Market Economy But Not Free Market System
- Preventing Food Overproduction and Improving the Environment in China
Jian-Ming ZHOU
Research Fellow, University of Florence, Italy
Post: 9 Via Roccettini, 50016 San Domenico di Fiesole, Florence, Italy
Fax: 0039-055-4685298, 599887. Email: Zhou@iue.it, Jmzhou46@hotmail.com
Abstract: Through the economic reform started in 1978, China had largely overcome
food shortage by 1984, which is still a challenge to many developing countries.
Furthermore, during 1995-99, food orverproduction has appeared, which has never
been resolved even by developed countries. China has prevented it from becoming
chronic, in combination with strengthening the environmental improvement, mainly
from mid-1999 on, by implementing a mixed economy, i.e., market economy plus
intervention of governments, rather than a laissez-faire free market system, and has
achieved initial success. The major measures and mechanisms are presented in this
paper.1
Key words: food shortage, food orverproduction, environmental improvement, mixed
economy, market economy, government intervention, laissez-faire free market system,
quantity reduction, quality promotion, variety perfectization, selective protection,
erodible cultivated land, forestry, grassland, lake land, wetland, Household Contract
System, excessive grazing, natural reserves, idleness of farmland and urban land,
afforestation, green agriculture.
1
This paper follows the author's FAO paper series on land consolidation and expansion in monsoon
Asia. Paper 1 {Zhou, Jian-Ming [1996] (1997)} introduced the monsoon Asia background, the Japanese
model which has been unable to conquer the fragmented small farms obstacle perpetuated by the
inefficient land-holding of part-time and absent small farmers, and the Chinese model which has found
effective ways to surpass this obstacle; the general follow of the Japanese model by those economies
under private land ownership, and the broad pursuance of the Chinese model by those economies based
on public land ownership. Paper 2 (Zhou, Jian-Ming 1998) raised two suggestions, and paper 3 (Zhou,
Jian-Ming 1997) proposed a new model for Japan and other economies under private land ownership.
Paper 4 (Zhou, Jian-Ming 2000) examined the Chinese ways of land consolidation and expansion in
detail. Paper 5 (Zhou, Jian-Ming 2001) inspected how appropriate large-scale farming has been
functioning in China, plus a theoretical consideration.
2
Through the economic reform started in 1978, China had largely overcome
food shortage by 1984. Furthermore, during 1995-99, China has achieved continuous
good harvests (see Table 1, numbers in italic and bold display the lowest and highest
levels respectively in the production fluctuation). By advancing from a chronic under- to
a temporary over-supply of food (as well as some other major agricultural products),
China has entered a new stage of development, as Ze-Min Jiang, President of the State,
declares in March 2000 (Jiang, Ze-Min 2000). On one hand, such an overproduction of
food was structural, i.e., with a mixture of over-supply of low, but under-supply of high,
quality of varieties (Lu & Zhao 2000). China's agriculture is generally speaking still
vulnerable to weather, and output could fluctuate owing to heavy natural disasters. Thus
Jiang stresses that one should never claim that the agricultural problem has been
Table 1 Per Capita Output of Major Agricultural Products (kg) in China 1978-99
Year
Total grain
Rice
Cotton
Oil crops
Meat
1978
316.61
142.25
2.25
5.42
8.90 *
1979
340.49
147.37
2.26
6.60
10.89 *
1980
324.77
141.75
2.74
7.79
12.21 *
1981
324.79
143.86
2.97
10.20
12.60 *
1982
348.73
158.97
3.54
11.62
13.29 *
1983
375.97
163.94
4.50
10.24
13.61 *
1984
390.30
170.82
6.00
11.41
14.76 *
1985
358.15
159.25
3.92
14.91
18.20
1986
364.17
160.19
3.29
13.71
19.65
1987
368.69
159.43
3.88
13.98
20.27
1988
354.94
152.32
3.74
11.89
22.33
1989
361.61
159.83
3.36
11.49
23.32
1990
390.30
165.60
3.94
14.11
24.99
1991
375.82
158.70
4.90
14.14
27.14
1992
377.79
158.93
3.85
14.01
29.28
1993
385.17
149.78
3.15
15.22
32.41
1994
371.38
146.79
3.62
16.60
37.54
1995
385.25
152.93
3.94
18.58
43.43
1996
412.24
159.41
3.43
18.06
48.33
1997
399.73
162.37
3.72
17.45
41.67
1998
410.46
159.21
3.61
18.54
45.86
1999
403.47
-
3.04
20.65
47.28
* Pork, beef and mutton only.
