57. The organizer of this session was Mr. M. Ward, formerly of the Development Data Group of the World Bank; and the discussant was Mr. Zhu Xiangdong, Director-General, Rural Sample Survey Organization, NBS.

 

58. Three papers were presented:

(i)“The Chinese Rural Non-agricultural Enterprises: Evidence from the First Agricultural Census” (E. Giovannini);

(ii)“The Composition Characteristics and Development Trend of Non-agricultural Township and Town Enterprises in China” (Niu Ruofeng);

(iii)“The Research on Transformation of Structure of Non-agricultural Activities” (Hao Chunhe).

 

59. As shown from the analyses presented in the papers of this session, rural non-agricultural enterprises represent one of the most dynamic sectors in the Chinese economy. It represents a core element of a rapidly emerging private sector which is still evolving - new enterprises have been set up in even greater numbers since 1992. However, the sector is responding and adapting with remarkable success to developing open market conditions. All the papers described the complex and varied structure of the ownership and village enterprises sector and its specific collective and private (individual) characteristics in respect of size distribution, location and value of output.

 

60. It was noted in the first paper that employment growth had virtually doubled between 1985 and 1996 and that by 1996 the sector accounted for 25.5% of GNP and output was continuing to grow by an annual average rate of about 25% at constant price. Four main factors were considered the key to this process: a) agricultural reforms over the period 1979-1984 which led to the formation of identifiable markets; b) the decentralization of production and reform in the Township and Village Enterprises (TVEs) which encouraged an increase in the size of TVEs; c) the acceptance of unbalanced economic development; and d) the opening up of international relationships. All of these factors created externalized and spill-over features advantageous to an expansion in private enterprises.

 

61. There is a large number of small and medium TVEs, but the largest (employing more than 200 people) account for 32% of total employment. Industries make up the largest single component but the services sector remains small. Likewise the percentage of non-agricultural enterprises which tend to be larger and are most dominant in the East and Coastal regions - that are run by collectives is high. Collective ownership overall account for three-quarters of all TVE operations, the rest being smaller units in private hands. It was noted that TVEs in the countryside are dominantly agricultural based or related and that many operations in the rural areas depend on an initial agricultural surplus accumulation for their establishment. Among rural TVEs, transport is quite important, but services are very small.

 

62. Questions raised related to the potential for non-agricultural enterprises to provide employment for displaced rural labour, and the relativities between the East and other areas of PRC, particularly rural regions, given wage and labour productivity differentials and comparative access to infrastructure services. It was also mentioned that during recent years a reform of the co-operative system had been implemented in PRC.