Township and Village Enterprises

by

Hong-yi Chen

• LAST MODIFIED: 25 February 2016
• DOI: 10.1093/obo/9780199920082-0128

Introduction

China’s rural industry, which stemmed from rural subsidiary production, has been an important part of China’s economy for centuries. It had its first wave of rapid development in the people’s commune era, responding to the central government’s call of promoting agricultural mechanization and rural industrialization. The phenomenal development of this sector, however, took place during China’s reform era, especially from 1978 through 1996. During this period, the former commune and brigade enterprises became township or village collective enterprises, while new enterprises, collective or individual/private, were established. Township and village enterprises (TVEs) as a sector absorbed rural surplus labor released from farming, contributed to rural economic growth, increased rural incomes, generated fiscal revenues for local governments, and helped narrow the rural-urban gap. Furthermore, as a major “growing-out-of-the-plan” part of the Chinese economy, it stimulated competition with state-owned-enterprises (SOEs) and drove the process of marketization in the entire economy. Therefore, it played a catalytic role in transforming the Chinese economy from a command economy to a market economy. The literature on TVEs is extensive. There is a rich body of descriptive and case-study material that provides a good introduction for those new to this field. These studies are mainly conducted by scholars either from international organizations such as the World Bank, or from Chinese research institutes affiliated with the Chinese government, with some joint work by scholars from both camps. Another part of the literature focuses on the institutional underpinnings of the TVE phenomenon. It presents diverse yet not-inconsistent explanations of the factors that led to development and success of this sector, comparisons of this sector to SOEs in various aspects, its contribution to China’s economic growth and reform, and to rural development in particular. Since the mid-1990s, the major literature published turned to the study of property rights transition and privatization in this sector. The causes, the process, and the consequences of the transition were analyzed in detail. A significant feature of TVE research is its interdisciplinary nature. Economists, political scientists, sociologists, and economic historians all contributed to the literature using their own expertise, especially in the field of the institutional foundation of the TVE phenomenon. TVEs became an integrated part of Chinese industry after the property rights transition, and since the mid-2000s, the Chinese government no longer provides statistical data for TVEs as a separated independent sector. Research on the TVE phenomenon declined and fewer works on it have been published thereafter.

General Overviews

Literature published at early period provides a good introduction and a comprehensive guide to the study of China’s township and village enterprises. It describes the origin of China’s rural industry; the kind of circumstances under which it became the TVE sector; this sector’s contribution to and its relationship with other sectors of the Chinese economy; and the factors that have made this sector a great success. Among such publications, the most influential and frequently quoted work is Byrd and Lin 1990, which is the report of a collaborative research project conducted by scholars from the World Bank and the Institute of Economics, Chinese Academy of Social Sciences. A specific chapter on township and village enterprises in Barry Naughton’s book, The Chinese Economy (Naughton 2007) is a concise yet insightful overview of this topic; whereas Du 1992 is a more general and comprehensive work on China’s rural industrialization. Both Wong 1988 and Findlay, et al. 1994 are good introductions for non-economics readers. The former contains lots of useful statistical data, while the latter covers a wider range of aspects related to TVE development. On the other hand, Putterman 1997 presents a more analytical overview to explain the historical success of TVEs. Two documents published in the same year, namely, Ma, et al. 1994 and Xie and Lin 1994, are reports of field investigations. The former is a collaborative work of Chinese and foreign scholars on a nationwide sample and leans more toward an “outsider’s” viewpoint; while the latter is by a semi-governmental research institute focusing on the suburbs of Shanghai, and representing an “insider’s” viewpoint.

• Byrd, William, and Qingsong Lin, eds. China’s Rural Industry: Structure, Development, and Reform. Oxford: Oxford University Press, 1990.

  A full-length book, mixed case study, and analytical work that covers almost every relevant aspect of township and village enterprises based upon field investigations conducted in four counties in four provinces. The Chinese version of this book (林青松. 中国农村工业：结构，发展与改革) was published in 1989 by Jingji Kexue Chubanshe.

• Du Haiyan 杜海燕. Zhongguo nongcun gongyehua yanjiu (中国农村工业化研究). Beijing: Zhongguo Wujia Chubanshe, 1992.

  A comprehensive research work done by a Chinese scholar and published in Chinese. Helpful in understanding the background, the process, and the impact of China’s rural industrialization, especially the discussions on the influence of political and economic system, government policies, and rural cultural tradition on rural industrialization.

• Findlay, Christopher, Andrew Watson, and Harry X. Wu. “Rural Enterprises in China: Overview, Issues and Prospects.” In Rural Enterprises in China. Edited by Christopher Findlay, Andrew Watson, and Harry X. Wu, 173–190. New York: St. Martin’s, 1994.

  This descriptive overview touches almost every important aspect of the TVE phenomenon. A good introduction to those new to this field, whether they have expertise in economics or not.

• Ma Rong 马戎，Huang Chaohan 黄朝翰, Wang Hansheng 王汉生, and Yang Mu 杨沐, eds. Jiushi niandai zhongguo xiangzhen qiye diaocha (九十年代中国乡镇企业调查). Hong Kong: Oxford University Press, 1994.

  A full-length book in Chinese based upon a 1992 collaborative field investigation conducted by scholars from Institute of Sociology and Anthropology, Beijing University and Singapore Institute of East Asian Political Economy. A descriptive research documented an overview of the historical development of TVEs and the impact of government policies and other institutional factors on such development.

• Naughton, Barry. The Chinese Economy. Cambridge, MA: MIT, 2007.

  The chapter on “Rural Industrialization: Township and Village Enterprises” (pp. 271–294) provides a concise overview of the most significant factors leading to the rapid growth of township and village enterprise sector and diverse patterns of its development.

• Putterman, Louis. “On the Past and Future of China’s Township and Village Enterprises.” World Development 25 (1997): 1639–1655.

  DOI: 10.1016/S0305-750X(97)00060-0

  Provides a general explanation of the historical success of TVEs with respect to China’s pre-reform economic conditions and local political settings. It also discusses the allocative and technical efficiency of collective TVEs and proposals for reforms in TVE sector.

• Wong, Christine P. W. “Interpreting Rural Industrial Growth in the Post-Mao Period.” Modern China 14 (1988): 3–30.

  DOI: 10.1177/009770048801400101

  Based upon field investigations conducted in the early 1980s, this document is a detailed description of the growth and development of TVEs in the early reform era, with lots of useful statistical data. It is not a technical analysis, thus it is easy to understand, especially for non-economics major students and/or scholars.

• Xie Zifen谢自奋, and Lin Yaochu林耀初, eds. Xiangzhen qiye yunxing jizhi yanjiu (乡镇企业运行机制研 究). Shanghai: Shanghai Shehui Kexueyuan Chubanshe, 1994.

  This publication is a report on a field investigation conducted in suburban Shanghai by Shanghai Academy of Social Sciences and Shanghai Suburban Industrial Management Bureau. It contains general overviews on the mechanism of TVE operation and governance, as well as TVEs’ business autonomy, outward-oriented strategy, technological innovation, and ongoing property rights reform.