Main Problems Currently Facing Rural Reform and Policy Choices
I. Main Problems
(1) The cost of grain is getting higher and higher, the price ratio of grain is getting lower and lower, land is seriously being converted away from grain production, and the security crisis of grain and other major agricultural products is becoming increasingly evident;
The national agriculture and statistics departments both say: China's grain and other major agricultural products have achieved "ten consecutive increases," with total output exceeding 120 billion jin. Per capita staple grain availability has reached 900 jin, setting a historic high. But at the same time, net imports of grain and related products have been growing at double-digit rates, reaching 14 billion jin by 2013, also setting a historic high. The self-sufficiency rate for major agricultural products set by the state is 95%, but the actual self-sufficiency rate has already fallen below 90%.
Has China's grain really achieved "ten consecutive increases"? With per capita grain output at 900 jin, would net imports of grain and related products continuously grow at double-digit rates? India's per capita grain is less than 400 jin, its grain output growth is slower than China's, and its population growth is much faster than China's, yet India's grain imports are less than one-tenth of China's, and its import growth rate is far slower than ours.
Could the truth be exactly the opposite, that China's output of grain and other major agricultural products is in a relatively low trough period?
It is now elderly agriculture (producing grain); this is an indisputable fact. Since 1990, China's grain purchase and storage prices have only risen 6-fold, while everything else has risen N6-fold. Of course, only the left-behind elderly, who have labor but no market price, are engaged in grain production. The question of who will farm the land (grow grain) in the future also deeply worries General Secretary Xi.
Because of the worry that no one will engage in grain production, the government promotes land transfer, with fiscal funds subsidizing so-called agricultural leading enterprises or large operators to transfer land from old farmers at high prices - engaging in so-called intensive management. The average land transfer price is now 800 yuan/mu per year, while Russia's is only 2 yuan/mu per year, the United States is below 100 yuan/mu per year, and Japan is only between 100-150 yuan/mu per year. After China's agricultural leading enterprises or large operators lease old farmers' land at high prices, will they produce grain?
The author has traveled throughout the country and seen countless production bases of agricultural leading enterprises. Scenes of hundreds or thousands of mu of land, or dozens or hundreds of contiguous greenhouses, growing weeds instead of crops can be seen everywhere. The author visits hundreds of villages every year, where grain output has declined year after year while what is reported is year-after-year increases.
I do not understand: no one believes that agricultural leading enterprises or large operators, after obtaining land, would rather let it lie fallow than produce grain, so why do governments at all levels, citing grain security, promote the concentration of farmland at high prices into the hands of agricultural leading enterprises and large operators? Under the push of erroneous policies, the more the central government subsidizes and invests in agriculture, the more frantically local governments do such unreasonable things. The final result is: continuous grain increases are fake, and continuous growth in net grain imports is unavoidable!
(2) Errors in rural reform of the land system, management system, and grassroots government system have left grassroots organizations and governments increasingly disorganized, and rural governance increasingly ineffective;
1. As farmers occupy land without paying rent ("if you don't occupy it, you've lost out") and "occupy more, get more subsidies" (agricultural subsidies are verified according to occupied area; those who occupy land without growing grain also enjoy grain, seed, and other subsidies), and as such unfair and unreasonable policies become "unchanged for a long time" and legalized, the unequal and unfair state of land occupation within villages becomes policyized, legalized, and permanent. This leads to violent land occupation increasing rather than decreasing, and triggers uncontrolled expansion of homestead land and private plots, and even induces many people to begin attacking the legitimacy of the Communist Party's revolution and to produce land deeds from 65 years ago to demand the return of "ancestral property." The land system is not only the root of agriculture, but also the root of the rural economy, the root of rural society, the root of rural politics, the root of rural ecology, and the root of rural culture. Fairness - land to the tiller, equalization of land rights, and public capture of appreciation - is the most fundamental principle for building and perfecting the rural land system, and under the discourse of reform this principle no longer exists. This is the source of the chaotic phenomena in agriculture and rural areas.
