Productivity change and the effects of policy reform in China’s agriculture since 1979 Yanjie Zhang and Bernhard Brümmer* During China’s rural reforms, policies were frequently adjusted. Most policies favoured the continuation and deepening of reform; but some were contradictory or even led to regression in the reform process. How have the rural reforms affected China’s agricultural production over the past three decades; and what lessons can be learned to aid the future course of reform? To answer these questions, this study estimates produc- tivity change in China’s agriculture and evaluates the effects of policy on agricultural output during the reform period. Aggregated provincial-level data for the 1979–2008 period are used in a translog production frontier model to estimate indices of total factor productivity (TFP) change and its three components—technical change, technical efficiency change, and a scale effect—with a focus on explaining the variation in technical effi- ciency. The estimation results show that the impressive improvement of TFP change is dominated by the technical change component. However, technical efficiency change and scale effects have worked against the improvement in TFP change in most periods. To improve technical effi- ciency, social welfare policies designed to eliminate the rural–urban divide, and reform polices focusing on factor market reforms, such as reform of the household registration system (hukou) and reform of land rights, seem to hold some potential. Introduction The rural reform that began in the late 1970s improved farmers’ incentives and had a huge impact on China’s agricultural productivity growth and output. The value of agricultural output increased enormously, from 139.7 billion yuan in 1978 to 6,036.1 billion yuan in 2009. 1 However, past success does not guaran- tee future agricultural production growth and food security. Whether or not agriculture has slower pro- ductivity growth than other sectors has been a long-disputed topic. Martin and Mitra (2001) showed that agriculture generally had faster total factor productivity (TFP) growth than manufacturing. They also found evidence of a * Yanjie Zhang, Research Associate, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) and Department ofAgricultural Economics and Rural Development, The University of Göttingen; and Bernhard Brümmer, Professor, Department ofAgricultural Economics and Rural Development, the University of Göttingen, Courant Research Center ‘Poverty, equity, and growth in developing and transition countries’, The University of Göttingen. 1 The data is taken from the 2010 China StatisticalYearbook of National Bureau Statistics of China (NBSC). doi: 10.1111/j.1467-8411.2011.01307.x 131 © 2011 The Authors Journal compilation © 2011 Crawford School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd.