The official banking institutions for rural China are Rural
Credit Cooperatives (RCCs). Although these co-ops are mandated to
support agricultural development among farm households, since 1980
half of RCC loans have gone to small and medium-sized industrial
enterprises located in, and managed by, townships and villages.
These township and village enterprises have experienced highly
uneven levels of success, and by the end of the 1990s, half of all
RCC loans were in or close to default, forcing China's central bank
to bail out RCCs. In Prosper or Perish, Lynette H. Ong
examines the bias in RCC lending patterns, focusing on why the
mobilization of rural savings has contributed to successful
industrial development in some locales but not in others.
Interweaving insightful and theoretically informed discussions
of rural credit, development, governance, and bank bailouts, Ong
identifies various sources for China's uneven development. In the
highly decentralized fiscal environment of the People's Republic,
successful industrialization has significant implications for rural
governance. Local governments depend on revenue from industrial
output to provide public goods and services; unsuccessful
enterprises starve local governments of revenue and result in
radical cutbacks in services. High peasant burdens, land takings
without adequate compensation by local governments, and other poor
governance practices tend to be associated with unsuccessful
industrialization. In light of the recent liberalization of the
rural credit sector in China, Prosper or Perish makes a
significant contribution to debates within political science,
economic development, and international banking.
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