Chen Xiwen

Research Report, No.104, 2000 (Total 1282)

During the 9th Five-Year Plan period, an overall balance was achieved between the supply and demand of major agricultural products, with the former outgrowing the latter in years of bumper harvests. This marked a big turn of historical importance in the economic and social development of China. China’s agriculture, which for long-term took the supply of sufficient food and clothing to the people as its fundamental target, would now enter a new period of meeting the demand of development of a fairly well-off society. Development of China’s agriculture, and the rural areas as a whole, has come across a series of new situations and new problems at present. Some of them have emerged due to changes in market conditions, and some have resulted from the surfacing of some deeply rooted contradictions that accumulated in the rural sector over a long period of time. To make strategic adjustment of the economic structures actively and to quicken the pace of system and organization innovation will be the key to smooth advance of China’s agriculture and rural work as a whole into a new period of development, and the central task in China’s agricultural and rural work during the 10th Five-Year Plan period.

I. Major problems in agriculture and in the rural areas as a whole at present and basic approach of thoughts about development during the 10th Five-Year Plan period

1. Major problems in agriculture and in the rural areas as a whole

(1). Glaring contradiction between supply of agricultural products and market demand in terms of quality. Agricultural growth characterized by emphasis on quantitative increase and inattention to qualitative optimization for long years in the past has obviously been restricted by demand.

(2). Growing employment pressure in the rural areas. Since the mid 1990s, township enterprises have grown noticeably weaker so far as their capacity of creation of job opportunities is concerned. As a result, the rural labour force has suffered a setback in its transfer to secondary and tertiary industries, and the total number of employees in agriculture has bounced back.

(3). Increasing difficulties in the growth of the farmers’ incomes. For three years, the growth of average per-capita net income of farmers has slowed down and the rural area as a whole has sunk into a situation of earning ever less from agriculture and relying upon non-agricultural sectors and other labour services for more incomes. Most of the purely rural households have in fact suffered a decrease in their incomes. The average per-capita spending on household operations and living by farmers has shrunk for two years.

(4). Aggravating pressure of competition on agriculture from international markets of commodity. Although the index of the purchasing prices of agricultural products in China in 1999 was only 80.3 per cent that of 1995, the prices of cereals, oils and other staple agricultural products were still more expensive than those at international markets. With the approach of China’s entry into the World Trade Organization, pressures from this direction will noticeably aggravate.

(5). Widening discrepancy between the rural social management system and the rural operation management system. China’s towns and villages are basically organizations of community management set up according to administrative divisions. What farmers need, however, are outward-oriented business operation organizations from which they can get market information, technical and fund support, and help in the marketing of agricultural products. In addition, the establishment of full governments at the town level has led to a swelling of organizations, staff and expenditures, and an aggravation of the burdens on farmers. It has also disharmonized relations between grassroots officials and the broad masses of people in the rural areas.

(6). Growing distance between a supportive and protective agricultural system characterized mainly by price protection and the demand of development of a socialist market economic system. China has a big absolute number of rural households and absolute quantity of agricultural products. Due to introduction of the practice of price protection for producers, governments would shoulder heavier burdens, government subsidies could hardly go directly to farmers, and farmers could hardly get true information about supply and demand. In addition, this practice conflicts with the agricultural clause of the World Trade Organization.

2. Some issues concerning the thoughts about agricultural and rural development during the 10th Five-Year Plan period

The basic approach of thoughts about agricultural and rural development at present and in the near future has been defined by the decision made at the 3rd Plenary Session of the 15th Central Committee of the Communist Party of China. During the 10th Five-Year Plan period, special attention should be paid to three issues:

(1). It should be stressed that the strengthening of agriculture should be listed as the top task of the national economic development. During the 9th Five-Year Plan period, the comprehensive production capacity of China’s agriculture saw fairly great improvement. Good harvests were achieved, in particular, in grain production for five years, and a situation of excessive supply emerged for the time being. Under this circumstance, it would be easy for blind optimism to develop, and the tendency of negligence of agriculture to gain ground. Development of the excellent situation of grain production during the 9th Five-Year Plan period has its inevitability, but it is also attributable to some special factors, such as substantial increase of the prices of government purchases, unlimited purchase of grain at protective prices, and a climate with abundant water and warm winters. These special and favourable factors would not always be there. A lasting and inevitable trend in China would be, however, the growth of the population, decrease of cultivated land, shortage of water, and improvement of the living standards of the people. In addition, the markets and prices of agricultural products are unfavourable for farmers at present. As the situation stands, special attention should be paid to strengthening the basic position of agriculture, protecting and increasing grain production capacity during the 10th Five-Year Plan period, and big upheavals in agriculture should be prevented by all means. Efforts to protect and support agriculture during the 10th Five-Year Plan period should be concentrated more on improvement of the production, living and market conditions of agriculture and the rural areas as a whole, promotion of agricultural science and technology and popularization of advanced and applicable technology, establishment of a system for collection and dissemination of information about the markets of agricultural products and a system of quality standards for agricultural products, and development of socialized services and industrialized management of agriculture. So far as the policies are concerned, the focus should be put on improvement of the comprehensive quality of agriculture, the quality of agricultural products and efficiency of agriculture, and the income of farmers.

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