A Grand Plan for Henan

In October, the State Council announced a grand scheme for Henan Province that is described as representing China's new model of economic and social development for the whole country.

The Council's "ideas on support for speeding up construction of a central economic region in Henan Province" is an all-encompassing plan for coordinating the development of agriculture, industry, urbanization and even culture. The plan encompasses nearly every aspect of the economy and society, but the plan has a central theme of raising grain production by upgrading irrigation and other rural infrastructure, upgrading technology, agriculture-industry links and breaking down the barriers between the rural and urban economies.

The plan emphasizes Henan Province's role as a major grain-producing region and its importance to national grain security. The plan aims to upgrade grain production capacity and mentions a goal of promoting the region's livestock production and processing industry (but there aren't a lot of details on meat in the plan). The plan includes all the standard buzz words of promoting "scale" production, mechanization, improved crop varieties, organization of farmers into cooperatives, high yields, efficiency, quality, safety, and ecological production. The plan puts a major emphasis on integrating agriculture with other sectors and viewing the Henan plan as radiating out to neighboring regions to boost the entire central China region. The plan includes development of logistics and construction of north-south transportation routes.

The plan does not mention the massive south-north water diversion project, but it may be related. The water diversion project begins south of Henan (in northern Hubei) and runs through Henan to north China. The plan's emphasis on water projects, north-south transportation networks, and reference to an economic region centered on the Yangtze River makes one wonder whether this plan is related to the water diversion project.

The plan is part of the broader national grain security plan for maintaining grain production capacity through 2020. The plan emphasizes "fall grain" (as opposed to wheat--the region's major crop which grows over the winter and is harvested in the summer). By 2020 Henan's grain production capacity is targeted at 65 mmt. Planting of wheat and corn for special uses, quality soybeans and rice will be promoted. The plan aims to add more grain fields that produce 1000 kg. Funds will be budgeted for water projects, to manage low-lying lands subject to flooding and water-logging, repairing dangerous reservoirs, construction of large-medium water irrigation projects, expanding large-scale pumping stations, and increasing ability to withstand droughts and floods.


Another paragraph calls for promoting other types of agriculture: livestock, horticultural crops, fruit and flowers. Four prefectures in Henan are designated as national-level model modern agriculture districts, and two others are to be "scientific agriculture areas."


Following this year's standard rhetoric the plan calls for increased spending on subsidies both for farmers and for local governments. It promises to arrange deals for purchasing grain between consuming and producing regions, improve agricultural insurance and set up pilot projects for improving rural financial services.
The plan also has a nationalist element. It emphasizes the historical culture of the Henan region (the capital of ancient dynasties were based there) and makes an appeal to Chinese nationalism. The plan describes Henan as a new region for Chinese history and culture that utilizes the resources and strengthens the cohesion of the Chinese people worldwide by creating an innovative cultural development district.

The plan invokes a new slogan of "three huas" (三化) that is even harder to translate than the "san nong" or "three rurals" or "three agricultures" that became an official slogan a decade ago (and is also invoked in the plan). ("Hua" refers to the Chinese practice of adding the suffix "hua" (化) to a word to make into a new word that denotes a process. One klunky approach would be to translate "three huas" as "three -zations": industrialization (gongye-hua), urbanization (chengzhen-hua), and agricultural modernization (nongye xiandai-hua). The basic idea is to "coordinate" these three related processes that are at the heart of the transformation of the Chinese economy and society in the current era. The 12th five-year plan that begins this year seems to be viewed as a the entrance into this new era. The "three huas" entail "flexible" policy measures, the orderly resettlement of rural population, tight control over land conversion, more efficient and intensive use of land, and reform of administrative management.

This plan raises the question of the role of government in resource allocation. Nearly everything in China can be bought and sold freely, but the key factors of production--land and capital--are are still allocated by the state. Land is owned by the state or by collectives and can't be bought or sold without officials acting as brokers or middlemen. Interest rates are fixed and bank executives receive lending orders from the communist party. While labor is allocated by market forces, the household registration system constrains rural-urban migration. Thus, the government still has a major say in allocation of the major factors of production and views itself as filling a vital role as coordinator and facilitator.