Sources: 1978-84: CSY 1993: 65, 330, 341. 1985-94: CSY 1993: 330; 1995: 354; 1999: 111,
3
fundamentally resolved, and agriculture's status as the foundation of the national
economy should never be neglected or shaken even in dozens of years (Jiang, Ze-Min
2000). On the other hand, however, China has indeed solved the problem of feeding the
population of the whole country by and large, and ascended a higher phase in which its
major task would not be to increase food output, but to prevent the temporary
overproduction of food from becoming chronic, and to improve the environment (SC
2000). Thus Jiang proclaims that the central task in this new stage is to carry out
strategic adjustment in the agricultural structures (Jiang, Ze-Min 2000).
Although this new stage has just started, the author has tentatively perceived a
new feature of the Chinese model of rural development: prevention of food
overproduction, promotion in quality and perfectization in variety of agricultural
products, and improvement of the environment, while strengthening development of the
Central and especially the Western areas, mainly from mid-1999. In so doing, China
has implemented a mixed economy, i.e., market economy plus intervention of
governments, rather than a laissez-faire free market system. The major measures and
mechanisms are presented below.
Reduction in quantity of grain and some other major agricultural products.
From 1998 on, the state has replaced planned targets for agricultural production, which
represent the centrally planned economy, by forecasting targets, that reflect market
economy and a respect to producers' autonomy and could guide local governments and
peasants in production. Following the decreased forecasting targets, in 1999, the area of
early rice in the whole country was actually reduced by 3,300,000 mu (220,000 ha)2, that
of winter wheat in the South by 5 million mu (333,333.33 ha), spring wheat in
Heilongjiang, Liaoning and Jilin provinces and Inner Mongolia Autonomous Region by
3 million mu (200,000 ha), low-yielding cotton in scattered fields by 9,700,000 mu
(646,666.67 ha), and sugar crops by 4,100,000 mu (273,333.33 ha) (Zhao, Cheng May
2000). At the beginning of 2000, the Ministry of Agriculture issued forecasting targets
of the year, cutting down output of grain by about 1.97% (10 million tons), cotton by
16.45% (630,000 tons), and aquatic products by more than 2.44% (over 1 million tons)
from their 1999 levels (Lu & Zhao 2000. SBNESDC [1999] 2000). The area of early
rice in 2000 declined by nearly 8% (over 9 million mu or 600,000 ha) compared with
1999 (Zhao, Cheng May 2000). In fact, in 2000, without causing any food shortage, the
grain sown area reduced by 90 million mu (6 million ha) from the 1999 level to 1,607
million mu (107.13 million ha) - the least grain sown area since the foundation of the
People's Republic of China in 1949, though population grew by 132% from 1949 to
1999, reflecting a healthy growth of yield and efficient use of agricultural land. It is
estimated that according to the current production capacity of China, 1,650 million mu
(110 million ha) of grain sown area would be appropriate for meeting the demand. Thus,
in 2001, the state has guided all regions to stabilize such area. (CNA 2001). Further
adjustment of the grain sown area would depend on the increase of the production
capacity in, and demand for, grain.
Promotion in quality and perfectization in variety of agricultural products. In
June 1998, the state stipulated that all grain sold by peasants was to be procured by the
state at the protective prices. Such an overall protection would however lead peasants to
produce products of low quality without good marketing prospects. Thus in June 1999 a
selective protection was initiated: the protective prices would be used to procure those
products with superior quality and good marketing prospects; for those goods with
2
1 mu = 0.067 ha, 1 ha = 15 mu.
4
inferior quality and bad marketing prospects, lower and eventually no protective prices
would be exercised. This selective protection would prompt farmers to produce goods
according to market demand and adjust structures of products while still enjoying
appropriate protection. (Wang, Chun-Zheng 1999: 2). At the beginning of 2000, the state
decided to pick certain unsuitable varieties of grain from the range of state procurement
under the protective prices, as promulgated by Prime Minister Rong-Ji Zhu (Zhu, RongJi 6 March 2000). In May 2000, the State Council ended its monopoly food procurement
policies by allowing and encouraging food-use and -sales enterprises (no matter whether
large or small), with the provincial government's approval, to directly procure those
foods still under the protective prices; permitting food-use and -sales firms, with the
prefectural and county government's approval, to purchase those foods no longer under
the protective prices; and encouraging farmers to sell foods produced by themselves,
without amount limit, in the rural trade markets (XHNA May 2000). In January 2001,
the state specified that public, private and individual food-use and -sales firms could,
with the provincial government's approval, procure foods from rural trade markets and
wholesale markets, and even directly from households in those rural areas without
convenient transportation (Du, Deng-Bin 2001). The State Council stressed the need to
further implement and perfectize the reform of the food circulation system (XHNA May
2000).
