中欧社会论坛 - China Europa ForumIssues Relating to Agriculture, Farming & Rural Areas and Reflections of the Century
Authors: Wen Tiejun
Extract from ” SDX Joint Publishing Company, 2005“
If the micro study of farming problems, rural and agricultural economy, placed under the premise of a change in the national system as well as earth and environmental science constraints, are looked at from the macro-perspective of the national economic development, then the following assumption about the issues of studying the rural system can be formed: China’s problem is « the problem of a developing country with poor resources endowment, pursuing Western-led industrialisation through inward-looking means. » Discussing China’s problems concerning agriculture, farming and rural areas under this premise, apart from following Marx’s political economy in accordance with constitutional principles,the theories which ought to be drawn from and discarded are developmental economics and institutional economics. According to this premise, the author proposes a research path which constructs an initial cause-related developmental process:
For China, a country with limited per capita resources and a populous developing country with a highly-distributed natural economy, rural areas have been under the land system which is one of a « two-field system » and « separation of ownership » before liberation; the cause of rural decline and peasant revolt is the excessive deprivation of the small rural economy by business and financial capital during the process of commercialisation of agriculture.
Under the pressure of a sinister geopolitical international environment without an external market, especially after a state-owned militarised industrial base was formed when the former Soviet Union made large-scale investments in Northeast China during the Korean War,
China decided after cautious research against the original set path of new democracy in favour of replicating the strategy of industrialising the country with a priority on heavy industry. However, industrialisation of the country can only derive its primitive capital from agriculture. Transaction costs between the government and natural economies formed after land reforms were overly high. Hence the government utilised the agricultural land « property defects » system to launch the collectivisation of agriculture.
A restructured industry inevitably leads to an internal mechanism with « dense capital growth and exclusion of labour ». After the former Soviet Union stopped investing in China, China’s Second Five-Year Plan was stopped in 1958 and created a national deficit at the same time. Therefore, was the urban industry unable to create jobs, it also had to exclude the city’s new labour force, hence forming a dual structure with a urban-rural opposition including the « industry-agriculture difference ». This is the largest system cost left behind by China’s industrialisation period and it is also China’s basic structural contradiction. Under this constraint, rural population continued to increase but could only remain in the rural area, capital flowed into the city’s industry and agricultural resource endowment continued to deteriorate. Through the integration of the People’s commune and the government agency as well as the state monopoly for purchase and marketing, China can indeed enforce the completion of the « industry and agriculture exchange », to extract rural accumulations but increase agricultural cost at the same time, relatively lowering earnings; because the collectivised internal per capita agricultural surplus has reduced to an unsustainable simple reproduction after China’s extraction of accumulation, a distribution principle which guarantees the survival of the community population and the rights of members had to be established. This resulted in inflation in working days and a drop in the enthusiasm towards effective labour input. Rural debt has increased and China has lowered investment in the agricultural industry under the pressure of the increase in fiscal deficit.
Therefore, the withdrawal of the government’s investment is the main reason that rural collectivisation was not sustainable.
Since the implementation of the all-round contract system, rural residents have divided their land according to the community population. The household contract management system can be fomularised as « equalisation system + fixed rent ». As rural areas collectively replaced the government in the provision of rural public goods and took up the duty of commitment to the social security of rural residents, it embodied a long-term status of land collective ownership being the fundamental system, forming a small rural community system with Chinese characteristics and a two-tier structure of agricultural land ownership. However at the same time, there was a rise in industrialisation led by the local government. Accumulation was still extracted from agriculture and rural households had to operate two or more industries. There was fragmentation of land division, causing the conflict of high transaction costs between the government and rural residents to resurface. Rural public organisations expanded and the residents’ burden worsened. The flow or agricultural products and tax reform were unsustainable.
Positive and negatives experiences from 50 years of institutional change in China, 25 years of rural reform and 10 years of pilot areas has proven that only under the premise of the ability to re-establish sustainable development strategies, can urbanisation be sped up to change external conditions through intensifying rural reform, and at the same time, strengthening the internalisation of small rural community economies. Only by executing both of these elements is it possible to improve the rural economic structure under the premise of adjusting urban-rural relations, improve the scale of agricultural operations, as well as to realise the sustainable development of rural areas under the condition of a market economy.