How to Pragmatically Advance the Integrated Development of the Primary, Secondary and Tertiary Industries in Rural Areas

Advancing the integrated development of the primary, secondary and tertiary industries in rural areas is a major deployment made at this year's Central Rural Work Conference, and also a major highlight of the Central No. 1 Document. Since this deployment has just been put forward, understanding across all sectors of society is still generally at an initial, scattered and immature stage. To thoroughly implement the spirit of the central authorities, there is an urgent need to deepen understanding with a scientific and pragmatic attitude, and to provide necessary answers to some important theoretical and practical questions.

Deeply Understand the Background and Significance of the Integrated Development of the Primary, Secondary and Tertiary Industries in Rural Areas

(1) Advancing the integration of the primary, secondary and tertiary industries in rural areas is the fundamental choice for the transformation and development of agriculture and rural areas under the new normal. In recent years, China's agricultural and rural development has shown new acceleration, and agricultural and rural economic development has seen a rare favorable situation in history. But it must also be recognized that the foundation for sustainable agricultural and rural development is still very unstable: First, from the perspective of agricultural resources, not only is spatial potential limited, but some main production areas also face prominent problems such as long-term overdraft of soil fertility, continuous decline in quality, excessive heavy metals, and groundwater overexploitation, which have posed increasingly serious threats to agricultural stability. Second, from the perspective of farmers' income, under the dual squeeze of rising costs and the price "ceiling" in household management, returns are limited; the growth in the number of farmers working away from home and in wage income has clearly slowed; and transfer income is small in total amount and limited in increment, so maintaining rapid growth faces great challenges. Third, from the perspective of rural society, the long-term large-scale migration of agricultural labor to cities has not only led to a serious drain of rural talent and other resources, but has also triggered increasingly serious social problems. Advancing the integrated development of the primary, secondary and tertiary industries in rural areas is conducive to promoting the deeper and closer integration of modern factors such as management, technology, capital and talent from industry and the service sector into agriculture, thereby raising the level of agricultural development; it is conducive to expanding the scale of rural industries and employment capacity, and broadening the space for farmers' employment and income growth; and it is conducive to gathering rural vitality and improving the demographic structure in rural areas, promoting rural social prosperity and stability.

(2) Advancing the integration of the primary, secondary and tertiary industries in rural areas is an inevitable requirement for conforming to new trends in industrial development at home and abroad. Internationally, industrial integration has increasingly become an unstoppable trend in industrial economic development worldwide. Domestically, under the new normal and new requirements, China's industrial structure is undergoing deep optimization and adjustment, and the pace of industrial development aligning with international standards and of cross-industry and cross-sector integrated development has accelerated as never before. Specifically for the primary industry, although China's agriculture has accelerated its pace of integration with the secondary and tertiary industries in recent years, it is still generally at the initial stage. Due to insufficient industrial integration, it faces not only a serious lack of competitiveness in the production segment, but also enormous challenges in the processing segment. To conform to the situation and respond to challenges, there is an urgent need to advance the integration of agriculture with other industries and enhance its own industrial competitiveness by leveraging development momentum.

⟦NL> (3) Advancing the integration of the primary, secondary and tertiary industries in rural areas has an important policy, theoretical and practical foundation. First, in terms of policy requirements, since the 18th National Congress of the Communist Party of China, the central authorities have repeatedly emphasized the need to advance the integrated development of relevant industries and fields. Second, in terms of theoretical background, foreign discussions on industrial integration began as early as the 1970s, when digital technology led to intersections among industries, while domestic research on industrial integration has generally lagged behind the West by about 20 years. Nevertheless, in recent years the theory of industrial integration has attracted the attention of scholars studying agriculture, rural areas and farmers, and specialized research results on advancing modern agricultural development from the perspective of industrial integration have begun to appear. Third, in terms of practical foundation, there are already many successful cases of integrated industrial development at home and abroad, and China has also accumulated some exploration and experience in the integration of agriculture with the secondary and tertiary industries, laying a certain foundation for further deepening integration in the next step.

Theoretical Discussion of the Integrated Development of the Primary, Secondary and Tertiary Industries in Rural Areas Must Avoid Falling into the Trap of Over-Academicization

First, we must avoid falling into the trap of simply applying economic theories mechanically. Advancing the integration of the primary, secondary and tertiary industries in rural areas is a brand-new topic that scholars at home and abroad have previously touched upon very little. It is very necessary to apply certain economic principles in research, but we must adopt a scientific and dialectical attitude to sublate them, avoid mechanical application, and avoid the error of bookish dogmatism.

Second, we must avoid falling into the trap of rigidly copying international experience. China's per capita arable land area is only 40% of the world average, and the average operating arable land area per farmer household is less than 10 mu, equivalent to only 1/40 of the EU and 1/400 of the United States. Even compared with Japan and South Korea, whose national conditions are similar to China's, the average operating scale per household is 2 to 3 times ours, while China's agricultural employed population is more than 140 times that of the United States and more than 300 times that of Japan and South Korea. These unique national and agricultural conditions further show that in advancing the integration of the primary, secondary and tertiary industries in rural areas, it is likewise difficult for us to copy so-called international experience. At present, because there is very little specialized discussion and practice abroad on the integrated development of the primary, secondary and tertiary industries in rural areas, when it comes to drawing on international experience, relevant parties all turn their attention to Japan's "sixth industrialization," which began at the end of the twentieth century. Indeed, the Japanese government issued a series of policies to implement the "sixth industrialization" development strategy, extending agricultural production to the secondary and tertiary industries and integrating them, effectively improving farmers' quality of life, adjusting the agricultural industrial structure, and promoting sustainable development. But it must also be seen that Japanese agriculture is not an internationally successful model: full-time farms account for only 14%, on average a farm has less than one laborer, and the vast majority are part-time farming households with low production efficiency. Its "sixth industrialization" is in fact a helpless move by the government to cope with these problems. Therefore, when drawing on Japan's experience, we likewise need to base ourselves more on reality, take what is useful and discard what is not, and must never blindly follow the trend.

