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Development of Agriculture and Rural Economy in China Ministry of Agriculture, PRC

DATE:2011-12-27       SOURCE:

March, 2009


In its 3rd plenary session of the 17th CPC Central Committee from October 9 to 12 2008, the Communist Party of China (CPC) took a systematic review of the glorious path and valuable experiences of China in rural reform and development. The Decision of the CPC Central Committee on Major Issues Concerning Rural Reform and Development was adopted in the meeting, which set clear the fundamental goal of rural reform in China by 2020. At the end of December 2008, specific plans were made in the central conference on rural works for fostering stable agricultural development and generating better income for farmers. Agriculture anchors economic growth, national prosperity and social stability. All-rounded, coordinated and sustainable development of agriculture and rural economy in China is of great significance to its ambition of building an all-rounded well-off society.


I. Achievement in Rural Reform and Development in the Past 30 Years


In the past 30 years since reform and opening-up, China made remarkable achievements in agriculture and rural economy, bringing dramatic changes to the countryside.


1. Dramatic changes in farm produce supply and demand. Farm production witnessed continuous growth, leading to sharp increase in total output and per capita availability of major farm produce, as well as substantive improvement of comprehensive agricultural productivity. China has been ranking first in the world in its output for grain, oil, vegetable, fruit, meet, poultry & egg, and aquatic products, delivering sufficient food for its 1.3 billion people through its own resources. 2008 registered bumpy grain harvest for 5 years in a row, with historic record in total and unit yield. Total grain output reached 528.5 million tons, 16.2 million tons more than 1998 (peak yield in the past years); unit yield exceeded 330 kg/mu, 13.4 kg more than the historic record in 2008. Unit yield growth contributed to over 80% of increment in total output. 65% of grain output was of high quality, while variety and quality mix was further optimized. Stable growth was also demonstrated in animal production, fisheries, cotton, sugar, as well as horticultural products such as vegetables, fruits, tea and flowers, with sufficient market supply.


2. Dramatic changes in rural economic structure. Comprehensive and balanced development was achieved in agriculture, forestry, animal production and fisheries, while township and village enterprises (TVEs), secondary and tertiary industry in the countryside grow rapidly. Rural economic structure, used to be dominated by agriculture, is now featured with balanced development between agriculture and non-agricultural industries. Gross added value of TVEs in China skyrocketed by over 380 folds from 20.9 billion Yuan in 1978 to 7.97 trillion Yuan. It is estimated that total loading power of farm machinery by end of 2008 would reach 800 million kw, up by 4%. Mechanized practices covered 45% of workloads for crop production, up by 2.5 percentage points for 3 consecutive years. Agricultural trade expands rapidly – total trade volume for farm produce in 2008 reaching 99.16 billion USD, up by 27%. Of the total trade volume, export contributed 40.5 billion USD (up by 9.4%) and import 58.66 billion USD (up by 42.8%), creating a trade deficit of 18.16 billion USD.


3. Dramatic changes in systems and mechanisms. The two-tier management system that integrates unified with independent management was established, and millions of farmers became main players in production and market. Farm produce market was fully liberalized, agricultural tax removed, and direct subsidy offered to the farmers. Policy system for agricultural support and protection, which is compatible with the current productivity and socialist market economy, is taking shape.


4. Dramatic changes in farmers’ livelihood. Farmers were lifted from earning sluggish income to enjoying rapid and sustained income growth. In contrast to poor life in old time, farmers are now living a generally well-off life and heading towards an all-rounded well-off life. From 1978 to 2008, per capita net income of farmers rose from 134 Yuan to 4761 Yuan, with annual average growth of 7.1%. For 5 continuous years, farmers witnessed income growth of over 6% -- a historic record in the past 20 years. Engel coefficient of rural residents declined from 67.7% to 43.1% in 2007, down by 24.6 percentage points. Rural poor population also plummeted from 250 million in 1978 to 14.79 million in 2007.


5. Dramatic changes in rural appearance. Changes are evident in a number of aspects – better livelihood, accelerating social undertakings, more competent farmers, as well as stable and harmonious society. Compulsory education in the countryside is gaining strength – nearly 140 million rural middle and primary school students were exempted from paying tuitions and textbook expenses, and 11 million boarding students from poor families obtained allowances. The New Rural Cooperative Medical Scheme (NCMS) is rolling out across the country, covering over 815 million farmers. Rural minimum living standard system is in full operation. Solid progress was also made in rural infrastructures such as water, power, road and gas.