2. For a fairly long period, land reform, agricultural industrial policy, and rural economic policy adjustments have not evolved in the direction of consolidating farmers' village community and its autonomy, but in the completely opposite direction. In particular, while abolishing the agricultural tax, the right of the village collective (community) to collect land contract fees by virtue of its land ownership was also abolished, causing the democratic self-governance system of the village community under the leadership of the Party branch to lose the support of the property rights system and economic foundation and increasingly exist in name only. Party leadership in rural areas has increasingly weakened, and the trend toward mafiaization of rural society has become increasingly obvious, and this trend continues to spread.
3. Since reform, the authority of township governments has been continuously weakened, and they basically have no command authority over the various functional departments (vertical lines) under their jurisdiction. In addition, as rural villagers' village communities gradually disintegrate, township Party committees and governments are almost unable to legally or normally and effectively exercise governance authority - the large amount of illegal survival we see among township governments is in fact the result of being forced into a corner. The daily work of the vast majority of township governments now generally consists of only the "four big items": compiling data, preventing and blocking farmers' petitions, dealing with family planning inspections, and chasing projects. Moreover, the vast majority of township Party committees and governments share one common feature in completing these "four big items," which is "faking." It is extremely rare for township economic data, family planning data, fiscal revenue and expenditure data, and data on the use of central transfer payment project funds not to be falsified. "Faking" is a "must" for grassroots Party committees and governments to cope with superiors or maintain their own existence. The level of "faking" represents the work level of grassroots Party committees and governments. "Faking" is the greatest seeking truth from facts for grassroots Party committees and governments.
(3) The opening of the agricultural industry to the outside world is out of control, endangering national security;
Against the background of globalization, the United States and other countries rely on their agricultural technological advantages and capital strength, using free trade as a weapon, in an effort to seize the market share of other countries' agricultural products and fight for pricing power - pursuing stable market share returns and pricing power returns, that is, implementing a strategy of "weaponizing" agricultural products to exercise "control" over other countries' economic, political, and social security. This is both an inevitable strategic choice of the third stage of agricultural development in developed countries and an inevitable strategic choice of leading countries against the background of globalization.
Against the background of globalization, a developing populous country like China must ensure the autonomy of its own agricultural industry in order to safeguard its own security. But after China joined the WTO, it opened up agriculture without precaution. Whether in technology or seeds, its autonomy has increasingly weakened; whether in the overseas market share and pricing power of labor-intensive agricultural products, or the domestic market share and pricing power of land-intensive agricultural products, its autonomy has increasingly weakened; whether in the production, purchase and storage, processing, or logistics and retail commerce of agricultural products and related products, foreign capital enters unimpeded, and many local governments even hand over the grain purchase and sales system to foreign capital. If such a trend continues, it will inevitably endanger national security.
(4) Agricultural modernization is divorced from farmers' urbanization, causing the social risk of modernization transformation to become higher and higher.
In the early period of reform, China's rural registered population was more than 700 million. After more than 30 years of rapid development through reform and opening up, China's rural registered population increased to more than 900 million. In all earlier-developing countries and regions before Asia's "Four Little Dragons," under the modernization background of implementing industrialization and urbanization strategies, when per capita GDP reached 4,500 US dollars, the rural population was basically urbanized - leaving only less than 15% agricultural and rural population. China's industrialization is nearly at its end, per capita GDP has exceeded 7,000 US dollars, and the rural farmer registered population has not fallen from 700 million at the beginning of reform and opening up but instead increased to more than 900 million now. This has no precedent in the modernization process of all earlier-developing countries and regions in the world. The author's explanation for this phenomenon is: after the gradient transfer of general global manufacturing to China, a "China inflection point" appeared - global general manufacturing reversed from a minority manufacturing for the majority to the majority manufacturing for the minority - general manufacturing became excessive, and the low wages of Chinese migrant workers cannot support the high cost of their urbanization. Under the background of China's reform and opening up, export-oriented industrialization - developing general manufacturing - has only created 200-300 million urban vagrants, without creating 200-300 million urban citizens and families.
