The Evolution of Agricultural Credit during China’s Republican Era, 1912–1949 (eBook)

Hong Fu is Associate Professor at Shandong University of Finance and Economics, China. Her research interests include economic history, rural finance and crop insurance. Calum G. Turvey holds the W.I. Myers Professorship of Agricultural Finance in the Charles H. Dyson School of Applied Economics and Management, Cornell SC Johnson College of Business and College of Agriculture and Life Sciences, Cornell University, USA. 

Preface 5
Contents 14
List of Figures 21
List of Tables 24
Chapter 1: Current Conditions of Rural Credit in China 27
1.1 Introduction 27
1.1.1 Financial Reform and Transition in China, 1978–2003 30
1.1.2 Household Conditions and Credit in the Early Reform Era 34
1.2 Joint Liability and Group Guarantees 37
1.3 Administrative Independence of RCCs, 1996 38
1.4 The Economic Rationale for Credit Policy 40
1.5 The New Countryside Campaign of 2006 42
1.5.1 Agricultural Development Bank of China (ADBC) 44
1.5.2 Postal Savings Bank of China 48
1.5.3 Rural Commercial and Rural Cooperative Banks 48
1.5.4 Rural, Credit Only, Microcredit Companies 48
1.5.5 County, and Township and Village Banks 49
1.5.6 Mutual-Help Associations 50
1.6 Private and Foreign Investment 51
1.7 Outcomes of Credit Reforms 1978–2016 52
1.7.1 RCC Loan Summary 53
1.7.2 National Survey Results 55
1.7.3 Credit Conditions of Farm Households 58
1.7.4 Effects of Credit Policy on Credit Demand 60
1.8 Macro Consequences of Credit Reforms 1978–2016 61
1.9 Summary 63
Appendices 64
Appendix 1: Average RCC Loans, Billion RMB, 1979–2014, Eastern Provinces 64
Appendix 2: Average RCC Loans, Billion RMB, 1979–2014, Middle Provinces 67
Appendix 3: Average RCC Loans, Billion RMB, 1979–2014, Western Provinces 68
Appendix 4: Average RCC Loans, RMB/Mou, 1979–2014, Eastern Provinces 69
Appendix 5: Average RCC Loans, RMB/Mou, 1979–2014, Middle Provinces 71
Appendix 6: Average RCC Loans, RMB/Mou, 1979–2014, Eastern Provinces 72
Appendix 7: National Rural Household Loans Per Mou 73
Appendix 8: Eastern Rural Household Loans Per Mou 74
Appendix 9: Middle Rural Household Loans Per Mou 75
Appendix 10: Middle Rural Household Loans Per Mou 76
Chapter 2: China’s Sorrow 77
2.1 Introduction 77
2.2 Affliction 78
2.3 Population Growth and Agricultural Productivity 81
2.4 The Malthusian Trap 87
2.5 Historical Weather Extremes and Agricultural Productivity in China 89
2.6 Agricultural Productivity 95
2.7 Political Economy and Dynastic Rule 96
2.8 Summary 103
Chapter 3: Low-Level Equilibrium and Fractional Poverty Traps 106
3.1 Introduction 106
3.2 The Needham Puzzle 107
3.3 Low-Level Equilibrium Traps 112
3.4 High-level Equilibrium Traps 115
3.5 The Anthropological View 118
3.6 Equilibrium and Poverty Traps 120
3.7 Multiple Equilibria and Fractal Poverty Traps 123
3.8 A Stochastic-Dynamic Model for Low-Level/High-Level Equilibrium and Poverty Traps 124
3.8.1 Population Dynamics 127
3.9 Agricultural Output 128
3.10 Technological Innovation and Output Uncertainty 129
3.11 Output Dynamics 129
3.12 Fractional Poverty Traps 133
3.13 Operationalizing the Simulation Model 134
3.14 Some Results from Monte Carlo Simulation 136
