SOAS Research Online

Abstract

This research investigates the nexus between industrialisation and rural growth in China, while providing alternative perspectives on inclusive and sustainable growth patterns. Instead of considering rural areas in China as homogenous, this research presents the multiple facets of rural China through three case studies, identifying various growth patterns that are suitable for different levels of development. The first case, Yuhuan City (county level) in Zhejiang Province, discusses how industrial development builds new engines of growth as this rural area becomes a burgeoning city. The case of Alxa League in Inner Mongolia investigates how a resource-abundant region diversifies its economy and seeks green transition. The third case documents the efforts of breaking poverty traps in Linxia, a poverty-stricken prefecture in Gansu Province. Prior to the Chinese economic reform in 1978, China implemented urban-rural divide policies that substantially delayed urbanisation. Rural populations were confined within rural collectives, and free movement was restricted. Since most of the Chinese population lived in rural areas before the economic reforms, the analysis of rural China begins with the dual economy model (Lewis, 1954). Instead of taking full employment in the modern sector for granted, this thesis stresses te significance of creating sufficient productive employment to absorb surplus labour and break dualism. Through a comparative analysis of macro-level growth strategies in the pre-reform and post-reform eras, it is considered that pursuing heavy industry-oriented industrialisation without participating in global value chains (GVCs) was responsible for the dualistic economic structure in pre-reform China. Yet, labour-intensive industrialisation in the post-reform era runs the risk of a race to the bottom, since it is important to develop comparative advantages that go beyond cheap labour. The Yuhuan case discusses how a local production system has been developed to support a “components supermarket” business model, enabling participation in GVCs while continuously increasing workers’ wages and thus avoiding the curse of racing to the bottom. The Alxa case investigates the pursuit of a green transition in ethnic minority communities and suggests that an environmentally sustainable growth pattern is also more equitable and inclusive. Environmental costs, which are treated as externalities by mainstream environmental economics, are not only causing market failures to persist, but are also one of the causes and manifestations of inequalities. Furthermore, enhancing the poor population’s capabilities is an integral part of fostering inclusive growth. The Linxia case indicates the state’s role in breaking poverty traps in underdeveloped rural areas. In addition to providing essentials such as access to education and basic welfare, the state devotes massive resources to improving the physical and social infrastructure and creates growth opportunities for underdeveloped regions. Casting attention to the power dynamics underlying the market economy, such as the capitalist world system, unequal ecological exchange that mispriced environmental costs is more about appropriation than market failures, and the inevitable flow of resources and labour from underdeveloped to advanced regions, this research delves into the pursuit of inclusive growth which goes beyond the concept of equal opportunity based on neoclassical economics. Roemer (1995) criticises conservatives for only touching the surface of the problem: “If there is no discrimination in hiring and everyone has access to education through a public school system or vouchers, then the conservative standard of equality of opportunity is met.” This research considers that promoting equality requires but is not limited to tackling the unequal world system, addressing market failures, and enhancing individuals’ capabilities. Through an investigation of rural China’s various growth patterns, alternative perspectives on fostering inclusive and sustainable growth are provided, such as through following a production-oriented growth pattern, nurturing advanced productive capabilities, moving up GVCs, pursuing green growth, and breaking poverty traps in underdeveloped regions with state-coordinated investments.