Xi Jinping is the vice president and presumed next president of China but little is known about him. In this post the dimsums blog offers its contribution to the genre of Xi Jinping-ology by conveying Xi's decade-old views on agricultural markets.
Ten years ago Xi Jinping wrote a thesis, "Tentative Study of Agricultural Marketization" (中国农村市场化研究) for a Doctor of Law degree at Tsinghua University in Beijing, a top breeding-ground for Chinese officials. The dimsums blogger has spent several hours poring over the 200-plus page tome to see what it reveals about Dr. Xi. The thesis is remarkably close to what China has been doing lately in agricultural policy, suggesting that Xi (or the person who actually wrote the thesis) has a major say in policy or is at least in agreement with what's being done. There is nothing adventurous, controversial (or insightful) in the thesis. It seems to be the work of a wonkish technocrat who is not prone to talk out of turn or wander from the standard "socialist market economy" dogma. Bottom line: the thesis suggests that there will be no significant changes or surprises in a Xi Jinping administration.
The thesis is dated December 2001, which coincides with China's accession to the WTO that month. The degree is for a doctor of laws in Marxist theory and political thought education (a safe major for a budding Chinese communist party leader). Xi's undergraduate degree was in chemical engineering, also received from Tsinghua in 1979. The Chinese wikipedia entry about Xi notes that netizens have raised questions about Xi's thesis (there is no mention of it on the English wikipedia page). People questioned the appropriateness of the topic of the thesis for a doctorate in law (indeed there is no law to speak of in the document), saying it is more of a sociology paper. People also point out Xi was busy working as vice party secretary and governor of Fujian Province during the period when the thesis was written. Others questioned how he could get a doctorate without having first obtained a master's degree.
It is common for emerging leaders to collect education credentials on their way to the top, and the thesis is commonly ghost-written by someone else. Xi probably didn't write this one but he probably agreed with what was in it.
While it is a doctoral thesis it is more like the final paper for an executive MBA course. The theory and the "Marxism" in the thesis consists mainly of a presumption that countries go through stages of development from feudalism to agricultural to industrial. China is somehow "different" from western developed countries (which seem to include Japan) because China is a socialist country, a big agricultural country, and it has a huge surplus rural population. This construct facilitates China's ideology-free approach of pursuing market-based policies that worked in other countries but reserving the option of government controls when desired since China is "different." Like most Chinese discourse, terms are seldom defined and frequently vague. In its latter chapters the thesis sounds like a Ministry of Agriculture report, spitting out statistics, using tables snagged from other Chinese publications (properly cited but with no value-added) and relying on slogans and aphorisms to make points.
The main point of the thesis is to call for establishing a complete market system to facilitate the modernization of rural China. The alternative to "marketization" is not stated (central planning?) Xi's approach is consistent with the approach of the last ten years--setting up markets to help farmers sell their products, allocate factors of production and distribute consumer products to rural people. The English abstract says, “In particular, [the] market should be relied on to solve the
problems in the structural adjustment of agricultural industry and the increase
of farmers’ income…”
While Xi endorses markets as the primary means of guiding resource allocation, he is by no means a libertarian. Xi makes a passing reference to the "invisible hand" of Adam Smith, but he does not endorse Smith's faith in unhindered markets. Xi calls for "orderly," "fair," and "rational" competition and says the "visible hand" of government intervention is necessary in agriculture.
Xi cites the United States as justification for intervention in agriculture. He points out that the United States had no department overseeing agriculture when the country was founded (imagine that) but after the USDA was set up it intervened more actively than any other department. He notes that U.S. rice producers got 40% of income from subsidies during 1986-93 and sugar producers got 50% of income from subsidies, and the U.S. spent large sums maintaining wheat reserves that reached 50 million metric tons in 1985. Says Xi, "If the United States, a big agricultural market-oriented country, intervenes in agriculture so much, then a developing country like China must intervene even more."
Xi's thesis is to a large degree a product of its time. When it was written China was experiencing declining commodity prices for farmers, there were big concerns about surplus rural labor, and everyone was worried about what WTO accession would mean.
Problems with agricultural marketing were a big motivation for the thesis' call for improved markets. Xi foresaw a nicely-organized hierarchy of national, regional and local agricultural wholesale markets and retail farmers markets. He (or his ghostwriter) did not anticipate the explosion of supermarkets that now dominate food retailing and marketing in China. The thesis called for establishing agricultural futures markets to help farmers manage risk. Ten years later, this is an ongoing project slowed by the tendency for Chinese markets to morph into casinos.
Interestingly, the 2012 "No. 1 Document" released this week includes three paragraphs on improving agricultural marketing tacked on to a document that is mostly about agricultural technology and infrastructure. The first set of recommendations--planning out a national hierarchy of agricultural wholesale and retail markets, exchanges, e-commerce--is strikingly similar to the main recommendations of Xi's thesis. An item in this year's "No. 1 Document" endorsing community vegetable markets is quite out of step with recent policies that have emphasized supermarkets. Apparently somebody besides the dimsums blogger has read Xi's thesis.
Xi's thesis worried a lot about surplus rural labor. He cites studies purporting to find that 40%-50% of the rural labor force was "surplus." In a number of provinces the surplus share was about two-thirds. Xi's thesis didn't seem to offer any startling measures to address the labor surplus other than encouraging companies to contract labor for overseas projects. Amazingly enough, ten years after Xi's thesis was written labor shortages and rising wages are the main feature of Chinese agriculture. The estimate of surplus labor force of about 150 million cited in Xi's thesis is about equal to the official estimate of the rural migrant population now.
One of the ways China differs from western developed countries, says Xi, is that China has large numbers of surplus agricultural workers. According to the thesis, China cannot allow agricultural modernization to push large numbers of rural people into cities to become a poor class. These worries continue to constrain leaders in their liberalization of rural land and household registration systems that keep peasants tethered to their villages. Xi's thesis says agricultural marketization must have socialist guidance, which consists of a rural welfare system (a favorite of the current government), development aid to poor districts, unspecified rural management, and training in technology. The thesis calls for surplus workers to be absorbed both by creating "small towns" in the countryside and by letting them enter cities.
There are few clues as to Xi's views on private enterprise. The thesis gives a run-down of the various forms of business organization in a rural market but the discussion is largely factual. The thesis seems to endorse the "share-holding cooperative" form of business operation associated with coastal regions of Fujian Province. This has long been a socialist favorite and is often used to pool village land, but such organization have sometimes been accused of being a front for fleecing farmers in the last few years. Xi's thesis endorses many of the features of farmer cooperatives that have been emphasized since the new farmer cooperative law was introduced in 2007, but the endorsement of cooperatives as a form of organization seems lukewarm. The thesis discusses rural traders, brokers, and non-state-owned businesses as participants in the rural economy. Xi calls for improved management of village collective organizations but seems to presume they will continue to operate.
Xi's views on foreign trade appear to be in the mainstream of the recent Chinese leadership--in favor of trade but averse to a high degree of reliance on imports. Xi's thesis endorses WTO accession and stress the urgency of upgrading the quality of Chinese agricultural products to make them more internationally competitive. It reproduces some indexes of regional "comparative advantage" that were used to guide specialization of particular regions in the agricultural products they produce most efficiently. The thesis notes a transition from quantity to quality, for example, an emerging demand for high quality fruit and high-protein wheat for making bread or crackers. Xi's thesis insists that imports cannot be relied upon to meet these emerging demands.