3.15 Fractional Poverty Traps 141
3.16 Summary 145
Chapter 4: Traditional Forms of Credit in Rural China 148
4.1 Introduction 148
4.2 Granaries and Traditional Rural Credit 149
4.3 Ever-normal Granary (Chang Ping Cang) and Formal Credit 152
4.4 Charity Granaries (Yi Cang), Community Granaries, and Farmers’ Mutual Aid System 153
4.5 Money-loan Society (Qian Hui) and Informal Traditional Rural Credit 156
4.5.1 Green Sprouts Policy 157
4.5.2 Money-loan Society (Qian Hui) 158
4.5.3 Dice-throwing Society (Yao Hui) 160
4.5.4 Amounts-increasing Society (Duiji Hui) 160
4.5.5 Subscription-Decreasing Society (Suojin Hui) 163
4.5.6 Rotating Society (Lun Hui) 164
4.5.7 Bidding Society (Biao Hui) 166
4.5.8 Pawn Shops (Dian Dang) 169
4.5.9 Traditional Native Banks and Chinese Currencies: Piao Hao and Qian Zhuang 172
4.6 Mortgaging Land, Usufruct Rights and Merchant Credit 176
4.7 Lease Contracts 179
4.7.1 The Manchurian Lease 180
4.7.2 Changchun Lease Arrangements 183
4.7.3 Between Landowners and CLCC 183
4.7.4 Between Koreans and CLCC 184
4.8 Summary 185
Chapter 5: Emergence of Modern Rural Financial Institutions in the Warlord Era: 1912–28 186
5.1 Introduction 186
5.2 Tariff Autonomy and the Likin Tax 187
5.3 Currency Chaos 189
5.4 The Beginnings of Financial Reform 191
5.5 The Warlord Era 193
5.6 Towards a Coherent System of Agricultural Credit 194
5.7 The Agricultural and Industrial Banks 195
5.8 Agricultural Credit Associations 197
5.9 Agricultural and Industrial Cooperative Loan Associations 199
5.10 The Chinese Postal Savings Bank 201
5.11 Summary 202
Chapter 6: Estimating the Demand for Farm Credit in the Republican Era 204
6.1 Introduction 204
6.2 Rediscovering Buck’s Data 206
6.3 Summary of Buck’s Rediscovered Data Used in Demand Analysis 208
6.4 Amount and Character of Farm Credit 212
6.5 Sources of Farm Credit 216
6.6 Uses of Credit and Special Expenditure 219
6.7 Livestock 221
6.8 Size of Farm Business 223
6.9 Agricultural Productivity 224
6.10 Yield Risk 227
6.11 Hired Labor and Subsidiary Labor 227
6.12 Time and Regional Variables 229
6.13 Estimation Method 235
6.14 Econometric Results: Who Is Borrowing? 238
6.15 Econometric Results: The Demand and Supply of Agricultural Credit 242
6.16 Econometric Results: The Demand and Supply of Non-productive or Consumption Credit 246
6.17 Results Analysis: Production Loan for Indebted Farmers with Time and Region Variables 251
6.18 Discussion on Credit Demand and Supply 255
Chapter 7: The China International Famine Relief Commission 258
7.1 Introduction 258
7.2 The Raiffeisen Model for Rural Credit 259
7.3 Early Attempts at Cooperative Societies 262
7.4 The China International Famine Relief Commission 263
7.5 Famine and the Household Economy 268
7.6 Famine and Population 268
7.7 Conceptualizing Rural Credit Cooperatives 273
7.8 John B. Tayler, John Lossing Buck, and Rural Cooperation 275
7.9 Credit Relief and the Yangtze River Floods 277
7.10 Summary 280
Chapter 8: Rural Reconstruction 281
8.1 Introduction 281
8.2 Communist Expansion 284
8.3 Rural Reconstruction and the Chinese Communist Party 288
8.4 Rural Reconstruction and Price Volatility in Copper, Silver, and Gold 290
