Three rural reforms must break out of three major misconceptions, including the household registration system reform

I. On the household registration system reform

I feel that the household registration reform over the past 30 years has been going around in circles. Why was the household registration system not reformed well in the past? If viewed from the planned system before the reform, there was no problem with the household registration system at all. The urban-rural dual household registration system was completely reasonable, because it served the planned economy. Now reforming the household registration system is right, because what we are running now is not a planned economy, not unified purchasing and marketing, not a rationing system. In the new system, the problem with the household registration system is unequal national treatment, discrimination against farmers, and obstruction of free movement. In the past, farmers compared with farmers were equal, and urban people compared with each other were also equal, and the urban-rural gap was not very large, so people at that time had a high patriotic sentiment. For example, I lived in Beijing for more than ten years, and it did not give me the same treatment as Beijing residents, so I could not feel the dignity of being Chinese. Many farmers who go to Beijing to work all face this problem, so the household registration system is a very big problem. The household registration system itself is not the problem; the problem is the welfare differences and treatment discrimination behind the household registration system.

Has the household registration reform been effective in recent years? No. Why? Besides the urban-rural dual system basically not being touched, it also produced an urban-urban dual system. For example, I am from Shanghai, and now if I am transferred to Beijing, if it is not a transfer within the state-owned enterprise system, even if you become a Beijing son-in-law, you still cannot enjoy Beijing's treatment. This is called the urban-urban dual system. There is also the enterprise-enterprise dual system, which means that within one enterprise there is a dual system, and between enterprises there is also a dual system. People inside the system do not work, while people outside the system work and may receive little treatment, apart from a little temporary wage. Although it is an internal company transfer, Beijing does not give a household registration quota, so one still cannot enjoy Beijing's treatment. So you will find why the household registration system reform is not going well: because the welfare differences attached to the household registration system are growing larger and larger.

Originally, the basic task of household registration system reform was to realize equality in basic national treatment, such as education, medical care, and so on. If the treatment differences are gone, then the household registration reform is complete. This matter can only be led by the central government, not done by local governments. For example, during the household registration reform in the 1980s, if a farmer wanted an urban household registration, it cost 20,000 yuan. Many people used connections to buy urban household registration. This was in fact local governments selling household registration for money. For example, in Beijing's current household registration reform, if a PhD is introduced, a household registration is rewarded. How can household registration be a reward item? When local governments treat household registration as a means of profit and as a prize, this kind of reform is very difficult to succeed. Beijing, Shanghai, and Shenzhen all have their own local interests. Therefore, household registration reform should be a matter for the central government. If local governments are allowed to do it, it will lead to more and more chaos the more it is reformed. However, we have seen that recently the central government issued a forceful household registration reform, and it is the central government that is responsible for it. I think this is breaking out of the original misconception, and this is worthy of praise.

II. On the reform of the rural land financial system

I think that in recent years some reforms related to finance and rural land have also entered a misconception. Have the reforms related to the rural land financial system been done well now? Rural credit cooperatives have been turned into commercial banks, credit cooperation has not developed (only 43 were approved nationwide), while village and township banks, small guaranteed loan companies, and others have flourished. Rural finance certainly should develop cooperative finance. All finance may transform into other kinds of finance; only cooperative finance is farmers' own finance. Therefore, to solve the three rural issues, cooperative finance must be developed first. Japan for more than 100 years only allowed rural credit to develop and restricted the development of other finance. South Korea and Taiwan were the same. Taiwan only allowed farmers' associations and rural credit departments to develop, and set aside 8 billion as a seed fund to guide rural financial development. For Taiwanese farmers, the interest on a loan of 100 yuan was no more than 3 yuan at most, generally 1%, and even interest-free.

Because rural financial reform has become non-agriculturalized and internal rural cooperative organizations are lacking, rural land contracting rights and management rights lack internal funding support and cannot be fully utilized. However, our academic circles generally attribute rural lack of financial support to the land system, believing that only if land is privatized or the three rights are separated can land mortgage loans be realized. But Vietnam's land reform achieved privatization; could it implement mortgage loans? It could not. I have exchanged views with senior Vietnamese officials many times, and what troubles them is why, after land privatization, farmers' land cannot be mortgaged at banks. No bank accepts farmers' land. They ask why land in Taiwan and Japan can be used for loans. I replied that the land rights of East Asian farmers are different from those of American farmers. In the United States, contiguous land and its management system match each other, while small-scale land in East Asia cannot become collateral for formal financial institutions. Because first, costs are high; second, information is asymmetric; third, there is default risk. We now separate management rights and concentrate land management. This is a useful attempt, but it may not necessarily succeed. Because management rights have endless constraints in the process of realization; unlike stocks and other things, they cannot be traded immediately. So how did Taiwan and Japan do it? In the farmers' association of a township or a county, there is a rural credit department, and the rural credit department can accept farmers' land mortgage loans. Why? First, costs are lower, and wages are not so high; second, information is symmetric; third, if the money is not repaid, the farmers' association can manage your land and realize it immediately. Therefore, the built-in financial system of small farmers in East Asia matches the cooperative credit system.