The State Council also called for the acceleration of the strategic adjustment in
the structures of agriculture and food production (XHNA May 2000). In fact, the area of
high quality early rice rose by 8,500,000 mu (566,666.67 ha) in 1999 over 1998; and
would expand by 9,800,000 mu (653,333.33 ha) in 2000, reaching more than 53 million
mu (3,533,333.33 ha), and accounting for about 50% of the whole area of early rice,
14% higher than in 1999. Since 1999, the ratios of cattle, sheep, and pigs with more lean
in the livestock have been raised; the productions of eggs and milk have grown by large
margins; and famous, superior, special and new aquatic products have increased by a
considerably big margin. (Zhao, Cheng May 2000). In reducing output of grain, cotton
and aquatic products in 2000, it has been emphasized that it is certain inferior varieties
of them which should be eliminated as soon as possible, while those superior ones
would be promoted (Lu & Zhao 2000).
The regional agricultural structures will accordingly be adjusted, as Vice
Minister of Agriculture Cheng-Guo Liu pronounces (Liu, Cheng-Guo 2000). The
Eastern regions and suburbs of large and medium-sized cities will develop export- and
city-oriented modern agriculture, producing more high value-added cash crops and
export-used distinctive goods. The Central zones are to give full play to their superiority
in food production, establishing large production bases for commodity grain, and food
special for processing and forage, with top quality, stable yields and superior economic,
social and ecological results. The Western and ecologically weak areas should accelerate
the development of agriculture with distinct features, superior economic, social and
ecological results, and xerophilous and water-efficient products conducive to protecting
the environment. Animal husbandry will be attached special importance, so as to
promote the transformation of grain products, structural adjustment of farming, and
development of foodstuff, wool spinning, leather, forage and other related industries.
Improvement of the environment all over the country, especially in the Central
and Western areas where the ecological system is much weaker. In June 1999, President
Jiang has announced the strategy of developing the Central and Western areas in a vast
scale (Li, Jian-Guo 2000), and in January 2000 the State Council further stressed to
implement this strategy by seizing the opportune moment that China has solved the
5
problem of feeding the population of the whole country by and large and faced a
temporary over-supply of food (SC 2000). All sectors of the national economy in the
Central and Western areas should be developed, but in agriculture the major task is to
improve the environment, and this task should also be fulfilled in the Eastern areas.
Converting erodible cultivated land back to forestry, grassland, lake land and
wetland. In China, there are more mountains and grasslands in the Central, further more
in the Western, than in the Eastern, part. In over 5,000 years, human beings have been
cutting trees and grasses and occupying lake land and wetland for producing grain (Zhu,
Rong-Ji 15 March 2000). In fact, a national survey found that by 31 October 1996,
4.66% of the cultivated land had a slope at or over 25 degrees, distributed with 6.4%,
17.1%, and 76.5% in the Eastern, Central and Western areas respectively (see Table 2).
As a result, soil erosion and desertification have been very serious in the Central, even
more in the Western, areas. For example, Sichuan Province is at the upper reaches of the
Yangtze River and full of high mountains and steep hills. In 2000, 70% of its total
cultivated land were on the slopes, and its soil erosion accounted for 40.87% of that in
the whole Yangtze River valley. (Liang, Xiao-Qin 2000)
During the 11 years from 1989 on, in the upper reaches of the Yangtze River,
over 9 million mu (600,000 ha) of the sloping cultivated land, and over 70% of the
steeply sloping cultivated land had already been converted back to forestry and grassland
respectively. By the end of 1998, in the middle and upper reaches of the Yellow River
where the soil erosion was the most serious and the ecological environment the weakest
in China and even in the world, conversion of the erodible cultivated land back to
forestry and plantation for water- and soil-conserving forests on waste mountains and
hills had covered 132 million mu (8,800,000 ha), while grassland converted from the
erodible cultivated land and with artificially planted grasses reached 36 million mu
(2,400,000 ha). (Jia, Quan-Xin 2000)
At the end of the 1990s, when China had reached the historic landmark – gaining
Table 2 Areas of Cultivated Land, That with a Slope at or over 25 Degrees, and Other Types of Land in
China by 31 October 1996
Country
Cultivated land
Cultivated land with a
slope at or over 25
Eastern
Central
Western
1,951,000,000 mu (130,066,666.67 ha)
28.4%
43.2%
28.4%
91,000,000 mu (6,066,666.67 ha)
4.66% of all cultivate land
6.4%
17.1%
76.5%
150,000,000 mu (10,000,000 ha)
-
-
-
3,414,000,000 mu (227,600,000 ha)
3,991,000,000 mu (266,066,666,67 ha)
-
-
-
-
-
-
361,000,000 mu (24,066,666.67 ha)
-
-
-
(5,466,666.67 ha)
-
-
-
9,949,000,000 mu (663,266,666.67 ha)
-
-
-
-
-
-
-
degrees
Garden plot
Forestry
Pasture
Residential, industrial,
& mineral land
Transportation land
Sub-total
82,000,000 mu
Waters & unused land
Source: National Survey [1996] 2000.