The remarkable achievement in rural reform and development during the past 30 years was underpinned by 5 principles. 1). Consolidate fundamental role of agriculture, and always give top priority to feeding more than 1 billion Chinese people to ensure sound administration and national security; 2). Squarely protect rights and interests of farmers, and make sure that the aim and outcome of all rural works is to realize, safeguard and expand the fundamental interests of farmers; 3). Liberalize and develop rural social productivity, and make reform and innovation fundamental driving force for rural development; 4). Harmonize urban and rural, economic and social development, and accelerate modernization process by forging new relationship between industry and agriculture, cities and the countryside; 5). Uphold CPC leadership in rural affairs, and deem stronger CPC leadership in rural affairs as the political guarantee for advancing rural reform and development.


II. Current Context of China’s Agriculture and Target for the Next Step


A strategic task that China is facing in the next step is to build the socialist new countryside, pursue a path of modern agricultural development with Chinese characteristics, strive for integrated development between cities and countryside, economy and society. The target set for 2020 is to achieve encouraging progress in modern agriculture development, apparent improvement of comprehensive agricultural productivity, sufficient supply of major farm produce and thus sound national food security, as well as higher per capita net income of farmers doubling that in 2008.


To meet the target of developing modern agriculture, the Chinese Ministry of Agriculture will need to substantively enhance efficiency in land use, resource use and labor production, build up capacity of agriculture in risk management, international competition and sustainable development, and foster sufficient supply of major farm produce such as grain, better income of farmers and sustainable development of agriculture. In response to basic needs of modern agriculture, China will need to vigorously develop high-yield, high-quality, highly efficient, eco-friendly and safe agriculture. Major tasks of developing modern agriculture include fostering national food security, advancing rural strategic restructuring, expediting agricultural technology innovation, consolidating rural infrastructure, establishing innovative agricultural socialized service system, facilitating sustainable development and expanding agricultural opening-up. Building modern agriculture is a long-term historic task, which calls for unswerving efforts to advance. A number of initiatives are necessary to take forward agriculture and rural economy, and thus contribute to modern agriculture and socialist new countryside – stabilizing system, reinforcing responsibilities, conserving resources, subsidizing farmers, investing in agriculture, awarding major producing counties, rationalizing price, advancing science and technology, and consolidating legal institutions.


III. Several Issues Pertaining to the Development of China’s Agriculture and Rural Economy


1. Ensure sufficient supply of farm produce through domestic resources


Comprehensive measures are needed to drive stable growth of grain production and ultimately ensure sufficient supply of major farm produce, such as grain, through domestic resources. These measures include: squarely implement mid and long-term national plan for food security, pay close attention to grain production, persist with the guiding concept of stabilizing farmland and increasing unit yield, apply the most stringent farmland protection system and land conservation system, safeguard permanent basic farmland, and manage to maintain grain acreage at around 1.6 billion mu; materialize the national program on capacity building targeting 50 billion kg increase of grain output, and intensify major programs such as quality grain production, plant protection and seed development; step up governor’s accountability in delivering sufficient food, gradually establish effective monitoring, inspection and performance review system on food security; provide more support to major grain producing regions, and create strong incentive for farmers and local government in producing grain; optimize grain risk fund policies, and gradually remove match fund practices in major grain producing regions; build capacity of grain supply in major marketing regions, and prevent degradation of food self-sufficiency; persist with market liberalization, actively mobilize circulation, and harmonize production with marketing; raise social awareness in grain conservation, and penetrate grain-saving measures from field to table; strengthen international cooperation in food, and contribute to food supply in the world. Measures shall also be taken for other major farm produce such as oil, cotton and swine in response to the industrial features and supply-demand dynamism. More policy guidance and support will be provided to drive forth coordinated development among sectors of agriculture, so as to ensure balanced aggregate supply, balanced mix, quality and safety of major farm produce such as grain.


2. Consolidate rural fundamental operating system


Efforts shall be made to maintain enduring validity of land contract, grant full and secure rights to farms for land contracting and operation, advance innovation in agricultural operating system and speed up transformation of agricultural operating models. Household operation shall introduce more advanced technology and production techniques, which represents a pragmatic path to reform traditional agriculture and facilitate intensive agriculture in the context of limited land resources, large rural population and small-holder economy in China. Unified operation shall head towards partnership and cooperation among farmers and a diverse, multi-tier and multi-form operating service system. Building capacity of collective economic organizations in delivering services, developing various socialized service organization, fostering the development of agri-business, and expediting specialized farmers’ cooperatives, comform to the requirements of developing modern agriculture, and constitute the key to creating more market access for farmers.


