China’s Rural Industrialization through Township and Village Enterprises

China’s Rural Industrialization
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China’s Rural Industrialization
The rural industry has been a critical component in China’s economy for centuries. Rural areas in China have been dotted with many rural enterprises. A majority of these enterprises used to serve limited markets. Over the years, a majority of the industries scaled up while others became scaled-down forms of modern process enterprises. China has a surplus of labor and shortage of capital. As a result, rural industries have been essential in the economic development of China. The industrial sector in rural areas consists of both state-owned and collectively-owned small businesses. Moreover, rural industry has remained crucial in the renovation of Chinese rural areas and especially in addressing the imbalance between cities and rural areas. Having almost all individuals as members of the rural industries offers basic security to the people. The industries function as training grounds for peasants who want to learn manufacturing skills. This essay will entail the analysis of rural industries through the lens of the three Township and Village Enterprises (TVEs).
Features of the Models
TVEs refers to economic units that are either collectively-owned by locals or controlled by peasants in rural areas in China (Sun, 2007). TVEs exhibit some distinctive characteristics. Firstly, while they are publicly-owned, they remain to be market-oriented. TVEs were subject to the discipline of the market. Secondly, TVEs are small in size, which allows them to enjoy a high degree of autonomy in the way they operate. TVEs emerged in the rural areas, which had less controls compared to the urban areas. This allowed them to enter into competition with the state-run industrial businesses hence driving forward the idea of marketization.
The first one is the Southern Jiangsu (Sunan) model. Sunan refers to an area around the Yangtze Delta around Shanghai (Chen et al., 2019). This particular area is one of the most economically developed areas in China. In these areas, TVEs thrived in early 1970s. While the surrounding regions emphasized collective systems, Sunan adopted TVEs model. As TVEs kept on expanding these areas maintained control while the collective system declined in other areas. Sunan elements appeared whenever TVEs grew up early close to the cities. The proximity to the cities allowed these areas to obtain technical assistance from the urban SOEs. The strength of Sunan remained in its ability to have the TVEs generating profits and hence supporting the local government.
The third one is the Wenzhou model. Wenzhou is a town that is fairly remote which has caused it to evolve a different model of TVEs. Being away from the city has enabled it to develop away from the influences of the urban areas. Since the beginning, the Wenzhou economy has been based on private ownership where private individuals control a significant portion of the economy in the area (Xu & Zhang, 2009). Initially, the firms were small-sized and based individual households. Traders took the items produced and peddled them throughout China hence filling the gap that existed for cheap and diverse items. It is important to note that the farmers in Wenzhou did not have the advantages brought about by proximity to the city. As a result, the collectives did not manage to develop TVEs to become viable money generation sources. On the contrary, the Wenzhou model entailed individually owned firms taking advantage of the existing opportunities to set up operations. The activities were oriented towards the market which mandated strong reliance coordination to ensure that products reach the intended audience. In essence, the Wenzhou model was responsible for the emergence of many private businesses in the region.
The last one is the Pearl River Delta (PRD) Model. The development of TVEs in this region was mainly because of foreign investment (Wei & Liefner, 2012). The model was driven by Hong Kong business people who returned home to start businesses. These businesses people had grown up in the Delta and understood the economy well. The village leaders were responsible for coordinating the transactions like leasing of land, signing of export contracts and asset management. The factories in the Delta were mainly focused on export. The TVEs were partly owned by foreigners, especially from Hong Kong. The existence of labor-intensive export factories enabled the region to be open to laborers from all over China. The demand for labor in the region makes the Delta region a destination for migrant workers. At the same time, the region became open to both local and foreign agents.
The Future of the Models
Geographically, the provinces of Fujian, Zhejiang, and Jiangsu have offered a ground for the expansion of TVEs. With TVEs emphasizing on a market-oriented approach, there is a huge potential for the development of these provinces (Amalia, Ionu & Cristian, 2008). The integration of TVEs into the world economy is a boost to the growth of these models. Considering that these regions have historically maintained ties with the overseas Chinese capitals especially Hong Kong and Taiwan, there is a possibility of more foreign capital flows to the provinces. Overseas Chinese investors are more likely to find the models suitable for investment.
With the flow of more capital into the provinces, there is a likelihood that the provinces will get more preferential treatments when it comes to issues like tax exception. Additionally, there is a possibility of convenient approval procedures to accelerate investments in the provinces. An increase in investments will increase the number of workers coming to these regions to seek employment opportunities. This time around, workers will be migrating from other areas including urban areas to look for job opportunities. This would facilitate cultural integration as people from different parts of China interact. It will also build family and kinship networks which are critical in the success of the provinces.
TVEs versus State-Owned Enterprises (SOEs)
There is no doubt that the economic ...