6
temporary food overproduction, the state further decided that peasants in the
ecologically weak areas, while receiving grain subsidy, gradually in a planned way
convert cultivated land including that with a slope at or over 25 degrees back to forestry,
grassland, lake land and wetland (Zou, Qing-Li 2000). In so doing, other areas could
continue to produce surplus grain, but it would be allocated to the ecologically weak
areas, so that the national food overproduction would accordingly be eliminated.
In March 2000 the state specified to convert 5,150,000 mu (343,333.33 ha) of
erodible cultivated land back to forestry in the same year in 174 counties of 13 provinces
and autonomous regions around the upper reaches of the Yangtze River and the middle
and upper reaches of the Yellow River (most of them are in the Western, some in the
Central, areas). For each mu, the state will, calculated according to the grain output and
costs per mu, subsidize 150 kg of grain at the upper reaches of the Yangtze River and
100 kg of grain at the middle and upper reaches of the Yellow River (each kg equivalent
to 1.40 yuan), plus cash 20 yuan for medical, education and other expenses to peasants.
The expenses of allocating and shipping the grain subsidy will be borne by the local
governments. The state will also subsidize 50 yuan per mu for seeds and seedlings of
trees and grasses to their producing firms; peasants, rather than being imposed the
varieties of such seeds and seedlings, may be given subsidies to buy them at their own
choices in the market (Zhu, Rong-Ji 31 July 2000). The length of subsidizing peasants is
according to the need, i.e., without time limit until they can stand on their own feet by
the returns from the forest fruits or other non-grain producing activities. The farmers
should plant and maintain trees on the previous cultivated land, and where the
conditions exist, also reclaim 2 mu (0.133 ha) or more of four wastes (waste mountain,
hill, beach and gully) for forestry. The Household Contract System applies, i.e., village
collectively owned land is contracted to households for operation; the contractors own
all trees and fruits and can dispose of fruits in the market after fulfilling their
responsibilities for the state and collective. The contract is for 30 years and renewable.
(CNA March 2000. Liang, Xiao-Qin 2000. PD 2000)
In addition to the state actions, many provinces, municipalities and autonomous
regions have made their own endeavor from their own budget. For example, Guangxi
Zhuang Autonomous Region converted 76,666 mu (5,111.07 ha) and 230,000 mu
(15,333.33 ha) of erodible cultivated land back to forestry for quick-growing fruits with
good marketing prospects in 1998 and 1999 respectively (Chen, Rui-Hua 2000).
* Halting excessive grazing in order to protect pastures. During the past
decades, increasing pastures have been desertified. Take the example of Inner Mongolia.
By the end of the 1990s, 145,800,000 mu (9,720,000 ha) or 23.5% of the whole area of
pastures have been destroyed. The area of usable pastures was less than that in the 1980s
by 124,200,000 mu (8,280,000 ha). The main causes - all related to population growth were: (1) Overload of pastures by excessive grazing. The effective area of pastures per
sheep declined from 49.5 mu (3.3 ha) in the 1950s, to 13.05 mu (0.87 ha) in the mid1980s, and 6.3 mu (0.42 ha) in the 1990s. The hunger sheep ate young grasses and
turned pastures to barren. (GD 2000). The destroying ability of goats to pastures is 20
times that of sheep, since they can dig and eat the roots of grasses even in precipices. (2)
Reclamation for grain production of pastures unsuitable for cultivated land. Without the
protection of grasses, such land was vulnerable to the invasion of desert. (3) Cutting
grasses for fuel. As a result, the northern deserts have approached Beijing, and the 12
sand storms - the most serious of the decades - in the spring of 2000 have even
threatened Shanghai in the South. (Shi, Yu-Wen 2000)
7
In 2000, farmers and herdsmen have been mobilized to not only convert the
erodible cultivated land back to grassland, but also halt excessive grazing by
slaughtering over raised livestock, and adopting animal husbandry in pens and stables.
