Who does agricultural modernization serve? The key is to ground it in China's national conditions

China's century-long dream of catching up has been to achieve modernization, and China's modernization naturally includes agricultural modernization. In the early days of the founding of New China, through socialist transformation led by "agricultural cooperativization," China restructured the production relations and social relations in the countryside. In 1964, Premier Zhou Enlai put forward the idea of the "Four Modernizations" at the First Session of the Third National People's Congress, holding that "agricultural modernization is the foundation, industrial modernization is the leading force, scientific and technological modernization is the source of driving power, and national defense modernization is the guarantee." In 1975, at the First Session of the Fourth National People's Congress, Zhou Enlai again proposed the goal of "realizing the Four Modernizations" by the end of the 20th century. Agricultural modernization is both a component of China's overall modernization and the foundation that safeguards that overall modernization. In the context of China's modernization in the second half of the 20th century, agricultural modernization mainly meant "mechanization of agriculture, water conservancy, chemical fertilization, and electrification," with the focus on modernizing the agricultural production process, raising labor productivity, and increasing output and income.

Entering the 21st century, the central government again raised agricultural modernization, with two important aspects: first, how to resolve the contradiction between scattered smallholder management and large-scale socialized production, and second, how to resolve the contradiction between small farmers and the large market. The mainstream understanding of agricultural modernization today emphasizes more the limitations of smallholder management and tends to favor the form of leading enterprises plus farmers, in which agricultural leading enterprises guide small farmers to improve production capacity and their ability to respond to the market. In the formulation of modernization, this means emphasizing agricultural industrialization. The problem is that practice has proved that China's more than 200 million smallholder households are extremely small in scale, and the practice of company plus farmers has produced many lessons nationwide and few successes. In 2010, the central government began to put forward the strategy of "synchronizing the three," namely "advancing agricultural modernization in step with the in-depth development of industrialization and urbanization," attempting, while farmers migrate to cities on a large scale, to promote rural land circulation, cultivate new types of agricultural operating entities, and, on the basis of these new types of agricultural operating entities, develop modern agriculture, enrich farmers, and build a new countryside. The No. 1 Central Document of 2015 was titled "Several Opinions on Increasing the Intensity of Reform and Innovation to Accelerate Agricultural Modernization," proposing the "strong, rich, beautiful" goal that "for China to be strong, agriculture must be strong; for China to be rich, farmers must be rich; for China to be beautiful, the countryside must be beautiful." Agricultural modernization thus became a project with high-standard requirements and all-around advancement.

Since entering the 21st century, the central government has continuously issued more than a dozen No. 1 Documents concerning agriculture, systematically deploying work at all levels of the three rural issues. No. 1 Documents carry policy value, and many of their work deployments require state fiscal support. Today the state's annual fiscal funds supporting agriculture exceed one trillion yuan. High-value agriculture-related policies have greatly changed and transformed the current state of China's three rural issues and have also powerfully advanced agricultural modernization. However, under the highly rallying slogan of agricultural modernization, the current three rural policies also seem to have several unclear points, and in the value of rural policy, quite a lot of fiscal funds are used with low efficiency or even in the wrong places. An important reason for this is the lack of analysis of agricultural modernization itself and the lack of clarification of the principal contradiction in the three rural issues and the principal aspect of that contradiction. The reason the central government has issued agriculture-related No. 1 Documents for more than ten consecutive years and transfers more than one trillion yuan in fiscal funds to rural areas each year is that there are several weak links in the three rural issues, and these weak links cannot be resolved by the market and society alone but must have state support. State support for the three rural issues is meant to solve bottom-line problems, not and cannot be meant to make rural areas "strong, rich, and beautiful." It is very difficult to expect support policies and agriculture-supporting fiscal funds to achieve a "strong, rich, and beautiful" agricultural modernization.

In general understanding, agricultural modernization is often replaced by modern agriculture and by the picture of large-scale American-style large-farm agriculture equipped with the most advanced technology. In the practice of local governments, there has generally appeared the situation of piling up large operators to develop large-scale agricultural operations. Agricultural modernization equals "high-end, grand, and upscale," and the more modern and advanced, the better. Some local governments have even proposed to take the lead in achieving the goal of agricultural modernization, ignoring the relationship between agricultural modernization and China's national conditions and also ignoring the question of what the goal of agricultural modernization is.

This article mainly discusses why the central government has issued agriculture-related No. 1 Documents for more than ten consecutive years and transfers more than one trillion yuan in agriculture-supporting fiscal funds each year to promote agricultural modernization, discusses the purpose and focus of agricultural modernization, and discusses what goals agricultural modernization should achieve and what it should focus on under China's current national conditions. Overall, this is "whose agricultural modernization."

