Observations and Reflections on the "Hollowing Out" of Rural Collective Economies
Hard to Get Things Done Without Money, Services Can't Keep Up
-- Observations on the "Hollowing Out" of Rural Collective Economies (Part One)
Currently, the "hollowing out" of collective economies in some rural areas of western China has become the norm, affecting the development of village-level public welfare undertakings and the supply of public services. Yet China has not yet established a public finance system covering both urban and rural areas, and a large number of livelihood needs in rural areas still rely on the already weak village collective economies.
The embarrassment of "hard to get things done without money" makes it difficult for many villages to change their backward development in the short term.
Infrastructure Hard to Develop, Public Services Hard to Provide
Investigations by Ban Yue Tan reporters found that the majority of rural collective economic organizations are villages with no operating income or low income. These "hollow villages," relying only on a small amount of fiscal transfer payments, find it difficult even to keep grassroots organizations running, let alone develop rural public welfare undertakings and provide services to farmers.
The "hollowing out" of collective economic organizations is concentrated in the difficulty of developing rural public welfare infrastructure and providing public services. Recently, Ban Yue Tan reporters visited Daxi Village in Fuling District, Chongqing, where almost every household had emptied out. At the simple village public service center, Village Committee Director Zhou Dewu admitted that in poor villages and hollow villages like Daxi, developing public infrastructure is doubly difficult.
"Village collective income comes from only two sources: a tea factory transferred 80 mu of collective land, with annual rent of 2,000 yuan; the reservoir has an annual contracting fee of 1,500 yuan. With just over 3,000 yuan a year, what can we accomplish?" Zhou Dewu said. To improve the village appearance, the village sought government projects and set up a centralized farmers' residential area, but the supporting facilities such as landscaping, public toilets and recreational facilities required more than 800,000 yuan. Government project funds provided nearly 400,000 yuan in subsidies, leaving no small gap.
"Besides government investment, where else can we raise money for public facilities like new farmer villages?" Zhou Dewu said. Due to the large funding gap, many supporting facilities are incomplete, and the farmers who moved in find life inconvenient and are dissatisfied.
To promote rural public welfare undertakings and infrastructure construction, the government has in recent years continuously increased investment in water conservancy, roads and industrial development, but fiscal input only covers project construction. Follow-up management, maintenance and sustained operation still require villages to raise funds themselves. The "hollow" state of rural collective economies means villages have no money to invest and cannot afford to invest, so rural pro-farmer projects often end up "with no one to manage them, no money to manage them, and difficulty in delivering long-term results."
In Feixiandong Village, Fengdu County, Chongqing, to solve the villagers' "difficulty in accessing drinking water," the county water conservancy department installed more than 10 km of household water pipes. But because the village had no routine maintenance funds, within just a few years some water intake points leaked and had to be abandoned, and some pipe networks became blocked, cutting off water to farmers' homes. Village Party Branch Secretary Peng Ruihua said that there are now many pro-farmer projects, but the village cannot afford maintenance funds, so projects "land" but the benefits to farmers do not last.
"Funds Need 'Begging,' Sometimes Village Cadres Advance the Money"
On one hand, the "hollowing out" of village collective economies makes it impossible to bear the demands of public undertaking development; on the other hand, facing the real needs of the people to improve village appearance and service levels, some villages have no choice but to go around "begging" for funds.
During the whole-village poverty alleviation process in Baiguo Village, Fuling District, Chongqing, 8.8 km of village roads were built at a cost of more than 1.3 million yuan. The government provided a fixed investment of 1 million yuan, leaving a funding gap of nearly 300,000 yuan. The village could not afford it, so village cadres had to approach the district civil affairs bureau to request financial support.
Township governments are also important targets for village "begging." A local cadre in a township in Chongqing told reporters that in 2014 the township renovated more than 160 ponds and reservoirs, with average fiscal input of more than 50,000 yuan per pond, while actual construction cost required more than 60,000 yuan per pond. For this alone, the township finance had to "cover" a cumulative total of more than 1.5 million yuan. This township's local grassroots financial strength was considered relatively strong, and it could barely support the village public infrastructure funding needs. Some townships with weak finances simply had the will but not the means.
