Study Xi Jinping's "Rural Thought"

President Xi Jinping is trying to engineer an historic overhaul of China's rural economic and political system. He appears to be adopting approaches that echo the Mao era, which is ironic since Xi's challenge is to uproot deeply-entrenched institutions put in place by Mao himself.

Earlier this month, a "Xi Jinping San Nong Thought" seminar on rural affairs was held in Beijing in conjunction with the celebration of the 60-year anniversary of the "war to resist Japanese aggression." Xi was not there personally and the seminar had no connection to the war or the Japanese. A procession of reliable apparatchiks gave speeches explaining "Secretary Xi Jinping's" concern about agricultural and rural problems and his approach to addressing them.

Xi was not physically present at Minister of Agriculture Han Changfu's Q&A with unidentified journalists on September 14 either. But Xi's name was invoked five times by Minister Han in his discourse on China's new strategy to make agricultural and rural development sustainable. Initiatives to restructure agriculture, integrate agriculture with industry and services, provide rural financial services, attack rural poverty, and overhaul the agricultural market system all have Xi's fingerprints and represent a grand strategy to completely re-engineer China's agricultural and rural economy.

The title of the "Xi Jinping San Nong Thought" seminar, sponsored by the Peoples Daily official news media organization, is inscrutable to the uninitiated. "San nong" refers to three Chinese words sharing the character "nong"--agriculture, the countryside, and rural people. Exhortations to "study" (学习) Xi's "thought" (思想) appear to subtly link Xi to "Mao Zedong Thought" of the 1960s and '70s which is still recited by officials as the foundation for communist party dogma. However, Xi does not dare take on the title of "chairman"--officials refer to him as "General Secretary" (of the communist party) or "Comrade."

Like Mao, Xi's "thought" is expressed by short, pithy couplets that are self-evident and are used as slogans or mantras to communicate official communist party dogma. The seminar kicked off by reminding officials that they can't neglect the countryside as they pursue shiny cities, airports, and trains. The first guiding thought is Xi Jinping's paen to the communist party doctrine of pursuing an "all-round well-off society" pronounced at a December 2013 meeting:

"If you want to know whether we're well-off or not, take a look at the countryside." 

During an inspection tour of Jilin Province this year, Xi put his own spin on the "san nong" doctrine with his "three can nots":

"Agriculture cannot be ignored; we cannot forget farmers; we cannot be indifferent to the countryside."

Another set of couplets obliquely spell out Xi's emphases on nationalism, strong governance, the physical appearance of the countryside, as well as the importance of integrating the rural economy with the broader economy:

"For China to be strong, agriculture must be strong;
For China to be beautiful, the countryside must be beautiful;
For China to be rich, the countryside must be rich."

His exhortation to maintain basic food security is embodied by this mantra:

"The food bowl of the Chinese people must always remain firmly in their own hands."

All of these sayings of Comrade Xi were cited at the seminar on his "thought."

Authorities seem insecure that there are still pockets of severe poverty--mostly in the countryside--after years of rapid economic growth, and officials worry that big gaps between cities and countryside and coast versus interior could fragment the country and lead to disorder.

Xi's rural doctrine emphasizes knitting together the country by making it easier to rural people to enter cities, breaking down distinctions between rural and urban real estate markets, setting up multi-province "corridors" of development, and forming economic linkages between agriculture, industry, and services. Manifestations of this doctrine are ambitious strategies to reform the urban hukou system, a plan to overhaul the system of agricultural markets (the topic of Xi Jinping's doctoral thesis 15 years ago), and an initiative to boost links between farmers and agricultural processing.

Xi calls for following a road to agricultural modernization that includes "efficient industry, safe products, resource conservation, environmental protection and environmentally-friendly production"--aspects that fell by the wayside in the single-minded pursuit of breakneck growth over the past two decades. Finally, another emphasis is a "beautiful countryside" which includes cleaning up trash and upgrading toilets in villages.

The doctrine calls for upgrading competitiveness of farms and businesses by increasing scale, using the latest technology (notably, "genetic modification" is identified as the first technology to pursue), with an emphasis on information technology both for production and marketing. The signature initiative is the push to create a new class of commercial-scale farm operators and create supporting infrastructure--banking and insurance services, technical advice, and a new subsidy system.

Officials are acknowledging and tackling long-neglected institutional bottlenecks.

• The lead-off speaker at the Xi Jinping Thought seminar identified weak rural governance as a barrier to building a well-off society, said that many rural institutions lacked institutional design and legal rights are ill-defined. 
• A set of articles in Farmers Daily last week pointed out that incomplete land rights and inflexible banking institutions prevent successful integration of farmers with industry and services which are needed to ensure that income flows to rural areas.  
• Minister Han's discourse on sustainable development acknowledged that great improvements in production had been achieved at a high cost of environmental and resource degradation.

Fundamentally, Xi is attacking Mao-era institutions that are toxic to economic growth, outdated, and create disparities that threaten to undermine the Party's governance:

• The urban-rural household registration system
• collective rural land-ownership
• taxation of agriculture to subsidize industry
• provincial self-sufficiency 

These 50-year-old institutions erected barriers to movement of people and goods that prevent establishment of a national, cohesive, self-sustaining economy. The countryside was the locus of economic growth during the 1980s when Deng Xiaoping used it as a giant laboratory to demonstrate the benefits of a market economy. During the 1990s, Jiang Zemin and Zhu Rongji concentrated on reforming state-owned industry and created a generation of urban real estate tycoons. Hu Jintao and Wen Jiabao addressed rural atrophy by eliminating taxes on peasants and starting to pour money in the "new socialist countryside." Now Xi is attacking the institutions that preserve fiefdoms and keep the economy reliant on the easy but unsustainable wealth created by building things and exporting goods to wealthy countries.

The Mao-era institutions created a spoils system that generates considerable wealth for officialdom through real estate deals and cronyism between local industry and officials. With the hukou system, city officials got an underclass of cheap labor but could dodge budgetary costs for schools, social insurance and housing since rural migrants were officially the responsibility of the rural county where they were registered. Just as Mao created a larger-than-life image while hammering opposition to put these institutions in place, Xi appears to be using a similar style to move aside entrenched interests and dismantle these growth-killing institutions.

Looking deeper, it appears that Xi's approach will replace one set of cronies with new ones. There is no coherent theory behind Xi's thought other than a vague, undefined exhortation to "reform." Xi wants to maintain and reform anachronistic institutions from the planned economy like COFCO, state farm entities, and supply and marketing cooperatives set up to serve communes during the 1950s, and make them models for the new economy. Many operators of the new-style farms and cooperatives are rural officials. There is no sign of permitting private banks in the countryside. The Xi Jinping seminar noted that the majority of communist party branches are in the countryside and strict governance of the party is a vital task. Private companies and tycoons are welcome as long as they finance the massive investment in fixed assets needed in the countryside as their "social responsibility."