Pomfret's China

« Previous Post | Next Post »

Is China Dismantling Its 'Socialist' Countryside?

The leadership of the Chinese Communist Party is meeting in Beijing this week to discuss what appears to be a revolutionary idea to allow farmers to lease their land to bigger landholders, thereby creating larger farms. This is an amazing idea for China, a so-called socialist country, because it will open the door to the reemergence of the hated landlord class (the hated dizhu class of China's Communist revolution) and share-cropping farmers who provided much of the muscle for China's revolution. Talk about back to the future!

The debate in Beijing is an indication of just how far China has come from its revolution -- as if we needed any more proof. Now, to be fair, the rationale behind the proposed changes are, well, rational. The last great decade for agriculture in China was the 1980s. Since then it has lagged behind the rest of the country in development. In terms of foreign trade, small-scale Chinese farmers compete very well in apple juice and garlic, but not in many other areas.

Second, one of the reasons China's food safety problems are so grave is that that current system -- because land is leased and not owned, and divided up in small plots -- does not reward investment. There's no incentive for an "organic" farmer not to use pesticides or a small-scale cattle rancher not to sell cattle who have died from disease to an abattoir as meat. A few weeks ago, I came across a series of photographs on the web about one Chinese business that goes house to house in search of dead chickens. It then "freshens" them up with dye (yum!) and sells them as "high quality" poultry.

So, why not "rationalize" production, create bigger farms and produce more goods, more cheaply, and hopefully more safely. It's basically the China factory model, or the China price, brought to China's countryside. One would expect that Chinese coffee, fruit and even its wine (it's not horrible but it ain't California yet) would become immediately more competitive.

Details of the reform remain a closely guarded secret, the FT reported today, but the country's top leaders are expected to enshrine the rights of rural citizens to transfer or rent their 30-year land leases to other individuals or companies and possibly allow that land to be used for collateral to access loans. Since 1949, the government has banned the private ownership of land. Since economic reforms began in the late 1970s, it has been giving peasants ever longer (30 to 50 year leases) to use the land. Up until today it has not allowed the peasants to individually sell those land use rights.

But what about the down side? Even liberal reformers in China worry about freeing up land markets, fearing that peasants would sell their leases to Slick Willies for peanuts. They worry about the potential results: a few landed fat cats and a mass of peons. Not so good for social stability, that one. Look to China's wealth gap -- already bigger than that of the United States -- to widen. Li Changping, a former rural official who now conducts independent research in Beijing, has criticized the proposals, saying they resembled those of the Philippines that boasts a rich class of rural landlords and millions of sharecroppers.

So it's going to be fascinating to watch as China tries to cope with this challenge. It's obvious the countryside -- where 60-70 percent of China's people live -- needs changing. But it's not clear what's the best way to do it.

Email the Author | Email This Post | Del.icio.us | Digg | Facebook

Comments (13)

sjgscreener Author Profile Page:

As China's pattern of land distribution changes, it is also true that the nation risks the possibility that some rural farmer's sad, brutish, borderline but mildly independent existence could become even a bit worse. So the government will need to invest in these people and protect them from bad deals. One way would be to exchange land rights for an audited annuity payment instead of a lump sum.

However, what some posters here have failed to consider is that agriculture now has vast economies of scale, which is to say that generally large farms produce much larger yields, and also that they are less subject to risks associated with economic, commodity pricing or weather-related variables. They are more stable, they employ people more consistently, and their existence reduces prices. This is not to say that they are perfect.

Across the board China needs to give the working class some of the standard supports, protections and educational opportunities given in the West, perhaps with a twist.

ladybug251 Author Profile Page:

This is yet another depressing development in China's national policy.

On a social level, contrary to what has been posted above, there is absolutely no guarantee that landlordism will not make a comeback. Landlordism is not a thing of the past. To see the application of landlordism as a modern concept, we only need to look to the new corporate class of agribusiness entrepreneurs like Monsanto who have effectively shut down small farmers across the Canadian and American Midwest.

If we look closely at areas in China in which such land consolidation is already taking place (I have personally witnessed corporate consolidation of agricultural land in Guangdong, but it is rumored to be happening on the outskirts of all the major coastal cities), albeit under the radar of the government, we find that such areas also have the highest levels of income disparity. A China seeking “harmony” and prosperity would do well to remember that when wealth is amassed only at the top, everyone ultimately loses.

By encouraging farmers to lease their land rather than cultivating it themselves, the government may unwittingly remove incentives for locals to grow subsistence crops thus undermining food security, and more importantly, increasing real poverty (i.e. poverty defined by lack of essential goods – food – rather than lack of cash flow).

China should focus on developing sustainable, small to medium scale agriculture. By cultivating high value organic crops – in ADDITION to cultivating subsistence crops - China could seize the opportunity to grab a share of what is a burgeoning world market.
China should increase its efforts to provide organizational support in the form of agricultural extensions offices, farmer cooperatives and local economic development offices to help farmers organize. Of equal importance is developing sufficient infrastructure for the marketing and transportation of crops.

Were China to develop its rural agricultural base it would not only benefit environmentally and economically, but also socially. By providing monetary and other incentives for rural residents (who are still the vast majority of Chinese citizens) to stay in the countryside, China will also have an opportunity to stem some of the social and economic ills of mass migration by engaging people in local communities and commerce, thereby giving them a reason not to flock to the cities and join an already out of control floating population.