8.5 Japanese Aggression, Bonds, and Credit 290
8.6 Lack of Currency Control Within China 292
8.7 The Yangtze River Flood 293
8.8 Canton Rebellion 295
8.9 Institutional Development and the Rise of Credit Cooperatives 297
Chapter 9: A Blueprint for Credit Under Rural Reconstruction 299
9.1 Introduction 299
9.2 A Blueprint for Modern Rural Financial Institutions by the Nanjing Government (KMT) 301
9.3 The Rural Finance Discussing Committee 304
9.4 Characteristics of Modern Rural Financial System in Design 305
9.5 Summary 307
Chapter 10: Evolution of the Cooperative Financial System: 1927–49 309
10.1 Introduction 309
10.2 Administrative Structure of Cooperative Credit 310
10.3 Rules and Law 311
10.4 Funding Cooperatives 312
10.5 Cooperative Credit Associations (Hezuoshe Lianshe) 315
10.6 Expansion of Cooperatives 316
10.7 Cooperative Treasury (Hezuo Jinku) System 322
10.8 Differences Between the Credit Cooperative Association and Cooperative Treasury 324
10.9 Summary 324
Chapter 11: Chinese Communists, Border Currency, and Agricultural Credit during Wartime 326
11.1 Introduction 326
11.2 Border Regions and Base Areas 327
11.3 Agriculture, the ‘Fair Burden’ Tax, and the Grain Standard 330
11.4 Monetary Control in CPC Base Regions and Border Areas 333
11.5 Currency Formulation in the Base Areas: The Formation of the Luxi Bank 335
11.6 Border Currency and Regional Trade 336
11.7 Currency-induced Hoarding 339
11.8 Credit and Cooperation in the Shaanxi-­Gansu-­Ningxia Border Region 341
11.9 Mutual-aid and Group Guarantees 343
11.10 Economic Warfare 344
11.11 Summary 345
Chapter 12: The Farmers Bank of China 349
12.1 Introduction 349
12.2 Rural Reconstruction and the Farmers Bank of Four Provinces 350
12.3 The Formation of the Farmers Bank of China 352
12.4 Joint Administration Office of the Four Policy Banks, Bank Specialization, and FBC’s Monopoly and Banking Progress in War Time 358
12.5 Debates and Conflicts on the Rural Finance System 361
12.5.1 Debates on Banks Specialization 361
12.6 Single or Ternary Agricultural Financial Structure? 362
12.6.1 Conflicts Between Farmers’ Bank of China and the Central Cooperative Treasury 364
12.6.2 Conflicts Between County Banks and Other Rural Credit Institutions 366
12.7 Summary 368
Chapter 13: Nong Ben Ju, the Farm Credit Bureau, and the KMT’s Agrarian Policy 370
13.1 Introduction 370
13.2 Nong Ben Ju and the Farm Credit Bureau 371
13.3 The Farm Credit Bureau 372
13.3.1 Agricultural Products Department 374
13.3.2 Agricultural Loans Department 376
13.4 Agricultural Loans of Commercial Banks and the Chinese Rural Credit Syndicate 378
13.5 Developing a Cooperative Financial System Under Nong Ben Ju 380
13.6 Nong Ben Ju, the Farm Credit Bureau, and the War Years 381
13.6.1 Impact of War on the Cotton Spinning and Weaving Industry 384
13.7 Reform and Dissolution of the Farm Credit Bureau 388
Chapter 14: Successes and Failures of Agricultural Cooperatives and Credit Societies 390
14.1 Introduction 390
14.2 Overview of Credit Cooperatives 391
14.3 Pre-War Impacts of Credit Cooperatives 394
14.4 Cooperative Credit and the Sino-Japanese War 405
14.5 Impact of War on Farm Credit Demand 420
14.6 Summary 423
Index 424