Within China, evaluating the experiences of the reform since 1978 is a hot topic among intellectuals. However, the economic theories in today's China are almost all imported from abroad and cannot adequately explain China's economic development. The author, having been long engaged in grassroots research work, tells four cautionary stories in order to expound on the question of the institutional cost induced by the “rural-urban dichotomy” and the fundamental systemic contradictions in China, as well as to discuss the rural reconstruction efforts that he has embarked on as an endeavor to resolve the systemic contradictions.
Story 1. The Story of the Zapatistas, the Masked Army: how the indigenous Indians have changed their ancient tradition of living in harmony with nature and are now “destroying” nature in order to farm and subsist.
Story 2. The Story of the “Straw-Hat Plot of Land”: how the poor peasants in Guizhou Province in southwest China are compelled to farm on steep slopes, showing that China does not have an overall strategy that takes care of the nation's environmental protection and sustainable development.
Story 3. The Story of “Enclosures”: how the grave traffic jams and air pollution in Beijing partly stem from a monopoly by the authorities over land and capital.
Story 4. The Story of Disease from Food: how food security is compromised with the excessive use of pesticide, chemical fertilizer, and heavy metal in farming and husbandry.
From the four cautionary stories is derived the Story of Rural Reconstruction, which the author has been engaged in, together with many volunteers, and which works for the integration of environmental protection and the reconstruction of rural culture. As Western-style modernization is not appropriate for China, which is superpopulous with extremely scarce resources, Chinese peasants should revive traditional patterns of small peasantry in growing grain and raising pigs at the same time and use natural energy conducive to environmental protection. Peasants should also organize themselves and, through collective effort and cooperative labor, transform human resources into social capital and use the surplus rural labor for changing the conditions of the villages. The James Yen Rural Reconstruction Institute (YIRR), set up in a village in Hebei Province, of which the author is the director, has been an experiment on self-reliant ways of development through the contribution of volunteers and villagers. Their production and daily life have been environmentally friendly, ecologically sound, and organically cyclical, in pursuit of sustainability.