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Softening the Impact of Adjustment to Reform: The China Experience

Author

Listed:
  • Lohmar, Bryan
  • Diao, Xinshen
  • Somwaru, Agapi
  • Tuan, Francis C.
  • Chan, Kitty Kay

Abstract

This paper examines the structural adjustments induced as China moved from a planned economy that subsidized capital-intensive industry at the expense of agriculture to a nationally integrated market economy more fitting with China's underlying resource endowments. We argue that there were few losers in the process because of 1) a gradual implementation process that maintained transfers to the favored groups under the planned economy, such as urban industrial workers, while the market economy developed benefiting the non-favored groups, such as farmers; 2) high growth rates allowed a large portion of the economy to benefit from the overall reform process and bolstered the government's commitment to further reform; and 3) labor, the most important resource that farm households hold in China, was much less institutionally constrained than land and capital during the reform period, allowing rural workers to participate in the fast growing nonagricultural sector.

Suggested Citation

  • Lohmar, Bryan & Diao, Xinshen & Somwaru, Agapi & Tuan, Francis C. & Chan, Kitty Kay, 2003. "Softening the Impact of Adjustment to Reform: The China Experience," Policy Reform and Adjustment Workshop, October 23-25, 2003, Imperial College London, Wye Campus 15733, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    • Handle: RePEc:ags:iapr03:15733
    DOI: 10.22004/ag.econ.15733
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    References listed on IDEAS

    as
    1. Knight, John & Song, Lina, 2006. "Towards a Labour Market in China," OUP Catalogue, Oxford University Press, number 9780199215553.
    2. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution of China's Rural Labor Markets During the Reforms," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 329-353, June.
    3. Huang, Jikun & Rozelle, Scott, 2002. "The Nature And Distortions To Agricultural Incentives In China And Implications Of Wto Accession," Working Papers 11970, University of California, Davis, Department of Agricultural and Resource Economics.
    4. Gérard Roland, 2002. "The Political Economy of Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 29-50, Winter.
    5. Dong, Xiao-Yuan & Putterman, Louis, 2002. "China's State-Owned Enterprises in the First Reform Decade: An Analysis of a Declining Monopsony," Economic Change and Restructuring, Springer, vol. 35(2), pages 109-139.
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