An agricultural problem or a farmer problem? Looking at China's current stage of development
I. China's Current Stage of Development and the Choice of Development Strategy
After more than 30 years of rapid development since reform and opening up, China has successfully moved from the ranks of low-income countries into the ranks of middle-income countries. It is currently in a critical period of transition from economic growth to economic development, from low-end processing and manufacturing to high-value-added industries, and in a critical period of whether it can escape the middle-income trap and leap from a developing country to a developed country.
In the middle-income stage, there is a well-known middle-income trap. From a historical perspective, since the 20th century, almost no country on the periphery of the world system has successfully entered the center of the system. The group of developed countries, just as at the beginning of the 20th century, is concentrated among European, American and Japanese countries, and has not changed for more than a hundred years. What is worth mentioning, and what development economists also delight in discussing, is the rise of the four Asian tigers. Apart from that, there have been few successful countries. The four Asian tigers developed under the specific background of the Cold War, and overall their size was very small. Singapore and Hong Kong, China had only a few million people, Taiwan, China had only 20 million people, and even the largest, South Korea, had only 50 million people. Together, the four tigers had only more than 80 million people, only 1/15 of the current population of the Chinese mainland. In this sense, the current world structure was already set more than a hundred years ago, and basically no large economy can change this basic structure or configuration of the world economy through rapid economic development. Generally, developing countries either lack economic development and remain in the low-income stage, or experience some development and, upon reaching the middle-income stage, fall into the middle-income trap and stagnate.
The force currently changing the world structure is China's development or rise. After more than 30 years of rapid economic development, China has successfully moved from a low-income country into the ranks of middle-income countries. If China successfully breaks through the middle-income trap and enters the ranks of developed countries, the basic world structure since modern times will undergo great change. This will be an important event in world history. The question is, can China break through the middle-income trap, and how can China leap into the center of the world system?
The middle-income trap has two dimensions: international and domestic. Internationally, or from the perspective of the world system, the core countries of the world system are the makers of international rules, their economies occupy the core position of the system, and their industries are concentrated in high-value-added sectors, thus forming a structure in which core countries shift crises and export burdens to peripheral countries while drawing resources and importing benefits from peripheral countries. For a peripheral country in the world system to enter the center, it must break such an international vested-interest structure, and there will inevitably be numerous conflicts. Domestically, when economic development reaches a certain stage, growth potential is exhausted, while the vested-interest structure of various domestic strata and classes has already taken shape. No one can tolerate losses of interest, yet the interests available for distribution have not increased, and hard clashes among various strata and classes may lead to social disorder and even political turmoil. The iron law that “development leads to instability” thus takes effect. This can be seen in the political instability that generally appeared in countries entering the middle-income stage in the 20th century.
The fundamental problem leading to the middle-income trap lies in the fact that when economic development reaches a certain stage and a country wants to leap toward the center of the world system, it must directly collide with the vested-interest structure of the core countries of the system. This collision in turn affects the internal structure of the middle-income country. One aspect is that the domestic strata that have long enjoyed economic growth and formed interest expectations cannot face the cost of the collision. The international dilemma of breakthrough is transformed through economic cycles and other forms into contradictions and struggles among domestic strata. These struggles are expressed in intense ways (even through political disorder) and become domestic crises. Domestic crises weaken the country's ability to break through the existing vested-interest structure of the world system, thus causing it to stop at the middle-income country stage.
China is currently in such a critical and delicate period of development as a middle-income country. At its core is whether China can enter high-value-added industries in international economic and trade relations, thereby changing the current basic economic structure and international interest configuration that is unfavorable to China.
