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China’s Growth

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By SEDACMaps – China: Population Density, 2000, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=85088842Population density measures the number of persons per square kilometer of land area. The data are gridded at a resolution of 30 arc-seconds.

Howard French has a nice essay on a new book by Wang Feng, including a discussion of what made China’s astronomical growth from the 1980s on possible:

China’s well-known experiments in agriculture, which freed peasants from the obligation to produce only for rural communes, have long been trotted out as a key reform. To this, Wang adds another decisive change that has received far less attention: a formidable wave of early industrialization in the countryside. In its first phase, Wang writes, industrialization “took off in situ.” Rather than moving to cities, farmers began to work as industrial laborers in their villages. “By the mid-1990s, 40 percent of China’s rural labor force was producing industrial goods in the Chinese countryside,” he writes. “In 1995, China’s rural laborers generated more than half of all China’s industrial output.” In 1987, Deng revealed his surprise over this to a visitor from Yugoslavia: “In the rural reforms our greatest success—and it is one we had by no means anticipated—has been the emergence of a large number of enterprises run by villages and townships. They were like a new force that just came into being spontaneously.”

It was only in the second half of the 1990s, well after the onset of rural industrialization, that an exodus to China’s cities took off in earnest. Historically, urbanization has been a key feature of many economic takeoffs, including that of Japan and, much earlier, of the United States. In China, though, urbanization had two special features. Because so many newcomers to cities had industrial experience, they were much better prepared to step directly into factory jobs. Secondly, because China enforces a two-track social structure under the hukou (household registration) system—a kind of soft-apartheid that favors long-standing urban residents—the new industrial workers migrating from the countryside could be given lower wages and far less generous social benefits than preexisting city dwellers. Moreover, factory workers enjoyed few protections from labor unions, which are toothless and government-controlled.

What has just been described fits with the theory that China simply had a vast pool of cheap labor during its takeoff period. But Wang rightly notes that this greatly oversimplifies things. It is undeniable that the hukou system discriminates against people who are not from rich metropolises. But urban newcomers nonetheless arrived with special attributes that were crucial in fueling the country’s fast growth: They boasted high literacy rates and generally good health.

Plenty more at the link, including an assessment of China’s economic growth on the broader historical stage, and a quick review of the very serious demographic problems that China is facing in the near to medium term.

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