I. Agricultural modernization and national conditions

Agricultural modernization obviously cannot be abstract and absolute; it can only be discussed under specific historical conditions. China's agricultural modernization must be discussed under China's national conditions. China's national conditions related to China's agricultural modernization include two parts: first, the environmental conditions of agricultural modernization, and second, the internal foundation of agricultural modernization. These are discussed separately below.

China is currently in the middle stage of modernization, with per capita GDP having reached 7,500 US dollars, belonging to the upper-middle-income countries and in the so-called "middle-income stage." From the development practice of nearly 200 economies worldwide over more than a century since the 20th century, the middle-income stage is a relatively dangerous stage. In this stage, economic growth is weak, while the structure of social interests becomes rigid, the interest demands of all strata continuously increase, and the elasticity of the social structure decreases. As the interest structure becomes increasingly rigid, social conflicts increase, wages continuously rise, and the international competitiveness of industry declines, ultimately causing ever-higher interest demands to collide with a weakly growing economy, with frequent social conflicts and even political conflicts, which in turn further affects economic growth, thus leading to the "middle-income trap."

From China's current situation, since reform and opening up, relying on the advantage of cheap labor, "Made in China" has been unmatched in the world and has become the "world's factory." For nearly thirty years, China's economy continuously maintained double-digit growth rates, creating a miracle in the history of world economic development and, in a very short time, transforming from a low-income country into a middle-income country. As China's economic growth has reached its current stage, labor costs have begun to rise rapidly, and "Made in China," which relied on the "demographic dividend" to gain comparative advantage, has begun to decline. China's economy faces enormous pressure for scientific and technological progress and industrial upgrading. In the next twenty years, if China can successfully upgrade from "Made in China" to "Created in China" and upgrade from the low end of the global industrial value chain to the middle and high end, China can escape the middle-income trap, transform from a developing country into a developed country, and truly achieve modernization. If China cannot complete industrial upgrading for a long time, the consequence may be that ever-higher labor costs make "Made in China" no longer internationally competitive, while "Created in China" cannot provide enough employment opportunities, thus leading to industrial hollowing out, and China may therefore experience severe social instability and even political turmoil.

Therefore, the next twenty years are a key stage for China's economic development, the core of which is whether China can successfully achieve industrial upgrading while continuing to maintain the international competitiveness of Made in China, upgrading Chinese industry from its current position at the low end of the global industrial value chain to the middle and high end. In fierce international competition, it is obviously very difficult for China to achieve such a transformation, especially since China is a large country with a population of more than 1.3 billion. This transformation means leaping from the low end of the international industrial division of labor pyramid to the middle and high end. Such a leap may even fundamentally change the structure of international industry and even the existing world system, and it will obviously involve huge risks and many difficulties.

To achieve such a leap from the periphery of the world system to the center or semi-center zone, the state must both maintain the international competitiveness of Made in China so as to obtain economic surplus and at the same time use the economic surplus obtained by Made in China mainly to support "Created in China" and realize the stable expansion of "Created in China." This is the principal contradiction in China's future modernization, a key stage in China's more than a century of modernization, and a stage full of opportunities and also full of risks. In the process of leaping from Made in China to Created in China, the whole Chinese society must remain stable. Without a stable social environment and without basic political conditions, such a leap cannot be completed.

Relatively speaking, agricultural modernization is more only a part of China's domestic market and a relatively secondary contradiction in China's modernization. In other words, agricultural modernization should provide basic conditions for China's modernization to leap from "Made in China" to "Created in China." Only when Created in China succeeds can the highly comprehensive modernization of Chinese agriculture ultimately be achieved.

From the perspective of the internal national conditions of Chinese agriculture, China still has more than 600 million rural people and more than 200 million agricultural laborers. Most of the more than 200 million migrant workers who go to cities to work or do business have not been able to settle down in the cities, and if they fail in the cities they may still return to the countryside. More importantly, China's countryside has generally formed a "half-worker, half-farmer" household livelihood model based on intergenerational division of labor, that is, in farmer households, the older parents stay in the village to farm while the younger children go to the cities to work.

Older parents lack employment opportunities in the cities and are just right for farming. In the foreseeable next twenty years, if China cannot complete industrial upgrading, the cities will find it difficult to provide enough stable high-income employment opportunities for farmers who move to the cities, and it will therefore be very difficult for them to truly settle down with dignity in the cities. Older farmers eliminated by the cities who return to the countryside to farm can then have agricultural employment and income and can combine retirement with farming. In this sense, for the next twenty years or even longer, China's countryside will retain hundreds of millions of people who need to rely on agriculture, which determines that Chinese agriculture will still have more people and less land and small-scale operations for a long period in the future.

