Land Reform in China and South Korea
Land reform was a critical component in the development of both Korea and China. The reform was undertaken differently in each, but the end goal was the same: Industrialization. The context in which the individual countries found themselves heavily influenced how reform would be implemented, yet in both countries land reform brought an increase in crop production, gave rural peasants increase in purchasing power, which in turn allowed for an increase in exports and a decrease in imports.
Arguably the biggest economic benefit from land redistribution is the increase in crop production. As Studwell explains, smaller plots of land and a household farming technique yield more per square meter than large industry farming. Larger farms tend to yield less per square meter, thus making them less effective (25, 2013). Land inequality was prevalent throughout much of Korea and China Pre-World War II; however, the way redistribution came about in these areas varied widely. Following World War II, Korea entered a civil war which ended in 1953 with a large American presence in the South (Kohli, 62, 2004). During the war, when the North gained ground southwards, they would redistribute the land to gain support among the peasantry, as the South and American forces pushed back, they left the lands redistributed (Kohli, 71, 2004). Moreover, the exit of Japan directly following World War II prompted many Japanese landowners to hurriedly sell their land. The remaining land was controlled by US forces and was eventually redistributed to pacify countryside and prevent the rise of communism (Kohli, 71, 2004).
While much of the land redistribution in South Korea occurred due to outsiders (Japan, North Korea, America forces), China’s land redistribution was state driven, although it occurred two decades after South Korea in 1977-1983. In the 1950s, the Chinese leader Mao Zedong, called for collective farms. The collective farms were required to sell surplus to the state, yet they did not produce any surplus, scared of seeming anti-communist many local officials sold their product to the state. This left the countryside with limited food and millions of Chinese peasants died from famine (Zweig, 256, 2014). Following Mao’s death, agriculture decollectivized starting in 1977 (Zweig, 262, 2014). China’s land redistribution differed significantly from Korea’s in that Chinese land was not privately owned. The Chinese communist model instead gave individuals rights to the land whistle making it clear it still belonging to local government. The individuals who farmed the land were taxed in grain. Thus, Chinese farmers could farm using a household farming style and any surplus after their tax could be sold on the market, all on state owned land.
Rural Consumption Power
In both South Korea and in China, the increase of crop production led to a spike in rural consumption power which resulted in a spike of domestically consumed goods. South Korea would not harness this power until Park Chung in 1961, since predecessor, Sigmund Rhee, had not focused on economic growth. Rhee had been very reluctant to accept land redistribution as a policy in South Korea and was focused not on growing its economy but of political stability, which to him meant, preventing communism. (Kohli, 72-73, 2004). Consequently, Rhee ignored the countryside and growth was stagnant.
Park came into South Korea looking to maximize exports. To do so he first aided the countryside by providing everything Rhee did not: subsidies and protection. Rice was bought at above market price and sold at a high discount to the public. This boosted farmer consumption power by supplying them with disposal income. In China, the ability to sell on the market was a big component to the increase of consumption power in rural areas, but nevertheless both countries now had a sector of people with greater purchasing power.
China harnessed the consumption power of farmers by setting up Township and Village Enterprises (TVEs) that provided goods for the increased demands in rural areas. TVEs could keep their earning and reinvest in their local governments, schools, and health centers. This would dramatically improve rural life quality. On the other hand, in South Korea the state did not intervene or set up consumption centers for rural peoples; they allowed them to spend their money wherever they saw fit. This increase in consumption power allowed both countries to increase consumption of domestic goods and decrease imports, which allowed them to reinvest in the economy and move towards industrialization.
Increased Exports, Decreased Imports
South Korea like China was keen on industrializing and both countries were enjoying growth from an increase in exports and a decrease in imports, made possible by an increase of crop production. China and Korea took distinct routes towards their industrialization goal. Park, through non-traditional methods, grasped the attention of the top businessmen in South Korea and together they devised a plan to industrialize (Studwell, 101, 2013). Big business and government had a tight relationship in South Korea. Park wanted to export goods and services and wanted the best men for the job so that they would bring in jobs and profit to the state, but these companies would also bring international attention, opening the opportunity to partner with companies overseas. China was more weary of opening up too quickly and how they should go about operating in the open market.
China opened slowly allowing only coastal cities within Special Economic Zones (SEZs) to trade on the foreign market. They adopted currency manipulation, that is kept their currency purposefully low, to sell their goods at the best possible price and be competitive on the global market. SEZs drove much of the economic growth in China in the 1980s (Zwieg, 257, 2013). Non-SEZ companies helped the Chinese economy too though. The government kept the price of all goods down for citizens by setting target output goals for companies, which were to be sold at an agreed upon price to the state. The state could then provide the people with goods at a lower price than the market price. The companies made money too because anything produced beyond what was owed to that state could be sold on the open market.
While Park had his eyes on maximizing exports as quickly as possible, China had to slow down and device an economic model that would work for a communist nation. The two different routes approached the same goal of industrialization and development. History separated them as South Korea entered a civil war and China entered the period of Mao communism. The road to household farming was drawn out in both China and South Korea, but for different reasons. South Korea’s rural sector was not being properly supported, meanwhile China’s lands were technically redistributed but being cultivated collectively. When both countries finally achieved successful household farming, crop production exploded, and rural consumption power played a big role in the subsequent economic growth.
The land reforms in China and South Korea were necessary for crop production to increase. Adequate support from the state was also necessary for an increase in production, but the outcomes were staggering. The surplus of food production allowed the rural sector to buy domestic good which both increased exports and decreased imports and allowed the respective country to continue investing in its economy and industrialization. The economic growth of both South Korea and China were built on the backs of rural farmers. Without the increase in crop production, that is an established and effective agricultural sector, development cannot be reached.
For countries seeking development, which do not have an established manufacturing industry, the way to engage with foreign trade is via exporting natural resources/raw materials, such as food or oil. Whether or not China could have industrialized so quickly without the SEZs, may be arguable, but they industrialized by opening up—which would not have been possible without a surplus of crops.
A country must be able to produce one good in abundance and sell it on the market at a competitive price. To do so, a country must have a surplus of food; how does a country ensure a surplus? Household farming is the most cost effective way to get the most yield per meter as discussed previously. These countries needed rural farmers to produce as much product as possible because the country’s economic future depended on this surplus. This surplus meant the country could sell it abroad and invest the winning towards manufacturing, all while creating jobs and new firms. Under Rhee, the agricultural sector was ignored, and the country saw no significant growth, yet Park ensured their success and consequently the success of South Korea’s industrialization.
This agricultural surplus meant that farmers had more spending money, which meant they had greater consumption potential. The farmers were indeed a driving force in increasing consumption of domestic goods. The money from the surplus was being reinvested in the economy and helping the respective countries invest in manufacturing and technology. Without land reform creating the opportunities for more capital by increasing crop production, driving down expenses from imports, and allowing the domestic markets to flourish, South Korea and China could not have industrialized.