This paper evaluates the role of self-employment in China's rural economy, while paying attention to whether the rise of self-employment promotes entrepreneurship and is a sign of development, or whether it is a stopover for disadvantaged workers and a sign of distress. Using data on 20-year labor market histories of a nationally representative sample of individuals, we provide descriptive evidence that self-employment in rural China, unlike in some other places, is a sign of development. Econometric evidence from a random-effects probit model and a continuous-time Markov model shows also that self-employment in rural China shares many features of a productive small-business sector.

Water scarcity is one of the key problems that affect northern China, an area that covers 40 percent of the nation's cultivated area and houses almost half of the population. The water availability per capita in North China is only around 300 m3 per capita, which is less than one seventh of the national average. At the same time, expanding irrigated cultivated area, the rapidly growing industrial sector and an increasingly wealthy urban population demand rising volumes of water. As a result, groundwater resources are diminishing in large areas of northern China. For example, between 1958 and 1998, groundwater levels in the Hai River Basin fell by up to 50 meters in some shallow aquifers and by more than 95 meters in some deep aquifers.

Past water policies have not been effective in solving water scarcity problems. China's leaders have put priorities on increasing water supply through developing more canal networks or building more reservoirs. In 2001, the State Council started the South-to-North Water Transfer Project. However, these supply-side approaches cannot meet the increasing demand for water from all of the different sectors and cannot solve water scarcity problems in the long run.

The dramatic transition from Communism to market economies across Asia and Europe started in the Chinese countryside in the 1970s. Since then more than a billion of people, many of them very poor, have been affected by radical reforms in agriculture. However, there are enormous differences in the reform strategies that countries have chosen. This paper presents a set of arguments to explain why countries have chosen different reform policies.

In a book assessing the development of China during the People's Republic era, it is of interest to know how well agriculture has performed and the role that it has played in the development process. Has China produced food and other commodities that have contributed to China's growth? Has it been successful supplying labor to the off farm sector? How has agriculture contributed to the rise in rural incomes and growth, in general? In short, one of the overall goals of this chapter is to document the performance of the agricultural sector and use the criteria of Johnston and Mellor to assess how well the agricultural sector has done.

This chapter, however, seeks to go further than describing the achievements and shortfalls of China's agricultural economy; we also aim to identify the factors, both domestic policies and economic events as well as foreign initiatives, that have induced the performance that we observe. To create an agricultural economy that can feed the population, supply industry with labor and raw materials, earn foreign exchange and produce income for those the live and work in the sector and allow them to be a part of the nation's structural transformation requires a combination of massive investments and well-managed policy effort. The process can only proceed smoothly if an environment is created within which producers can generate output efficiently and earn a profit that can contribute to household income. Policies are required to facilitate the development of markets or other effective institutions of exchange. Although the sector is expected to contribute to the nation's development and allow for substantial extractions of labor and other resources, large volumes of investment also are needed. Investment in education, training, health and social services are needed to increase the productivity of the labor force when they arrive in the factories. Investment is needed in agriculture to improve productivity to keep food prices low, allow farmers to adopt new technologies and farming practice as markets change, and to raise incomes of those that are still in farming. Investment is needed in technology, land, water and other key inputs that are in short supply. In this chapter we seek to point out both policies that have facilitated the performance of the agricultural sector and those that have constrained it.

A key issue in political economy concerns the accountability that governance structures impose on public officials and how elections and representative democracy influences the allocation of public resources. In this paper we exploit a unique survey data set from nearly 2450 randomly selected villages describing China's recent progress in village governance reforms and its relationship to the provision of public goods in rural China between 1998 and 2004. Two sets of questions are investigated using an empirical framework based on a theoretical model in which local governments must decide to allocate fiscal resources between public goods investments and other expenditures. First, we find evidence, both in descriptive and econometric analyses, that when the village leader is elected, ceteris paribus, the provision of public goods rises (compared to the case when the leader is appointed by upper level officials). Thus, in this way it is possible to conclude that democratization, at least at the village level in rural China, appears to increase the quantity of public goods investment. Second, we seek to understand the mechanism that is driving the results. Also based on survey data, we find that when village leaders (who had been elected) are able to implement more public projects during their terms of office, they, as the incumbent, are more likely to be reelected. In this way, we argue that the link between elections and investment may be a rural China version of pork barrel politics.

The goal of our paper is to provide an empirical basis for understanding progress (or stagnation) in the evolution of China's village committee elections. To meet this goal, we pursue three specific objectives. First, we seek to identify patterns (and trends) of voting behavior and develop ways to measure participation in the voting process. Second, we analyze who is voting and who is not (and document the process by which their votes are cast). Finally, we see to understand the correlation between propensity to vote and the quality of village elections.

To meet our objectives, the rest of the paper relies on a unique set of national representative, household- and village-level data collected by one of the authors. Using the data, descriptive analysis and multivariate analysis are used to demonstrate that while voting protocol differs across villages and over time, despite progress and despite high nominal voting rates, there are still gaps in coverage of groups of individuals in rural China. Some of the largest gaps occur in the case of women and migrants and migrant women. In many cases, large shares of individuals in these groups are being systematically excluded from truly participating in the process of voting. Policy-wise, the paper concludes that China's government needs to increase its effort to promote more regular voting procedures to insure that true participation in village committee elections is more widespread and does not systematically exclude groups of individuals.