Quickly growing and high quality varieties of sheep, goats and cattle have been
introduced in to replace the slowly growing and low quality ones, so that herdsmen
could decrease the numbers of livestock, but increase their sales, and also incomes. (GD
2000. Li & Tang 2000. Nie & Tang 2000)
* Stopping reclamation of forestry, grassland, lake land and wetland. For
example, Heilongjiang Province started reclamation of a region nicknamed
`Beidahuang' (meaning a vast Northern wasteland) at the beginning of the 1950s. By
1999, the region had acquired 30 million mu (2 million ha) of cultivated land, and
produced 8.5 billion kg of grain per year, hence becoming a `Beidacang' (a vast
Northern barn). In that year, the regional authority resolutely decided to stop
reclamation, so as to preserve the remaining forests, grasslands, wetlands, and wild
lives; to convert 2,700,000 mu (180,000 ha) of sandy, semi-sandy and inferior cultivated
land back to forestry, grasslands or fallow fields within three years; to appropriate 5
million yuan for enlarging and constructing the natural reserves; and to establish training
and monitoring programs for improving wetland ecology in joint venture with Japan.
The grain output of the region will not be affected because the authority has meanwhile
also carried out market-oriented adjustment of the agricultural structures and promoted
technological progress to raise yield. In fact, its grain output in 1999 has reached another
historic record - 9.05 billion kg. (Gao & Wang 2000)
Qinghai Lake in Qinghai Province is the largest inland salty lake of China. Its
water level was lowered, and the numbers of Huang fish (a special fish) and birds
decreased in recent decades. The Province started a seven-year fishing-forbidden period
in 1994, prohibited reclamation of grasslands around the Lake in recent years, and
implemented other environmental protection measures. As a result, in 1999 the water
level increased the first time since 1993, the numbers of Huang fish started to restore in
recent two years, and the quantity of birds grew by 400% since 1990. From the
beginning of 2000, the Province has started conversion of erodible cultivated land back
to grasslands, and a project invested by the state in over 5 million yuan to improve the
ecology by planting 5,000 mu (333.33 ha) of trees in the islands for birds, and
ameliorating retrograded grasslands of 20,000 mu (1,333.33 ha). (Liang, Juan 2000)
Guizhou Province is at the watershed of the upper reaches of the Yangtze River
and Pearl River. Its ecological environment is therefore vital to the middle and lower
reaches of these long rivers. Due to population growth, some peasants at outlying
districts carried out large areas of land reclamation for grain production, and thus
seriously destroyed vegetation, and strengthened soil erosion and natural disasters. In
August 2000, the Province decided to completely prohibit land reclamation for grain
production; convert cultivated land with a slope at or over 25 degrees back to forestry
and grassland; and transform medium or low-yielding cultivated land with a slope below
25 degrees to high- and stable yielding one. (He & Ding 2000)
* Establishing natural reserves for wild animals and plants. Contrary to
reclaiming forests, grasslands, lake lands, and wetlands for grain production, by the end
of 1999, China had established 1,118 natural reserves of various types including over
240 of those on wetlands, the total area being 1.2 billion mu (80 million ha or 800,000
square km), accounting for about 8.3% of the whole country’s territory 9,600,000 square
km. They have protected 85% of the total types of land ecological systems, 85% of the
entire races and colonies of wild animals, and 65% of the whole plant communities at
8
higher degrees. (XHNA January 2000). In Qinghai Province, the area of the natural
reserves has reached 50% of the whole area by mid-September 2000 (Chen & Zhang
2000).
