Home Political science Dancing with the devil : the political economy of privatization in China
The Wenzhou Story Retold
Wenzhou is a prefectural city in the southern region of Zhejiang province. It governs four districts (Lucheng, Longwan, Ouhaiand, and Dongtou), two county-rank cities (Ruian and Yueqing), and five counties (Yongjia, Pingyang, Cangnan, Wencheng, and Taishun). Wenzhou’s geography is 75% mountains and hills, whereas plains only account for 17.5% of the surface area (WZSY 1985, 13). Maps 5.1 and 5.2 show the location of the prefecture and the subprefectural administrative units mentioned above.
map 5.1 Map of Zhejiang province
map 5.2 Map ofWenzhou
Wenzhou has always been the most populous prefecture in Zhejiang. When economic reforms started in 1978, it had a population of 5.61 million, which was twice the size of the local population (at 2.76 million) in 1949 (WZSY1999, 20). But Wenzhou was also one of the poorest prefectures of the province. In 1978 90% of the local population resided in rural areas (WZSY 1999, 20). As shown in table 5.1, GDP per capita was only 238 yuan, significantly below both the provincial average and the national average. Of the three counties in Zhejiang classified by the central government as national poverty-stricken counties in the 1980s and 1990s, two were located in Wenzhou (i.e., Wencheng and Taishun). Table 5.1 further shows weak endowments of the prefecture in terms of literacy level and arable land availability.
In the three decades that followed, however, Wenzhou became one of the most dynamic economic regions in the country and a spearhead of privatization, as widely noted in the literature. To explain this dramatic reversal, it is important to take a close look at the initial economic conditions of the prefecture. Despite the concentration of population in the rural sector, there was a sizable presence of nonfarm activities in the rural economy. Table 5.1 shows that in 1978 per capita output from such activities was lower than the provincial average and that of Jiangsu, which was famed for a thriving nonfarm rural sector led by commune and brigade enterprises. Nonetheless, the percentage was higher than the national average. Furthermore, the rural nonfarm sector of Wenzhou accounted for a slightly higher percentage of rural economic output and a much higher percentage of the rural workforce than the provincial average, suggesting greater intensity of nonfarm activities. Even more noteworthy is the role of private economic elements (as revealed by the last column of table 5.1), which contributed nearly a quarter of the nonfarm output in 1978 and provided the launch pad for the development of the private sector in the reform era. The question is why private economic elements persisted—probably to a greater extent than in many other locales—under (and despite) Maoist socialism, making Wenzhou an “outlier.” The answer, as I will show below, lies in the interplay of four factors: the local entrepreneurial tradition, economic hardship, shallow socialist transformation, and the role of local officials.
Table 5.1 Selected indicators on economic conditions in 1978
Sources: JSSY1991,1993; SCTE; CSY1986; LSYC 1999; ZJSY1991,1993,1999; WZSY2000.
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