China's current basic rural operating system is the system of "unified and separate management with the household contract responsibility system as the basis and two-tier management," that is, contracting by household, with each rural household obtaining land contract management rights, thus forming the current smallholder operating system in China's countryside of "1.3 mu per person and no more than ten mu per household." The great difficulty currently faced by smallholder operations is that it is hard to connect with large-scale socialized production.

If small farmers can connect relatively well with large-scale socialized production, older farmers who lack employment opportunities in the cities can obtain employment and income from agriculture, thereby maximizing farmer household income through the "half-worker, half-farmer" model based on intergenerational division of labor and thereby easing the pressure on the social structure in China's modernization process. Over the past thirty years, an important reason China has maintained stability amid rapid development is that Chinese farmers can obtain both wage income and farming income at the same time, farmer income has continued to increase, and the countryside has become a stabilizer and reservoir for China's modernization.

To summarize, the next twenty years will be a critical period for China's modernization. If China can remain stable in the next twenty years and leap from Made in China to Created in China, China will truly escape the middle-income trap, transform from a developing country into a developed country, and move from a peripheral country in the world system into the ranks of core countries. At that time, China will have the conditions to build a higher degree of agricultural modernization. At the current stage, however, China's agricultural modernization itself is not the goal; rather, it should provide the means for China to escape the middle-income trap. Only by understanding China's agricultural modernization in this context can three rural policies be proposed in a more targeted way and agriculture-supporting funds be arranged.

II. Why agriculture is important

Agriculture is obviously very important. Why is it important? At the current stage, Chinese agriculture has three basic functions. It is precisely the bottom-line guarantee of these three basic functions that gives China the conditions to carry out modernization smoothly and makes it possible to ensure that China escapes the middle-income trap. These three basic functions are: food security, farmer income and employment, and rural social stability. They are discussed separately below.

Agriculture is the foundation, and the fundamental aspect is that no matter how developed and modern the economy is, people must eat. With more than 1.3 billion people in China, having enough to eat is not a simple matter. General Secretary Xi Jinping has said that the Chinese people's rice bowl must be held firmly in their own hands. This is the consensus of Chinese society, because once China does not have enough food and there is a problem with the rice bowl, the world's surplus grain cannot satisfy the needs of the Chinese people, and once Chinese people cannot solve the food problem themselves, food may be used as a weapon to choke China's development. With economic development and population growth, demand for food will continue to increase, while China's cultivated land area is not only very difficult to increase but will also decrease because urbanization occupies land. Therefore, the task of increasing grain output by increasing agricultural input and developing agricultural science and technology is very arduous. The primary task of agricultural modernization should be to increase grain output and ensure food security by increasing input and advancing science and technology, thereby ensuring that the Chinese people have enough to eat.

People should not only eat enough but also eat well. There should be not only food security but also safe food. Overall, however, at present and for a fairly long period in the future, the primary task of Chinese agriculture is to ensure people have enough to eat. If people cannot eat enough and go hungry, modernization cannot be achieved. Whether people can eat well is a more secondary issue. When conditions permit, the issue of eating well can be solved through the domestic market and even the international market. Chinese agricultural products are forming market gradations. Through organic certification and so on, some high-quality agricultural products are being consumed by families that emphasize safe food, and this is formed spontaneously by the market. Even some high-quality foreign agricultural products have an increasingly large market in China. There is no problem with Chinese families being willing to eat well, and there is no limit to it. The state cannot guarantee that all Chinese people eat well, but it must guarantee that all people eat enough. If people cannot eat well for a time, they can wait until conditions permit to eat well, but if they cannot eat enough for a time, people will starve to death, and the West can use this as a weapon to choke the Chinese people.

The second major function of agriculture is to provide employment opportunities and income for the hundreds of millions of farmer households that need to rely on agriculture. At China's current stage of economic development, cities cannot provide all farmers who move to the cities with employment opportunities and income for settling down with dignity in the cities, nor can the state have the financial capacity to provide them with social security for settling down with dignity in the cities. This is a structural problem, meaning that China's current position in the global value chain determines the income level of Chinese migrant workers. An industrial structure at the low end of the global value chain cannot provide migrant workers with employment opportunities to settle down with dignity in the cities.

It happens that China's current basic agricultural operating system is the unified and separate two-tier operating system based on household contracting, and almost all farmer households have contracted land. Since reform and opening up, as urban employment opportunities have increased, surplus rural labor has transferred out of agriculture and entered the cities to seek employment opportunities. Some farmers who moved to the cities made money through work or business and had enough ability to move their whole family to the cities to live; they left the countryside, integrated into the cities, and became urban residents. The greater majority of farmers who moved to the cities did not make money through work or business and could not move their rural families into the cities; they may even have to return to the countryside when they grow old. Such farmers who moved to the cities account for the majority of China's rural-to-urban migrants today.

