Agriculture Reference
In-Depth Information
Foreign exchange and trade policies.
Chna's polces governng the
external economy have played a highly influential role in shaping the
growth and structure of agrculture for many decades. Durng the entre
Socialist Period (1950-78), the over-valuation of China's domestic currency
destroyed incentives to export, effectively isolating China from international
exporting opportunities (Lardy 1995). The government, however, allowed
the real exchange rate to devalue by 400 per cent between 1978 and
1994. Except for recent years, when the exchange rate has experienced a
slight appreciation, adjustments in the exchange rate throughout most of
the reform perod ncreased export compettveness and contrbuted to
China's export growth record. This, in turn, has assisted the expansion of
the national economy. Perhaps more than anything, China's 'open-door'
policy, including its exchange rate policy, has contributed to the rapid
growth n the mportance of the external economy.
Rural development and labour market policies.
The shft of labour
from the rural sector to the urban sector les at the heart of a country's
modernisation effort, and China has been experiencing this in primarily
two ways: by the absorption of labour into rural firms and by massive
movement of labour nto ctes. Rural ndustralsaton has played a vtal
role in generating employment for rural labour, raising agricultural labour
productvty and farm ncomes. The share of rural enterprses n GDP rose
from less than 4 per cent in the 1970s to more than 30 per cent by 1999.
Rural enterprses domnated the export sector throughout the 1990s (NBSC
2001). Perhaps most importantly, rural enterprises employ about 35 per
cent of the rural labour that works off the farm. In addton to wage-earnng
jobs in rural areas, a large and increasing part of the rural labour force—up
from 8 per cent in 1990 to 13 per cent in 2000 (de Brauw et al. 2002)—also
works n the self-employed sector.
Although Chna's nput markets stll had a number of structural
imperfections—such as employment priority for local workers, housing
shortages and the urban household registration system—labour poured into
cities during the 1980s and 1990s and the emergence of labour markets
has been transformng the economy (Ln 1991; Lohmar 1999; de Brauw et
al. 2002). According to a national survey of 1,200 households, more than
100 mllon rural workers found employment n the urban sector n the
late 1990s (de Brauw et al. 2002). Chna's labour markets have allowed