* Recompensing cultivated land occupied by non-agricultural constructions with
reclaimed wasteland. At the mid-1990s, the state already prescribed that a dynamic
balance between the amount of cultivated land turned over for non-agricultural
constructions and that of cultivated land newly reclaimed from wasteland must be
reached in every province, municipality and autonomous region. At the beginning of
2000, the Ministry of Land and Natural Resources criticized seven provinces and
municipalities which still had not achieved such a balance in 1999, and requested them
to realize so in 2000. It reiterated that provincial governments must hold responsibility
to reject any application for non-agricultural construction by any working unit without
funding and feasible planning for reclaiming wasteland whose amount and quality
would be equivalent to those of the cultivated land to be occupied; to supervise the
reclamation; and to dig the cultivated land surface and move it to the reclaimed
wasteland if possible. (CNA April 2000).3 In February 2001, the Ministry further
proclaimed to implement the practice of recompensing cultivated land before its
occupation by non-agricultural constructions with reclaimed wasteland, through
establishing cultivated land reserves at provincial level (SQD 2001).
China has a great quantity of mining. Mining would ravage land not only
because its facilities would occupy land, but also, when the mineral has been dug out,
the land surface would cave in. Thus Article 18 of `Land Management Law' adopted on
25 June 1986 and enforced on 1 January 1987, stipulated that any land which is
restorable after mining or its surface has been taken, should be restored by the working
units or individuals that have used it (LML [1986] 1989: 29). The State Council further
issued detailed `Regulations on the Restoration of Land' on 21 October 1988, to be
exercised on 1 January 1989 (RRL [1988] 1989: 194-9). By 1999, 8% of the land ruined
by mining has been restored. But this ratio was still much lower than the prevailing one about 50% - in the advanced countries. China has thus strengthened work in this field in
recent years and established over 20 successful demonstration sites, e.g., Huaibei City of
Anhui Province, Tangshan City of Hebei Province and Feicheng City of Shandong
Province. (Qin, Jing-Wu August 2000)
Since July 1999, the Ministry of Land and Natural Resources has used the data
from the US and French satellites with resolving power of 30 and 10 meters respectively
to monitor - in an accuracy of over 90% - the dynamic change in land use of 66 cities
with 500,000 or more inhabitants. These cities account for 78.6% of the cities with
500,000 or more inhabitants and their area of the cultivated land makes up 19.5% of that
of the whole country. Applying the remote sensing data to check the land change
investigation results of 10 provinces and municipalities, the Ministry found that, while
most results were correct, a few districts hid the truth or did not make thorough
investigations. In one city, over 2,800 mu (186.67 ha) of cultivated land had been
occupied without approval. Now, all the 66 cities are utilizing the remote sensing data to
check their land use situation and correct errors. The Ministry will extend remote
sensing to larger areas. (Qin, Jing-Wu July 2000. Wang, Shi-Yuan 1999). In February
3
As it may no longer be possible to reclaim wasteland with a slope at or over 25 degrees for cultivated
land, a corresponding adjustment of this regulation would be to reach a balance between the amount of
cultivated land turned over for non-agricultural constructions, and that of cultivated land newly reclaimed
from wasteland with a slope below 25 degrees as well as that of forestry and grassland newly reclaimed
from wasteland with a slope at or over 25 degrees.
9
2001, this Ministry has announced to take the strictest measures (including both those
already adopted and to be implemented) to protect the cultivated land, and ensure that its
area will not be below 1,920 million mu (128 million ha) during the Tenth Five-Year
Plan period (2001-05) (SQD 2001).
* Preventing idleness of farmland transferred for non-agricultural
development and urban land turned over for real estate development. Article 21 of
`Regulations on the Protection of the Main Farmland' promulgated on 18 August and
implemented on 1 October 1994 by the State Council prescribed that, if a piece of
main farmland already approved for non-agricultural construction is not to be used so
within one year, it should be cultivated and harvested (if possible) by the original
collective or individuals, or by other farmers organized by the constructing unit; if it
has been idled for more than one year, the constructing unit should pay an idling fee;
if it has been continuously idled for two years without proper approval, the land
should be withdrawn to the original collective by the county government (RPMF
[1994] 1995: 14). Article 37 of `Land Management Law' amended on 29 August 1998
and exercised on 1 January 1999 further extended its application to all farmland and
ordained that such withdrawal of land is free of remuneration to the constructing unit
(LML [1998] 1999: 11 ). Similarly, the state has also prohibited idleness of the stateowned urban land transferred for real estate development. Article 25 of `Management
Law on Urban Real Estate' announced on 5 July 1994 and enforced on 1 January 1995,
decreed that the government can impose an idling fee on the real estate developer if
the construction has not started one year after the date specified in the contract, and
withdraw the land free of payment if it has been idled for two years (MLURE 1994:
23).
