Introduction to the special issue on “China’s agricultural development in global perspective”

Citation

Tian, W. and Zhou, Z. (2013), "Introduction to the special issue on “China’s agricultural development in global perspective”", China Agricultural Economic Review, Vol. 5 No. 2. https://doi.org/10.1108/caer.2013.40605baa.001

Introduction to the special issue on “China’s agricultural development in global perspective”

Article Type: Guest editorial From: China Agricultural Economic Review, Volume 5, Issue 2

Welcome to this special issue of China Agricultural Economic Review (CAER) on “China’s agricultural development in global perspective”!

Agriculture plays an important role in Chinese society. Although it has experienced remarkable growth in the past three decades, old challenges still remain and new challenges are emerging. The most striking challenge is how to transform it into a modern agriculture that can efficiently make use of domestic resources to produce agricultural products competitively in response to the changing global economic and political environment. Due to the overwhelming importance of Chinese agriculture, much attention has been given to its development in the past three decades by both Chinese researchers and scholars elsewhere. Published in this special issue are six articles addressing some of the important issues that affect China’s agricultural development.

The articles were selected from the 2011 Association for Chinese Economic Studies Australia (ACESA) International Conference on “China’s Growth and the World Economy”, 7-8 July 2011, Perth, Australia, and the 4th CAER – International Food Policy Research Institute (IFPRI) International Conference on “Transforming China’s Agricultural and Rural Sector: Challenges and Solutions”, 18-19 October 2012, Beijing, China. The selection of articles for this special issue was also open to authors who did not participate in these two conferences. Articles were selected based on the significance of topics and quality.

Since entering the twenty-first century, the accession to the World Trade Organization (WTO) has been one of the events that have had great impacts on China’s agricultural development. The impacts are multi-faceted, e.g. on the adjustments of agricultural structures, patterns of agricultural trade, agricultural employment, development of agricultural supply chains and perhaps, the most important one being rural income. All such impacts deserve research attention. Zhu et al. estimate the impacts of further trade opening up on rural employment. Although China’s exports of labour-intensive products have increased since accession to the WTO, the net impact has been the reduction in labour inputs in China’s agricultural production due to the fact that agricultural imports have grown faster. In other words, this has resulted in “creating” unemployed labour. Even worse, such negative impacts are more prominent in those regions that are major producers of China’s key agricultural commodities.

Following Zhu et al. are three articles that examine, from different perspectives, China’s rural-urban migrating labour and returning rural labour issues. Based on the Chinese Government’s Official Statistics, by 2011, altogether about 253 million of the labour force left agricultural industries, accounting for 47 per cent of the total agricultural labour force. Of these, about 159 million left their home town and migrated to other places to look for a job. Given that such a large number of the labour force have moved out of the agricultural industries, is there then still a labour force surplus to agricultural requirements? If so, what is the actual size? Answers to such questions are most valuable to the development of future agricultural and rural policies, because the size of the surplus labour and their effective utilisation crucially affect rural development and farmer income. Kuan et al. verify whether China has reached the Lewis point. Their study shows that there still exists a large amount of labour surplus to agricultural requirements. They point out that labour shortage as occurred in some urban areas in recent times was largely caused by some institutional factors rather than that the surplus labour in rural China has been exhausted. This contrasts with some other studies that claim that China has reached the Lewis point. Thus, further studies in this area are called for. Future studies should also pay attention to changes in the rural labour force in different regions.

Chen et al. focus on how workers who migrated from rural areas to urban areas get integrated into the urban environment. They discover that current institutional arrangements are the fundamental causes that led to large income and welfare differentials between migrating rural workers and existing urban residents. As such, how to ensure those new urban dwellers are treated fairly through some essential institutional reforms can play an important role in encouraging the rural population to migrate to urban areas. This in turn affects the scale of operations of remaining farmers and thus future improvement of China’s agricultural productivity.

Some studies believe that rural workers who have had experience working in urban areas may become entrepreneurs after they return to their home town (i.e. they bring back with them better human resources and capital which help to break the so-called efficient but poor peasant equilibrium as proposed by Schulz). The article by Wang et al. analyses employment choices by those returning rural workers. Wang et al. believe that, although non-rural working experience seems to improve general skills of those rural workers, it did not seem to have helped them to be more entrepreneurial. The sample used in this article may to some extent have affected its findings. Nonetheless, improving the business environment in rural areas and making it more conducive for entrepreneurs to start new businesses should receive more attention from the Chinese Government.