Whether China can escape the middle-income trap therefore depends on two aspects of strategy. First, whether China can concentrate its main resources on a national development strategy of developing high and new technology and realizing industrial upgrading. China cannot waste the little hard-earned money obtained through tremendous hardship, at the cost of the environment, resources and several generations, but should concentrate it on developing strategic industries and realizing industrial upgrading, so that China can successfully leap from low-end processing and manufacturing to high-value-added industries in the international economic structure. Only when China's main economic structure enters the middle and high end of the global industrial chain and occupies a position in high-value-added industries in the international economic structure can China truly enter the center of the world system and be said to have changed from a middle-income country into a developed country. Conversely, the current domestic discussions about people's livelihood, the environment, employment and economic growth are mostly without a clear target. China must realize its national strategy, the core of which is developing high and new technology and carrying out industrial upgrading. The second strategy is whether China can continue to maintain coordination of interests among domestic strata, maintain the elasticity of China's social structure, and maintain China's social and political stability. This includes China's ability to maintain domestic stability in response to economic cycles and various external shocks.
How should these two national strategies be implemented? In the book *The Chinese Road of Urbanization*, the author once proposed a “three-wheel drive” strategic conception for China's modernization, arguing that the next 30 years are a critical period for whether China can escape the middle-income trap and leap into the ranks of developed countries. China must simultaneously exert effort in three areas. First, concentrate resources on developing high and new technology and realize industrial upgrading. The key to this industrial upgrading is being able to occupy a position in international high-value-added industries. This is fundamental.
If China concentrates resources on developing high and new technology and realizing industrial upgrading, where can the resources to be concentrated come from? In current China and for a long period in the future, the main resources can only come from export-oriented “Made in China.” “Made in China” is concentrated in low-value-added industries and can be said to be obtained mainly through China's cheap labor and the cost of sacrificing the environment and resources, and even through sweatshops. Since reform and opening up, China has achieved rapid economic growth and developed from a low-income country to the middle-income stage, relying mainly on this export-oriented processing and manufacturing industry, on this “world factory.”
For China to develop high and new technology in order to break through the existing world economic structure, it cannot immediately obtain returns from high and new technology, but requires large upfront investment. This upfront investment can only come from the accumulation formed by export-oriented processing and manufacturing. In the next 30 years, China must maintain international competitiveness in processing and manufacturing, so that it can obtain the resource conditions necessary to realize the national strategy of developing high and new technology.
Whether China's processing and manufacturing industry can continue to have international competitiveness is related both to the development model adopted by the state and to China's comparative advantages. The reason China achieved rapid economic development through export-oriented Made in China over 30 years of reform and opening up is that China has comparative advantages that ordinary developing countries do not have. First, high-quality and cheap labor; second, advantages in the land system. The core of the advantage in the land system is that China's land system has basically eliminated land rentiers; third, China's efficient administrative and rule-of-law system and stable political and social structure.
As China changes from a low-income country to a middle-income country, the cheap labor in “Made in China” has begun to be no longer cheap, especially compared with “Made in India” and “Made in Vietnam.” China's labor price has already far exceeded that of ordinary developing countries. However, current “Made in China” still has three major advantages: first, good infrastructure; second, an already formed “Made in China” industrial cluster chain, which helps reduce the cost of “Made in China”; third, a still efficient Chinese administrative and rule-of-law system. Among these, good infrastructure is again related to China's land system, because China's land system can achieve the public appropriation of land value increments, and local governments can build good urban infrastructure through land finance derived from land transfer fees, thereby achieving “shared land benefits.”
In other words, the negative impact of rising labor costs in current China on “Made in China” is offset by the positive impact of China's good infrastructure and industrial cluster system, and “Made in China” still has international competitiveness. Maintaining the international competitiveness of “Made in China” is key for China to obtain the resources to realize its national strategy.
Of course, one premise for maintaining the competitiveness of Made in China is that labor prices cannot rise to a level that Made in China finds difficult to absorb. The reason the labor price of current Made in China is still not too high is determined by China's special labor reproduction model. Specifically, China currently realizes labor reproduction through “half-work half-farming based on intergenerational division of labor,” and it is precisely “half-work half-farming” that provides a way back home for migrant workers who fail in the cities. In other words, the currently widespread model in China in which elderly parents stay in the village to farm and younger children go to the cities to work allows migrant workers in the cities to accept relatively low labor remuneration while still completing labor reproduction with dignity. Without rural “half-farming,” if the whole family of migrant workers moved to the city, they would need higher wage income to live in the city, and if the elderly could not return home, the state would have to provide them with more social security. It is precisely “half-work half-farming” that greatly alleviates the labor cost pressure on “Made in China,” enabling Made in China to maintain international competitiveness.
