This book is a collection of translated papers by many well-known Chinese economists, including Zhang Shuguang, Zhou Qiren, Cai Fang, Lu Feng, Li Shi, Shi Qinghua, and others. What makes this book unusual is that it is the first in a series on “Developing China,” and the editorial committee promises to publish more books to answer the now heatedly debated question of whether China's successful experience in the past thirty years can be duplicated as a “China model” elsewhere in developing world (p. xv). In addition, the editor, Deng Zhenglai, makes thought-provoking observations in his chapter to interpret China's changing place in the world during recent centuries. According to Deng, the contrast between China's experience as a victim versus a miracle economy is attributable to the different nature of early globalization and the current round (p. 4). Readers will find his observations rather intriguing.
Zhang Shuguang and Zhao Nong have a useful chapter explaining why the household responsibility system is more efficient than the people's commune system. Zhang and Zhao find that the confusion about the difference between public and private products, and the associated confusion about the difference between public and private decisions, can explain the low performance of China's rural economy under collectivization. In response to the damage caused by this confusion, China has been giving back more and more property rights to farmers and allowing them to make production decisions themselves. However, the government finds it difficult not to go to the other extreme and neglect public goods.
The chapter by Zhou Qiren is most relevant to those who are interested in how to improve rural institutions in developing nations. Zhou uses the theory of property rights to explain why the people's communes, by denying peasants the right of exit in an attempt to maximize rural surplus (or, in Zhou's term, “rent,” p. 347) for industrialization, actually reduced the share of rent in total output as a result of rampant shirking among peasants, while drastically increasing the resources needed for supervising agricultural production. The persistently poor performance of the communes finally forced the government to yield and partially restore the right to exit the collective by legalizing the household responsibility system. By privatizing use rights to land that is still collectively owned, the state can drastically reduce the cost of supervision while significantly increasing agricultural surplus. This is a useful lesson.
However, Zhou may be too optimistic in his belief that Chinese peasants have already obtained “the full withdrawal right” from the collectives (p. 392). It is true that a Chinese farmer now has the freedom to leave his native village and to work in an urban area. However, his exit right is not complete because he cannot exit the village without losing his land. Because rural land is still collectively owned, rural residents cannot sell it to gain capital in order to settle down in a town or city. In addition, farmers as a group do not have the right to exit the farming sector and enter collectively into an urban sector, such as real estate, to capture the appreciation of the value of their land as a result of urbanization. All farmland, once designated for urban use of any kind—public or commercial—must be converted into state-owned land. But the meager compensation offered to farmers under such government land-taking policy has caused increasing social conflicts and confrontations.
Lu Feng contributes a good chapter on food, focusing on the concern about whether China can feed its growing population as its economy becomes more urbanized. His finding seems to be very encouraging. According to Lu, China imports more and more food grain and feed grain. However, China is also increasing exports of such foodstuffs as rice, fruit, vegetables, and aquatic products, following its factor endowment pattern and comparative advantage. This trade not only increases the income of Chinese farmers, it also improves China's environment and ecology.
Overall, this book is a serious effort to explain the rather successful experience that China accumulated up to the early 1990s. All of the authors were born and raised in China, and many of them received education or conducted research overseas. Knowing China well, they provide in-depth discussions on many issues related to rural institutional reforms and agricultural growth, such as gender inequality in the land tenure system, the allocation of decision-making power between the private and public domains, the impact of out-migration on rural income, the current food policy, and changes in the relationship between the state and land holders. All of the topics covered are extremely important. Researchers and students who are interested in China's rural development and agricultural production, in particular, and China's reforms and growth, in general, will find the book insightful and inspirational, as it was the rural reforms that triggered the chain of reforms in other realms of Chinese life. The book contains many insights for policy makers in developing nations who want to speed up rural development and agricultural growth.