With no doors to "beg" at, village cadres had to dip into their own pockets to advance funds. Baiguo Village Party Branch Secretary Yang Jian said that previously the village's financial strength was very weak, and to carry out construction, it owed more than 400,000 yuan in debt. Building the village public service center, after deducting government subsidies, still left a gap of more than 100,000 yuan, so he had to take out a personal bank loan for the construction.
Poor Management and Lagging Reform Constrain Collective Asset Development
At present, whether based on resource endowments or operational reality, growing rural collective economic organizations remains quite difficult. Reporters interviewing in western rural areas found that in recent years, through developing resources and revitalizing assets, rural collective economic organizations in various places have achieved certain results, but overall, rural collective economic strength remains weak, and the total volume of assets that can be disposed of or operated is not large.
The rural management system is also not smooth, affecting the enthusiasm for village collective asset disposal and operation. Currently, most administrative villages use the village Party branch and village committee to replace the village collective economic organization in exercising collective asset management and operation functions. "Village" and "enterprise" are not separated, and the functions of the village Party branch and village committee and village collective asset management overlap. For the village Party branch and village committee, daily administrative affairs such as grassroots Party organization construction and community public management services are already complicated, revitalizing village collective assets has not been included in the performance evaluation of village cadres, and there is no incentive mechanism or effective supervision mechanism.
At the same time, unclear rural collective property rights mean that rural collective asset disposal and operation also lack policy support. According to statistics, most village collective economic organizations in Chongqing have not yet carried out property rights reform. Traditional property rights subjects are nominal, and property rights are blurred. There are institutional obstacles to the use, investment and development of collective assets. Members of rural collective economic organizations nominally have "a share for everyone" in collective assets, but in reality "no share for anyone," which is not conducive to the standardized operation of rural collective economies.
Village-Level "Hair-Strung Debt" Reflects the Development Predicament
-- Observations on the "Hollowing Out" of Rural Collective Economies (Part Two)
To maintain operations and carry out construction, some villages in rural China have incurred varying degrees of debt. These small and scattered "hair-strung debts" are like a mirror, directly reflecting the current predicament in the development of collective economies.
Construction Debt: A Love-Hate Relationship
In recent years, the state's support for rural areas has grown ever stronger. Projects such as new rural construction, rural roads, industrial support and rural tourism all adopt the approach of "the state gives a little, the city and district/county match a little, and the village raises a little." But against the background of the "hollowing out" of rural collective economies, inability to contribute matching funds, and difficulty in carrying out "one case, one discussion" mass fundraising and labor contribution, for some villages the use of state pro-farmer funds has become a "dilemma": getting a project may mean going into debt.
Recently, Ban Yue Tan reporters visited more than 10 administrative villages and found that most of these villages had varying degrees of debt burden, with the largest over a million yuan and the smallest 100,000 to 200,000 yuan. When asked about the sources of debt, one reason was still rural construction debt. For some village road hardening projects, government finance generally subsidized more than 50,000 yuan per km, while actual construction cost was generally more than 70,000 yuan per km. The gap in between needed to be raised by the village. During interviews, some village cadres told reporters that for infrastructure like village roads, if it was impossible to get farmers to contribute funds and labor through "one case, one discussion" and they still wanted to get the project done, they had no choice but to borrow money for construction.
"Other villages borrow money for construction, but our village can't even borrow money, because the village has no income at all. Maintaining operations depends entirely on government subsidies. We can't repay loans, so who would be willing to lend to us?" During an interview in a certain village, a cadre told reporters that the village could not raise money but still wanted pro-farmer policies to land, so sometimes project quality had to be compromised. When this village was lifted out of poverty as a whole in 2014, 5.5 km of village access roads were hardened, but because the fiscal subsidy standard was low and the village could not afford to contribute, the per-unit funding intensity did not meet requirements, and project quality problems emerged. The village Party secretary took reporters to inspect the road on site and said that because the cement grade was insufficient and the paving thickness inadequate, the road surface now "blisters," dust flies everywhere when vehicles pass, and there are potholes all over.
When visiting another village, reporters also found a similar phenomenon. This village newly built 11 km of village roads, but also because of insufficient funds, the road width was only 3.5 m, enough for only one vehicle to pass, which the villagers jokingly called a "one-way street."
Muddled Bad and Doubtful Debts
Besides construction debt, some village-level debt arises from agriculture-related policies or the village collective economic organizations' own development problems. In particular, some villages still have unclear historical debts that no one dares to write off, and no one has the authority to write off, becoming "bad and doubtful debts" that cannot be resolved.
