Review of Agricultural Modernization and Anti-poverty Policies in China（1978-2012）

Research Center for Rural Economy, Ministry of Agriculture, P. R. China International Poverty Reduction Center in China

July, 2012

PART I

Review of Agricultural Modernization in China¹

1 Introduction

The Third Plenary Session of the Eleventh Central Committee of China’s Communist Party marked the beginning of rural reforms in China. From 1978 to 1984, the rural reform started from the fundamental management system in rural areas to abolish the people's communes and institute the responsibility system, the main form of which was the household contract that linked remuneration to output, thereby preliminarily establishing the household contract system. From 1985 to 1991, following the establishment of household contract system, the rural reform witnessed a comprehensive development by focusing on reforming the purchasing and marketing system of agricultural products, developing township and village enterprises (TVEs), and practicing self-governance among villagers. From 1992 to 2001, in line with the requirements of establishing socialist market economic system, the rural reform was deepened by stabilizing and improving the fundamental management system in rural areas, deepening the reform of distribution system for agricultural products, encouraging institutional innovation in TVEs, adjusting the rural industry structure, and speeding up the rural labor migration. Since 2002, the rural reform has entered a new stage of integrated urban-rural development by stabilizing and completing the land tenure system, conducting an all-around rural tax and fee system reform, deepening the reform of grain and cotton distribution systems, establishing the agricultural subsidy policy system, expanding the opening of agriculture, improving the rural labor employment environment, and pushing forward rural constructions.

So far China’s rural reform has made significant achievements. First, the principal position of farmer households in production and management has been set up. Meanwhile, the dual management system that integrates unified with separate management on the basis of household contract management has preliminarily taken shape. Second, state monopoly over purchasing and marketing was abolished and the distribution system for agricultural products and rural marketing system have been cultivated. Third, the highly centralized planned economic system was broken and the marketing mechanism began to play a basic role in resource allocation. Fourth, closeness or semi-closeness of agriculture was terminated and the opening up is increasingly expanded. Fifth, the people's communes were abolished and the democracy at the grass-roots level was gradually promoted. Sixth, integrated rural-urban development was implemented to preliminarily break the urban-rural dual

¹ This part is written by the research team of Research Center for Rural Economy, Ministry of Agriculture, P. R. China. The team members are Song Hongyuan, Zhao Changbao, Wu Zhigang, Ma Yongliang, Wang Ou, Chen Yanli, Zhang Hengchun, Su Zhen and Zhang Hongkui.

economic structure.

Policy is one of the core factors to promote the agricultural development. During the last 30 years, following the gradual promotion and continuous deepening of the rural reform, China has continuously adjusted and improved the economic policies on agriculture and rural areas. In particular, the Central Committee of the China’s Communist Party and the State Council have implemented a series of powerful policies and measures to promote the development of agriculture and rural areas since 2004. In this case, the agricultural policy system has basically taken shape in building a well-off society in an all-round way. These policies and measures have greatly promoted the development of agriculture in China, to successfully feed 20% of the world’s population with merely less than 6% of the world’s freshwater and 9% of the world’s arable land.

Poverty alleviation is always an important content of China’s rural reform and is also the major focus of agricultural policies. Although the focus of China’s agricultural policies has been adjusted at different phases, the two core objectives remain unchanged, that is, guaranteeing the effective supply of major agricultural products and improving the income level of rural residents. The agricultural policies which are built up and improved by increasing both production and income have played a critical role in alleviating problems in China’s rural areas. Many scholars suggest that reforming land use right and improving agricultural price have increased the income of farmers and are the major driving force for alleviating poverty in the early days of the opening-up and reform. Policies issued in recent years to support agriculture and to benefit and to rich farmers have also exerted positive influence on poverty reduction in rural areas. In particular, the agricultural subsidies and policies to exempt agricultural taxes have directly alleviated the taxation burden of the poverty-stricken population. In this way it has benefited farmers implementing agricultural management, especially those easy to get into poverty. These policies and development-based poverty alleviation supplement each other, together promoting China’s poverty reduction undertakings and contributing to the poverty alleviation and elimination across the world.

