Lifting hundreds of millions of people out of poverty - FU Jun*

Preface

In June 1987, during a meeting with Yugoslav guests, Deng Xiaoping reflected on China’s bourgeoning economic growth: “In rural reform, the biggest unexpected achievement is the dramatic growth -- seemingly out of nowhere -- of township and village enterprises, which was not by design of the central government. All of a sudden, peasants are engaged in all sorts of industries, the commodity economy, and small business. These enterprises have been growing at a rate of over 20% per year for several years. . . [and they] have largely solved the problem of employment for 50% rural surplus labor. Instead of running to cities for work, peasants have built up many small towns.”1

How to account for the “sudden” and “dramatic” rise of township and village enterprises (TVEs) in China? Take a look at a few more statistics first.

In 1978, China initiated reform and opening-up program. In less than a decade, TVEs rose from constituting less than 1/4 (in 1978) to over 1/2 (in 1987) of the country’s total rural output. By 1985, the total output by TVEs accounted for 13% of China’s GDP. Ten years later, this figure exceeded 30% in 1995. That same year, exports by TVEs exceeded 40% of the national total. In 1998, employment by TVEs exceeded 125 million, compared with 20 million in 1978, and average wage reached 6,000 RMB in 1998, compared to a meager 100 RMB in 1978. In 2007, employment reached 150 million, and average yearly wage income was over 9,000 RMB.2

What is the significance of these numbers in a global perspective?

Copyrighted material. Use in class discussion is authorized by Prof. Fu Jun.

• This is part of a narrative project on China stories and is financially supported by the Bill & Melinda Gates Foundation. During various stages of its composition and rendition, including research, interviews, transcribing, drafting, drawing, translations, and classroom teaching and discussion, I have been assisted by a dedicated taskforce. Members include Zhou Qiang, Yin Jianhong, Xin Ying, Gabriel Lerner, Zoe Jordan, and Zhao Ting. I also want to express my thanks to students, too many to name here, especially from developing countries, for participating in my classes and training sessions, and giving feedbacks.

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