ABSTRACT
Under the Maoist, rural political economy resources flowed primarily through a vertical, bureaucratically dominated system that controlled the goods produced in the countryside and transferred them according to the dictates of a command economy. State and collective rural cadres from the county level down managed the labor, capital, and land of the collectivized farmers, and withdrew resources from them to expand their own sinecures. 3
After the nationwide introduction of the household responsibility system, China's reform leaders called for the second stage of the rural reforms. A market mechanism and increased privatization of the nonagricultural sector have increased the amount of goods flowing horizontally among individuals and units beyond the purview of the bureaucracy's vertical controls.4 In addition, to increase the free flow of commodities and services, the second stage of the rural reforms has introduced policies that weaken the state and collective sector's monopoly over rural marketing and services. In response, a resilient private sector now cuts into their markets and challenges them for business. And yet, as these commercial and service companies confront this new competition, they find themselves constrained by the dilemmas of partial reform.
