On October 12 the Third Plenary Session of the 17th Central Committee of the CCP approved “Decisions on Major Issues Concerning the Advancement of Rural Reform and Development”. The proposed legislation, which awaits ratification by the National People’s Congress in March, would legalize the “contracting, rent, exchange, transfer, and other joint-stock ownership methods of land right transfers” by farmers to other individuals or companies. The policy draft, which was approved on the 30th anniversary of Deng Xiaoping’s dramatic land reform initiatives, can be seen as both a commemoration of the late leader’s farsighted commitment to economic reform and also an attempt by the Party to address the inequalities and problems that have arisen because of those very reforms. Indeed, “Decisions” represents a significant effort by the central government to ensure agricultural self-sufficiency and alleviate the social stress caused by local government corruption and income inequality between urban and rural residents.
Historical Overview
Two key reforms of the Deng era have contributed to the present climate in which “Decisions” has been drafted. The first was agricultural. Under Deng, the rural collectives that were a trademark of Mao era politics were dismantled and production shifted from communes to individual households. The Household Responsibility System successfully generated production incentives by granting farmers decision-making freedom, land use rights through fifteen-year (later thirty-year) contracts, and by linking rewards and performance. Between 1978 and 1984 grain output increased at a rate of 13.8%.
Heavy subsidies were also a crucial part of the grain production incentive package. The state paid 50% more for grain produced over the contracted amount. As grain hit a high of 407 million tons in 1984, however, this system became financially untenable: the government refused to raise the resale price of grain in urban areas to correspond with its own spending on increased grain production. In 1985 the state sought to ease the financial burden its subsidies created by ended the preferential grain procurement terms for peasants. A system of contract purchasing was introduced in which all grain was purchased at an increased average price.
The second major reform was the shift from a rural-based economy to an urban one. In 1979 the central government licensed four SEZ to attract foreign investment and in the late 1980s expanded the program into a coastal zone development strategy. Heavy manufacturing, construction, and real estate in these areas fueled the rise and spread of cities and dramatically altered the landscape of profit opportunity in China. In contrast, rural areas have lagged further behind. In 2007, the average annual urban income was RMB 13, 786; the average annual rural income was RMB 4,140.
The Present
The shift from a rural-based economy to an urban one over the past 30 years has brought record growth. But dramatic land and agricultural reform as well as increased urbanization have created two distinct but closely connected problems that “Decisions” has been drafted to alleviate: food production dilemmas and social instability.
The HRS was indeed able to generate production and short-term growth. However, a number of inherent weaknesses in the system have become apparent since its implementation and have hampered China’s agricultural efficiency. Arguably the most notable in this respect is the size of farm plots. Farmland is distributed in small, fragmented parcels: according to official statistics, an individual plot today averages .67 hectares (1.66 acre) of land; independent statistics put that number at .4 hectares (1 acre). Consequently, most farmers engage in low-level subsistence farming with little incentive to introduce advanced technologies or farming techniques capable of effectively and efficiently exploiting the land. This is highly problematic when wealth has generated increased demand for food, which has outpaced production and the land’s present capabilities.
Additionally, the comparative advantage of harvesting grain was greatly weakened by a number of factors. The first was the abolishment of preferential grain subsidies. A drop in production was immediate: whereas grain output in 1984 reached approximately 407 million tons, output dropped 6% in 1985 and stagnated thereafter. Even when grain procurement prices were once again raised in the late 1980s, the rising costs of seeds, fertilizer and pesticides outstripped them. Second was the potential for cash crops and non-farm work to yield higher profits for peasants. They began to diversify farm activities or quit farming altogether, often for business or migration into the cities. This pattern continues today: given the likelihood of higher pay in non-farm work, many farmers will leave their land to find more lucrative work in a city. Their land, however, will often be left to elderly parents, dependents, or abandoned altogether. As a result, it is not properly or efficiently tended to.
The HRS, increasing demand, and the economic disadvantage of staying on the land has led to an agricultural deficit with the United State: official figures from Beijing show that China became a net food importer in 2008. In the first half of this year agricultural imports rose 59.9%, to USD 28.8 billion from last year’s corresponding period. This is an alarming figure to a government that views its ability to produce enough food for its people as a critical component of its national sovereignty.
Policies aimed at urban development have also affected land and have thus affected social stability as well. By consistently favoring fast industrialization, not only have millions of acres of arable land been diverted for industry, an environment of corruption has taken root. Land seizures by local officials and connected land developers for pet projects coupled with little or no compensation for the land has led to increasing discontent among farmers. Protests over rural corruption and illegal land seizures have become common and widely publicized.
Discontent is undoubtedly also rooted in the huge inequities that have arisen between rural and urban residents: for all of the wealth economic reforms have brought, they have almost exclusively privileged urban areas. Leadership in the past has been slow to implement measures to correct the growing economic gap within the country. Inequality, encapsulated by one of Deng Xiaoping’s stock quotes “let some get rich first”, might have been seen as a necessarily evil for economic development, but modern China is considered one of the most unequal societies in the world. The government has publicly turned its focus to rural development and “Decisions” reinforces the commitment it has to distribute the benefits of China’s so-called economic miracle through rural reform and development.
