China’s New Industrialization Strategy

China’s New Industrialization Strategy

Was Chairman Mao Really Necessary?

Y. Y. Kueh

Deng Xiaoping’s economic strategy is widely regarded as a complete anathema to Mao’s, but this study strongly argues that without the material foundations laid by Mao, it would have been very difficult for Deng to launch his reform and open-door policy. Deng basically shared Mao’s aspirations and approach in pursuit of China’s industrialization, and this had in fact helped to condition him to the successful gradualist methodology. Deng lost patience at times and resorted to the ‘big bang’ strategy, only to fail miserably. Taken together, the book tells a new story about the economics of China’s transition. This is a highly thought-provoking study, blending institutional and convincing statistical analysis.

Chapter 4: The Rise of Agricultural Dengonomics

Y. Y. Kueh

Subjects: asian studies, asian economics, economics and finance, asian economics, economic psychology


* THE ISSUE There are two major aspects to Deng Xiaoping’s economic reform in Chinese agriculture. The first is the drastic increases in state farm procurement prices as promulgated immediately upon his return to power at the famous Third Plenum of the Eleventh National Party Congress (NPC) held in November 1978. The second is accelerated dismantling of the agricultural collectives, more precisely the entire people’s commune system, as triggered by the price and income incentives offered in 1979 (what may be considered as a ‘less harsh consumption policy’). By early 1984, the process had already culminated in a de facto ‘redistribution’ of collective farmlands to the individual peasant households throughout the Chinese countryside. There is no doubt that the changes threaten to tear apart the very raison d’être of Mao’s economics of collectivism. That is, to maximize farm surplus extraction to support the massive industrialization drive through the familiar ‘scissors-price’ instrument and to facilitate Nurksian-type accumulation by way of non-quid pro quo labour mobilization, as a means of hedging against natural calamities and exploiting scale economies. Thus, what could be the economic consequences of Deng’s approach? This chapter discusses the impact on national and farm savings, rural investment priorities, overall production stability, and implications for farm procurements and supplies to the urban–industrial sector, and attempts to shed some light on possible future trends. Chapters 5 and 6 look at the decollectivization process and the effect on peasant incomes and consumption. To begin with, the major features of...

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