 

This report will briefly introduce the forming process and basic framework of China’s agricultural policy system and specify some of the policies. Due to the limited number of supported materials, currently we cannot make a comprehensive assessment of the effect of these policies. However, these series of policies and measures have undoubtedly made direct or indirect contributions to China’s poverty reduction.

 

2  Overview of Agricultural Modernization Process and Agricultural Policy System in China

2.1 Development of Agriculture in China

Through over thirty years’ development, the agriculture in China has achieved a historical progress. The agricultural production has continuously developed. The rural economy has seen an overall prosperity, and the living standards of farmers have been improved significantly. Generally, there are five major aspects of achievements of development of agriculture.

First, the output of agricultural products is growing substantially and major agricultural products have been shifted from chronic shortage to aggregate balance and surplus during good harvest years. From 1978 to 2011, the grain output in China increased from 304.765 million tons to 571.21 million tons in 2011, cotton output from 2.17 million tons to 6.6 million tons, meat output from 10.62 million tons to 79.54 million tons, and aquatic product output from 4.65 million tons to 56.11 million tons. Also in this period, the output of grain, vegetables, fruits, meat, and aquatic products ranked first in the world for years.

Second, the structure of agricultural production is significantly optimized. The internal structure of the agriculture industry has seen marked improvement, with the output value proportion of farming decreasing from 80.0% to 53.3%, output value proportion of forestry increasing from 3.4% to 3.7%, output value proportion of animal husbandry increasing from 15.0% to 30.0%, and output value proportion of fisheries operations increasing from 1.6% to 9.3%.

Third, the intensification level of agriculture is greatly improved. The technology contribution is improved year by year and the contribution of technologies to agriculture had reached 53.5% in 2011, a 26 percentage increase from that in 1978. Agricultural mechanization has been improved rapidly and the mechanization of farming, seeding and harvesting had reached 54.5% in 2001, up 33.7 percentage point compared with that in 1978.

Fourth, the income of farmers sees a continuous growth. From 1978 to 2011, the per capita net income of farmers increased from CNY 152 to CNY 6, 977, with an average annual increase of 7.4%. The Engel’s coefficient of rural residents decreased from 67.7% to 40.4%. Since 2010, the growth of rural residents’ incomes has successively exceeded that of urban residents, narrowing the gap of incomes between rural residents and urban residents.

Fifth, with the rapid development of agriculture, the modernization level of Chinese agriculture keeps on improving. Based on the measurement standards and methods of task groups of Chinese Academy of Agricultural Sciences, by using measurement indicators in 2011 like output value proportion of agriculture, proportion of people engaged in agriculture, commodity rate of agricultural products, agricultural labor productivity, agricultural mechanization rate and contribution of science and technology progress on agriculture development, currently, China’s agriculture modernization has entered into the growth phase in an overall manner, as shown in Table 1.

Table 1 Flag value of main indicators in terms of China’s agricultural modernization in different phases

	Traditional	Implementation Period of			Agricultural
Main Indicators		Agricultural Modernization			Post-moder	Data in
	Agriculture
		Starting	Growth	Maturity	nization	2011
	Phase
		Phase	Phase	Phase	Phase
Output value
proportion of	>50%	20%-50%	10%-20%	5%-10%	<5%	10.1%*
agriculture
Proportion of
people engaged	>80%	50%-80%	20%-50%	6%-20%	<6%	36.7%*
in agriculture
Commodity rate
of agricultural	<30%	30%-60%	60%-90%	90%-95%	>95%	84.3%**
products
Agricultural labor
productivity (CNY	<0.54	0.54-1.28	1.28-2.16	2.16-3.60	>3.60	1.45*
10,000/person)
Agricultural
mechanization	<5%	5%-30%	30%-60%	60%-80%	>80%	54.5%
rate
Contribution of
science and
technology	<5%	5%-30%	30%-60%	60%-80%	>80%	53.5%
progress on
agriculture
development

Note: The standards for dividing agricultural modernization phases are determined by the research results of the tasks groups of Chinese Academy of Agricultural Sciences (2010) and Huang Delin (2010). * Data are from 2010.

