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Bridging the gap

By FU JING (China Daily)
Updated: 2008-11-10 08:08

At a time when the global financial meltdown and looming recession are capturing the world's attention, some have wondered why China's highest leadership still places rural development high on its work agenda by convening a close-door plenary among top decision-makers in October.

It's simple, really. Before the financial tsunami, food shortages, grain price hikes and starvation were plaguing the world and continue to do so. And the World Bank recently estimated that an additional 100 million people outside China have fallen into poverty because of rising food and energy prices.

Meanwhile, December sees China's 30th anniversary of reform and opening up and the central government believes it's time to design a roadmap for farmers to equally benefit from economic prosperity as their urban counterparts.

The worsening world economy is also forcing China to change its export-dependent model and tap the potential of vast rural regions in an effort to sustain three decades of growth.

Against the backdrop, the 3rd plenum of the 17th Central Committee of the Communist Party of China (CPC) on October 9-12 decided to respond swiftly to protect arable land, rekindle farmers' passion for planting crops, ensure self-sufficiency in grain supplies, bridge the rural-urban gap and push forward grassroots democracy.

"This is a policy stone from the highest leadership that is expected to kill several birds at the same time," Vice-Premier Hui Liangyu told a recent meeting.

As crises and uncertainties at home and abroad arrive in droves, Hui says, "We must bear in mind that agricultural harvests and rural stability are the base for us to cushion against external impacts."

Hui and the leadership are wise to safeguard the bottom line.

Last year, the total volume of global grain trade reached 250 million tons, nearly amounting for 40 percent of China's grain consumption. This means any increase of grain imports by China may cause global grain price fluctuations.

However, China has implemented a self-sufficiency policy for years with its grain yield exceeding 500 million tons last year after five consecutive harvests, and now it only imports 5-percent of grains it consumes. To balance grain trade, China also exported about 20 million tons of grains in 2007.

In face of its growing population, dwindling arable land and water supplies and climate change, the State Council has already approved a plan prior to the CPC's October plenary that the country would be 95 percent grain self-sufficient over the next 12 years.

In order to do so, the country should maintain a grain yield of 500 million tons by 2010 and reach 540 million tons by 2020, when the population is likely to hit 1.36 billion and 1.45 billion respectively.

The biggest challenge for the government is to find a solution to stop urban sprawl from seizing more arable land, says Lu Mai, secretary-general of China Development Research Foundation, a think-tank organization during a recent interview with China Business Weekly.

He urges efforts to ensure a minimum of 120 million hectares of arable land by 2020 and says the agriculture infrastructure and water facilities should also be improved.

At the end of October, the State Council ordered provincial governments to draw "red lines" to protect arable land in their domains.

China aims to keep its arable land at 121 million hectares by 2010 and no less than 120 million hectares in 2020, when the urbanization rate is likely to surpass 55 percent from current 42 percent.

"But it's difficult as local governments are still in a spree of urban sprawl," says Lu. "And very soon, China's expansion policy amid global recession may further rekindle the local government's enthusiasm in this regard."

Lu's concern is reasonable.

Urbanization and industrialization has resulted in a consistent decline in the country's arable land bank in recent years, which dropped to 121.73 million hectares by the end of last year from 127.6 million hectares in 2001.

Meanwhile, Lu says the government at various levels should protect the interests of 30 million farmers whose land has been seized in the name of urbanization and property development. "They are landless, some are jobless and their interests should be protected properly."

Hard to bridge gap

At the October plenary, the leadership also decided to double the farmers' per capita income by 2020 from that of 2008, a goal which the decision makers think is vital for social harmony and to reduce the urban-rural wealth gap.

This is a continued commitment made by the government. Since 2003, the government has taken many measures to improve rural infrastructure and productivity. In 2007 alone, the central government allocated 420 billion yuan from the treasury for rural development, a sum that is almost equal to total government spending in rural areas between 1998 to 2003.

This has injected life into rural development as it has created many jobs for surplus laborers. Following a 9.5 percent annual increase last year, the per capita income for villagers rose 10.3 percent in the first half of this year, the highest in four years.

However, compared with urbanites, the income level for farmers is still low. With the urban per capita net income at 13,786 yuan, against 4,140 yuan in the countryside, the ratio was 3.3:1 last year, the highest since China launched its reform and opening-up policy in 1978.

Meanwhile, there is a sign that the global financial crisis has started hurting Chinese farmers' incomes as many coastal factories have started to close or become idle. And meanwhile, the prices of global farm produce have begun to fall. In China, most rural households mainly rely on earnings from working as migrants in cities and income from planting crops is marginal.

This year, the annual income growth of farmers is likely to cross 7 percent but that is about 2 percentage points lower than the government target, says Song Hongyuan, an economist with the Agricultural Research Center of the Ministry of Agriculture at a recent forum in Beijing.

Song says the worsening external situation and global recession may further affect the farmers' wallets despite the fact that China's leadership has set an ambitious "double-income" plan by 2020 for them.

The financial turmoil and the global slowdown have caused massive unemployment in labor-intensive sectors and the external demand for China's agricultural products is also down.

"The country will also have a difficult time meeting its target of doubling farmers' income by 2020, taking 2008 as the base year," Song says.

To achieve that goal, the farmers' per capita income should increase at an averaged pace of 6 percent annually by 2020. But, for most of the time during past three decades, the farmers' per capita income has grown at a snail's rate, lower than 5 percent.

Actually, China has already had a timetable to help unify urban-rural development. By 2010, all rural regions should be covered by a basic social security system. And by 2020, China says it will unify separate urban and rural social security systems and the urbanities and farmers will enjoy the same prosperity brought by the fast-developed economy.

"But slow-paced income increase for farmers is still a bottleneck towards achieving the goal," says Lu Mai.

(China Daily 11/10/2008 page3)