China Starts New Round of Rural Reform

China is initiating a new round of rural reform aimed at lightening the burdens of farmers and increasing their income.

This is regarded as a major move following the Land Reform in the 1950s, which abolished the centuries-old feudalist land ownership, and the introduction of the household-based contract responsibility system linking payment to output in the 1980s.

In his report on the Outline of the Tenth Five-Year Plan for National Economic and Social Development (2001-2005) to the current session of the National People's Congress, Premier Zhu Rongji stressed the foundation role of agriculture in the economy and the importance of increasing farmers' income, saying that these are the primary tasks of economic work for the next five years.

His report was applauded by economists and farmer NPC deputies attending the annual session.

The level of farmers' income has a direct bearing on rural development and stability, said Cai Lifeng, mayor of major grain producing city of Yiyang in Hunan Province. The new round of rural reform means a major realignment of different interests in the countryside and it will find an answer to the fundamental problem concerning the long-term stable development of the rural areas, he noted.

In China, with a rural population of 900 million, the issues of farmers, agriculture and the rural economy have always been top priorities of the government work. The previous two rounds of rural reform all brought about profound changes in the rural areas, enabling the country with only seven percent of the world's arable land to feed 22 percent of the world's population.

However, concomitant with the rapid economic growth, problems in agricultural development and the rural economy have become more and more outstanding just as rural expert Chen Jiyuan said. The income of farmers has been dropping for years in a row; the urban- rural income gaps are being widened steadily; the rural market with millions of consumers has remained dormant, making it impossible to materialize the potential of this biggest market in the world.

Some places have imposed on farmers the expenses on public utilities and welfare undertakings that should have come from local finances. The too heavy a burden on farmers has put the farmers into sharp conflict with local officials, threatening to destabilize the rural social order.

According to official statistics, the annual income of farmers in 1996 increased nine percent over the preceding year. But the increase dropped to 4.3 percent by 1998 and further down to 2 percent by 2000, far lower than the 6.8 percent per capita annual income increase in urban areas. Even in the economically developed coastal Jiangsu Province, 60 percent of the farmers complained about their big drops in income in 2000.

Lu Xueyi, a rural economic expert from the Chinese Academy of Social Sciences, said that the waning initiative of farmers in grain production due to declining income has sounded the alarm again on China's grain security. The big drop in grain production in 2000 is an ominous signal, he noted.

The Ninth-Five Year Plan of the Chinese government admitted that China's population is increasing steadily, but the amount of arable land is decreasing. Water is in short supply and most areas have to make a living at the mercy of nature.

It is, therefore, a great challenge to China in the new millennium to really solve the food problem for a quarter of the world's population and enable the rural population, which accounts for 80 percent of the total national population, to become the main motive power to pull domestic demand.

The new round of rural reform is strategic in nature. It involves the introduction of a new grain distribution system featuring state purchase of grain at protective prices and good prices for good quality products, the change in the rural financial services, market-oriented production and the change in the taxation and fee collection system.

The reform of the taxation and fee collection system involves the scrapping of all fee collection items by townships and villages and raise the agricultural tax rates due to levy by governments at next higher level, thus denying townships and villages of the opportunity to collect fees directly from farmers.

The realization of stability in the rural areas requires institutional reforms, including the standardization of government behavior and the shift of government functions, said noted economist Chen Jiyuan.

His views were shared by many other NPC deputies, who said that county and township governmental organs are too bloated, breeding formalism and bureaucracy that have eroded the confidence of the people in the government.

An Anhui NPC deputy said that the township finance in Anhui Province is so overloaded that each has to support about 300 government functionaries.

It was disclosed that the country will cut the number of staff members of governmental organs at the county and township levels by 20 percent and at the same time the central and provincial finances will provide township and village finances with subsidies to make up for their normal shortfalls.

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