Efforts should be made to build a full-fledged system on rural land management, to improve the power related to land use rights and to safeguard farmers’ rights to occupy and use the land and collect proceeds thereof according to law. We should set up a registration system of contracted rural land, strengthen the management and services of the land transfer and allow farmers to transfer their rights to the contracted rural land through multiple ways on a voluntary and compensatory basis and encourage farmers to conduct operations of moderate scale. In addition, the contracted land shall be transferred by farmers instead of government officials, via the market instead of the government. The transfer could take multiple forms on a legal, voluntary and compensatory basis. The fundamental rule is that the collective ownership and the use of the land cannot be changed and farmers’ rights and interests to the contracted land shall not suffer during the transfer. In general, the interests of the country, farmers and operators shall all be accommodated. Or in other words, food security of the country, farmers’ rights to the contracted land and returns to the operators shall all be ensured.


3. Upgrade the Quality and Safety of Agricultural Products


China should improve agricultural standardization and the quality and safety of agricultural products. In this regard, we should establish strict control over the environment of the place of origin, the use of agricultural inputs, the whole production process and the product quality. A quality and safety accountability system should be maintained during the whole process of production, procurement, storage, transportation, processing and marketing so as to prevent the unqualified products from entering the markets. To ensure the sufficient supply and balanced structure as well as the quality of agricultural products, we should upgrade the quality and safety supervision system, in this way, China can be food-secure in both quantity and quality. Agricultural standardization and the quality of agricultural products should always remain high on our agenda. We should strengthen risk assessment so as to remove hidden problems timely. We should build a scientific, consistent and authoritative agricultural standardization system and promote standardized production. Besides efforts should be made to maintain a supervision accountability system, keep a clean environment at the place of production and exercise strict input management and agricultural practices as well as strengthen the certification of quality and safety. In addition, we should step up examination and testing, the administration and law enforcement as well as the supervision of the quality and safety of agricultural products.


4. Increase Farmers’ Income and Promote Off-farm Employment of Rural Laborers


The Chinese government plans to double the net income of farmers by 2020 as compared to 2008. To increase farmers’ income, we should on the one hand promote all-rounded development of agriculture so as to expand channels for income generation and on the other hand readjust income distribution and get rid of the urban-rural dual economic structure. The key is to establish an enduring mechanism to promote sustained income increase of farmers. We should tap the potential of agriculture in increasing farmers’ income and the agricultural output. Efforts should be made to speed up the development of non-agricultural sector in rural areas thus shifting surplus rural laborers out of agriculture into mid-size and large cities. We should take strengthening county-level economy as a major strategy, accelerate the development of small towns and develop secondary and tertiary industries in rural areas. We should improve policies of agricultural subsidies, increase farmers’ off-farm income and create conditions to increase farmers’ property income.


We should guide farmers to work in cities in an orderly way, encourage them to work locally and support farmers returned from cities to run their own business. We should remove the urban-rural barrier, regional barrier and sectoral barrier in the labor market, so that our laborers can be market-oriented, select jobs for themselves and take jobs through competition. We should build an integrated labor market and a level playing field for employment system.


5. Advance Agricultural Science and Technology


The Chinese government should boost independent innovation of agricultural science and technology. Efforts should be made to promote technology integration, mechanization and IT application. We should proceed from the need of industrial development and take full consideration of the special features of Chinese agriculture, such as producers, way of production and the demand, application and extension of sci-tech, as well as China’s typical national conditions, such as industrial development, institutional environment, responsibilities and target group of the service. We should speed up system innovation, establish a pragmatic and highly-efficient model for the sci-tech advancement and upgrade innovation and extension of agricultural sci-tech. To develop modern agriculture, we should turn out a new generation of farmers who are better educated and understand both agricultural techniques and business management. Attention should be paid to train more skilled grain producers and animal breeders, leaders of agricultural sci-tech, rural agents and managers of specialized farmers’ cooperatives. We should develop rural compulsory and vocational educations and set up an enduring training mechanism so as to upgrade farmers’ overall quality.


