Institutions, Inputs, and Agricultural Growth in China:Revisiting Several Controversies, 1949--1986

Scholarly debates on China's agricultural growth between 1949 and 1986 continue to differ over the extent of the price scissors, the effect of heavy industrial investment, the role of the 1978 reforms, and the impact of decollectivization on irrigation. Using a single dataset and complementary econometric methods, this paper addresses each of these controversies. The results show that 1952--1957 was the only net extraction period across all three channels, after which the state channelled a net inflow of about 168.6 billion yuan into agriculture via fiscal and credit instruments. Heavy industrial investment exerted a significant positive lagged effect on agriculture, while the contemporaneous negative correlation stemmed from the zero-sum nature of the investment share indicator. The input-output elasticity shifted abruptly in 1970, and collective agricultural loans broke in 1971, both pointing to the rectification effects of the North China Agricultural Conference. Disaster prevention capacity fell from 0.70 under the collective era to 0.53 after household contracting, mainly because the collective maintenance system collapsed rather than because state investment declined. After 1979 the price elasticity of agricultural supply approached zero, suggesting that the 1979 procurement price increase acted more like a one-off recalibration than a sustained marginal incentive.