Large Farms and Small Businesses: The difficult path toward development in rural China

The "Chinese Economic Miracle" of sustained growth since the 1970s has been thoroughly explored by many economists. So, too, has the obvious dichotomy between China's urban industrial sector and its rural agrarian economy. What has kept China's industrial development from migrating outward from its cities and into its countryside? When will the industrial revolution in Chinese agriculture begin? This paper examines a series of obstacles to the development of an industrial agricultural system in selected communities in China, contrasting government's goals for development with a realistic assessment of the economic characteristics of China's rural areas. The first section of this paper addresses the development of China's modern agricultural system, and the systems of land trading utilized by rural Chinese. The second section examines the impact of formal and informal financing on the development of rural businesses, as well as the development of a microfinance market in China's rural areas. Together, analysis of these issues demonstrates that China's government must address issues of property rights, access to capital, and social welfare if agricultural industrialization is to be encouraged