Published Paper Details:

China witnessed momentous changes in the countryside after the Third Plenum in December 1978 as major changes in public policy and institutions unfolded. With the onset of reforms, the rural economy posted impressive growth in agriculture and rural industrialization. Did the growth translate into better incomes and consumption, and how was rural income distributed are pertinent questions to ask given the fact that although there was hardly any significant intra-village rural inequality, the peasants were unhappy over their nearly stagnant income and consumption level despite agricultural sector and the rural economy generating enough resources for China's heavy industrialization led economic development. This question is also important because the Deng Xiaoping regime had recognized the peasantry's unhappiness and discontent as a reason for adversely affecting their work -incentive and declining productivity in agriculture and also as an important factor in straining the Party-state-peasant relationship. This paper, from a political economy perspective, drawing upon literature on rural reforms in China, deals with the impact of changes in policy and institutions on the income and consumption levels of the Chinese peasantry during the first decade of post-Mao rural reforms, i.e., 1978-1988. Additionally, this paper looks at the impact of the growth process on poverty and rural income distribution. It finds that while output, employment, and real income grew rapidly, which enabled peasants to enjoy improved diets, have more housing space to themselves, and use new items/articles of consumption, and many came out of absolute poverty, all this was accompanied with rapidly rising rural incomes within villages across rich and poor regions, which became a matter of concern as it portended societal and political disquiet. This period is a prelude to the rise of China as a great power.