182 Sources of Inequality•..•................... 185 Rural Poverty............................... 193 Social stratification•...................... 205 China in the 21st Century.•.•............... 209 APPENDIX "............ .. 212 NOTES ••.•.••••••••••••••••••••••••.••••.••••••.•••.••••• 238 SELECTED BIBLIOGRAPHy................................... 249 vi LIST OF TABLES Table Page 1 counties with Average Annual Income 200 Yuan and Below, by Province and Autonomous Region.•...... 212 2 Comparison of Counties with Highest and Lowest Ave:age Annual.I~com7 by Province, Autonomous Reglon and Munlclpallty•...•....••••...•.••.•... 213 3 contributions to Guangdong Province from Overseas Chinese and Hong Kong Compatriots.••••.•.•...... 214 4 Guangdong's Intake of Foreign Funds..•..........• 215 5 Guangdong's Intake of Foreign Funds, by Area....• 216 6 1988 National Income by County (Guangdong) ••..... 217 7 Comparison of the Lowest and Highest Income Groups, Guangdong . 221 8 Percentage of Families by Income Group, Guangdong 222 9 Distribution of Land in Guangdong and Sichuan Prior to Land Reform . 223 10 Distributed Collective Income Per Capita in Sichuan. ....................................... 224 11 1988 Agricultural Income by County, Guangdong ... 225 12 1988 Per capita Village Income by County, sichuan 228 vii LIST OF GRAPHS Graphs Page 1 contributions to Guangdong Province from Hong Kong and Overseas Chinese 234 2 Comparison of Income between Plains, Hills and Mountain Areas, 1978 and 1988 235 3 comparison of the Lowest and Highest Income Groups, Guangdong. ...........................•........... 236 4 Percentage of Families by Income Group, Guangdong 237 viii PREFACE When China began to experiment with rural reform in the late 1970s, development specialists the world over began to take notice. until then, China had appeared to offer an alternative to growth-oriented development based on the capitalist market. Under Mao, China had achieved relatively equitable growth and resolved problems of extreme famine and malnutrition without amassing large foreign debts. The decision to replace the communes with a system of contracting production to private individuals was a radical departure from the past. Would a socialist system prove to be more effective in resolving some of the problems associated with development on the capitalist model? Specifically, could China achieve economic growth without sacrificing socialist equality? Could China avoid the all-too-familiar scenario of other Third World nations in which high incomes for a few individuals is accompanied by extreme poverty for many? In 1990, a decade after most of rural China had adopted the reforms, it seemed appropriate to take a close look at the question of inequality and poverty in post-Mao China. Political economy analysis, used by development specialists to study other Third World countries, provides a ix comprehensive framework. During the course of this study I began to see China not as a model of socialist egalitarianism, but as a real country working to resolve real problems. I would like to thank the members of my dissertation committee, Oliver Lee, chair, Harry Friedman, George Kent, Alvin So and Stephen Uhalley for their comments and patience. Professors Ye Xian-en and Chen Cunsheng of Zhongshan University and Professors Wu Fa-gin and Wang Shijun of Sichuan University were instrumental in helping me obtain materials while in China and arranging visits to villages. Finally, my husband Tom not only provided his technical expertise on the computer but served as "Mr. Mom" during the time I was in China and sustained me with his constant support. x CHAPTER 1: INTRODUCTION The decade of the 1980s brought dramatic changes to the chinese countryside. At the heart of these changes is the Production Responsibility System (PRS) which replaces the commune as the system of economic organization. Although land remains collectively owned, production is now contracted out to groups, households or individuals. Work points and rations have been abolished and remunerations are at least in theory more closely tied to labor, or actual work performed. For some peasants the reforms have brought new