Abstract:

Agricultural growth in cropping sector was trapped into stagnation after Household Responsibility System had been completely popularized in rural areas in China. Based on a case study from Henan province, it is discovered that "Tiliu" and "Tongchou" taxes allocated by the local government discouraged the agricultural production when farmers with heavy tax burden flowed to cities for jobs. Hence, the agricultural stagnation from 1984—1988 is enunciated. The Hysteresis hypothesis that it takes some time for farmers to adopt new technology is also proposed to explain the sudden impulse of agricultural growth in 1987. The state and provincial macro agricultural data are used to validate the analysis. The conclusions suggest the agricultural fiscal system be a core object of economic reform in rural areas in China. In addition, the way of introducing new technology in such areas should be improved.

Key words: China agricultural economy, growth stagnation, taxation hypothesis, agricultural science and technology, hysteresis hypothesis