A REVISIONIST VIEW OF CHINESE AGRICULTURAL PRODUCTIVITY

I. INTRODUCTION Most studies on Chinese agricultural productivity come to the same general conclusion regarding the early agricultural reforms: productivity growth was dramatic between 1979 and 1984 (McMillan et al., 1989; Lin, 1992; Wen, 1993; Carter et al., 1996; Mao and Koo, 1997; Carter and Zhang, 1998, Lambert and Parker, 1998). The period after 1984 suggests a slowing of productivity growth, but there is something of a split on what actually happened to productivity. To varying extents Lin, Wen, Mao and Koo, and Lambert and Parker argue that productivity growth continued, but at a slower rate. Carter and Zhang (1998), and Kalirajan et al. (1996) suggest that productivity growth not only slowed but also turned negative for significant portions of China. A look at the growth in agricultural output and in production inputs reported by Chinese sources reveals the rationale for these conclusions. China's agricultural output (Figure 1) increases sharply with the implementation of agricultural reform, especially during the 1979-84 adoption of the Household Responsibility System (HRS), but output growth slows or stagnates after 1984, especially in the cropping sector. Post-1984 grain production is fiat or increases slowly. Cotton is volatile but shows no real increase after 1983. Oilseed production is better but stagnates in the late 1980s before increasing again in 1992. Fruit and meat production show large increases but begin from low levels. Coinciding with the slowdown in output is an increase in the reported quantities of production inputs (Figure 2). There are large increases in capital farm machinery and fertilizer, a moderate increase in draft animals, a mild increase in agricultural labor, and virtually no change in the quantity of sown land. Significant input increases without corresponding output increases imply a productivity slowdown or decline. Is it safe, however, to conclude that factor productivity growth slowed or even declined when the amount of an important input, like labor, did not increase but declined instead? Coinciding with the time period of reported agricultural productivity slowing are key changes in policy, including the opening up of the rural industrial sector and the explosive growth in China's township-village enterprises (TVBs), which draw on rural labor. Lambert and Parker (1998) argue that one reason for decreased productivity is the virtual explosion in the TVE sector and credit it with drawing higher-quality or more motivated workers away from traditional agriculture. Kalirajan et al. (1996) tend to concur by leading off their list of explanations with the observation that the TVE sector led to a shift in the rural labor force. The idea of a shift in China's labor force is not surprising. Chinese accounts in the early 1990s trumpeted the absorption of 100 million farm workers by the TVEs or fretted about the problems created by rural- urban migration. Lardy (1985), Yu (1989), and Cohen (1992) also observe farm outmigration. Examining the average labor input per mu for various crops suggests a farm labor decline (Rawski and Mead, 1998), and some studies show either a large decrease in Chinese farm labor (Rawski and Mead, 1998; Chen et al., 1991, 1992) or surplus in farm labor (Bhattacharyya and Parker, 1999). Despite an apparent outflow of labor from farming, annual figures reported by the National Bureau of Statistics indicate an increase in China's farm labor force, resulting in a gap (Figure 3) between what is officially reported as the amount of labor involved in agricultural production and the actual amount of labor involved. Rawski and Mead (1998) estimate that this gap may be as large as 100 million workers (in addition to the 100 million laborers absorbed by the TVE sector). This labor transfer and its relation to Chinese agricultural productivity during a period of policy fluctuation prompts a reexamination of Chinese agricultural productivity. …