Tuesday, August 26, 2014

Township and Village Enterprises: Owed by So Many to So Small

Mao proclaiming the foundation of
the People's Republic of China
The death of Mao Zedong brought waves of changes to Communist China. Under Mao, China suffered hardship through his failed Great Leap Forward and Cultural Revolution. The nation was in ruins. Many were poor, starving, and jobless. After his demise, a brief period became under Hua Guofeng. But he was later replaced by another formidable figure in Chinese politics – Deng Xiaoping. Under his authority China saw reforms that shook the foundations of communism. Among his projects were small business called Township and Village Enterprises.

Township and Village enterprises were already in operation during the time of Mao Zedong. During the era of Mao, Township and Village Enterprises served as an alternative use of idle labor. Individuals who can’t work in the farmlands were sent to work in these enterprises. Disabled and women were permitted to work in the enterprise. Officials allowed the operation of such enterprises because they received a percentage of profits from the enterprises.

In 1976, Mao Zedong passed away and years later a new man was in charged. Deng Xiaoping returned from the obscurity and persecution of the Cultural Revolution to the most powerful man in China. Unlike Mao, he was realist and dedicated in enriching his nation in the name of security of the Chinese Communist Party. He promoted his famous slogan “To be rich is glorious” promoting private enterprises. Among his agenda was alleviating poverty in the countryside. During the 1850’s and 60’s, the Great Famine brought hardship to many peasants. And now, he wanted to revive the rural villages and towns. First, he allowed the dismantling of the People’s Commune and launched the Household Responsibility System. Along with the system, in order to increase the income of Chinese in the rural areas, he promoted the growth of small and medium size Township and Village Enterprises and opened its employment to all.

Deng supported the growth of this business. He provided incentives to them. They received easy credit and favorable tax rates. Also, they were protected from strict local government interference, thus, sparing them from the politics.

During the course of Deng’s leadership, various types of enterprises appeared. There were light industry enterprises producing clothing, traditional Chinese medicine, bricks, buttons, fertilizers, agricultural tools, etc. There were also service providing enterprises, from machinery repair to automobile repair. Some enterprises capitalized of cash crops grown in some areas. They established enterprises which would process these crops into consumer goods.

Many of the Township and Village Enterprises that grew were in provinces where Special Economic Zones or SEZs existed. Most of the fledgling enterprises were in the provinces of Guangdong, Fujian, Zhejiang, Jiangsu, and Shandong. These provinces had SEZs within their jurisdiction. Foreign capital in form of money and technology over spilled and some of these Township and Village Enterprises were lucky enough to receive it. Some enterprises were able to grow, mechanized, and began to sell good quality products. Some were even lucky enough to produce export goods, increasing their profits further.

Township and Village Enterprises were always compared to state enterprises. Difference do exist between the two. In salary, sometimes the enterprises pay higher than those in the state enterprises. However, the enterprises don’t offer to workers the so-called iron rice bowl that include job security, health benefits, and even housing. Furthermore, working conditions in the state enterprises were better than those in the Township and Village Enterprises that had no uniform quality of workplaces. Some enterprise had good working areas while others were horrific and unbearable. Nevertheless, many Chinese worked in these enterprises and earned extra income.

Through the leadership of Deng, Township and Village Enterprises contributed to the Chinese economy. In the 80’s 9% of industrial output in China were made by Township and Village Enterprises. It also employed millions of Chinese. From only 28.3 million Chinese in 1978, it rose to 105 million Chinese in 1992 employed in Township and Village Enterprises. With state support, its revenues also rose tremendously. In 1978, they earned only about 49 billion Yuan. By 1992, they were earning about a trillion Yuan.

The Township and Village Enterprises helped to lessen poverty in rural China. It provided income to families when agricultural seasons were off. It also provided millions of job and helped to contribute to the growth of the Chinese economy as a whole. The Township and Village Enterprises changed the face of China. 

Draguhn, Werner. China's Communist Revolution: Fifty Years of The People's Republic of China. New York: RoutledgeCurzon, 2002

Fairbank, John. China: A New History. Massachusetts: Belknap Press of Harvard University, 1992.

Lieberthal, Kenneth. Governing China: From Revolution Through Reform. New York: W. W. Norton, 2004.

Meisner, Maurice. Mao's China and After: A History of The People’s Republic. New York: Free Press, 1999.

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