RURAL REFORM AND DEVELOPMENT IN CHINA: REVIEW AND PROSPECT

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1 RURAL REFORM AND DEVELOPMENT IN CHINA: REVIEW AND PROSPECT Dr. HAN Jun Director-General Development Research Center of the State Council (DRC) PRC

2 China s rural population ranks second in the world China is a large developing country with the largest population in the world. In 2009, its rural population was 713 million, representing 53.4% of national total. China s rural population ranks second in the world, next to India. There are 220 million farmer-householders in China, with operating lands less than 0.6ha to each householder. Average area of farmers operating lands in China is less than that in American and European countries, also less than that in Japan and Korea, even less than that in India.

3 China s achievements in rural development Over the past 30 years reform, China has created a miracle of rapid economic growth. Dramatic achievements in rural development include: A. China has basically ensured food security for over a billion people by using approximately 9% arable lands and 6.5% water resources of the world s total. Grain yield has risen from over 300 million tons in 1978 to over 500 million tons in Grain consumption per-capita stably reaches 390kg. Nutrition level has been above the world s average.

4 B. Outstanding results in rural poverty alleviation According to the definition by the WB, poverty population in China decreased from about 530 million in 1981 to 129 million in Human Development Report 2005 by the UNDP recognizes China's massive achievements in poverty-relief in the past 30 years, saying that if China's achievements were not recorded, the world would have actually regressed in its progress towards poverty alleviation.

5 The progress of PA is the result of: a sustained economic growth a series of development policies for social equity special programs for poverty alleviation taken by the Government

6 Development-oriented Poverty Alleviation Program with Chinese Characteristics government leadership public participation self-reliance The core is: development-oriented poverty alleviation and all-round development

7 C. Significant progress on rural economic diversification Rapid development for TVEs, which number grew from 1.50 million in 1978 to 23 million in 2006, with 119 million new jobs offered during this period. Rural enterprises deeply participate in export sector, which produce 40% of the China s export products. Rural enterprises have undergone a profound restructure.

8 D. Significant increase of agricultural market opening China has become the world s fourth largest importer and the fifth largest exporter of agricultural products. Some agricultural products increasingly depend on international market. China has become one of the countries with lowest tariff level for agricultural product import.

9 China s agriculture deeply integrates into international trading system The tariff level for agricultural products had been reduced to the final bound rate, from 23.2% in 2001 before the WTO accession to 15.35% in 2005 A level much lower than the world average of 62%, making China one of the countries with lowest tariff level for agricultural products

10 E. large scale rural labors transferred and increasingly rural emigrants. 223 million rural labors have left their lands and villages for non-agricultural sectors, which represents nearly half of China total rural labors. Rural outflow labors increased to 145 million in 2009 Over the past 30 years, China s urban population grew 400 million; current urban population has exceeded 600 million. Farmers wage income to their total incomes already exceeded 40%, being the largest proportion.

11 State timely adjusted policy on labor flow Since the late 1950s, the peasants were virtually excluded from the country's industrialization process. Since the beginning of reform and opening, the flow restrictions have gradually been shifted to the recognizance, acceptance and encouragement for flow.

12 Young people in rural areas are being absorbed According to a survey on 2,749 administrative villages, 74.3% villages claim that the young people who are available in their villages have all worked outside. Nearly 80% of the rural labors whose age under 30 has transferred to non-agricultural sectors.

13 F. Rural social safety net fundamentally established China adopts policy of exempting tuitions and charges for all rural students in rural areas, offering free text books, and living subsidies to whom they accommodate at campus. Implement new rural cooperative medical system, which already covers 94% of the rural population. Establish minimum living subsistence guarantee system in rural areas. By the end of 2009, more than 47 million people have enjoyed this system. Comprehensively initiate pilots for implementing new rural social security insurance for the aged, which will cover over 20% of China s rural areas in 2010.

14 Challenges for China s rural reform and development A. China s per-capita arable land is only 40% to the world s average. Water resource shortage is a severer problem than the land. Its level of per-capita water resource is only ¼ to the world s average. B. Urban-rural income gap is widening. The government meets great challenge for a sustaining growth of farmers income, and narrowing the urban-rural income gap. C. The fact of out-of-date infrastructures and insufficient supply of public service in rural areas has not changed significantly. There s still a wide gap between the social welfare levels in urban and rural areas. D. Population aging is more severe in rural areas than in urban areas. In the future, one farmer family will have to support 4 elders.