The Policy
Though certainly propagandist and vague on just how such a major policy shift will be practically implemented, “Decisions on Major Issues Concerning the Advancement of Rural Reform and Development” is an explicit attempt to address what the central government sees as two of the most pressing challenges it faces today. It emphasizes the importance of self-sufficiency, or “food security” and production, by calling for an unceasing commitment to this issue (粮食安全任何时候都不能放松). Among its 2020 goals are a noticeable improvement in agricultural production capabilities, and to “ensure of national food security and the efficient supply of main agricultural products” (国家粮食安全和主要农产品供给得到有效保障). Various strategies to achieve these goals are listed throughout the text, including adequate storage and transport capabilities, which have previously been so substandard that grain has rotted in its containers. Additionally, technology investment and construction in rural areas are also listed as essential parts of a strategy of “scientific rural development” (科教兴农战略), a variation on the primary Hu-Wen doctrine of “scientific development”.
Allowing peasants to contract, rent, exchange, transfer, or use other joint-stock ownership methods to transfer land rights opens the possibility of concentrating the land in the hands of large-scale farmers, agriculture producers or conglomerates to increase farming efficiency. Evidence that the land is not meant for factories or non-farm industries can be found in the call for a strict system of arable land protection (坚持最严格的耕地保护制度) as well as the mandate that neither the nature of the land nor the use of the land may be altered (不得改变土地集体所有性质, 不得改变土地用途). It clearly intends to devote a certain amount of land for food production as well as control the seizures of arable land for industrial or non-farming purposes by officials.
The formal right to transfer land is also meant to provide peasants with a source of capital. The text emphasizes abiding by the system of compensation for land, which is often ignored by officials and land developers, and avoiding harming peasants’ land rights (不得损害农民土地承包权益). In fact, reference to “peasants’ rights” and either the protection of or commitment to them is repeated throughout the proposed legislation. Both the social and economic rights of rural residents are listed in the central government’s 2020 goals: doubling rural incomes, conscientious protection of peasants’ democratic rights (农民民主权利得到切实保障), increased educational opportunities, and basic healthcare and social security. The latter two goals in particular would go a long way in closing the gap between rural and urban privileges as city residents already have access to both.
Interestingly, a system of legal recourse for rural residents is listed under the necessary steps to building a strong rural democratic management system. “Establishing and strengthening rural legal systems and institutions, perfecting rural laws and regulations, strengthening administrative capabilities in accordance with law…strengthening rural legal education, setting up legal services, raising peasants’ legal consciousness” (加强农村法制建设，完善涉农法律法规, 增强依法行政能力 …加强农村法制宣 传教育，搞好法律服务，提高农民法律意识) are all perhaps meant to discipline cadres where the regime cannot and also steer rural anger into official channels to tamp down on highly visible protests.
Yet the set up and effectiveness of such systems or respect for basic peasant rights depends on the cooperation of local officials. Vesting officials with the power to oversee themselves cannot help but weaken the force of the promises made in the proposal. However, the broader objective of the rural rights discussion in the text, legal or otherwise, is cadre accountability. Considerable space is devoted to managing rural areas in a manner accountable to Party traditions and the people, to building leadership, improving cadre education, and safeguarding against corruption and land grabs. Though perhaps sloganist in sections, the pointed language and the frequency in which these phrases are invoked underlines the priority put upon discipline within Party ranks and intolerance for socially destabilizing behavior by cadres. This includes the promise of punishment for members that abuse rural rights or succumb to corruption.
The Debate
Land reform in China is a controversial topic and “Decisions” has divided economists, scholars, and government officials. Advocates of the resolution claim that land reform will move China decisively towards self-sufficiency by making agriculture more efficient. A rise in production in tandem with rising food prices would be advantageous in keeping domestic prices low and avoiding protests over food shortages or costs. Supporters also believe that rural land reform will reduce corruption as well as provide peasants with a much-needed source of capital.
However, because rural residents lack the social supports that their urban counterparts enjoy, land use rights represent the only form of social security peasants have. Opponents of “Decisions” have painted scenarios in which a farmer transfers his land for a quick injection of capital, fails to find stable work in the city, and has no land to return to. Scenarios like this are increasingly likely in the present economic climate and would create an entire class of landless and poor Chinese.
Although the text carefully avoids words like “sell” or “buy”, experts claim that the ability to transfer, rent, or trade one’s land is in fact official approval for the de facto sale of land; farmers would have enormous difficulty in reclaiming their land once it is transferred. Indeed, if an agricultural sector filled with efficient, large-scale agribusinesses is the regime’s ultimate goal, it would be highly unlikely for a peasant to retain genuine land rights over their plots. Though few believe farmers will be pushed of their land for large producers, the prospect of a lucrative agribusiness generating high profits in areas low in funding are hardly circumstances that spell an end to land-related corruption or abuse.
How the central government plans to enact this landmark reform remains to be seen, as neither the details nor the implementing rules of “Decisions” will be released until after its approval. The National People’s Congress is thought of as a rubber-stamp body and it is generally believed that “Decisions” will be approved in March. However, if the rumors of high-level dissension over the legislation are true, it could mean a dramatically altered version of the text is approved.
