A new perspective on Chinese agricultural development

A pessimistic view of Chinese agricultural development is based on a Malthusian trap, characterized by declining incomes in agriculture and declining land-labor ratios. This column presents stylized empirical data on 19th and 20th century Chinese agriculture, focusing on seasonal labor demand and consequently sideline employment growth to challenge the impact of this approach. Redistribution of labor throughout the idle season facilitates commercialization and high population density, yet it was industrialization that took place outside the agricultural sector that enabled modernization.

The historical performance of Chinese agriculture is one of the key determinants of China’s long-term quality of life and at the center of the so-called Great Divergence debate. The long-term decline in China’s land-labor ratio has given rise to a Malthusian interpretation of Chinese agriculture in the form of Philip Huang’s so-called ‘Involution’ thesis. The main argument leads to a more pessimistic view of long-term decline in agricultural productivity and per capita output in the face of resource constraints and overpopulation (Huang 2002). Nonetheless, a more optimistic version of the thesis, as recently championed by the California School, suggests that Chinese agricultural expansion, especially in the highly developed Lower Yangtze area, has moved in a technological and institutional direction that differs from the well-known British. Or the Western European model. In agriculture, skills were acquired through improved fertilizer application, rational use of resources, agricultural intensification and cash crop cultivation. This technological bias, induced by the Lower Yangzi Relative Factor Endowment, combined with the expansion of regional trade and the geographical division of labor, which they saw as the Smithian Growth or ‘Labor Revolution’ (Kenneth Pomeranz 2002, Lee 1998).

In our recent research paper (Ma and Peng 2021), we argue that one critical issue overlooked in the debate is the work of subsidiary or sideline production as part of the interim labor redistribution process to address the high agricultural season of China’s seasonal climate. Using stylized empirical data and a theoretical model from 19th-20th century Chinese (and Japanese) agriculture, we show that this redistribution of labor throughout the harvest and dormant seasons contributes to a bossropian type growth with increasing commercialization and population density, but not necessarily urbanization. . , Increasing productivity and structural change (Boserup 1965). Ultimately, it was industrialization and market expansion, developments outside of agriculture that pushed China (or Japan) out of the ‘irreversible’ path and into the path of modern economic growth (see Saito and Setsu Japan in 2010).

Menstruation

At least compared to Western Europe and North America, two interrelated features of Chinese (and East Asian) agriculture stand out: season and mainly crop or grain-based economy. In China, the two main agricultural regions are the wheat fields on the banks of the Yellow River in northern China and the rice fields on and below the Yangtze River. Figure 1 shows that there is a greater seasonal variation in rainfall in both regions than in Western Europe, which had a profound effect on Chinese agriculture as it created intense demand for agricultural labor in a very short peak season. This has created serious restrictions on the average size of a household farm and the nature of agricultural production (Ma and Peng 2021).

Figure 1 Rainfall data in Western Europe and China

A 1930 survey of agricultural labor use across northern and southern China clearly shows the highest seasons, pronounced June and October in different regions, where labor inputs were extremely low in the first and last part of the 12-month cycle of the year. . As shown in Figure 2, by comparison, seasonality is much less pronounced in the United States, partly due to less seasonality in grain production but more importantly due to a much greater proportion of animal husbandry. Even in the case of the United States, the most obvious pattern of seasonality is cotton cultivation in the American South (see Figure 3, Ma and Peng 2021).

Figure 2 Seasonality compared to the United States

Such pronounced differences between seasons will manifest themselves in the form of wages throughout the seasons. Figure 3 shows the inverse relationship between daily agricultural wages and the percentage of idle time throughout the year. Figure 4 Wage series plots against the agricultural seasonal indices of the two Hebei counties in northern China, except that the wage series was much smoother than the seasonal index, except for interesting synchronization. Most notably, the months of January, February, November, and December are almost completely inactive in terms of labor use. However, the wage rate was above zero in those months. This, as we argue, is exactly the process of redistribution of labor in the workplace where farmers consciously shift sideline or household production during these lazy months, allowing wages to remain above zero. Clearly, the wage rates presented in the statistics are a balanced result achieved after smoothing out the difference in seasonal marginal products throughout the month through redistribution of labor between agricultural main line and sideline activities.