 

** Data are from 2009.

Source: The agricultural mechanization rate and contribution of science and technology progress on agriculture development are released by Ministry of Agriculture. The commodity rate of agricultural products is replaced with the commodity rate of farming produce. Other data are sourced from China Statistical Yearbook (2011), National Agricultural Production Cost and Revenue Information Summary, and Statistical Bulletin in 2011.

 

Although the agriculture in China has made substantial growth, the agricultural modernization process still lags behind compared with the fast industrialization and urbanization，and agricultural development still confronts many contradictions and problems. First, resource restriction on agricultural production is further intensified due to increasingly tense freshwater resources and growing influence of climate changes. Second, the demand for agricultural products continuously increases and the requirement for quality also increases, intensifying the pressure on grain security and supply of major agricultural products. Third, the aging and personal quality structure of people engaged in agriculture is becoming prominent and the problem of insufficient labor capital to develop modern agriculture takes into shape. Fourth, the material equipment level of agriculture is low and the technological innovation and promotion capabilities of agriculture are relatively low. Fifth, many factor resources like capital, technologies, talent and management, flow from agriculture and rural areas to industry and urban areas in an accelerated manner, severely weakening the capability of agriculture and rural areas for sustainable development. Sixth, the small-scale agricultural production in decentralized management mode, and professionalism, standardization, scale, and intensification of production and management are very low.

In addition, the agricultural product market system, socialized service system for agriculture, and agriculture support and protection system have yet to be improved.

2.2 Evolution of Agricultural Policies in China

Since the rural reform is gradually deepened, China’s agricultural policies have been subject to constant adjustment and improvement. The external environment and major problems to be resolved related to agriculture and rural areas vary with historical periods. As a result, the evolution of China’s agricultural policies also embodies prominent phase characteristics. In general, the evolution of agricultural policies can be divided into the following stages.

From 1978 to 1984, the household contract system was implemented and the reform of distribution system for agricultural products was launched. Before the reform, the people’s commune system featuring large in size and collective in nature and integration of government administration with commune management was implemented in rural areas of China. In that case, the enthusiasm of farmers for production was not high and the agricultural productivity was extremely low. In 1978, the reform was first initiated from changing the fundamental management system in rural areas, to promote the household production contract system, separate the land ownership from the land management right, and establish the principal position of farmers in production and management. Meanwhile, the reform of the distribution system for agricultural products was initiated. The procurement price of agricultural products such as grain was raised. In 1979, the average procurement price of 18 major agricultural products such as grain, cotton and oil was raised by 24.8%. The monopolized procurement scope was narrowed and the procurement categories were reduced. In addition, the 25 mandatory production plan targets issued by the country towards major agricultural products were basically abolished. Restrictions on trade markets were released to allow negotiated purchasing and marketing, and released purchasing and marketing of some agricultural products. During the period from 1978 to 1983, the transaction amount of produce fairs increased by about 100%.

From 1985 to 1991, the state monopoly of agricultural products procurement was abolished and the duel system for agricultural product distribution was implemented. A huge increase in the capability to supply agricultural products minimizes the necessity for the long-term unified purchasing grain. In 1985, the Chinese government decided to abolish the unified purchasing of agricultural products by the state according to fixed quotas. Except several categories, no unified purchasing according to fixed quotes would be delivered to farmers. Instead, contract purchase and market purchase. For major agricultural products of vital importance to the nation’s economy and the people’s livelihood, the ‘duel system’ was applied. In addition, the mandatory plan management was performed on grain and cotton. The unified purchasing was abolished in form. Instead, contract purchasing was used. The purchasing base number and price were managed by the state. The agricultural products surplus after the unified purchasing task was finished can be sold on market. The price was subject to market fluctuation. Meanwhile, the operation and distribution of fresh agricultural products such as fruits, vegetables and aquatic products were further opened to cultivate multiple forms of distribution subjects.