Peter34 Author Profile Page:

sblow Author Profile Page:

By reading, watching and listening to the western media, we have long become accustomed to the critical view of China's financial system and everything else. But how could all of the sudden we hear that China's banks are among the soundest?

http://www.economist.com/finance/displaystory.cfm?story_id=12381871

Why could the same media not apply the same critical spirit to the financial system at home?
================================

During Asian financial crisis in 1990s,Western financial firm caused that turmoil and loot some emerging Asian countries' (Philippine for one) wealth and assets,under the help of IMF forcing those countries fully open their financial market.Now look at U.S and E.U countries,when they are in trouble,do they allow others to buy their assets?

China did not crumble in those two financial crisis because this Chinese government was not fooled and bullied by the western media's demonetization which has been in line with some powerful countries' political agenda.

U.S sanction China on too many technology and goods.U.S refused Chinese investment on those firms with possible good prospects while welcoming Chinese investment on the doomed companies.All they could let Chinese investment go freely is that 3% annual rate T-Bond,which is a ridiculous considering the inflation rate and possibly the default risk.

Now G-7 is calling on other emerging countries to work together to rescue them and maintain their prosperity and superiority.Yet,G-7 is not going to give away interest to others as opposed to that they loot those emerging countries in 1990s during Asian financial crisis.

So that's what somehow behind some media.

sblow Author Profile Page:

By reading, watching and listening to the western media, we have long become accustomed to the critical view of China's financial system and everything else. But how could all of the sudden we hear that China's banks are among the soundest?

http://www.economist.com/finance/displaystory.cfm?story_id=12381871

Why could the same media not apply the same critical spirit to the financial system at home?

howardxue Author Profile Page:

="Li Changping, a former rural official who now conducts independent research in Beijing, has criticized the proposals, saying they resembled those of the Philippines that boasts a rich class of rural landlords and millions of sharecroppers."

I agree with Mr. Li, and I found a related artible about the agriculture reform failure in the Philippines.

See http://www.upiasia.com/Economics/2008/04/08/solutions_to_the_philippines_rice_crisis/8927/

here are some opinions of the filipino author who want a genius reform rather than agriculture cartel.

"......
Land-use conversions of rice lands should be stopped. Food crops should be prioritized over cash crops and biofuel crops. The bloated funding for debt and war spending should be realigned to food production. The rice cartel should be dismantled. Rice smugglers should be charged with economic sabotage.

Finally, the rice crisis today is an opportunity to review the land reform programs of the government in the past four decades. Landlessness remains a fundamental problem in Philippine society. Agricultural production is still backward. Perhaps it is time to implement a genuine agrarian reform. A sound agricultural system will propel the Philippine economy. At the same time, it will ensure that all Filipinos have access to food at all times.
......"

scidem Author Profile Page:

Today is the 30-year anniversary for the The Reform and Open policy in China. There's been a seachange in China since then. I think Washingtonpost should highlight this. And the land reform this time will become the most profound change in China's society in the furture 30 years...

pgr88 Author Profile Page:

The only thing allowing this change is demographics. While many rural laborers are still considered "underemployed" a visit to nearly any farm village will prove the labor force actually growing crops is, like the USA or Europe, - well over 40 years old.

Young people have gone to the cities, or the focus for the one child (sometimes two) is education and factory or even white color work.

The Gov't recognizes that large farms are more efficient, and are more easily controlled. At the same time, the Gov't will always maintain ultimate control of the property rights.

wenchi_yu Author Profile Page:

Most likely, they will extend the years of lease and grant farmers the right to transfer their land. If more clear policy changes can help prevent exploitation of farmers and land grabbing by local thuggish officials, that's a positive development.

Donald2 Author Profile Page:

The nationalization of US financial institutions and land ownership of Chinese farmers are both practical approach to fine tune their unique problems. Neither free market system nor socialist system is perfect all the time. The key is to be practical and taking care of general population's interest, and not to kill too many people (like killing thousands or millions of landlords, or like liberating Iraq) in the process.

thmak Author Profile Page:

China is not dismantling the present socialist system. China is preparing to adapt the present socialist agricultural system to the modern highly-efficient, large-scale,semi-automitic mechanical, agricultural system. By pooling the land together, the farmers have a share or an employee of the agri-business or free the farmer for other more rewarding job.

jiaming Author Profile Page:

The landlord class is a thing of the past thanks to Western technology in agriculture. In the old days, larger farms in China meant more subsistent peasants who depended on the rich landlords for their livelihood. They were subjected to all kinds of abuses by the landlords. Today, larger farms only mean more mechanized agriculture and far greater efficiency. It's a vital step for China to move toward a more automated society and achieve western style living standards.

dahuanzhou Author Profile Page:

As long as a new policy will help to increase the people's livelihood, help to promote social stability and to narrow the wealth gap,I don't care which label you will put on it.I remember Mr. Deng Xiaoping 's well -knowing saying "a cat will be considered as good cat if it can catch the rat,no matter white one or black one."But I still have a little bit worry about the new policy, not the policy itself, but if the new policy could be implemented correctly.To put in another way, I believe it is a good music, but more important is that we need everyone play it well.

infoshop Author Profile Page:

China is dismantling its 'Socialist' skin, and what are we doing here in the US? We are nationalized these private enterprises. Are we heading the wrong way?

Links & Resources

Visit Pomfret's Website
PostGlobal is an interactive conversation on global issues moderated by Newsweek International Editor Fareed Zakaria and David Ignatius of The Washington Post. It is produced jointly by Newsweek and washingtonpost.com, as is On Faith, a conversation on religion. Please send us your comments, questions and suggestions.