Transforming Rural China: How Local Institutions Shape Property Rights in Rural China

By Chih-Jou Jay Chen | Go to book overview

3

The Yangtze Delta in the postreform era

This chapter aims to illuminate the past, present, and future development of rural TVEs through a case study conducted in the heartland of rural China. This study shows that throughout the take-off period of the reforms, from the late 1970s to mid-1990s, rural industry in traditionally pro-collective southern Jiangsu operated as collectives and cadre-directed corporations. Throughout certain periods of the rural reforms, collective-oriented ownership existed together with fast industrialization and economic growth. Only in the mid-1990s has the pro-collective heartland begun to feel the privatization thrust.

A key issue addressed in this chapter is the level of benefit and domination in publicly owned enterprises by local cadres and corporate leaders. The case study presented here suggests that a symbiotic relationship has long existed between corporate entrepreneurs and village cadres, blurring the boundaries between village ownership and elite family ownership. Recent privatization in the early 2000s actually changed little of the resource allocation and power structure, but it did legitimize undervalued transfer of legal ownership to elites.

The financial distributional consequences of privatization are far reaching. The village under study in this chapter shows that those in the village government and enterprises have been a group of specific families and individuals. Before and after the privatization, their power and vested interest remained stable, if not strengthened. Thus, the questions are: who precisely were the village administrators and enterprise managers of the economic reform? How were property rights transfers processed? And who are the winners and losers in the transition process?

To answer these questions and illustrate property rights transformations, the following two chapters will be devoted to a case study of one village in southern Jiangsu, which once had a predominant collective sector in the rural economy. The first section of this chapter provides a brief description of the regional development trend in southern Jiangsu. It suggests that a downturn in the region's rural economy in the mid-1990s pushed government administrators to adopt privatization measures in the TVE sector. The central government's decision to sell and merge

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