RURAL INDUSTRIALIZATION - AN ENGINE OF PROSPERITY IN POSTREFORM RURAL CHINA

The postreform period (post-1978) in China has been marked by very sharp increases in both income and consumption of peasant households. Such sustained high growth over a period of more than a decade is impressive by any standard. The fast-growing rural industries acted as the engine of prosperity achieved by the peasant households of China during this period. With very high rates of growth achieved by such industries, the emergence and rapid growth of private enterprises, and institutional changes that took place in methods of recruitment and payment of wages in collectively owned industries, rural industries as a whole became an important source of income for peasant households. In addition to the direct contribution, these industries played an important role in fostering the growth of agriculture (e.g., by providing funds for social investment in irrigation, and by facilitating farm mechanization and the use of fertilizers), and thus made a valuable indirect contribution to peasant income.