6. Build a New Social Service System for Agriculture


China should build a new social service system for agriculture. Such a system should rely on public service agencies, base on cooperative economic organizations, be backed by leading enterprises, be supplemented by non-governmental sectors; it shall combine public services with for-profit services and coordinate special services with comprehensive services. China aims to build, within three years, township or regional public service agencies for agricultural technology extension, prevention and control of plant and animal diseases and supervision of quality of agricultural products. Village-level service stations shall be built gradually. We should build diversified social service organizations so as to better serve agriculture. Efforts should be made to develop distribution services with strong infrastructure, innovated way and smooth channel of distribution so as to promote its modernization. In addition, the government should guide and support the service providers such as specialized farmers’ cooperatives, professional service companies, and professional technological associations in providing a whole range of services including distribution of agricultural supplies, extension of agricultural technologies, plant protection, disease prevention, agricultural information, product marketing and machine operation etc.


7. Strengthen Agricultural Input and Infrastructure Construction


The Chinese government identified the policy orientation of greatly increasing input in agriculture and rural areas – remarkably higher increment for public spending in agriculture, government investment in fixed assets in rural areas and investment using proceeds of government land transfers in rural construction than the previous year. We should increase direct subsidy to grain producers and general subsidies for agricultural supplies, subsidies for the procurement of agricultural machineries and continue to increase the minimum procurement price of grain to a great extent. We should expand national reserves of grain, cotton, edible vegetable oil and pork, and launch temporary storage of major agricultural products. A greater proportion of budgetary fixed assets investment should be used in agriculture and rural areas and the newly increased treasury bonds should also benefit agriculture and rural areas more. Incremental revenue from higher farmland conversion tax shall all be used in agriculture and the newly increased part of the urban maintenance and construction tax should mainly be used in rural planning, the construction and maintenance of rural infrastructure. We should abolish the request for match fund at and below county level for such public projects as the consolidation of dangerous reservoirs, ecological development, and access to safe drinking water in rural areas and reconstruction in the large and mid-sized irrigation areas. The match fund for risk control in the major grain producing areas should also be abolished. We should strengthen financial service in rural areas and encourage local banking institutions to use the newly absorbed deposits mainly for loan offerings locally. Besides the policy supported agricultural insurance should also be developed.


8. Improve Agricultural Laws and Regulations


The Chinese government as always values legal institutions in agriculture. Attention has been paid to refining agricultural laws and regulations, and strengthening law-based administration. Over the past three decades, achievements and changes accumulate in agricultural legal institutions. China has already enacted 14 laws, 24 administrative rules and 151 MOA regulations in the field of agriculture. A legal system with Agricultural Law as the centerpiece takes initial shape and comprehensive law enforcement was strengthened. We should refine the body of agricultural laws and regulations, making them the basis for better administration. We should codify those reform achievements that can comply with the scientific outlook on development, the demand of agricultural and rural development and the will of farmers. We should strive for system innovation and promote strict and comprehensive law enforcement and protect farmers’ rights and interests. We should step up educational campaign, so as to raise law practitioners’ awareness to conduct duty according to law and improve administration as well as to enhance farmers’ awareness and capacity to protect their own rights according to law.


9. Open Agriculture Wider to the Outside World


Chinese agriculture cannot develop without the world and China’s full participation is also indispensible to the world agricultural development. The Ministry of Agriculture of China will take opening-up as the basic orientation, take cooperation, development and win-win as the basic principles, take enhancing agricultural efficiency, farmers’ income and international competitiveness of agricultural products as the fundamental goals and take building modern agriculture as the basic task. We should strengthen friendly ties with all countries and international organizations as always. To this end, we should firstly, strengthen international cooperation in the area of grain. China honored its commitment to the Millennium Declaration and contributed within its means to the agricultural development and food security of some least developed countries through programs such as South-South Cooperation under the framework of Special Program for Food Security of FAO, agricultural technology demonstration outside China and management and farming technology training to foreigner in China; secondly, participate in bilateral and multilateral agricultural cooperation. We should promote the exchange of agricultural technology and personnel as well as economic cooperation through stable and effective mechanism for bilateral and multilateral cooperation such as high-level exchange of visits and joint committees; thirdly, promote the sound development of agricultural trade. We should enhance the quality and safety of agricultural products, fulfill China’s obligations as a WTO member and provide safe and reliable food for consumers home and abroad. In the meantime, to ensure China’s food security, we should also consider the special difficulties of China, as a developing member, in food security, farmers’ subsistence and poverty elimination.




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