China’s New Industrialization Strategy
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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.
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Chapter 6: Peasant Consumption and Incomes in Critical Turn

Y. Y. Kueh

Extract

6. Peasant consumption and incomes in critical turn* AGGREGATE TRENDS AND STRUCTURAL CHANGE The pace with which the new Dengonomics has helped to boost peasant incomes and consumption since 1978 is truly amazing. By a large measure, the increases in farm procurement prices since 1979 have immediately translated into disposable income for the peasant households and improvement in consumption standards. As shown in Figure 6.1, per capita peasant consumption has accelerated most markedly relative to that of the urban residents since 1978, narrowing the gap from 1:3.2 in 1978 to 1:2.6 in 1986. Note also that the growth in urban consumption has slowed down equally remarkably in the early 1980s, as a result of drastic curtailment in urban investment, in heavy industry in particular. Undoubtedly, by the advent of the Deng era, the decades-long industrialization drive was considered basically mature enough to afford a relaxation in rural control. However, Figure 6.1 also reveals that, once the ‘Economic Readjustment’ was completed, from 1983 onwards, there has been a marked equalizing trend in growth rates between urban and rural consumption; and the trends are indeed underscored by the parallel decline in 1985–86. As a matter of fact, the absolute figures given in Figure 6.1 show that the relative difference in per capita consumption in 1986 between the peasants (191.02 yuan) and non-peasants (496.50 yuan), is exactly at par with that prevailing in 1957 (respectively 72.6 and 186.9 yuan), with both years bearing the same 1:2.6 ratio....

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