In this sense, the structure of “half-work half-farming based on intergenerational division of labor” is a key institutional arrangement supporting Made in China, and the “half-work half-farming” system is in turn based on the existence of elderly farming, the smallholder economy and the small rural community system. In this sense, the smallholder economy still needs to be maintained in the next 30 years. At the same time, it is precisely the maintenance of the smallholder economy that gives farmers who fail in the cities a way back, and when economic cycles occur, migrant workers can still return home. That migrant workers can return home after failing in the cities is the reason China has not seen large-scale urban slums. The smallholder economy not only guarantees China's food security, but is also key to maintaining the elasticity of China's social structure. It is precisely the smallholder economy that provides a strong guarantee for China to respond to crises and maintain stability. It is also in this sense that the countryside is the stabilizer and reservoir of China's modernization.
That is to say, in the next 30 years, only with the three-wheel drive of the smallholder economy, Made in China and industrial upgrading can China break through the middle-income trap and enter the ranks of developed countries. Among the three, the most basic and also the most misunderstood is the smallholder economy, because current policy departments and academic circles are both striving to eliminate the smallholder economy.
II. The Countryside as Stabilizer and Reservoir
In other words, in the next 30 years, the main goal of China's countryside should be to serve and submit to the strategy of China's rise. China's economic development pole is in the cities, and China's social stabilizer is in the countryside. All considerations of rural development focus on whether and how they can serve the overall situation of China's modernization. If China can develop high and new technology and realize industrial upgrading, thereby truly entering the core countries of the world system, the problems of the countryside and agriculture will naturally be solved. Otherwise, the rural problem and the agricultural problem themselves will remain difficult to solve.
Then, what problems should the countryside and agriculture solve? Or what kind of support should they provide for China's modernization in this critical period?
Generally speaking, in the next 30 years, the countryside and agriculture must have the following three particularly important functions. First, ensure food security, so that Chinese people can eat their fill and preferably eat well. Agricultural production of food and feeding the Chinese people is the most basic meaning of agriculture as the foundation of the national economy; second, continue to reproduce cheap and high-quality labor, thereby providing comparative advantage for internationally competitive Made in China; third, provide a way back home for migrant workers who fail in the cities. It is precisely because migrant workers who fail in the cities can return home that the pressure on urban social security is reduced, and at the same time large-scale urban slums can be avoided.
In fact, over the past 30 years, China's countryside has already provided enormous support in the above three aspects for Made in China and thus for China's modernization. This is the key to China's rapid and stable economic development over the past 30 years. The reason the countryside can provide the above three major supports is again closely related to the widely existing rural household livelihood model or labor reproduction model of “half-work half-farming based on intergenerational division of labor” formed under China's special national conditions.
Specifically, since reform and opening up, the surplus labor previously hidden in agriculture has shifted in large numbers to the secondary and tertiary industries. From township and village enterprises that left the land but not the village to going to the cities to work and do business while leaving both the land and the village, rural young and middle-aged labor has gone to the cities to work and do business, while older middle-aged and elderly labor has stayed in the village to farm. China's “two-tier management system based on household contracting and combining unified and separate management” has formed a smallholder management system with Chinese characteristics of “about 1 mu and 3 fen per person, and no more than 10 mu per household.” Because agricultural labor was surplus and labor was abundant while land was scarce, after young and middle-aged labor went to the cities, the middle-aged and elderly labor staying in the village to farm could still easily cultivate the fields well. Agricultural output, especially grain output, did not decline with the migration of large numbers of young and middle-aged laborers to the cities; instead, grain output achieved “eleven consecutive increases.” Especially important is that almost all Chinese villages formed a “half-work half-farming” structure in which younger children go to the cities to work and do business while elderly parents stay in the village to farm. Farmers' households therefore increased their income from work without reducing agricultural income. Farmers' household income increased and living conditions improved.
