Plot development

How do you encourage tens of millions of farmers to move to the city each year?

Counter-intuitively, the Chinese government seems to think that the answer is to guarantee them their land rights back home.

As part of China’s urbanisation drive – the largest managed migration of people in human history – millions of people who draw their livelihoods from small plots of agricultural land will be encouraged to sever that connection and take up jobs in urban areas.

One of the desired outcomes: that the land can then be consolidated into larger more productive farms.

However, under the various pilot schemes currently in operation, the migrant farmers ultimately retain their rights to the land should they ever want it back.

Take the scheme in several villages around Jiaxing city in China’s eastern Zhejiang province. Since 2009 farmers there have been able to rent their land out to a professional agricultural firm in exchange for an apartment in the nearest town and a yearly stipend.

The contracts are usually for 30 years. After expiry, the farmer can renegotiate the terms or – in theory at least ­– return to work the land himself.

Of course the government hopes that isn’t going to happen. “The development of China’s rural sector has entered a new stage along with the deepening of industrialisation and urbanisation,” the government’s ‘number one’ policy document – released in January – claimed.

As regular readers of WiC will know, the Chinese government sees ongoing urbanisation as a way of preventing the economy from falling into the middle-income trap – a stage of development in which most of the population has been lifted out of poverty but in which the GDP growth required to take the economy to the next level is missing.

Why so? Economists say that China is losing its lead as a cheap manufacturing base but is not yet strong enough in services nor innovative enough to capture the value in higher end production. But Premier Li Keqiang – China’s urbanisation tsar (see WiC186) – has said repeatedly that moving people to the cities will both improve the living standards of those migrating and provide the domestic demand to keep powering the economy forward.

“As a whole, our country still trails developed countries, and even the world’s average level in terms of urbanisation,” Li said in comments published on China.cn.org, a portal run by the State Council Information Office.

“Related statistics show that the urbanisation rate of developed countries has reached 80%, and some developing countries – with similar average income levels to China – topped 60%,” he added.

China’s urbanisation level is at just over 50%, according to the National Bureau of Statistics.

It’s not that people don’t want to move to towns and cities. At least 250 million Chinese have already done so unofficially. But because they are still classified as rural citizens under China’s household registration system (hukou) they are denied access to urban social services.

The Jiaxing model, which is now being rolled out across the wider prefecture, allows people to change their hukou for the duration of the contract.“In the past, there was resistance to land transfer because of two things: firstly, the farmers worried about their income and social security and secondly, they were concerned about getting their land back when the contract is over,” was the verdict given by Xiang Zhangwei, a former farmer, to the Economic Observer.

Xiang transferred all of his land to an agricultural company called Green Bridge back in 2008 and pretty soon the rest of the village followed suit, the newspaper said.

This has allowed for the farming of larger fields and the adoption of heavy-duty farming machinery such as combine harvesters and fruit pickers. Yields have also gone up, a spokesman for the company said.

Most agricultural land in China is still divided up into small family-tilled plots of less than a hectare, which limits productivity.

A report from the Chinese Academy of Sciences last year said that farming in China was over a hundred years behind that of the US, Japan and Europe on several key indicators. Tractor usage is a quarter of that in developed countries, for instance.

Farming’s contribution to GDP is also only 10%, despite providing employment to almost 40% of the population. “China cannot reach the level of agriculture in the developed world this century if it continues with its old policies,” the report concluded.

At the core of these policies is the Household Contract Responsibility System introduced 30 years ago. It divided most of the agricultural land into tiny plots. Initially the reform did lead to improved yields because farmers were allowed to sell their excess produce, something that had been forbidden under the former system of collective farming.

Now the goal is more farm consolidation, although some have argued that it is better to keep holdings in the hands of individuals rather than put it in the care of corporations.

Dr Jia Xiangping from the Centre for Chinese Agricultural Policy told WiC that there is “some nervousness” around allowing corporations to rent land directly. But he also pointed out Li Keqiang has frequently referred to the “family farm” – similar to European farms in size and management – as the way forward.

Indeed, as Dr Jia suggests, the direction of agricultural policy is yet to be set in stone. “Don’t look for the final details. They are still consensus-building at the moment,” he said.

But Jiaxing will definitely be one of the models to get serious attention.

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