15 China s forwarding objectives and core policies for rural reform and development A. Ensure national food security Insist on relying on domestic production to guarantee food supply, and guarantee basic self-support of important food including grain. The self-support rate of grain will be stable at 95% over. Balance supply and demand mainly through increase domestic production. Focus on increasing per unit of grain yield, improve arable land protection system, grain subsidy and price support system, and strengthen grain reservation system.

16 Food security as central issue to the national agenda In the future, even if the nation completely liberalized all trade, economists in China forecast that by 2020 rice and wheat will still be almost fully produced in China. The nation will be a net importer of maize and soybeans. For biological energy development, strictly conduct the principle of land for grain,grain for people. It has been impossible for China to achieve self support of agricultural products such as soybeans and cotton by relying on domestic production. China needs to actively expand imports of shortage agricultural products, promote transnational agricultural cooperation and investment.

17 B.To stabilize and improve the rural land tenure Clarify land rights, strengthen the nature of land rights transaction, reduce local governments over reliance on land transfer revenues and land-related financing in urban expansion. Enhance legal protection for farmers land property rights. Ensure more reasonable compensation for farmers as land occupied in the accelerated urbanization and industrialization. Develop rural land market.

18 China Rural land tenure system Rural land is de facto owned by village collectives, which extend land use right to individual farm households. Households have most of the property rights: they can use, sub-lease and transfer land, but they cannot sell it.

19 C. Change agricultural growth pattern, improve science technology for production Promote self-innovation of agricultural science and technology, accelerate converting and using the output of agricultural science and technology, strengthen promoting agricultural technologies, and continuously promote the integration of agricultural technologies, mechanization of labor process, and informatization of production and operation. Accelerate the generalization of senior high school education in rural areas, focus on developing rural vocational education, and improve farmers skills for jobs.

20 Develop and promote Gene Modification Technologies China s gene-modified crop research is at a leading level among developing countries. Some programs are on international leading list. China s research technologies in respect of gene-modified rice, maize, potato, rape and pork are at leading level. China is implementing some national major S-T programs on GM for new species, hopefully with output of good species with application value and independent intellectual property.

21 D. Promote innovation for rural financial system Establish an inclusive rural financial system Promote accessing to rural financial market, develop a competitive rural financial markets Faster develop new rural financial institute, Micro credit and finance services, and explore new types of farmer cooperative credit organizations.

22 E. Create job opportunities in rural areas and promote Rural- Urban migration Reform public policies in respect of housing, social security, education and medical service. Accelerate transforming rural new-generation migrants to being permanent city residents, and for their social inclusion. Promote permanent Rural-Urban emigration through efforts of providing full and stable employment.

23 Most large developing countries meet challenges of job creation for rural areas and Rural Urban migration Of 11 large countries with more than 100 million population, only the two developed countries US and Japan have achieved agricultural modernization. One of the challenges facing developing countries with large population is that it is impossible for non-agricultural sectors to absorb numerous rural surplus laborers in the progress of agricultural modernization. After migrated to cities, large labors are not employed to formal sectors, resulted massive urban poor and slums. Over-growth of urban population will lead to over-urbanization, which directly leads to poverty in urbanization.

24 F. promote comprehensive development and social equity in rural areas Comprehensive, coordinated and sustainable development Well develop rural education, promote education equity Integrate programs for urban and rural employment, formulate equitable institution for urban and rural employment Develop rural medical and health system, facilitate basic medical and health services to each of rural dwellers. Improve social security level in rural areas, establish social security system covering both urban and rural population. Improve urban and rural housing system Ensure public finance covering rural areas, promote an equalization of basic public services provision to urban and rural areas.

25 A more equitable sharing of the fruits of development and reform for farmers China s new leadership presents five objectives for the development of social undertakings: To ensure that all our people enjoy their rights to education, employment, medical and old-age care, and housing. Fairness and justice are more glorious than the sun! --Premier Wen Jiabao

26 Thank you!