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Reform from Below: The Private Economy and Local Politics in the Rural Industrialization of Wenzhou*

Published online by Cambridge University Press:  12 February 2009

Yia-Ling Liu
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Extract

Since the introduction of economic reform in late 1978, rural China has undergone an impressive economic transformation. On the one hand, decollectivization has culminated in the disbanding of the people's commune and the development of individual household farming. On the other, the re-emergence of the market has brought about a growing commercialization and industrialization of the rural economy.

Type
Focus on Rural China
Information
The China Quarterly , Volume 130 , June 1992 , pp. 293 - 316
Copyright
Copyright © The China Quarterly 1992

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References

1. The description “peasant” in China has gained almost a legal status. It is determined by the rural residency registration and is irrelevant to actual occupation. A rural resident who has long been separated from fanning is still officially identified as a peasant. If he runs a manufacturing enterprise, he will be called a peasant entrepreneur. If he engages in commerce, he will be called a peasant merchant or peasant businessman.

2. There are other areas in which a predominant private sector has emerged in the local economy. They include Quanzhou in Fujian (see Zuyiao, Yu, “Xiangzhen qiye fazhan de di er gaochao: Fujiang jinjingxian yu anxixian xiangzheng qiye fazhan de duibi kaocha” (“The second peak in the development of rural industry”), in Zhongguo Shehui Kexueyuan Jingji Yanjiusuo (ed.), Zhongguo xiangzhen Qiye de jingji fazhan yu jingji tizhi (The Development of Chinese Rural Industry and Its Regime) (Beijing: Zhongguo jingji chubanshe, 1987), pp. 77–123Google Scholar; Feitian, Chen and Huakai, Jiang, “Quanzhou xiangzhen qiye gufen jingji de kaocha” (“A study on partnership enterprises in rural Quanzhou”), Zhongguo nongcun jingji (Chinese Rural Economy), No. 8 (1988), pp. 45–50)Google Scholar and Qinghe county in Hebei province (Jingji ribao, 4 11 1988, p. 2Google Scholar; Renmin ribao, 3 03 1989, p. 3)Google Scholar. However, the predominance of the private economy came much earlier and is greater in degree in Wenzhou than in these places.

3. For more detailed discussion of sweeping privatization and marketization over the local economy in Wenzhou, see Nolan, Peter and Furen, Dong (eds.), Market Forces in China: Competition and Small Business- The Wenzhou Debate (London: Zed Books, 1990).Google Scholar

4. Rongfei, He, Wenzhou jingji geju: women de zuofa he tansuoxing yijian (The Economic Structure of Wenzhou) (Zhejiang: Zhejiang renmin chubanshe, 1987).Google Scholar

5. For instance, as early as 1985, 70% of local transport and 70% of food services in Wenzhou were provided by the local private sector; the total value of transaction proceeds in private commerce was at least equal to, if not greater than, that of the state sector. See “Wenzhou nongcun shangpin jingji kaocha yu zhongguo nongcun xiandaihua daolu tansuo” (“A study on the commodity economy in rural Wenzhou and the investigation on modernization of rural China”), Jingji yanjiu (Economic Studies), No. 6(1986), pp. 3–18.Google Scholar

6. The production value of the household industry accounted for 58.8%, 60.5% and 59.5% of the total industrial output in Wenzhou in 1984, 1985 and 1986 respectively, according to local statistics.

7. Interestingly, in his discussion of the development of factory industry in medieval Europe, Weber pointed out that, among other things, the separation of a household from production is one of the most important conditions in distinguishing factory from household industry. It seems that this process is universal in both east and west in the development of a factory industry. See Weber, Max, General Economic History (New Brunswick, New Jersey: Transaction Books, 1981), pp. 153–177.Google Scholar

8. Bai, Lin et al. (eds.), Wenzhou de jueqi (The Rise of Wenzhou) (Nanning: Guangxi renmin chubanshe, 1987), p. 103Google Scholar. It should be noted that a private enterprise is officially defined as an undertaking which employs more than eight workers. The 10,000 private enterprises might not be exclusively industrial enterprises. They may include non-industrial undertakings with more than eight employees in the service, transport and food sectors.