Third, we must avoid falling into the trap of conceptual definitions that are too mechanical and closed. Theoretical discussion of industrial integration at home and abroad has gone on for a very long time, yet to date no unified concept has been formed, so we must not fall into academic impatience. The integrated development of the primary, secondary and tertiary industries in rural areas is in essence a dynamic and open system. If we must give a very clear definition of it, it is best to handle it flexibly from the viewpoint of development according to the time and circumstances, and it is not appropriate to be too rigid.

Strive to Blaze a Path of Integrated Development of the Primary, Secondary and Tertiary Industries in Rural Areas with Chinese Characteristics

(1) It must be made clear that the base point of integration is agriculture. To advance the integrated development of the primary, secondary and tertiary industries in rural areas, we must emphasize and always adhere to taking agriculture as the base point, and take promoting the sustained and stable development of agriculture and increasing farmers' employment and income from farming as the fundamental starting point and ultimate goal. If we place the base point of integrated development on aspects other than agriculture, it may ultimately drive agricultural and rural development, but it may also harm the interests of agriculture and farmers. Agriculture is a vulnerable industry and farmers are a vulnerable group. Only by clearly placing the base point of rural primary, secondary and tertiary industry integration on agriculture from the very beginning, and always giving prominence to agriculture and farmers, will the direction of integration be unlikely to deviate greatly.

(2) It must be made clear that the key to integration lies in the agricultural product processing industry. Apart from agriculture, among the various business forms connected with the secondary and tertiary industries, many can play a positive role in the integrated development of the primary, secondary and tertiary industries in rural areas, such as service industries like science and technology, information and markets, as well as industrial enterprises. But faced with numerous options, we need to persist in highlighting the key points and give priority to grasping the most important aspects firmly. In the integration of the primary, secondary and tertiary industries in rural areas, the agricultural product processing industry not only has certain capital conditions, but also possesses natural advantages that other industries do not have. On the one hand, the agricultural product processing industry itself connects processing raw material production at one end and the market sales of processed products at the other, so it not only occupies a convenient position of forward extension and backward expansion in the integrated development of rural primary, secondary and tertiary industries, but also has the endogenous driving force for such integrated development. On the other hand, most agricultural product processing enterprises have been in the industry for a relatively long time, and they not only have deep feelings for agriculture but also have accumulated professional talent and technology. They are more likely to be adept at supporting agricultural development. In addition, the processing industry is huge in scale: in 2014 its main business revenue already exceeded 18 trillion yuan, and the added value of the processing industry already accounted for about 20% of China's total GDP, making it a pivotal sector with enormous influence on rural and even national industrial economic development, and giving it the strength to integrate the rural primary, secondary and tertiary industries. These circumstances show that it is very necessary to position the agricultural product processing industry as the most critical and most important key business form for advancing the integrated development of the primary, secondary and tertiary industries in rural areas. Moreover, in recent years leisure agriculture has advanced by leaps and bounds, with very broad market space, and it is also an important business form worthy of great attention and leverage in advancing the integration of the primary, secondary and tertiary industries in rural areas.

(3) It must be made clear that the main actors of integration are in the new-type operating system. Starting from China's actual conditions, to advance the integrated development of the primary, secondary and tertiary industries in rural areas, it is necessary both to mobilize the enthusiasm of the broad masses of traditional farmer households and, more importantly, to give play to the role of new-type agricultural operating entities. At present, China has 400,000 various agricultural product processing enterprises above designated size, 120,000 leading enterprises in agricultural industrialization at all levels, of which 10,000 are at or above the provincial level and 1,245 are national-level; and about 1 million farmers' professional cooperatives. These new-type agricultural operating entities are practicing the concepts and requirements of integrated rural primary, secondary and tertiary industry development in different fields, and in the future process of advancing integrated development, their greater vitality should be stimulated and they should be promoted to play a greater role as a fresh force.

(4) It must be made clear that the guarantee for integration lies in the combined action of the two hands of the market and the government. In advancing the integrated development of the primary, secondary and tertiary industries in rural areas, the emphasis should be on giving play to the role of market mechanisms and market entities; the government cannot take over everything, nor is it able to. However, while giving play to the decisive role of the market, it is also necessary to better give play to the role of the government. First, it is necessary to strengthen planning guidance. Especially at a time when understanding among all parties is not yet fully unified and the work priorities of various localities are not yet clear, it is particularly necessary to unify thinking, raise awareness, and clarify principles, directions, goals, tasks and measures through guiding documents such as plans. Second, it is necessary to strengthen demonstration guidance. In advancing the integrated development of the primary, secondary and tertiary industries in rural areas, conditions vary greatly from place to place. In different regions, industries and fields, it is very necessary to summarize, identify and establish a batch of advanced models of integrated development, strengthen publicity and promotion, and promote the play of a demonstration-driven role from point to area. Third, it is necessary to strengthen policy incentives. Research and formulate targeted policies, and give appropriate rewards to regions and operating entities that do well in the integrated development of the primary, secondary and tertiary industries in rural areas through forms such as fiscal awards and subsidies, tax preferences, financial support and public commendation, so as to promote the formation of a good atmosphere of striving to be advanced, learning from the advanced and catching up with the advanced, and build a long-term mechanism for advancing the integrated development of the primary, secondary and tertiary industries in rural areas.