However, China's agricultural modernization path and policy arrangements are based on the "earlier-developing experience" of more than 85% of the rural population becoming urban citizens. After the emergence of the "China inflection point" in global general manufacturing, this "earlier-developing experience" has in fact become a fallacy. If agricultural modernization and farmers' urbanization are not planned and considered in a coordinated way at the same time - agricultural modernization wants the smallholders' land but not the smallholders (people), and industrial modernization and urbanization want migrant workers' labor but not migrant workers (people) - the social risk of China's modernization transformation may cause China's modernization cause to fail at the final step.
II. On the Choice of Path, Guidelines, and Policies
First, on the path of agricultural and rural development.
If one faces squarely the objective existence of the "China inflection point" in global general manufacturing and its impact, and if one faces squarely the reality that against the background of more than 30 years of rapid development through reform and opening up, the rural population has not fallen but increased by 200 million, then one must reconsider the path issue of China's rural and agricultural modernization.
The issue of China's rural and agricultural modernization path is essentially the issue of the organizational model of farmers and agriculture, and can be highly summarized as two paths: one is to take the path of agricultural and rural modernization in which the government allies with the newly emerging bourgeoisie to eliminate smallholders, and the other is to take the path of agricultural and rural modernization in which the government supports village communities (communities) to transform traditional smallholders into organized modern smallholders. The former is the "Philippine path," proven to be a failed path; the latter is the path of Japan, South Korea, and China's Taiwan, proven to be a successful path. With industrialization already near its end, economic development speed already slowed, and more than 900 million rural registered population still remaining, how can the government choose the path of agricultural and rural modernization in which it allies with the newly emerging bourgeoisie to eliminate smallholders? Rapidly transforming the rural farmer problem into the urban migrant worker problem is not only harder to solve, but also dangerous. Solving the farmer problem in China may take longer than in the earlier-developing countries and regions before Asia's "Four Little Dragons," and the rural population going back and forth between cities and rural areas may require several generations of "free choice" before stabilizing. Therefore, the erroneous practice of supporting leading enterprises to annex smallholders must be stopped and corrected. For a fairly long historical period, the government must take supporting the construction and development of smallholder village communities and relying on them to lead rural agricultural modernization as the fundamental starting point and focus of guidelines and policies.
Second, on the three basic systems of agriculture, rural areas, and farmers. If for a fairly long historical period it is still necessary to rely on village communities to lead rural agricultural modernization - development, construction, and governance - then it must be confirmed that the village (villagers') community under the leadership of the Party branch is the basic organizational system for farmers, that the "two-tier management system combining unified management with separate management" within the village (villagers') community is the basic management system of agriculture and the rural economy, and that the village (villagers') democratic self-governance system is the basic rural governance system. The basic organizational system, basic management system, and basic governance system are an integrated whole. The "basic management system" of the "two-tier management system combining unified management with separate management" has already been written into the Constitution, and the other two basic systems should also be written into the Constitution and adhered to over the long term. As for the three basic systems being a complete system, the author has a special discussion in the book "Telling the Premier the Truth Again," and will not belabor it here. What needs special emphasis is that the three basic systems exist on the foundation of collective ownership by the village community (members) of rural land, and shaking the collective ownership of rural land shakes the foundation of the development, construction, and governance of agriculture, rural areas, and farmers. The central government's emphasis that rural agricultural reform cannot touch the bottom line of collective land ownership is completely correct, and this bottom line must be upheld unwaveringly. Only when the "three basics" are determined will policy-making not waver and change frequently, will transfer payments have a foothold, will policy implementation have a handle, will the development of agriculture, rural areas, and farmers have subjectivity, and will the majority of people be able to share the fruits of reform and development.