The market-oriented reform process of the agricultural product distribution system was greatly accelerated. In 1993, the quantitative rations method that had been implemented for forty years was basically abolished. Since 1994, the ’maintaining ordered quantity of grain and enabling price to vary with market fluctuation’ policy has been implemented on the grain ordered by the state, completely abolishing the unified purchasing of agricultural products by the state according to fixed quotas. In 2001, the market-oriented reform of grain purchasing and marketing was carried out across the whole country. In the same year, the cotton market was fully opened. As a result, the market-oriented distribution system for agricultural products was basically set up. To ensure the stable supply of grain, the grain reserve system and grain risk funds were successively established by the state and the provincial governors assuming responsibility for the ‘rice bag’ (which means grain supply in Chinese) was implemented. In 2001, after China entered into the WTO, the regulation mode of the Chinese government towards agriculture was likely to change and the non-price regulation become the major means supplemented by price regulation. By so doing, the macro-regulation capability of agriculture was continuously strengthened.

From 1992 to 2001, the distribution system of agricultural products was established and the Macro-adjustment system of agriculture was explored. The market-oriented reform process of the agricultural product distribution system was greatly accelerated. In 1993, the quantitative rations method that had been implemented for 40 years was basically abolished. Since 1994, the “maintaining ordered quantity of grain and enabling price to vary with market fluctuation” policy has been implemented on the grain ordered by the state, completely abolishing the unified purchasing of agricultural products by the state according to fixed quotas. In 2001, the market-oriented reform of grain purchasing and marketing was carried out across the nation. In the same year, the cotton market was fully opened. Up to this point, the market-oriented distribution system for agricultural products is basically set up. To ensure the stable supply of grain, the grain reserve system and grain risk funds were successively established by the state and the provincial governors assuming responsibility for the “rice bag” (which means grain supply in Chinese) was implemented. In 2001, after China entered into the WTO, the regulation mode of the Chinese government towards agriculture was likely to change and the non-price regulation become the major means supplemented by price regulation. As a result, the macro-regulation capability of agriculture had been continuously strengthened.

From 2002 till now, the agricultural support and protection system was improved to boost the industry-agriculture and integrated urban-rural development. Since entering the new century, China’s GDP per capita has exceeded 1,000 US dollars in a stable manner. The comprehensive national strength and state financial situation have been significant improved. However, the problem of imbalanced industry-agriculture and urban-rural development was gradually prominent. Against this circumstance, the Chinese government decided to put agriculture and rural area development into a more prominent position. Since 2002, the Chinese government has pushed forward the guiding ideology that “agriculture, rural areas, farmers” are the priority of the all, specified that the coordinated urban-rural development is the fundamental strategy, carried out the basic principle for “agriculture, rural areas, farmers” work (i.e. “giving more to, taking less from and liberalizing the farmers" and “industry nurturing agriculture and cities supporting the rural areas”), and introduced a series of policies to aid agriculture and to benefit and rich farmers. The agricultural taxes were abolished in an all-round manner. In 2006, the three categories and twelve types of taxes and fees originally levied on farmers were completely abolished across the state. The input in agriculture and in rural areas was increased. From 2006 to 2011, the expenditure on “agriculture, rural areas, farmers” arranged by the central budget increased from 339.7 billion Yuan to 1040.8 billion Yuan. The proportion of the expenditure on “agriculture, rural areas, farmers” in the budget spending increased from 14.5% to 18.4%. The subsidies for agricultural production are carried out with five categories of subsidies, respectively direct subsidies for grain farmers, subsidies for high-quality seeds, agricultural machinery subsidy, comprehensive subsidies for agricultural input and subsidies for agricultural insurance. The categories and scopes of subsidies are further expanded. In addition, the government further strengthened the infrastructure construction for agriculture and rural areas. It also tried to accelerate the pace of agricultural technological progress, develop the social undertakings in rural areas and deepen the rural comprehensive reform. In this way, the new rural construction and modern agricultural development has made significant progress.

