The Rural Economy in China and Russia – What is Different? Is there a Lesson for Russia?

A question frequently posed in Russia amid the economic and social anarchy of the post socialist period is whether it might not be better off if it followed the Chinese model of transition. This latter might be described in broad terms as a very slow liberalisation of the political system with a certain devolution of decision-making powers from the “centre” down to provincial and local levels while at the same time a fairly rapid introduction of the capitalist model of privatisation and the market economy. The de facto situation on the ground with regard to the operation of market forces in rural China and rural Russia today differs little in reality. However, the historic evolution of institutional processes and relationships and the relative levels and organisation of the production resources of land, labour and capital are very different in rural China and rural Russia. Therefore, there are enormous differences in the challenges faced in raising the level of value added per capita in these two rural environments. The paper presents the general political, administrative and economic context, including the spatial differences, within which the rural economy operates in both countries. The rural economy in both, including agriculture and non-agricultural activity, are compared. The special role of the Town and Village Enterprises (TVE) in China in invigorating the rural economy is analysed in detail, drawing in particular on two contrasting Township case studies. The circumstances, which facilitated rural development in China, do not exist in Russia. The conclusion is that Russia has little to learn from the Chinese model of rural development and must indeed develop its own model to address the current crisis in the countryside and rural society. Nevertheless, one lesson is clear, the current crisis in rural Russia can only be resolved with significant public sector intervention.