Privatization of rural industry and de facto urbanization from below in southern Jiangsu, China

At the heart of China’s economic transformation from plan to market is the institutional rearrangement of the ownership of property rights. Privatization of collectively owned township and village enterprises (TVEs) in recent years has significantly changed the rural economy and affected small town development in China. Located mainly in villages and small towns and producing 62% of the total industrial output in Jiangsu in 1994, TVEs played a crucial role in southern Jiangsu (Sunan)’s economic development and urbanization, giving rise to the well-known “Sunan model” of regional development during the 1980s. Since the mid-1990s, ownership transition (zhuanzhi) of the TVEs from collective to private in Sunan has altered the nature of the regional economy and the pattern of small town development. The privatization of TVEs in Sunan has been so pervasive that it can be seen as the “second industrial divide” in the region’s economy. This paper traces the evolution of ownership reform in Sunan’s rural industries leading to the current phase of privatization and analyzes the effects of privatization on de facto urbanization from below in Sunan. Given the importance of privatization, continuous scholarly monitoring of its relationship to regional economic development and urbanization from below is necessary.