2.3 Current Agricultural Policy System in China

Through the last 30 years’ development and reform, a comparatively complete framework for China’s agricultural policies has been established. It mainly consists of 16 categories, as shown in the following figure.

Figure 1 Framework of China’s Agricultural Policies

1. Fundamental management system. The two-track management system that integrates unified with separate management on the basis of household contract management is implemented in the rural areas of China. As the core of the system, the household contract management enables the contractual right of land that is obtained by household contract to be transferred according to the law and on a voluntary and compensatory basis.
2. Arable land protection system. The focus of the arable land protection policy is to maintain the arable land quantity and to improve the arable land quality. In particular, it tries to establish the fundamental arable land protection system, carry out the most stringent arable land protection system, strengthen the arable land quality construction, and improve the arable land transfer and requisition system.
3. Food security policy. The policy includes the following contents. (a) To strive to enable the domestically produced grain to meet the requirement for grain and ensure the self-sufficient rate of grain to be around 95%. (b) To implement the provincial governors assuming responsibility for the rice bag (grain supply), enabling the heads of provincial governments to be responsible for grain supply of the responsible provinces.

(c) To carry out the bonus policy for core grain producing areas and improve the food security guarantee level for low-income population.

4. Structure adjustment policy. On the basis of guaranteeing the efficient supply of major agricultural products, the Chinese government leveraged the regional comparison advantages, adjusted the agricultural production structure and economic structure in rural areas, and raised competitiveness.
5. Agricultural product quality and Safety policy. The Chinese government issued the Law of the People’s Republic of China on Quality and Safety of Agricultural Products, set up the regulatory system, carried out the agricultural product quality certification, put into force the standardized production of agriculture, and established the monitoring & retrospect system.
6. Agricultural tax policy. The Chinese government totally abolished the agricultural taxes, eliminated the charges from farmers such as village-level retention and township-level comprehensive arrangement, and set up and improved the “one discussion over each matter” system for public welfare undertakings in rural areas.
7. Agricultural subsidy policy. It mainly includes the revenue-type direct subsidy policies, production-type subsidy policies, technological promotion subsidies, subsidies for public welfare undertaking construction of agriculture and rural areas, and the special transfer payment and subsidies targeting at local areas.
8. Price support policy. It includes carrying out the minimum purchasing price for major agricultural products and gradually increasing the price level.
9. Market distribution policy. The Chinese government set up the agricultural product market system, cultivated diversified market subjects, and facilitated the diversification of circulation forms. It also strengthened construction of various markets and constructed the nation-wide circulation network. In addition, it implemented the green transport channel policies for fresh agricultural products and reduced the circulation cost.
10. International trade policy. In terms of import, the Chinese government reduced the tariff rate to implement the commitments to enter the WTO and set up the tariff rate quota management system for agricultural products. In terms of export, the government abolished the export subsidies for agricultural products and positively carried out the free trade area studies.
11. Agricultural technology policy. The government established the agricultural scientific research system consisting of academies of agricultural sciences at central, provincial, and city levels and agricultural colleges and institutes. It also established the agricultural technology promotion system consisting of stations for popularizing agricultural technologies at central, provincial, city, and county levels. It included the agricultural technology promotion into the public finance, and gradually deepened the reform of agricultural scientific research and technology promotion system.
12. Agricultural infrastructure construction policy. The government focused on the arable land irrigation and water conservancy, strengthened the agricultural infrastructure construction. It also included the agricultural infrastructure construction in to the financial output scope, applied the fixed assets investment increment of the state finance to mainly the rural areas, and gradually increased the proportion of government land transfer expenses used for rural areas.
13. Rural finance policy. The government deepened the financial system reforms in rural areas, established the financial system featuring joint development of policy-based finance, commercial finance, and cooperation-based finance, and carried out the policy-based agricultural insurance.
14. Rural labor transfer and employment policy. The government carried out the rural labor transfer employment services, established the training system for rural labor transfer employment. It also guaranteed the migrant workers’ legitimate rights and interests and set up the work injury insurance, medical care insurance and endowment insurance for migrant workers, and resolved the education problems of children of migrant workers.
15. Agricultural resource and environment policy. The government implemented the proper use and ecological protection of land, water, grassland, and fishery resources, strengthened the exploitation of renewable energies related to agriculture, and strived to develop the circular agriculture.
16. Rural anti-poverty and development policy. It tries to Set up the development-oriented anti-poverty system, carry out the anti-poverty development in the entire village, accelerate the industrialized poverty alleviation, strengthen the training in labor from poverty-stricken areas, and mobilize people of all social circles to participate in poverty alleviation.