Third, on the improvement of the rural land finance system. Now, the mainstream group with discourse power generally believes that only when land (farmland) is privatized can farmland be mortgaged for loans at financial institutions, and only then will farmers' farmland be farmers' true property. This understanding is one-sided, even confused. Vietnam's land has been privatized for more than 20 years, and Vietnamese farmers' farmland still cannot be mortgaged for loans at financial institutions. The farmland of Japan, South Korea, and Taiwan also does not achieve mortgage loans in formal financial institutions, but achieves mortgage loans in the internal finance of farmers' communities (township farmers' associations or agricultural cooperatives). The farmland of East Asian smallholders and the farmland of American large farmers are completely different farmland, and also completely different farmers. The contiguous farmland of American large farmers can be mortgaged for loans at formal financial institutions, or in other words, American farmland property rights and formal finance are matched. But the farmland of East Asian smallholders cannot become collateral for formal financial institutions. In China, it is not that the land system does not adapt to the financial system, but that the financial system does not adapt to the land system (the author has a special chapter discussing this in the book "Telling the Premier the Truth Again," and will not repeat it here). The author calls the mutual-aid cooperative finance within farmers' organizations (village communities) "built-in finance," and has conducted a large number of village community "built-in finance" experiments. The experiments prove that as long as mutual-aid cooperative finance is established within the village community, the contracted land and collective membership rights of village community members can be mortgaged for loans in "built-in finance." Under collective ownership of rural land, as long as members' contracted rights and share ownership rights are matched with "built-in finance," the liquidity of their land rights and the exit right of membership rights can be realized. The farmland of East Asian smallholders is different from the farmland of American large farmers, and can only realize mortgage loan rights in "built-in finance." In China, it is not that the farmland system does not adapt to the financial system, but that the financial system does not adapt to the farmland system. If this issue is not explained clearly, a minority wanting to carry out privatization will cause the majority to confusedly join in the clamor. In fact, under market economy conditions, collective ownership of land within village communities is not public ownership in the traditional sense, but a system of popular ownership, and also a form of existence of private rights. This kind of community members' "share private ownership (special shareholding system)" requires the support of the community's "built-in finance" in order to be fully implemented.
Chinese rural areas have maintained smallholder agriculture and smallholder society for thousands of years without being able to upgrade, and the most fundamental reason is ineffective financial supply and ineffective organizational supply. The most fundamental reason for ineffective financial supply is the failure to develop village community "built-in finance." Ineffective organizational supply is also highly related to ineffective financial supply. When village community "built-in finance" becomes strong, the effectiveness of the village community (organization) will greatly improve. China's rural financial reform and improvement of land property rights must be considered in a coordinated way with the choice of the modernization path of agriculture, rural areas, and farmers and the construction of the "three basics." Japan, South Korea, and China's Taiwan, for more than a hundred years, have only permitted rural areas to develop farmers' organizations (farmers' associations or agricultural cooperatives) "built-in finance" and restricted the development of other finance. This is worth learning from. A determination must be made to correct the directional errors of rural financial reform in recent decades, and the central finance must focus on supporting the development of village community "built-in finance." Now direct fiscal investment in rural agriculture is not small, and its growth is also fast, and the crowding-out effect cannot be ignored. Fiscal funds should spend more on supporting the development of "built-in finance."
Fourth, break through the ideological obstacles to rural reform and development, and reform according to law. In his later years, Deng Xiaoping positioned the "contracting" system as a "transitional" model for solving food and clothing problems, and emphasized that common prosperity must go through a "second leap" - developing the collective economy. President Xi emphasizes that the two thirty-year periods cannot be set in opposition to each other, that rural agricultural reform must uphold the bottom line of collective land ownership, and that the collective economy must be developed and common prosperity realized. This fully conforms to China's reality and the people's wishes. However, in China's universities and research institutions, in virtual worlds such as online media, in legal circles, in financial circles, and among private entrepreneurs, there is always another reform ideology influencing rural reform and development: if you advocate collective land ownership, they attack it as "unclear property rights" and label you as anti-reform; if you emphasize the collective economy and "common prosperity," they attack it as "egalitarianism" and label you as "reform regression"; if you advocate rebuilding village communities, they attack it as reviving the "people's commune" and label you as "leftist"; if you emphasize the core role of the Party branch, they attack it as "one-party dictatorship" and label you as opposing democratic self-governance; if you emphasize grain security, they attack it as reviving the "planned economy" and label you as "anti-market economy." The reform goal in the hearts of this group is economic privatization and political multi-party system. Although they are not many in number, their discourse power is very great. After their interpretation, any resolution of the central government is completely no longer the central government's resolution. Therefore, reform must be brought onto the track of rule of law, an ideology of reforming according to law must be established, reform must be carried out according to law, and illegal reform must be pursued.