It draws on extensive field interviews in two villages in Shanghai County conducted during 1991 and 1992. This paper comments on a theoretical debate between proponents of market transition theory and local state corporatism. The former claims power resources have significantly shifted in marketized areas, and the latter argues local authorities maintain a great deal of control over the operation of local political economy. This paper claims that the expanding cash nexus provides a useful tool to dissect some of the economic changes occurring in villages with strong collective leadership, noting the significant income gains villagers have made since 1978. Growth of villager income has both stimulated and transformed mutual aid exchanges.
Villagers have more money to give in the form of gifts and interest-free loans.
The cash nexus and time constraints of industrial employment have also reduced the number of labor exchanges between villagers since the mid 1980s. Mutual aid exchanges remain an important element in the life course of village families and underscore the importance of horizontal exchanges.