Wednesday, December 27, 2017

China's "Rural Revitalization" Set for 2018

An ambitious rural revitalization initiative was one of 8 priorities set for Chinese officials at the 2018 "economic work conference" held in Beijing December 18-20. The strategy was one of the directives issued in Xi Jinping's October speech to the 19th communist party congress where he proclaimed that agricultural and rural problems are foundational issues that must receive the utmost attention from communist party leaders.

Over the past decade, China's statisticians consistently reported numbers showing that the gap between countryside and city was improving, but now the official Xinhua news service reports a dismal situation to explain why rural revitalization is so critical: development in the countryside still lags far behind cities, inadequate development in the countryside is a glaring weakness, and the rural-urban imbalance is the most prominent imbalance in China's development.
The rural strategy was described only briefly in Xi's speech (434 characters of the 32,000-character speech) and in reports on the economic work conference, but the Minister of Agriculture instructed rural cadres to study Xi's speech and implement the strategy to achieve a transformational upgrade. The strategy is mainly a comprehensive restatement of various initiatives that have already been underway for several years.

Ambitious institutional reform is at the heart of the rural strategy: officials are measuring plots of rural land and verifying who has the rights, nurturing a new core of "appropriate scale" agricultural businesses, rectifying ownership of other collective property and profit-distribution mechanisms, and they hope to improve support policies for farmers. Family farms, cooperatives, and agribusinesses are expected to pull small agricultural households into "the orbit of modern agriculture" by sharing profits, imparting technical knowledge and linking small farmers with processing and service businesses. National food security will be maintained by investing in farmland that no one really owns, making scientific achievements that are brought to fields by an army of new service providers, and further mechanizing agriculture. All this will be accomplished while fully embracing the concepts of an open economy and "green" development.

The centerpiece of rural reforms is a giant project to clarify rural land rights which has been underway since 2014 and is expected to be complete next year, except for a few minority and border areas, according to a news conference held by Ministry of Agriculture officials last month. Officials have verified plots and issued certificates for 74 million hectares so far, 82% of collective cropland on the books (officials have discovered that there is actually more contracted land than previously thought). Xi Jinping also declared that villagers' contracting rights to rural collective land would be extended to 30 years. Defining boundaries and verifying contracting rights to land will give villagers confidence in their rights that will put them at ease when transferring the use rights of their land to others, facilitate distribution of land-based farm subsidies, and it will be the foundation for giving migrants compensation for giving up land rights, making mortgage loans, and promoting investment in land, officials say.

Another 3-year program is clarifying rights to a broader scope of collective assets in 129 pilot counties. Nationally, village collective assets are estimated to be worth 2.86 trillion yuan ($435 million, excluding Tibet), an average of nearly 5 million yuan ($762,000) per village. Officials say some of the pilot villages have set up dividend payment schemes for villagers, but the size of the payments is relatively small. The collective asset pilots will be expanded in 2018.

With greater assurance of land rights--where the boundaries are and with certificates that give them better prospects of getting the land back--it will be easier to transfer land use rights to "new farmers." One farmer in Heilongjiang Province reportedly took six months to assemble a farm of 800 mu (53 hectares) six years ago, but it only took him two weeks to acquire another 700 mu this year, according to state media. Officials are setting up provincial mortgage guarantee companies to facilitate agricultural lending, and they plan to set up similar companies at the municipal and county levels. Other plans are to mortgage farm equipment and other assets, and to promote leasing of farm machinery to speed up mechanization.

Officials see the traditional small-scale rural household as an inherent feature of rural China, and they hope new farm businesses will help the masses of rural households by linking them with processing and service businesses, giving out loans and training, and establishing profit-sharing mechanisms with small farmers.

More structural adjustment is on the horizon for Chinese agriculture. Corn was the focus of structural adjustment over the past year, but hogs are also in structural adjustment and state media say ruminant animals are next on the agenda. The focus is to protect resources (reduce soil erosion in the case of corn, reduce water pollution by pigs, and reduce over-grazing by ruminants), to increase quality and raise net income.

Rural and agricultural tourism, e-commerce, and other new industries will be promoted. The economic work report mentioned an initiative to align purchase prices for grain reserves more closely with market prices. Officials promise to explore establishment of "functional areas" for grain production and "protected areas" for other key crops.

The strategy is perplexing to outsiders because it is both capitalist and socialist, both forward-looking and conservative. The strategy aims to use capitalist tools like markets and entrepreneurship to enliven moribund socialist institutions governing the countryside: collective land ownership, state farms, and bureaucracies. These institutions were jury-rigged in the 1950s by officials trying to balance their utopian vision of collective farming with the realities of giving peasants incentives to produce efficiently. Xi envisions a 21st century "new era" for China of affluence, efficiency, and interconnectedness. Yet his vision also calls for preserving the past: promoting pride in rural "civilization" and maintaining a countryside laid out to accommodate medieval subsistence agriculture.

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