Contemporary Reflections on Development in Republican China

Contemporary Reflections on Development in Republican China Scott Rozelle Modern theories of rural development stress two major conditions that must exist in an economy before it can experience long term economic growth. First, the economy must have an engine of growth. Sustained growth can come from different sources: technical change; technology transfer; increased investment allocations from both domestic and foreign sources; greater investment in human capital; etc. At least one source, however, must be present and sufficiently strong in order to stimulate higher output and/or greater productivity over the long term. . Second, in order for these sources of growth to result in widespread increases in welfare, the economy must become more integrated. Increasing integration causes many positive trends in an economy. It can lead to more efficient use of resources. An integrated community helps provide opportunities for more segments of the rural population. Finally, and perhaps most importantly, an integrated rural economy with few barriers can play an instrumental role in creating a strong domestic demand for the nation's output. Hence, although integration is not sufficient by itself to create sustained economic growth, it may be necessary to perpetuate efficient and welfare-increasing growth. Commercialization policies which encourage competition, reduce barriers to resource movements and minimize transaction costs are pro-integrative. Understanding modern development theory and applying its principles may provide a useful approach in the analysis of a rural economy's historic performance. The issues are often complicated and highly interdependent. Sorting out causal 122 relationships, understanding the long-run consequences of fragmented. observations and projecting macro-implications from micro-data sources can benefit from using a well- ~eveloped analytical framework. If this is true, development theory should be particularly useful in studying China's pre-1949 economy. One of the fundamental purposes in four recent books on China's rural economyl is to answer a basic development question: Would China have modernized faster with greater balance if the pre1949 economic system had been allowed to continue? In some of the works, the issue is raised drawing comparisons between the performance of the pre- and post-1949 economies (e.g., Brandt, p. 12; Huang, pp. 17-18 and Parts 2 and 3). In others, the comparisons are less direct but still present (e.g., Faure, pp. 7-10).2 It is beyond the scope of this paper comprehensively to re-analyze the recent works on the pre-1949 economy in light of modem development theory. Rather, this paper raises several' issues in order to show the analytical gains that may arise by approaching future studies with a well-defined, theoretical framework. The issues addressed in this paper also respond to those raised by other readers of the Republican-era economic history literature (e.g., Wiens, 1992; Gottschang, 1992). To meet these goals, this paper begins by briefly reviewing some of the modem schools of development thought and identifying a set of measures which may be meaningful in understanding trends which are indicative of long-run economic development. The next section examines the recent works to see if a complete set of development issues are being analyzed. The final section draws parallels with the current, post-Mao economy from which more comprehensive data are available to question some of the assumptions of the recent studies. To anticipate some of the conclusions, I argue that the commercialization of the pre-1949 economy was a necessary 123 but not sufficient condition for sustained development. There is little evidence that governments in the early twentieth century had conceived of any well-defined plan for developing sources of sustained economic growth in rural areas (i.e., they did not have a comprehensive agricultural technology research system, they were not creating national networks of transportation or water control, and they were not investing heavily in rural schools or in the health and sanitary infrastructure). Moreover, the current research does not demonstrate the effectiveness of government actions in spreading the effects of strong, but localized commercialization trends. Consequently, even though the integrative effects of commercialization have been observed and shown to have initiated (or arisen simultaneously with) economic expansion in certain regions (e.g., the Yangzi delta, parts of Guangdong and along certain key...