The Contribution of Collective Landownership to China’s Economic Transition and Rural Industrialization

Abstract

The high growth of outputs of township and village enterprises (TVEs)1 is a remarkable feature of China's transition to a market economy. Therefore, many researchers regard TVEs as the major force driving China's high growth and its transition. They hotly debate the reasons for TVEs' growth, supplying various explanations of why China's transition has been more successful than that of the East European countries. These explanations (e.g., Oi, 1992; N. Lin, 1995; Che and Qian, 1998) fall into two schools, exemplified by the debate between Andrew Walder (1995) and Victor Nee (1992): one emphasizes statism and the other neoclassical liberalism. The debate considers nothing outside the state market, and neither side believes in the existence of a third alternative. While Walder claims that local governments that directly control the collective TVEs act as efficient industrial firms, Nee argues that the organizational form of TVEs-a hybrid between state and private ownership-makes them more efficient than state-owned enterprises (SOEs) in China's mixed economy.