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In the 1990s a much clearer picture has emerged of the structure of the reform policies and their effects on the different sectors of the Chinese economy. Researchers have described the mechanisms of agricultural, industrial, financial and other reforms, and have identified factors, mostly at the macro level, that contributed to their successes and shortcomings. Several studies have adopted a "micro" approach and attempted to measure the responses to specific reform measures of different groups of individuals. The general conclusion drawn by many of the researchers working in this field is that institutional constraints and remaining structural rigidities have caused reform policies to produce unintended outcomes. These imperfections have frequently resulted in some degree of negative efficiency, equity or developmental consequences.

The article aims to contribute to an understanding of the complex decisionmaking structure in the Chinese rural economy during the late, post-reform period. Focusing on the two most fundamental actors in the rural sector, it seeks to understand the behaviour of village leaders and farm households and the interactions between them. (DÜI-Sen)

While the forces of development and transition have been in part responsible for generating the progress that rural China has experienced during the past 20 years as well as being responsible for some of the remaining barriers, the nation's efforts at pushing ambitious Trade and Investment Liberalization (TIL) policies threaten to further accentuate the trends in rural China. Surprisingly, however, even though the potential for gain and for damage is great, almost no literature exists to answer some of the most basic questions about the proposed efforts to push TIL. On balance, will TIL policies help or hurt rural residents? How will they affect rural incomes? How will they affect rural employment in the agricultural and non-agricultural sectors? What policies can the government adopt to reduce the harmful effects and enhance the positive benefits? The general goal of my essay will be to begin the discussion of these critical questions. In particular, I will attempt to meet this broad goal by pursuing four objectives: First, I will review the rural economy's record on income generation. Second, I will review the rural economy's record on employment. Third, I will attempt to assess the net results of the positive and negative impacts that TIL policies may have on rural incomes and employment. Finally, I will discuss a number of alternative policies that leaders may consider adopting to reduce TIL's costs and increase its benefits. To meet this goal, I will organize the rest of this paper as follows. In the first section, I will first review China's macro setting and discuss a number of the important macro-forces that may have important impacts on rural incomes. I then trace out the record of rural incomes during the reform era. In the second section, I examine in more detail the record on employment in the rural economy during the past two decades. The purpose of the first two sections will be to motivate the third section: a discussion of how TIL policies may help and hurt incomes and employment in rural China. Finally, the last section concludes with a discussion of policies that may assist policy makers in dealing with the cost and benefits of TIL policies.

Intro -- Contents -- Author's Note -- Introduction -- 1. The Middle-Income Trap -- 2. China's Looming Transition -- 3. The Worst-Case Scenario -- 4. How China Got Here -- 5. A Shaky Foundation -- 6. Invisible Barriers -- 7. Behind Before They Start -- Conclusion -- Acknowledgments -- Appendix: The REAP Team -- Notes -- Index.

As the glittering skyline in Shanghai seemingly attests, China has quickly transformed itself from a place of stark poverty into a modern, urban, technologically savvy economic powerhouse. But as Scott Rozelle and Natalie Hell show in Invisible China, the truth is much more complicated and might be a serious cause for concern. China's growth has relied heavily on unskilled labor. Most of the workers who have fueled the country's rise come from rural villages and have never been to high school. While this national growth strategy has been effective for three decades, the unskilled wage rate is finally rising, inducing companies inside China to automate at an unprecedented rate and triggering an exodus of companies seeking cheaper labor in other countries. Ten years ago, almost every product for sale in an American Walmart was made in China. Today, that is no longer the case. With the changing demand for labor, China seems to have no good back-up plan. For all of its investment in physical infrastructure, for decades China failed to invest enough in its people. Recent progress may come too late. Drawing on extensive surveys on the ground in China, Rozelle and Hell reveal that while China may be the second-largest economy in the world, its labor force has one of the lowest levels of education of any comparable country. Over half of China's population--as well as a vast majority of its children--are from rural areas. Their low levels of basic education may leave many unable to find work in the formal workplace as China's economy changes and manufacturing jobs move elsewhere. In Invisible China, Rozelle and Hell speak not only to an urgent humanitarian concern but also a potential economic crisis that could upend economies and foreign relations around the globe. If too many are left structurally unemployable, the implications both inside and outside of China could be serious. Understanding the situation in China today is essential if we are to avoid a potential crisis of international proportions. This book is an urgent and timely call to action that should be read by economists, policymakers, the business community, and general readers alike.