Due to the very limited land resources, further raising China’s agricultural output level will critically rely on effective enhancements of land productivity. Improving rural infrastructure is also crucially important as this improves farmers’ access to markets and reduces their production and living costs. The two articles by Liu et al. and Ma et al. address such issues. In recent years, the Chinese Government has increased its investment to improve rural infrastructure. However, the effectiveness of such investments rests on effective execution of intended infrastructure projects. Liu et al. find that village community governance importantly affects the quality of infrastructure projects. This suggests that only some policy guidelines from central government about how things should be done may be not sufficient. Attention should also be given to improving governance at the grass-root community level. In this regard, more efforts should be devoted to effectively promoting democracy at the village level and hence villagers can help village leaders to avoid corruption.

Ma et al. make use of household-level survey data to analyse the relationships between farmers’ perceived land tenure security and their decisions to invest in land improvements. They find out that perceived land tenure security significantly affects self-governed investments but does not affect individual investments in land quality improvements. (According to the authors, self-governed investments are those for which farmers make decisions within collective-choice arenas. This self-governing system identifies the investors and the benefiters of the investments as well as the size of the investments that each investor should make. Irrigation canal maintenance and improvement are examples. Individual investments may include terracing, planting green manure and land levelling. These investments are based on private decisions made by households. Although self-governed investments and individual investments are both fully funded by households, the factors driving them may be different due to differences in decision-making rules). Their results provide evidence that individual investments in land quality improvement contribute to higher perceived land tenure security. The Chinese Government has recently started to pay more attention to land tenure issues. Such research findings as by Ma et al. are valuable for China’s future efforts in rectifying land ownership issues.

The six articles dealt with different issues concerning China’s agricultural development with different approaches. However, they all point to the importance of institutional arrangements to further agricultural development in China. This suggests that, compared to increased expenditures on agricultural R&D and subsidies, further institutional reforms are crucial to promote an increase in farmers’ income and overall agricultural development.

Clearly, issues covered by these articles are limited and by no means exhaustive. There are many more important issues that affect China’s agricultural development and need to be addressed. For example, food security and trade, agricultural subsidy, food quality and safety, agricultural insurance, food wastes, agricultural R&D and extension, environmental pollution and protection, biosecurity, global environment for China’s agricultural development; and overseas opportunities for China to expand its agriculture. Unfortunately, articles addressing such important issues of acceptable quality were not available, in spite of our efforts in soliciting them.

One important issue that is worth particular mention is about future agricultural subsidy. Should China subsidise its agriculture? If so, how should such subsidies be carried out? What should be the policy objectives to be achieved? What kinds of operational mechanisms should be devised to ensure that the subsidy will be utilised most effectively and maximise China’s overall national welfare? Are there any legitimacy concerns of providing large amounts of subsidies given the WTO rules? If China starts to heavily subsidise its agriculture, could this be sustained? There have been efforts from Chinese researchers to address such questions. Many Chinese researchers believe that the Chinese Government should subsidise its agriculture and the only remaining matter is how to subsidise. There are two common justifications based on which some Chinese researchers promote agricultural subsidy in China:

1. 1.

   Too much has been taken from agriculture in the past several decades and now non-agricultural sectors have quite developed and the country has the financial ability to “return” some favour back to agriculture.

2. 2.

   Many other countries, especially developed countries, subsidise their agriculture and hence China should subsidise its agriculture to counteract possible negative impacts on China.

Such arguments are politically sound but economically naïve. Whether subsidies should be provided to agriculture needs to be assessed in terms of their impacts on the efficiency of resource allocation and the overall national welfare.

Assume that agricultural subsidies should be provided. Then, the question on how the subsidy should be provided needs to be carefully answered. Channelling subsidies to the hands of farmers may have short-term impact to stimulate output level but may indulge less efficient farmers to stay on land thus hindering the expansion of operation scale of those more able farmers. This then prevents the improvement of China’s agricultural productivity in the longer term. Alternatively, would using such subsidy funds to invest in rural infrastructure, or agricultural R&D and extension, or to help less efficient farmers to exit agriculture, be better options? Clearly, more efforts are called for to address such important questions.

In relation to agricultural R&D and extension, empirical studies of various countries have confirmed that return on such investments is high. The Chinese Government has in recent years significantly increased its investment in agricultural R&D and extension. However, much of such valuable investment has been abused or wasted for private gains by some individuals of R&D funding bodies and research institutions, and sometimes even by researchers. Reforms have to be carried out to make research funding arrangements transparent, accountable and effective. In this regard, how to make China’s agricultural R&D system be more efficient itself warrants research attention.

Despite the fact that only a small number of articles were chosen and a limited number of issues addressed, we still hope that the publication of this special issue will further stimulate discussions and debates among researchers and policy makers on various important issues and challenges facing Chinese agriculture. We hope such discussions and debates will encourage creative and constructive thinking, contributing to the formation of sound policies that will help China to deal with those challenges so that China’s agriculture can sustainably grow in the changing global environment.

Weiming Tian, Zhangyue ZhouGuest Editors