During interviews, some local agricultural cadres said that one type of debt is historical policy debt: before the agricultural tax was abolished, farmers seriously defaulted on the collective "three deductions and five unified charges." To collect the unified fees and agricultural tax, townships and subdistricts issued measures requiring cadres' wages to be "linked" to tax and fee collection and applying a "one-vote veto." Some villages had to borrow money to advance payments. In some places, the debt formed by borrowing to advance payments even reached more than 10 million yuan.
At the same time, during the cleanup of some rural "three capitals," it was also found that some villages had off-book accounts and debt beyond debt. A small number of village cadres, when going out to handle affairs, put on airs and competed over pomp, spending lavishly and creating many muddled debts. Reporters once interviewed in a certain place and found that an administrative village had a "food and drink debt" of nearly 10,000 yuan that had passed through the hands of three successive groups of village cadres. The current cadres could not explain how the debt had been incurred, and every time the village finances were cleaned up, it had to remain on the books. Creditors often came to the village committee with IOUs to demand repayment, and the current village cadres could only put them off, saying, "Whoever owes it, ask them for it," turning it into a "bad and doubtful debt" dragged out for more than 10 years.
Local cadres admitted that rural "muddled debts" are still due to lax revenue and expenditure management of village-level collective economies and the lack of effective constraints. Many cadres believe that village-level debt falls within the scope of villagers' self-governance, and that the less trouble the better. The more you manage, the more troublesome it becomes. At the same time, villagers' supervision of village-level debt is weak, their due rights have not been fully respected, and it is difficult for them to question and supervise abnormal revenue and expenditure in village affairs disclosure. Village democratic financial management and democratic supervision become formalities and go through the motions, which also creates obstacles to cleaning up and resolving village-level debt.
Supervise and Control Village-Level Debt Within a Reasonable Range
During interviews, some industry insiders believed that debt in rural collective economic development is a normal phenomenon. The key is to have a sound regulatory and disposal mechanism for debt. It is necessary to clarify responsibilities, start with the easy and then the difficult, and handle matters according to law and regulations and by category. As the main body of this work, village-level organizations should strive to resolve debt through increasing income and reducing expenditure, revitalizing existing assets such as collective forest land, waters, real estate and land, and disposing of idle assets.
Experts suggest increasing rural fiscal investment, reducing or canceling the requirement for village and township matching funds in rural support projects, and adhering to the principle of planning first when implementing rural infrastructure construction and public welfare undertakings, doing what is within one's capacity while striving to do one's best, avoiding new debt, and enhancing village-level organizations' ability to resolve debt. At the same time, a "four-in-one" village-level financial supervision system should be established, comprising village-level democratic supervision, township accounting supervision, government audit supervision and real-time online supervision, to strictly control the growth of village-level debt.
Revitalize Stock, Do Well in Increment, Make the "Cake" Bigger and Seek a Way Out
-- Observations on the "Hollowing Out" of Rural Collective Economies (Part Three)
How to solve the "hollowing out" of rural collective economies is being explored in various places. In many villages in Chongqing, village-level debt has been decreasing and collective income increasing in recent years. Examining the reasons, it is not hard to find that the key to these villages' enhanced economic strength still lies in reform. First, revitalize stock: rely on reform of the rural collective asset property rights system to consolidate the cornerstone of long-term collective economic development. Second, do well in increment: by smoothing urban-rural interest mechanisms and building a platform for urban-rural resource interaction, truly realize "cities leading villages and industry promoting agriculture."
Property Rights Reform Straightens Out Interest Relationships
In many places, especially in the more economically developed urban-rural fringe, one important reason why rural collective economic organizations previously found it difficult to become bigger and stronger was the chaotic property rights relationships in the collective economy and weak supervision.
To make the collective economy "cake" bigger, one exploration in Chongqing is to straighten out property rights relationships. By revitalizing stock and implementing reform to quantify collective asset equity, it guarantees from an institutional level that the collective economy can become bigger and stronger. In areas such as Jiulongpo and Shapingba in Chongqing, many rural collective economic organizations have also carried out equity quantification and confirmation of village existing funds and assets, establishing a governance system with "clear property rights, clear rights and responsibilities, and improved governance" to achieve value preservation and appreciation. In some villages, farmer shareholders can receive annual dividends of more than 10,000 yuan.