While the structure of “half-work half-farming based on intergenerational division of labor” generally formed in ordinary villages, some farmers who went to the cities were relatively lucky and quickly settled comfortably in the city, with the whole family moving to the city. They no longer cultivated the land, and their contracted land was transferred nearby to relatives and friends still farming in the village. At the same time, there are always some young and middle-aged laborers in the countryside who, for various reasons, cannot or do not wish to go to the cities. They only farm their own contracted land, which is too small in area and yields too little income, and they have a strong demand for transferring in farmland. In this way, households whose whole family has moved to the city and no longer farms transfer their land to young and middle-aged laborers still farming in the village. These young and middle-aged laborers remaining in the village to farm can therefore expand their cultivated area and even form appropriately scaled operations. These young and middle-aged laborers remaining in the village to farm have a relatively large scale of operation, income from side occupations, and other rural income, while consumption in the countryside is relatively low. They can therefore obtain income no lower than that of working away from home, while also ensuring the integrity of family life. Such rural young and middle-aged laborers, whose economic income is in the countryside, whose social relations are in the countryside, who can maintain complete family life, and who because of no low income also have a good spiritual outlook, we call “middle farmers.” This “middle farmer” group may not necessarily be large in number, perhaps only 10%-20% of the rural left-behind population, but it is very important. It is precisely this middle farmer group plus the left-behind elderly, weak, sick and disabled that can form a relatively stable grassroots governance structure.
The currently widespread structure in China's countryside of “half-work half-farming based on intergenerational division of labor” and the “middle farmer” group are also a dynamic structure that can reproduce itself. This dynamism is manifested in the following three aspects:
First, in farmer households, as time goes on and age increases, the parents staying in the village to farm grow older and older. They not only cannot go to the cities to work, but also become increasingly unable to farm, and they exit agriculture. When these left-behind parents reach the age of exiting agriculture (around 70 years old), their children who went to the cities to work are also no longer young, already nearly 50 years old. Their opportunities to work in the cities become fewer and fewer, and eventually they fail in the cities, cannot settle comfortably in the city, and begin to return home. Returning home is a process. After several years, they finally return to their hometown to take over farming from their parents. And the children of these already aging children have in turn grown up and begun to go to the cities to work, or have been admitted to university and formally work in the city. In this way, the self-reproduction of the structure of “half-work half-farming based on intergenerational division of labor” is realized.
Second, for farmers who fail in the cities, precisely because their parents are still farming in the countryside, when they return home to farm they not only have cultivated land, but also agricultural sites, farming tools, cultivation techniques and so on, so they can smoothly return home to farm. Even if farmers whose whole family has moved to the city have already transferred their contracted farmland to relatives and friends to cultivate, as long as they want to farm, they can take back the land to cultivate at any time. In this way, farmers can freely choose between going to the city and returning home. When they have difficulty in the city or even fail and cannot settle comfortably in the city, they can return home at any time. It is precisely because farmers can freely return home that China's cities have not formed large-scale slums. Some people say farmers are willing to go to the cities and unwilling to return home. This statement is not comprehensive. Farmers are willing to go to the cities because they hope to settle comfortably in the city. If going to the city can only lead them to fall into slums, then returning home is an extremely important right for them.
Third, middle farmers themselves are not stable, and their sources of income are diversified. They both transfer in land to form appropriately scaled operations and engage in side occupations and handicrafts, and also work as agricultural brokers to obtain income, and even rely on income from serving as village and group cadres to supplement household expenses. Middle farmers can also go to the cities to work, and as long as the countryside has diversified income opportunities, these diversified income opportunities can keep farmers who are still young and middle-aged in the village to obtain these opportunities.
The reason the “half-farming” part of “half-work half-farming” is important is not only that farmer households obtain income from “half-farming,” but that it has much broader content. The middle-aged and elderly parents left behind in the countryside cultivate their own contracted land, “no more than 10 mu per household.” It is difficult for them to grow high-priced crops oriented to the market, and generally they can only grow bulk agricultural products, because the agricultural inputs and production products required for bulk agricultural products are standardized, there is no problem of purchase and sale, and their production technology is also conventional and mature, with no difficulty in learning. Growing bulk agricultural products has low risk, simple production technology, and no difficulty in connecting with the market, though of course it is also impossible to obtain very high income. Not counting labor input, the net income from one mu of field crops is 1,000 yuan per year, so 10 mu is 10,000 yuan. This income may be only equivalent to 1/3 of current income from working away from home.