9. Szelenyi, Ivan, Socialist Entrepreneurs: Embougeoisement in Rural Hungary (Madison, WI: The University of Wisconsin Press, 1988).Google Scholar

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11. In fact, many Party members have joined the camp of capitalist entrepreneurs, using their political connections to advance their economic interest. A 1986 study pointed out 330 such cases, though I believe the real figure must be higher. See Ruiming, Chen, “Dui Wenzhou nongcun guyong dahu de chubu fenxi” (“A primary analysis on the large employers in rural Wenzhou”), Jingjiyanjiu ziliao (Materials for Economic Studies), No. 8 (1986), pp. 28–36.Google Scholar

12. It is estimated that the ratio of capital to output in the state sector is 1:2 in the textile industry, as opposed to 1:10 in the private sector of the same industry. As a result, the pay in the private sector is much higher than that in the socialist sector. See Enzhen, Yuan, Wenzhou moshi yu fuyu zhilu (The Wenzhou Model and the Road Towards Affluence) (Shanghai: Shanghai shehui kexueyuan chubanshe, 1987), p. 10.Google Scholar

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15. Bai, Lin et al. , The Rise of Wenzhou, p. 26.Google Scholar

16. One 1987 report indicates that about 30% of household enterprises in Jinxiang township market their products by mail order. These household enterprises send their catalogues and order forms to state and collective enterprises, department stores and supply and marketing companies in other areas which may be interested in their products. See Bai, Lin et al. , Markets in Wenzhou, pp. 99–101.Google Scholar

17. Yanjiushi, Wenxian, “Zhonggong zhongyang guanyu yijiubasinian nongcun gongzuo de tongzhi” (“The instructions on the rural administration in 1984 by the Central Party”), in Yanjiushi, Wenxian (ed.), Shierda yilai zhonggong wenxian xuanbian (Collections of Central Documents since the Twelfth Congress (Beijing: Renmin chubanshe, 1986), pp. 424–441 at p. 430Google Scholar; Zhengui, Liu and Jianfa, Chen, “Weishi de silu chuangzaoxing de shijian: Wenzhoushi fazhan jiating gongshangye de diaocha” (“Pragmatic thinking and creative practices”), Renmin ribao, 8 07 1986, p. 2.Google Scholar

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21. In an official briefing in 1987 at Wenzhou municipal government, many cadres reported the local tradition of entrepreneurship as one of the most important conditions that contributed to the boom in private industry in today's Wenzhou.

22. Yikang, Gu, “Wenzhou moshi de xingcheng: teding lishi tiaojianxia de chanwu (2)”Google Scholar (“The formation of the Wenzhou model (2)”), in Bai, Lin et al. , Theoretical Investigations, pp. 91–93.Google Scholar

23. It is reported that a newly-built airport in the suburban area of municipal Wenzhou has been open to commercial flights since July 1990. Renmin ribao, 19 06 1990, p. 1.Google Scholar

24. In my discussions with a group of researchers from Zhejiang Shehui Kexueyuan, Jinjixue Yanjiusuo (The Institute of Economics, Zhejiang Academy of Social Sciences) in 1987, they pointed to the geographic isolation from central control as the most important condition determining the rise of the private sector in Wenzhou. They used the popular Chinese dictum, “The Emperor is as far as the sky” (tiangao huangdiyuan) to describe the geographic isolation of Wenzhou.

25. Xiaohan, Zhou, “Sunan moshi he Wenzhou moshi de bijiao ji zhongguo nongcun fazhan de xuanze” (“A comparison between south Jiangsu and Wenzhou models and the selections among the paths of Chinese rural development”), Zhejiang xuekan, No. 2 (1987), pp. 4–9, at p. 5.Google Scholar

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28. Bai, Lin et al. , The Rise of Wenzhou, pp. 229–252Google Scholar; Zhengui, Liu and Jianfa, Chen, “Pragmatic thinking.”Google Scholar

29. See Renmin ribao, 30 06 1988, p. 3Google Scholar. According to a Chinese official from a policy research institute under the State Council (1990), the passing of temporary regulations on private enterprises seems to have no substantial effect in increasing the entrepreneurs' confidence in state policy or in reducing political discrimination against the private sector. The majority of peasant entrepreneurs would therefore not bother to change the registration of their enterprise from collective to private.

30. Wenzhoushi xiangzhen gongye guanliju, Wenzhoushi xiangzhen qiye zhengce huibian (Collections of Policies on Wenzhou Rural Industry) (Wenzhou: Wenzhoushi xiangzhen gongye guanliju, 1987), p. 18.Google Scholar

31. In fact, anxious about the politically risky capitalist tendency in the local economy, the municipal government of Wenzhou has been encouraging joint ventures rather than individually-owned large enterprises.

