Relationships between rural enterprises, township communities and township governments in China : a study in Guanghan County of Sichuan Province
Creators: name: Hong, Xiaoyuan
Publisher: name: The Australian National University
Year: 1992
Subjects: subject: Rural industries China Guanghan Xian
subject: Rural development China Guanghan Xian
subject: Local government China Guanghan Xian (China)
subject: Guanghan Xian (China) Politics and government

description: Many countries have recently experienced a period of diversification in their rural economies. The rapid rural industrialization which occurred in China during the 1980s is widely believed to be based on small rural communities. This thesis, based on a county case, explores relationships between rural enterprises and township communities/governments , and the resulting implications for China's rural industrialization. Township governments have been deeply involved in the development of local rural enterprises. As investors, they established and ran many enterprises (township enterprises). At the same time, as local administrators, they played an important role in mobilizing all kinds of local resources for supporting local enterprises, whether township-owned (TEs), village-owned (VEs) or privately-owned (PEs). Related to rural enterprises' heavy dependence on home townships for the supply of capital, labour and land, the roles played by township governments were also most evident in the provision of these main production factors. Strong incentives for township governments to be actively involved in rural enterprises arose from the immediate benefits for township governments and communities. Townships relied heavily on local enterprises for providing public revenue, employment opportunities and for increasing local personal income. Following introduction of a fiscal contract system at the township level in 1988, taxation, particularly output-related sales taxes, became the dominant revenue source for township governments. As a result, the output level of rural enterprises, rather than profits, played an increasing role in determining rural enterprises' contributions to township governments and local communities. In these contexts, rural enterprises have acquired a strong community orientation since their emergence. The concern for local employment and income levels has justified the establishment and survival of firms which might not have been established or survived in a profit-dominated environment, and has given these firms a stronger incentive to increase output than profit and prudence might dictate. Since the fiscal changes in 1988, a further shift has occurred towards greater emphasis on output level in the priorities of township enterprises. This shift then produced a significant gap in objectives between TEs and VEs, and could be one major reason for the recent differences in the performance between TEs and VEs (with TEs being lower than VEs), which was evident in 1990 in Guanghan County, in China as a whole, and in almost all individual provinces throughout the country. The thesis concludes with a discussion of the past and future relevance of the community-induced output orientation of rural enterprises, and of the rural bias which has been characteristic of China's recent industrialization.