* Strengthening afforestation. At the beginning of 2000, China declared that in
contrast to the downsizing trend of the forest resources of the whole world, both area
and storage quantity of forests in China have been continuously increasing (Wang, ZhiBao 2000), and 12 provinces and autonomous regions have made all their afforestable
waste mountains green. The ratio of land covered by forests to the whole land has been
raised from 8% in 1949 (Li, Liu & Zhang 2000) to 15.12% in 1993 and 16.55% in 1998
(Zhao, Cheng June 2000). After the heavy flood in the summer of 1998, the state firmly
stopped lumbering in the upper reaches of the Yangtze River. At the beginning of 2000,
the state further put forward that (1) in the upper reaches of the Yangtze River and the
middle and upper reaches of the Yellow River, natural forests should be protected,
afforestable waste mountains and land be made green, and cultivated land on steep hills
be converted back to forestry and grasslands; (2) in the dry, windy and sandy Northwest
and Northwesternmost zones, anti-desertification projects be strengthened; (3) in the
Northeasternmost and Inner Mongolian regions, lumbering be changed to forest
maintenance; and (4) in the Eastern and Central areas, quick-growing and high-yielding
timber, forests for industrial use, and famous, special, new and superior varieties of cash
fruit forests be developed (Zhao & Zhou 2000).
The state also encouraged foreign businessmen to invest in afforestation. A
new regulation in 2000 stipulated that the maximum land use period for foreign firms
and individuals to invest in afforestation would be 50 years; foreign businessmen
investing in afforestation could apply for loans with deducted interests; and 80% of the
forest-raising funds collected by the county governments could be fed back to foreign
businessmen for afforestation. (CMJ 2000)
* Substituting tree-cutting with forest tourism and services. For example, Li-Min
Zhang of Tiantang Zhai Tree Farm of Luotian County of Hubei Province lived by tree-
10
cutting before 1999. In that year, he turned to guide tourists and sell them foods in the
Farm and earned over 3,000 yuan. In the same year, the Farm received 20,000 tourists,
gaining economic benefits equivalent to those from tree-cutting in a whole previous
year. In the Province, there are already nearly 100,000 persons like Li-Min Zhang who
have left poverty for richness through forest tourism and services. (Liu, Hui 2000)
* Developing pollution-free green agriculture. For instance, Jiangxi Province
enjoys suitable temperature, full of sunshine, and abundant rainfall as favorable natural
conditions to develop pollution-free green agriculture. Under the promotion of all levels
of governments, in recent years, water- and soil-conserving forests and grasses have
been grown, cash fruit forests planted, and terraced fields re-arranged in scientific ways.
In 1999, 343,000 mu (22,866.67 ha) of land with soil erosion were harnessed; firewoodand coal-efficient stoves popularized; and methane-generating pits (in which human and
livestock excrements are kept to yield methane for heating, cooking and lighting thus
saving firewood, coal and electricity, and then used as manure for fruits, vegetables and
fish, that in turn would be consumed by human beings and livestock, hence a sanitary
ecological chain) kept by 8.92% of the total rural households. These pits could per year
lead to the production of 660,000 domestic animals, 200,000 tons of vegetables, and
190,000 tons of fruits, direct economic benefits of about 1 billion yuan, and saving of
firewood equivalent to a quantity yielded by 3 million mu (200,000 ha) of fuel forests.
