Sunday, October 12, 2008

Another Rural Revolution in China?

30 years ago, in 1978, 18 farmers in Xiaogang village in Fengyang (鳳陽) county in Anhui province secretly agreed to divide community-owned farmland into smaller pieces called household contracts, for each family to cultivate. Each household promised to deliver a required quota of grain to the commune and the state. They would then keep the surplus. Now that they have the incentive to work hard and produce more, grain output increased 6 times in the first year. They have helped to launch a rural revolution.

(By the way, this Fengyang is same as that 鳳陽 as in the folk song 鳳陽花鼓.)

30 years later, there is a different problem. The land is divided into very small plots. The greener photo was of fields near Changsha in Hunan in Southern China in August. It is picturesquely lush but not efficient.

The browner photo was of fields near Lanzhou in Gansu in North-Western China on the same day. It is not even that pretty because of the chronic shortage of water.

Part of the problem is that the land cannot be sold. The rural land is owned by the state. Farmers only have 30 year land use rights, which they are allowed to sell to other farmers in a limited way, but not to companies. They often cannot even use the land as collateral to obtain a loan. These prevent efficient commercial farming in a large scale, as is widely practiced in North America and elsewhere. Rural productivity and earnings have stagnated and lag far behind the cities.

Now, it is said that the peasants may be allowed to buy or sell land-use rights. More efficient land use and much larger forms are anticipated. Will the introduction of market forces launch another rural revolution?

Many farmers would like to sell the land and move to the cities to find work there. But that may worsen the problems in the cities. Keeping the peasants contented on the farms has been a thousands year old national objective. Will the new rural revolution accelerate the swelling of the urban population? How would that change the face of China?

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