This study reinvestigates the question of whether the Chinese economy passed the “Lewis turning point” in the early 2000s. The implication of reaching the turning point is that the rural labor surplus which is a source of comparative advantage of low labor cost in China is exhausted. This suggests that future economic growth is constrained by the contraction of labor intensive sectors, such as textile and processing industries. We estimated an agricultural production function more accurately from province-level panel data on Japonica rice production costs during the 1992-2009 period in order to appropriately control differences by province in agricultural technology and to address the issue of endogeneity in input choice. Then we examined the existence of rural labor surplus in terms of differentials between the value of marginal product of labor (VMPL) and our proposed measure of the “subsistence wage” (on farm hired wage). After testing wage differentials by various statistical techniques, we obtained a statistical proof that, on average, the VMPL fell below the farm hired wages. These results show that Japonica rice farmers in sample provinces still have labor surplus in the end of 2009. In some provinces, the VMPL for Japonica rice production substantially exceeded hired wages in 2004 and later years. However, qualitative findings suggest that this was caused not by the exhaustion of the rural surplus labor supply, as claimed in previous studies, but by a series of generous agricultural protection policies implemented by the central government starting in 2004 such as the abolishment of agricultural tax, the establishment of guaranteed prices of farm products, and the introduction of direct subsidies, which raised agricultural productivity and increased reservation wages for farmers’ labor supply in urban areas.

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In rural China, the problems of declining young labor force and land abandonment are increasingly becoming serious. At the Third Plenary Session of the Seventeenth Central Committee in 2008, the Communist Party of China decided to reform the rural land system and comprehensively promote rural land circulation. Most of the circulation between farmers takes place because of migrant workers, not the land scale management needs. The farmers lend their farmlands to those who stay in village temporarily, when the farmlands are deserted. This is called “Temporary Land Rentals.” This article examined the factors related to “Temporary Land Rentals” by analyzing the survey data from the rural Hunan province. First, the Cobb-Douglas production function model was used to determine that the scale economy of rice production based on investment does not exist in this area. Second, binary logit model was used to conclude that social factors such as “expressive ties” and “instrumental ties” are the most important factors in the promotion of land circulation between the farmers in rural China at present. In the absence of land demand in traditional rural areas, borrowing land is considered as a burden but strength of “expressive ties.” While in more modern rural areas, land rental plays a positive role in establishing and accumulating “instrumental ties.”

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This paper examines the current situation and problems of the Japanese meat processing company in China shifting from exports to domestic sales. Company NI focused in this paper, products meet products, and especially expand to domestic sales. At first, company N which is parent company of NI raised investment ratio to start domestic sales. NI raises materials by using Chinese major company which is another parent company, on the other hands sales by own strategy. In addition, the products of NI are mainly to target catering and meal replacement market. NI’s customers of retails are almost Japanese. However, customers of catering and meal replacement market are Chinese, Japanese and others. There are some problems about starting domestic sales. First, if expand market, cost recovery could become serious problem. Second, costs of entering shops increase too. NI is needed to expand market which is not only retails but also catering and meal replacement. As a result, NI devises following risk diversification strategy. 1. NI expands domestic sales, at the same time, continues to exports to Japan. This approach can compensate risks about each other. 2. About domestic sales, expands both retails and catering and meal replacement market. It can compensate risks and pays such as cost recovery or costs of entering shops.

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