The current problem is that middle-aged and elderly farmers themselves lack opportunities to go to the cities to work and do business. When they enter the city, they may be purely consumers rather than producers. Yet farming in the countryside can provide farming income that is neither high nor exactly low.
Apart from farming income, in the countryside there can also be some income from side occupations, and most importantly, the countryside has land and courtyards, so people can be self-sufficient. Ordinary daily necessities can all be produced by oneself without needing to buy them on the market. And living in one's own house requires no rent. The cost of living in the countryside is greatly lower than in the city.
In this way, “half-work half-farming based on intergenerational division of labor” not only provides two sources of income, from work and from farming, but also has a much lower cost than living as a whole family in the city. This makes this labor reproduction model far more able than the model of leaving the countryside and moving the whole family to the city to allow farmers to complete labor reproduction with dignity.
Especially important is that under current agricultural production technology conditions, farmers growing field crops face no technical or market risk, and the spread of mechanization has made farming a relatively easy task that even middle-aged and elderly people can complete without much difficulty. Some rural elderly people even say that farming is a good way to exercise the body. Whether it exercises the body or not is uncertain, but engaging in agricultural production is employment beyond income and an important way to prove that one still has value. Without employment, life has no meaning. Agriculture unfolds with the seasons. When middle-aged and elderly people in the countryside farm, what unfolds with the seasons is their sowing and harvesting, hardship and hope.
In addition, farmers carry out agricultural production in a society of acquaintances where they were born and raised. This society of acquaintances is their own. Relatives and friends gather nearby. Even if they go out to work or even settle in the city, villagers still maintain close ties with the village. They must come back for festivals and be buried in the village after death, returning to their roots and their homeland. When middle-aged and elderly farmers engage in agriculture in the village, it is easy for them to obtain support from acquaintance social networks, and they also have a strong sense of belonging and security. This is exactly the opposite of the alienation, unfamiliarity and insecurity produced by the city. In this sense, the countryside is indeed a much better place for old-age care than the city. The bustling city life has already been experienced when they were young and went to the city, and these things belong to others (the rich). The quiet countryside is precisely a good final resting place for oneself, a final resting place that no one would consider bad.
In other words, the structure of “half-work half-farming based on intergenerational division of labor” formed over the past decades can still play an important role in the next 20 to 30 years. On the one hand, the more the economy develops, the more migrant workers will have the conditions to settle comfortably in the city. They will then leave the countryside and integrate into the city, and may even bring their parents left behind in the countryside to live in the city. At the same time, there will always be some migrant workers who fail in the cities and still return to the countryside to live. At this time, preserving a way back home for farmers is important to them and equally important to China's modernization. Once China can complete industrial upgrading and enter the ranks of developed countries, the cities can provide employment and income conditions for the vast majority of migrant workers to settle comfortably, and even if a small number of migrant workers fail in the cities, the state will also have ways to provide social security that allows them to stay and live in the city. At that time, whether farmers can return home will no longer be important.
In other words, maintaining the current rural smallholder operation of “about 1 mu and 3 fen per person, and no more than 10 mu per household” can not only sustain the cheap labor reproduction model of “half-work half-farming based on intergenerational division of labor,” but also provide a way back for farmers who fail in the cities, thereby providing strong support for “Made in China” and providing a strong guarantee for China to respond to economic cycles and various instabilities in the process of modernization. The countryside has become the stabilizer and reservoir of China's modernization.
There is another question: can the smallholder economy guarantee China's food security, and can elderly farming feed China? It should be said that the experience of agricultural development worldwide has proved that the output capacity of the smallholder economy in growing grain is higher than and superior to scaled operations. China's eleven consecutive increases in grain output despite the large outflow of labor is also the best proof. When elderly farming grows grain with intensive cultivation, the per-mu yield is certainly very high. Of course, this does not mean there are no problems, still less that agriculture has no problems. Below we will discuss this further.