Xiao Junyan

The main features of the rural economy in 2004 are characterized by strong policy measures, favorable market environment, visibly higher peasant income and a major turn for better for grain production. The most striking feature however is that the central government continued to support and protect rural development with unprecedented intensity. In order to consolidate and strengthen agriculture’s status as the foundation of the national economy, the central government introduced a series of direct and effective policy measures to strictly protect farmland, reduce the peasants’ tax and fee burden, provide direct subsidy and the subsidy for improved seeds to the grain-growing peasants, set the minimum purchasing prices for the main grain varieties, stabilize prices of the means of agricultural production, increase inputs in agriculture and rural infrastructure construction, support the development of rural social undertakings and deepen rural reforms. These measures greatly boosted grain output and the peasants’ income. It can be said that 2004 was the year when policy support for agriculture was the strongest ever. As a result, hundreds of millions of peasants received real benefits and agriculture and the rural economy demonstrated an excellent development momentum.

In relative terms, the environment for the operation of the rural economy in 2005 will not be as liberal as in the previous year. The favorable factor is that the policy environment will continue to improve and the central government will continue to intensify support for rural development. The main unfavorable factor is that the prices of major farm products are unlikely to continue to rise and may even decline due to the improvement in the supply of Chinese and foreign farm products. Therefore, the growth of peasant income in 2005 is likely to be lower than in the previous year, the total output of grain, cotton and other major farm products will be largely stable, but there are also some uncertainties.

I. The Performance of the Rural Economy in 2004

1. The situation of agricultural production was good and grain and cotton outputs went up sharply

Grain production posted a major turn for the better and reversed the five-year decline after 1998. Grain output totaled 938.9 billion jin, surpassing the plan target of 910 billion jin. That was 77.5 billion jin or 9 percent higher than in the previous year. Cotton witnessed a bumper harvest, with the total output reaching a record high of 6.32 million tons. That was 1.46 million tons or 30 percent higher than in the previous year. The production of other major farm products also increased steadily. Oilseeds totaled 95.28 million tons or up 8.8 percent, meat totaled 72.6 million tons or up 4.7 percent, raw sugar totaled 95.28 million tons or down 1.2 percent, aquatic products totaled 48.55 million tons or up 3.2 percent, fruit totaled 152.43 million tons or up five percent and vegetables totaled 549.27 million tons or up 1.7 percent.

2. The growth rate of peasant income was the highest in the past six years

The per capita net income of the peasants was 2,936 yuan, which was 314 yuan more over the level of the previous year. If price factor is deducted, the real growth was 6.8 percent, which was the highest since 1997. Unlike many years in the past, the income from agricultural production and operation in 2004 was the main source of the income growth for peasants. The per capita net income from the primary industry was 1,398 yuan, which was 203 yuan or 17 percent higher; the net income from the secondary and tertiary industries increased by only 2 yuan. Wage income from working outside native places remained a major source of income. The per capita wage income of peasants was 998 yuan, which was 80 yuan or 8.6 percent higher. The growth rate was more or less at the same level of the previous year. Income from policy factors went up sharply, with each peasant receiving a transfer payment of 116 yuan or 19 yuan and 19.3 percent higher than in the previous year.

3. The prices of farm products and the means of agricultural production increased by a big margin

(1) The prices of farm products that had been sluggish for years began picking up, with the overall level being visibly higher. Compared with the previous year, the most dramatic price hikes for the farm products sold by the peasants were 30 percent for grain, 27.3 percent for cotton, 15 percent for oilseeds, 9.5 percent for vegetables, 41.5 percent for pork, 8.9 percent for poultry, 27.3 percent for eggs and 22.4 percent for fish.

(2) The prices of the means of agricultural production represented by chemical fertilizer went up sharply. In 2004, the prices of all major fertilizer varieties were 17-20 percent higher than in the previous year.

4. Rural enterprises posted a steady growth

Rural enterprises realized a total added value of 4.15 trillion yuan, up 13.3 percent. Their profit totaled 990 billion yuan, up 15.5 percent. Tax payments reached 365 billion yuan, up 16.6 percent. The value of export delivery was 1.68 trillion yuan, up 18.3 percent.

5. The international trade in farm products posted a deficit with cereals posting a net import

China’s import and export of farm products in 2004 totaled 51.44 billion U.S. dollars, or 27.4 percent increase over the previous year. Specifically, export was 23.39 billion U.S. dollars, up 9.2 percent; import was 28.03 billion U.S. dollars, up 48.1 percent. Trade in agro-products posted a deficit of 4.64 billion U.S. dollars against a surplus of 2.5 billion U.S. dollars in the previous year. Specifically, grain trade posted a drastic fall in exports and an equally drastic increase in imports. The year witnessed a net import of 4.958 million tons while the previous year saw a net export of 19.917 million tons. The trade deficits for edible oilseeds, cotton, sugar and livestock products all expanded, though in different degrees.

6. Rural finance intensified support for agriculture

In 2004, the rural credit cooperatives across the country saw their deposits and loans expanding rapidly and intensified their support for agriculture. At the end of 2004, the balance of deposits stood at 2,784.1 billion yuan, a net growth of 15.7 percent over the beginning of the year. The balance of loans stood at 1,955.1 billion yuan, a net growth of 15.5 percent over the beginning of the year. In the meantime, the balance of loans to agriculture reached 849.0 billion yuan, a 22.5 percent net growth over the beginning of the year. In particular, the balance of the loans to peasant households reached 679.5 billion yuan, which was a 22 percent net growth over the beginning of the year.

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