Wen Emphasizes "Coordinated Urban-Rural Development"

On March 5, Premier Wen Jiabao gave a government work report to the National Peoples Congress in which he repeated the emphasis on "coordinated urban-rural development" that was featured in the No. 1 Document. The video is here.

China's leadership now appears to have recognized that the barriers that created a dual urban-rural economy need to be dismantled. Since the 1950s rural people have been barred from freely moving to cities by the household registration system and collective land ownership that tied them to their home villages. The rural system of equally dividing up and leasing out tiny plots of collectively owned land to village members is coming under pressure as more rural people find nonfarm employment and it becomes evident that small-scale subsistence agriculture is an outmoded institution.

With its "coordinated urban-rural development" strategy, the Communist Party is relying on its instincts to plan and control the structural adjustments that are needed. Wen called for opening urban residence to rural migrants, letting their kids attend urban schools, letting them participate in social insurance, but mainly in small towns and cities, not in large cities. Xinhua's article on Wen's report concludes, "We should let rural migrants become urban residents as conditions permit, and let them have a happy life in a good home."

Coordinated urban-rural development features "three concentrations": farmland is concentrated in larger-scale farm operations; rural people are to be concentrated in small towns, small cities, and new rural communities; and industry is to be concentrated in industrial parks. Everything is carefully planned to preserve "order" and control.

In order to take over farmland for industrial parks or other urban expansion, new farmland has to be created elsewhere in the same district. The new farmland is obtained by moving villagers into highrise apartment buildings, tearing down their old houses and turning their residential land into new farmland. In Chongqing, "land tickets" that give companies rights to these new land parcels are sold on a new exchange established in December 2008.

Wen's report (and all other official documents on the topic) insist that the basic rural operation system should be preserved, i.e. land will remain collectively owned and farmers' rights to operate their land will be guaranteed to them "for a long time." Within these constraints, Wen encourages a search for new ways to facilitate exchange of the operation rights to land and finding new ways of organizing larger-scale farming operations. These new modes include mainly large-scale household farms, companies operating farmland, farmer cooperatives. In many provinces, a large farm is one who controls just 20 mu (about 3 acres). Wen calls for continuing experiments with rural financial institutions and expanding micro-lending.

Wen also catalogs a list of "preferential" rural and agricultural policies. Spending on the four main agricultural subsidies will expand to 133 billion yuan (about $19.5 billion), up a relatively modest 4.5% this year. Minimum procurement prices will be raised for rice and wheat. Wen calls for adhering to the plan to increase grain production capacity, increasing oilseed acreage, increasing supply of commodities that are in short supply, standardizing horticultural and livestock production and forming stronger links between producers and markets.

Total spending on rural ("san nong") issues will be increased to 818 billion yuan ($120 billion), up 11%. There will be big spending on rural infrastructure, improved "field management," irrigation district reform, reconstruction of deteriorated reservoirs, improvements in extension services, and implementation of genetically modified varieties.