32. Rongfei, He, The Economic Structure of Wenzhou, p. 152.Google Scholar

33. Xiaojun, Xia, “Wenzhou moshi yu changzhenhua: dui Wenzhou jizhen fazhan de diaocha he sikao” (“The Wenzhou model and urbanization”), Nongcun jingji wengao (Articles of Rural Economy), No. 4, pp. 19–27.Google Scholar

34. This figure was provided by a local cadre when I took a tour of Qianku township.

35. For instance, a cadre left his job as a township Party secretary in Yongjia county, and undertook a business in a commercial orchard instead. See Bai, Lin et al. , (eds.), Wenzhou duihualu (The Dialogues in Wenzhou), (Nanning: Guangxi renmin chu-banshe), pp. 40–41.Google Scholar

36. This indeed happened in the 1982 campaign “Cracking down on economic criminals,” and in the 1986 campaign “Against bourgeois liberalization.” In the 1982 case, eight of the richest peasant entrepreneurs in Liushi township were indicted and subsequently seven of them were arrested on the charge of “fraudulent capitalist activities.” In the 1986 case, many rich entrepreneurs of Wenzhou fled as far as Eastern Europe. After so many political campaigns against the private economy, the local peasant entrepreneurs' confidence in state policies has been shaken, despite subsequent reversals by the state.

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40. From 1966 to 1973, small household farming was found among villages in Yongjia county until the local cadres who tolerated it were purged in 1973 and 1976. For details see Bai, Lin et al. (eds.), Wenzhou de ganbu (Cadres of Wenzhou), (Nanning: Guangxi renmin chubanshe, 1987), p. 85.Google Scholar

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42. According to a Yishan peasant, many Yishan cadres and their families had been engaged in the local textile industry in the past 40 years. Moreover, cadres could always make more money from their business than peasants because they could get higher prices when they sold their products to the local supply and marketing companies because of their position in the local hierarchy.

43. Bai, Lin et al. , The Rise of Wenzhou, pp. 32–33.Google Scholar

44. According to the recollection of a local specialized household member, when she worked for a local collective enterprise in Wenzhou city in 1975, she contracted production from the enterprise and worked at home instead. When political control tightened later on, she closed the household enterprise and returned to the shop floor of the collective enterprise.

45. Dabing, Ye, Zhenan nongmin baodong he hongshisanjun (Peasant Uprisings in South Zhejiang and the Thirteenth Red Corps) (Hangzhou: Zhejiang renmin chubanshe, 1982.Google Scholar

46. Ibid.

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48. The “advance division” was originally the advance guard of the Tenth Red Corps, which had engaged in the guerrilla wars on the border between Zhejiang and Jiangxi after the main force of the Red Army left Jiangxi on the Long March. The advance division first came to the mountainous areas in south-western Zhejiang and built up a guerrilla base there before it was defeated by the Nationalist public security forces. It then moved to south Wenzhou on the border between Zhejiang and Fujian, attempting to build a new base. See Yu, Su, “Huiyi zhenan sannian youji zhanzheng” (“Recollecting guerrilla wars in South Zhejiang”), in Junqu, Zhejiangsheng (ed.), Zhenan Sannian (Three Years in South Zhejiang) (Hangzhou: Zhejiang renmin chubanshe, 1984), pp. 1–42.Google Scholar

49. Ibid. p. 17; Fei, Ye, “Mindong suqu de chuangjian he sannan youji zhanzheng” (“The establishment of soviet government in East Fujian and the three-year guerrilla wars”), in Yi nanfang sannian youji zhanzheng (Recollecting Three-year Guerrilla Wars in the South) (Shanghai: Wenyi chubanshe, 1987), pp. 306–351 at p. 337.Google Scholar

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58. Historical resources show that a conflict over the distribution of power in the new local authority took place between the Wenzhou Communist Party and the Twenty-First Corps, which arrived later, straight after the “liberation” of Wenzhou in 1949. Nevertheless, many leading positions in the local authority were taken by the local Party members. For instance, both the first Party secretary and the mayor of municipal Wenzhou, Long Yao and Hu Jingxian, were leaders of the local guerrilla force.

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61. The native cadres here refer to those who have Wenzhou origins and those who came from the adjacent districts or provinces but had joined the Wenzhou guerrilla force before 1949. For instance, the outsiders who came with the advance division from Jiangxi province had stayed and worked with the Wenzhou guerrilla force since 1937. The common experience shared by Wenzhou natives and their Jiangxi comrades in their long-term struggle against both Japanese and Nationalist troops had enhanced the outsiders' localization. Those outsiders are therefore loosely regarded as natives because their interest was deeply associated with that of the local people.

62. My explanation of the success of Wenzhou was confirmed in May 1990 by a Chinese official at a policy research institute under the State Council, who said that the cadres of Wenzhou have since 1949 been very proud of their capacity to resist the central government. Their courage in standing up against the central state is based on their ever-remembered glorious history of the 1949 “self-liberation.”

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