Self-Sufficiency and Regional Specialization

Before the 1980s, local self-sufficiency was a strategy enforced by the Chinese government in dealing with regional grain production and supply. Under this strategy, each province was required to produce sufficient grain to meet local demand before it could produce other products. When the selfsufficiency strategy was enforced, regional comparative advantage was given little consideration, and local resources often could not be used efficiently. As a result of this policy, intra-regional grain transfers were kept as low as possible, and the evidence shows that during the 1970s they accounted for only around 1 to 2 per cent of total production, compared with 5 per cent or more in the 1950s (Lardy, 1990, p. 4).