Figure 3 Lazy time (left axis) and percentage of wage rate (copper cash unit on right axis)

Figure 4 Hebei Province Wage Rate Index and Agricultural Seasonal Index (Monthly Average)

Seasonality and economic impact

In a comparative study, Sokoloff and Dollar (1997) argued that the greater seasonality of labor supply in England than in the United States, measured by the ratio of harvest and idle wages, increased English dependence on the cottage industry compared to its American counterpart in the early days. In Industrialization Ma and Peng (2021), we show that the seasonal differences between England and the United States are much smaller than the differences between them and China. To cope with the seasons, farmers prefer technology for redistribution of temporary labor rather than increasing productivity during the busy season. The development of cotton spinning or weaving in the early modern era of China revealed a difference of about two to one daily value added for grain production compared to cotton cultivation, spinning and weaving in a joint family production. Evolution arguments often explain this productivity difference as a sign of reduced or reduced labor as a result of overpopulation in cotton or textile handicrafts subject to grain or staple production. However, cotton cultivation increases the number of working days and increases marginal income through sideline production during the agricultural recession season (such as spinning and weaving). Moreover, sideline (handicraft) production can benefit not only the lazy season but also the relaxed labor force like women and children (Lee 1998).

We employ this new analytical framework to reinterpret some interesting existing studies. Li and van Zanden (2012), analyzing a region of Lower Yangtze China – Hua-Lu area – and the Netherlands in 1823-1829, and comparing the national accounts of the Netherlands, a comparative study showed that labor productivity in the primary (agricultural) sector is relatively comparable between the two regions. Yet Dutch labor productivity in textiles and textiles is 6.5 times higher than in the Hua-Lu region. This contrast reflects the fact that the Dutch textile industry is largely composed of modern capital-intensive factories, employing mostly full-time male workers whereas Hua-lu textile production consists mainly of domestic production run by female workers. It reveals the salient features of East Asian industrialization in the early stages, which depend on the early stages of industrialization (‘low-productivity’) of household production.

We can be sure from the experience of Japanese industrialization that the evolution of rural sub-employment could be seen in the early 20th century. This occurs in two stages: an expansion in the initial stage, then a contraction (Saito and Setsu 2010). Figure 5 shows that, despite industrialization, labor participation in the agricultural sector did not decrease significantly until WWI, when the urban-rural or manufacturing-agricultural wage gap for male workers began to widen. Meanwhile, for women workers, who were more engaged in sideline production, the wage gap between urban and rural areas did not increase at the same time. With the advancement of industrialization they only gradually expanded and became much more prominent in the pre-World War II period and gained real momentum during the Civil War. This shows the resilience of rural sub-employment due to the strength of cheap labor during the agricultural recession season.

Figure 5 Urban-rural wage disparity and primary labor share in Japan

In conclusion, we emphasize that seasonal factors have a significant impact on our understanding of China’s long-term development and industrialization. Indeed, the renaissance of rural-based industrialization, such as urban and rural enterprises, during the reform era of the 1980s and 1990s provided the engine for Chinese economic growth. More importantly, it is the gross ignorance about this seasonal factor that is partly responsible for the catastrophic agricultural aggregation experience in 1950s in China.

References

Boserup, E (1965), The state of agricultural growth, the economy of agricultural transformation under the pressure of populationLondon: George Allen & Unwin Ltd.

Huang, PCC (2002), “Development or Innovation in Eighteenth-Century Britain and China? A Review of Kenneth Pomeranz’s The Great Divergence: The Making of China, Europe, and the Modern World Economy”, Journal of Asian Studies 61 (2): 501-38.

Pomeranz, K (2002), “Beyond the East-West Binary: Resituating Development Paths in the Eighteenth-Century World”, Journal of Asian Studies 61 (2): 539-590.

Lee, B (1998), Agricultural Development in Jiangnan, 1620-1850, Macmillan Press Ltd.

Lee, B and JL Van Janden (2012), “Before the Great Divergence? Comparing the Yangtze Delta with the Netherlands in the early nineteenth century. “ Journal of Economic History 72 (4): 956-989.

Ma, D and K Peng (2021), “Involution” or Seasonality: a New Perspective on the 19-20th Century Chinese Agricultural Development “, CEPR Discussion Paper 16614.

Saito, O. and T. Tsetsu (2010), “Unveiling the Historical Professional Framework for Analyzing Sectoral Labor Productivity in Japan’s Economic Growth and Its Impact”, Global COE High-Stat Discussion Paper Series.

Sokoloff, K. L. and D. Dollar (1997), “Agricultural Seasons and Production Agencies in Primary Industrial Economy: The Difference Between England and the United States”, Journal of Economic History 57 (2): 288-321.