Chinese Rural Industrialisation in the Context of the East Asian Miracle

This paper synthesises the different explanations and presents an overview of the development and characteristics of the Chinese rural enterprises (REs). The rural industrialization history of the Chinese provinces in the last 30 some years is analyzed. Among other results, the analysis has reached the following conclusions. First, provincial diversity in RE development is strongly linked with the capital stock in the rural area; in other words, a province with a comparative advantage in industry relative to agriculture has a larger RE sector. Second, a lighter SOE sector at the outset of the development helps a province develop a larger RE sector. This result suggests that a province that initially abided by China's comparative advantage in labour intensive industries laid a better stage for its future RE development. Thirdly, a larger share of public REs hinders the overall RE development in a province in the reform period. This last result contradicts the prediction provided by many theories advocating the vaguely defined property rights widely observed in Chinese REs. The Chinese experience is also placed in the context in East Asia, noticeably, Thailand.