At present and for a fairly long period in the future, China's countryside will have the household livelihood model of "half-worker, half-farmer" based on intergenerational division of labor in farmer households. Older parents lack employment opportunities in the cities, and farming may be just right for them. Agricultural income is not high, but it can solve a family's food and clothing and daily expenses, and the wage income of children working in the cities can then be saved for major undertakings. The countryside not only has income opportunities but also many elements of a self-sufficient economy, so the cost of living for farmer households in the countryside is very low. With the farming income of elderly parents, farmer households can live relatively well. Conversely, precisely because farmer households have farming income, young people working in the cities can accept relatively lower wages, which can maintain the international competitiveness of "Made in China" and thereby provide space for China's industrial upgrading and the growth of "Created in China."

Agriculture is not only an indispensable source of income for farmer households and the basis for farmers' self-sufficient economy to reduce living costs, but also farmers' employment. For middle-aged and elderly farmers who lack urban employment opportunities, if they live in the cities with nothing to do and drift about, they will have no sense of dignity or accomplishment at all. But if they farm, sowing in spring and harvesting in autumn and unfolding their days with the rhythm of nature, they will have a sense of accomplishment and satisfaction. When farming is busy, there is work to do; when farming is slack, there is expectation. It is through agricultural production that relations in the village acquaintance society are established and governance in rural society is formed. For farmers, or for anyone, without employment and without anything to do, life is as good as over ahead of time. It is precisely agricultural employment that keeps middle-aged and elderly farmers who lack urban employment opportunities from becoming a "waiting-to-die brigade." As long as they can move, they will gather and pick things up and do something, feel that they are useful, and will not seek their own death.

China still has more than 200 million agricultural laborers today, and the first generation of rural-to-urban migrant workers is also on the way back to the countryside or has already returned. In the foreseeable future, there will still be hundreds of millions of agricultural people and farmer households that need to rely on agriculture for income and employment. When agriculture accounts for less than 10% of GDP, it is very important to leave as much agricultural GDP as possible to farmer households. In the future, farmer households will rely more and more on wage income, but farming income is indispensable, especially for the older parents in farmer households. Agricultural income and employment are the basis for maintaining their basic dignity and sense of dignity and must never be lacking.

Agricultural modernization obviously cannot aim to eliminate the hundreds of millions of smallholder households (including elderly farming), but should only serve smallholder households and elderly farming, help them overcome difficulties in production and life, and respond to problems they themselves cannot solve.

The third major function of agriculture is to provide a stable rear area for China's modernization, making the countryside a stabilizer and reservoir for China's modernization. Unlike ordinary developing countries, since the founding of New China, China has maintained social and political stability while achieving sustained economic development. In the last twenty-plus years, Western countries have predicted China's collapse almost every year, yet China has remained very stable. One important reason is that China's countryside has remained stable, and the countryside has provided a great buffer for China to respond to financial, economic, and even social and political crises. The 2008 Western financial crisis caused 21 million Chinese migrant workers to lose their jobs, but migrant workers could return to the countryside. As farmers say, losing the chance to work and returning to the countryside is merely a matter of adding a pair of chopsticks to the dinner table. The fact that unemployed migrant workers can return to the countryside gives China an extremely strong ability to respond to crises. At the same time, because farmers all have land in the countryside, farmers who fail in the cities can retreat to the countryside and will not fall into urban slums where they cannot live with dignity. If farmers fail in the cities and cannot return to the countryside, large-scale slums will inevitably form in the cities, and these large-scale slums will certainly amplify the impact of every financial, economic, and social crisis, making it more difficult for Chinese society to remain stable. China's future path of modernization will not be smooth and will certainly encounter various difficulties and may even encounter major crises, but as long as the countryside remains stable and can provide a way back for farmers who fail in the cities, China will have the ability to absorb difficulties and crises, and China can therefore have relatively ample time to achieve industrial upgrading and leap from a peripheral country in the world system to a developed country.

In this sense, agricultural modernization must certainly not be turned into a modernization in which farmers who move to the cities cannot return to the countryside; rather, through agricultural modernization, a smoother return channel must be provided for farmers who fail in the cities.

To summarize the above, for the next twenty years or even longer, agriculture must simultaneously fulfill three basic functions: first, ensuring food security; second, enabling hundreds of millions of farmers to obtain agricultural employment and income; and third, providing a rural stabilizer for China's modernization. Agricultural modernization must obey and serve the above three functions, and these three functions are also agriculture's bottom-line functions. Precisely because they are bottom lines, the central government must issue agriculture-related No. 1 Documents for more than ten consecutive years, and the state must allocate more than one trillion yuan in agriculture-supporting transfer payments each year.