Gonghe Village in Huayan Town, Jiulongpo District, on the urban fringe, faced exactly this "threshold." Since the village founded a village collective enterprise in 1985, after more than 20 years of accumulation, total collective assets had already reached 14.83 million yuan by 2006, with stable income growth, mainly from factory building and storefront rental income.
After the village collective assets implemented shareholding reform, results began to appear. After Gonghe Village implemented shareholding reform of village collective assets, total annual dividends reached more than a million yuan, with an average dividend of 300 yuan per villager. Gonghe Village resident Liu Chunxiang said his family had a total of 107 shares, and at a standard of 20 yuan per share, they could receive more than 2,000 yuan a year. In addition, according to Gonghe Village's collective asset distribution plan, elderly people over 60 like Liu Chunxiang can also receive a 1,000 yuan living subsidy each year from the village collective economy.
Shareholding of village collective assets also straightened out the relationship between the villagers' committee and the collective economic organization. Many farmers said that previously collective assets were nominally owned by everyone, but in fact a few people made the decisions, and there were loopholes in the system. After the shareholding reform, villagers became shareholders and could better exercise their right to know and right to supervise, ensuring the normal operation of the collective economic organization.
In Xishan Village, Jiulongpo District, villager Luo Xi said: "After the shareholding of collective assets, every member of my family received a 'Collective Asset Equity Certificate.' With shares, you get dividends; with more shares, you get more dividends. This gives us a 'reassurance pill.'"
"Land Ticket" Trading Feeds Back into Rural Areas, Strengthening Village Collective Strength
To develop the rural collective economy, another means in Chongqing is to expand the increment and strengthen collective economic organizations. In Baiguo Village, Fuling District, at its peak the village collective owed more than 400,000 yuan, but now the debt has basically been eliminated. Village Party Branch Secretary Yang Jian said the key to the change was that Baiguo Village used Chongqing's "land ticket" trading platform to realize the reclamation of more than 110 mu of homestead land. For this alone, the village collective economy received nearly 3 million yuan in compensation.
As a pilot zone for comprehensive coordinated urban-rural reform, Chongqing explored "land ticket" trading of urban-rural construction land quotas. According to regulations, for income distribution, if farmers' homestead land and affiliated facilities are reclaimed, after deducting reclamation costs, all net income is returned to rural areas, with 85:15 ratio payments to the farmers whose homestead land and affiliated facility land was reclaimed and to the rural collective economic organization. If rural public facilities, public welfare undertakings and other construction land are reclaimed, after deducting reclamation costs, the remaining price is all allocated to the corresponding rural collective economic organization. The income is mainly used for social security of members of the collective organization and for infrastructure and public service facility construction.
In Huangshi Village, Yunyang County, more than 20 ponds and reservoirs at Shanping Pond have been renovated in recent years, with average government input of 65,000 yuan per pond and village matching funds of 15,000 yuan. The reason the village could afford to pay was "land ticket" trading. Village Party Branch Secretary Fan Guangzhi said that since 2012, the village had reclaimed more than 20 mu of homestead land and obtained more than 400,000 yuan in income, most of which was used for such rural public welfare infrastructure renovation.
Accelerate Reform and Increase Policy Support
In the view of many industry experts, based on reform practices in some places in Chongqing, to make the rural collective economy bigger and stronger, it is necessary to continue steadily advancing pilot reform to confirm and quantify rural collective asset rights. On the basis of fully completing asset verification, establish asset ledgers and resource registers, define ownership of collective funds, resources and assets according to law, straighten out property rights relationships, and revitalize idle rural collective assets through auctions, leasing, property investment and shareholding cooperation.
At the same time, supportive policies to promote the disposal and operation of rural collective assets should be formulated as soon as possible. Given that the rural collective economy is currently weak and its development foundation poor, and that rural collective economic organizations bear responsibilities that should originally be borne by public finance, such as maintaining the operation of rural grassroots organizations and providing public facilities and services, government finance should increase support for the rural collective economy. Special funds can be arranged and funds from various departments integrated to support rural collective economic organizations in infrastructure construction and the purchase of equipment and machinery necessary for production development, and to provide loan interest subsidies, financing guarantees and rewards for projects that increase collective economic income.