Overview

Notwithstanding the current Western skepticism following the previous economic troubles in East Asia, China's performance must be considered no less than an economic miracle. Agriculture has played a central role in that miracle.

When reforms began in 1978, China was one of the poorest countries in the world, with 60 percent of the 1 billion population living below poverty and earning less than $1 a day. Almost all of the poor were in the agricultural sector, which provided livelihood to nearly 75% of the total population.

For several preceding decades China had gone through cataclysmic events, e.g., the collapse of an imperial state, foreign invasion, civil war, followed by the rise of communism, the Great Leap Forward and the Cultural Revolution. Since 1978, however, China has been in the midst of two important transitions, from a rural to an urban society and from a command economy to a market based one. The first transition would be unremarkable were it not for China's vast size, its past control of urbanization and unprecedented speed of its industrialization. China has experienced one of the fastest rates of agricultural and overall economic growth. At 1.2 billion China's population easily exceeds the combined populations of sub-Saharan Africa and Latin America and its agricultural growth of 6 percent and industrial growth of over 8 percent per capita, for two full decades (from 1978 to 1997), has also been remarkable for its speed and duration.

Its transition to a market economy has been unique for its combination of experimentation and incremental reforms leading to rapid progress in several areas, although agriculture, which was a clear leader in reforms, now lags behind other sectors.

Since 1978 China has lifted over 200 million people out of poverty, an unprecedented decline. Again agriculture has played an important role in poverty reduction. By international standards, China's social indicators as reflected in close to universal access to primary education, low infant mortality and high life expectancy have been outliers, in view of China's low initial per capita income.

China's integration with the world economy has advanced rapidly, leading to a strong external position including rapid export growth and reserves estimated to be well over $100 billion in 1996. China has essentially privatized farming, liberalized markets for many goods and services and intensified competition in industry while introducing modern macroeconomic management.

Both the transitions to urbanization and liberalized economies have taken a long time in most industrialized and currently developing countries. It took the UK 58 years (from 1780 to 1838) to double per capita incomes, the US 47 years (from 1839 to 1886) Japan 34 years (from 1885 to 1919) and Korea 11 years (1966 to 1977). China has doubled its income twice in periods of 10 years each (1978 to 1996). Whereas liberalization of the economy has also been fraught with many risks and set backs in eastern block countries, China has telescoped both these in a relatively short period and done so successfully.

In 1997, the total output of grain, cotton and edible oil came to 490 million tons, 4.6 million tons and 21.57 million tons, increasing respectively by 62.1 percent, 112.4 percent and 313.5 percent over 1978. The output of milk and eggs was 4.5 times and 2.7 times as much as those in the early 1980s. The output of grain and cotton jumped to No.1 in the world. The total output value of agriculture, forestry, husbandry and fishery reached 2.4709 trillion yuan, 2.4-fold increase over 1978 after adjustment for price factors with an average annual increase of 6.6 percent which is 2.8 times as much as that before the initiation of reform and opening to the outside world. By the end of 1997, township and town enterprises throughout the country added up to 2,015 and provided 130 million job opportunities for the surplus labor force in the countryside. At the end of 1997, the original value of fixed assets of township and town enterprises exceeded one trillion yuan, current assets came to over 1.3 trillion yuan, business income totaled 3.8 trillion yuan, tax paid and profit turned to the state amounted to 323.8 billion yuan and these enterprises retained nearly 200 billion yuan of profit.

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