The current goal of the central government is to benefit China’s 900 million farmers through development of a market economy, as there can be no harmonious society without the participation of its major body.

Sharing Economic Fruits with 900 Million Farmers

By staff reporter QIAO TIANBI

Noted sociologist Fei Xiaotong points out that China is earthbound, both in social structure and culture.

He Jingli is a farmer in Hubei Province. For the past three years he and his three sons have worked as casual laborers in the city, returning home just once a year at Spring Festival. In 2005, however, the four of them did not go back to the city. Instead they decided to stay at home and build a pond in which to breed crabs and eels on their 0.5-hectare farmland. “Taxes were high in the past that we were better off laboring in the city than farming,” explains He Jingli. “Now that we get to keep every cent we make from our plot, there’s no reason to leave home.” Today, after unprecedented civil legislation, 26 provinces, autonomous regions and provincial-level municipalities have abolished agricultural taxes. (They remain in force in Shandong, Yunnan, Hebei, Gansu and Guangxi.) This means that in 2005, 730 million farmers will be exempted from agricultural taxes worth more than RMB20 billion (US $2.4 billion).

In March 2003, newly elected Premier Wen Jiabao cited “backward agricultural development and slow growth in farmers’ incomes” as the main challenges facing his administration. He declared, “Our ultimate objective is to remove entirely the undue taxes and fees currently levied on farmers.” During the 2004 NPC and CPPCC meetings, Premier Wen announced, “As from the beginning of this year, we will gradually reduce agricultural taxes at an average rate of one percentage point annually, with the ultimate aim of abolishing them altogether within five years.” The primary stage of this goal has already been realized.

Trials and Tribulations of an Agricultural Giant

China feeds 22 percent of the world’s population on seven percent of its arable land. Bearing in mind, however, that 40 percent of the world’s farmers feed seven percent of the non-farming population, China’s small peasant economy generates low agricultural productivity. The core of the whole Chinese issue is farming, farming areas and farmers -- the so-called three Fs issue. Back in 1945, famous Chinese sociologist Fei Xiaotong published his English language work Earthbound China based on his observations of rural Yunnan Province. He concluded that China was earthbound not only in terms of national economy, but also in social structure, ethics and culture, pointing out that social turmoil in China has almost always related directly to rural crises. Mao Zedong’s deep understanding of rural issues and their appropriate solution enabled him and the Communist Party of China to triumph over the Kuomintang. Mao awarded farmers property rights to farmland, so winning their support. It was his “encirclement of the cities from the countryside” strategy that won the revolution and established New China

In 1949, Mao Zedong knew that if New China was to develop it must industrialize, and that a period of capital accumulation was prerequisite to this goal. The burden of this accumulation fell naturally on farmers. From 1953 to 1983, Chinese farmers contributed more than RMB600 billion (US $72.6 billion) to China’s industrialization through state monopolization of the purchase and marketing of agricultural staples, such as grain and cotton. China’s rural taxation system was formally established in 1958. Statistics from the State Administration of Taxation show that from 1949 to 2003, China’s agricultural tax revenue amounted to RMB394.6 billion (US $47.7 billion). Farmers supported the early stage of Chinese industrialization, but the accumulation earmarked for industrialization that they accomplished to a large extent deprived them of economic benefits and dampened their enthusiasm for farming.

Proudly showing their social security cards, these two seniors from rural Shanghai are grateful for the support local farmers get from the municipal social security network.

It was rural economic reform in 1978 that ushered in China’s reform and opening up. Between 1982 and 1986 the first document of the year issued by the central authorities concerned agriculture, and by 1986, the income of Chinese farmers had increased for seven consecutive years. It was in 1986, however, that China began urban economic restructuring, and government policy was directed towards cities. Farmers were again obliged to make sacrifices that would enable the Chinese economy to achieve and maintain a high growth rate. Although the per capita GDP in 2004 stood at US $1,000, the development of rural economy had meanwhile slowed down, and growth in farmers’ income had ground to a halt. This caused a greater-than-ever income gap between urban and rural residents, the disparity in their earnings often as much as seven folds.

Time to Support Farming

President Hu Jintao, Premier Wen Jiabao and the new central government have focused on solving social issues and conflicts arising in the course of stable and rapid growth of the Chinese economy. Since 2003, the central government has introduced a series of reforms and measures designed to benefit farmers who make up 70 percent of the Chinese population.

Earlier this year, the central government proposed greater efforts towards building a harmonious and just society. Ensuring farmers’ share in the fruits of industrialization, urbanization and modernization is vital for maintenance of sustainable, stable and coordinated social and economic development, and key to solving the three Fs issue. In his government work report to the 2005 National People’s Congress, Premier Wen Jiabao proposed overall abolition of agricultural taxes in 2006, and supportive policies for farmers who have yet fully to benefit from the market economy.

President Hu Jintao said that in the early stages of industrialization it is universal practice for agriculture to support industry and accumulate for its development. Upon industrialization advancing to an appropriate level, it then falls to industry and the urban economy to support agriculture and rural areas, thereby maintaining coordinated development. Rapid development of China’s industry and service trade in recent years has reduced the proportion of China’s agricultural revenue in the national treasury from 41 percent in 1950 to less than one percent in 2004. This translates to less than RMB 20 billion (US $2.4 billion). As in 2004, State revenue stood at RMB2.6 trillion (US $314 billion), the time had obviously come for China’s industry to support its agriculture.

A farmers' sports meet.

In 2005 the first document issued by the central authorities concerned agriculture. In it, they call for greater efforts towards agricultural tax exemption and subsidy for farmers; greater support for rural infrastructure construction and agrotechnological progress; greater financial subsidy for major grain producing counties; and greater input towards aid for the rural poor and development of rural social undertakings.

Professor Zhang Guangzhi, head of the Henan provincial agricultural department, believes that farmers’ exemption from agricultural taxes means more than merely relieving their burdens, as it will have far-reaching impact on political, economic, cultural and ideological life in rural China. He says that it will allow China’s rural reform to proceed on a broader scale, and lay a foundation for basic rural institutional restructuring, development of scale agriculture, and the building of a harmonious rural society.