China Plans Many Rural Reforms

China's chief rural policy advisor asserted that major reforms are necessary for agricultural development but reforms will be gradual.

At a recent speech given at China Agricultural University, Chen Xiwen--vice director of the "central rural policy leadership group"--signaled that major reforms are needed to address fundamental changes in the country's agricultural supply and demand and rural economic structure. While there is progress in rising grain production and closing the gap between rural and urban incomes, Chen raised concerns about a rising reliance on agricultural imports.

Chen worried that China has become a net importer of the three major cereal grains--rice, wheat and corn--since 2010. He attributes this to steadily rising demand for ag products and a gap between Chinese prices and lower international prices. Chen claims that Chinese farmers, processors, traders, "the state", and consumers all face a dilemma of no profit. He attributes this to low labor productivity, scarce land resources, and a low contribution of science and technology to agricultural production.

Chen also blames the surge of imports on current international trade rules which he says lead to abuses. He doesn't elaborate, but presumably this is a veiled complaint that the WTO and other international institutions are stacked against China. Chen asserts that China must protect its ability to increase agricultural production and must strengthen its position in international agricultural trade.

The current economic situation is both pushing reforms and slowing them down. Chen said that 50 different agricultural and rural reform items were proposed at the "third plenum" of the 18th party congress held late in 2013.

Chen highlighted progress on reforms of the "agricultural price formation system," the domestic agricultural support and protection system, registration of land rights, and reform of the residency registration system, The chief item related to price formation and domestic support is this year's "target price" subsidy pilot which has been pushed forward as a way of addressing the problem of Chinese prices being pushed above international prices by domestic price supports. Reforms of land and household registration have been proceeding slowly and cautiously due to opposition by vested interests and fears of social instability.

Chen asserted that agricultural development cannot proceed further without reform. He said many other reforms are being evaluated and promised many more major reforms in the future. However, he said the reforms would be gradual, "not overnight." Chen mentioned several land-related reforms, including the system for reassigning rural land, marketization of collective land, and mortgaging and reassignment of rural housing property rights.