As a result, the ratio of land covered by forests to total land reached 53%, leading in the
whole country. Peasants further changed from highly poisonous to biological, slightly or
non poisonous new pesticides, and used advanced technology to reduce the times of
pesticide application, thus greatly cutting down their remnants. At the beginning of
2000, farmers eagerly purchased special fertilizers, composite fertilizers, and new
pesticides, increasing their sales by more than 10%. Transformations of the present
varieties of grain, oil, pigs, vegetables, melons, fruits, etc. have been made in order to
produce new brands of high quality, local, special, pollution-free green agricultural
products. In 1999, 21 types of green foods were developed, equivalent to the sum in the
previous 10 years. The pollution-free vegetables of Yangzizhou High Technology
Garden of Nanchang City entered the supermarkets of the City. Biyun (meaning white
clouds in a blue sky) japonica rice won a large share of the coastal markets. The price of
Dazhang Mountain Tea was three-four times that of ordinary ones, but sold well even in
the European Union. (Ou & Yan 2000)
A brief theoretical discussion. In merely about 20 years from 1978 to 1999,
China had first overcome food shortage, a challenge still facing many developing
economies and even developed ones. For example, Japan once reached food selfsufficiency in 1960, but since then has been unable to maintain it without huge
government subsidies mainly owing to the persistent inefficient land-holding (land
under-utilization and idling) by part-time and absent small farmers seeking higher offfarm incomes, as analyzed in paper 3 (Zhou, Jian-Ming 1997) of the author’s FAO paper
series. China has then also prevented food overproduction, a task even developed
countries have never fulfilled. Here it would be interesting to re-visit the observation of
the Nobel Economics Prize gainer Schultz ([1964] 1983: 20-1) that `The breakthrough
in agricultural production centers on Japan. China, despite its massive program to
expand agricultural production, is in real trouble'. This should be correct for the first
breakthrough in sustainable rural development of monsoon Asia in 1960 (shattering the
vicious circle of rural poverty by Japan). However, China has not only crushed the
vicious circle of rural poverty during 1978-84, but also achieved the second
breakthrough (overcoming the fragmented small farms obstacle maintained by the
11
inefficient land-holding of the part-time and absent small farmers in the mid-1980s), and
the third one (preventing food overproduction at the end of the 1990s). Thus, the same
observation would still be true as long as the names of the two countries are exchanged.
The theoretical consideration at the end of paper 5 (Zhou, Jian-Ming 2001) of
the author’s FAO paper series has already pointed out that the land tenure system of
China has played a key role. On one hand, China’s village collective land ownership
could reduce/eliminate the individual bargaining power, so that the land inefficiently
held by the part-time and absent small farmers could be transferred to the remaining fulltime farmers for more efficient use and benefiting from economies of scale. On the other
hand, the large-scale farming has been promoted gradually following the development of
the off-farm activities which has increasingly absorbed surplus peasants, rather than
crowding out those small farmers who still rely on land from agriculture. The
arbitrariness and corruption of village officials could be controlled in democratic ways
as they are subject to the elections by villagers, and the change of the land contracted to
households requires a two-thirds majority agreement of the villagers or their
representatives.
In this paper, we have further seen that as a result of more efficient use of land,
surplus food could be produced. This has created a necessary condition for the state to
allocate the surplus food produced on the normal land as subsidies for the peasants in the
ecologically weak areas to convert erodible cultivated land back to forestry, grassland,
lake land and wetland.4 In this approach, not only a national balance between food
supply and demand could be reached, food overproduction prevented, but also the
environment could be improved. Here again, the land tenure system plays a crucial role,
as the public ownership of land empowers the state to mobilize peasants to adjust the
land use for the fundamental interests of both the peasants and society. But the state did
not abuse the power from the public land ownership. In fact, as we have seen in this
paper, the mechanism the state has adopted is a mixed economy, i.e., market economy
plus government intervention, as a third way between the centrally planned economy
and laissez-faire free market system.
It is along such a third way that the Chinese model of rural development has
advanced from overcoming food shortage to preventing food overproduction, and
realized the essential goals of sustainable agricultural and rural development as
defined by FAO: `Food security, to be obtained by ensuring an appropriate and
sustainable balance between self-sufficiency and self-reliance; employment and
income generation in rural areas, particularly to eradicate poverty; and natural
resource conservation and environmental protection' (SDD-FAO 1995: 1). In contrast,
in the Japanese model under private land ownership, due to yielding to free market
forces, the land inefficiently held by part-time and absent small farmers could not be
smoothly transferred to the remaining full-time farmers, who as a result have had to rely
4
Agriculture in a broad sense includes cropping (farming), animal husbandry, fishery, forestry and hunting
(whose importance has declined due to environmental protection), but in a narrow sense may only refer to
cropping. It is important to note that China’s grain subsidies for peasants to convert erodible cultivated
land back to forestry, grassland, lake land and wetland are yielded from grain agriculture, hence a selfreliance within agriculture. This is different from using industrial profits to subsidize agriculture in
many developed countries. In fact, according to the World Trade Organization, the government subsidies
which would distort trade include market price support measures, direct production subsidies, input
subsidies, etc. The minimum allowed level is 5% of the total value of production of the agricultural product
in question for developed countries, and 10% for developing countries. (WTO 2000). China is the largest
developing country of the world. However, by January 2001, the government trade-distorting subsidies
have been at only 2% (EIN 2001).
12
on the huge government subsidies derived from non-agricultural sectors, which then led
to rice overproduction, that further required government subsidies to reduce, hence an
unsustainable agricultural and rural development.
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