3 Rural Land Tenure System

3.1 Household Contract Management System

In the early days of reform and opening-up, on the basis of exploration of managerial responsibility systems such as ‘fixed output quotas for individual households’ and ‘work contracted to households’, gradually took shape the household contract management system for rural land. It exerted a huge influence on agricultural production development. Currently, the household contract management system has been established and is relatively stable. The basic content can be concluded as ’consolidating the principal position of households in contract management, stabilizing the rural land contract relationship, normalizing the transfer of the contractual right of land, and implementing the most stringent arable land protection system.’

 

1. To consolidate the principal position of households in contract management.

According to provisions of the Constitution, the duel management system that integrates unified with separate management on the basis of household contract management is the fundamental management system in rural areas. In 1982, the Central Committee of the CCP issued the No. 1 Document on the issue of agriculture, rural areas and farmers, making clear that the system of fixed output quotas for individual households and work contracted to households is part of the socialist agricultural economy". In the 21^st century, the Central Committee explicitly requires that the land right should be devolved to rural households and protection should be provided for household contractual right. The Central Committee’s Document No. 1 for 2002 definitely pointed out that the area and land block of the contracted land should be fully implemented to each household. The contract management contracts are signed with each household. The land contractual right certificates should be delivered to each household. Forcible withdrawal of the household contracted land for concentration of landholding is prohibited. The Law of the People’s Republic of China on the Contracting of Rural Land that has been implemented since 2003 explicitly stipulates in the form of law “granting to the farmers long-term and guaranteed land-use right”.

2. To stabilize the rural land contract relationship. On 1984, the CCP’s Central Committee released the No.1 Document, stipulating that the land contract period should be longer than 15 years. In 1993, the CCP’s Central Committee released No. 11 Document, proposing that the land contract period should be extended to 30 years. The Law of the People’s Republic of China on the Contracting of Rural Land that has been implemented since 2003 explicitly stipulates in the form of law that “the term of contract for arable land is 30 years; the term of contract for grassland ranges from 30 to 50 years; the term of contract for forestland ranges from 30 to 70 years” and “during the term of contract, the party giving out the contract may not take back the contracted land.” The Decision of the Central Committee of the Communist Party of China on Several Big Issues on Promoting the Reform and Development of Rural Areas that was passed on the Third Plenum of 17^th CCP’s Central Committee in 2008 further proposed that the land contract relationship needs to keep stable and remain unchanged permanently. With regard to the time connotation of “remain unchanged permanently”, concerned experts note that it may refer to the entire primary stage of socialism to continue at least through the middle of the 21^st century.
3. To allow the transfer of contracted land and specify the circulation principals and principles. The No. 1 Central Document released by the CCP’s Central Committee in 1984 noted that the contracted land of farmers can be subcontracted at one’s will. The No. 18 Document released by the CCP’s Central Committee in 2001 made clear the principals and principles of land transfer, stressing that “the principals of land transfer are farmer households" and putting forward that “the transfer of contract land-use right must be carried on according to the law and on a voluntary and compensatory basis”. In the Law of the People’s Republic of China on the Contracting of Rural Land, it is explicitly stipulated that “the right to land contractual management obtained through household contract may, according to law, be circulated by subcontracting, leasing, exchanging, transferring or other means. The right to land contractual management shall be circulated according to the principle that consultation on an equal term, voluntariness and compensation, and no organizations or individuals may compel the contractor to circulate his right to land contractual management or prevent him from doing so.”

4. To strictly control the shift from arable land to non-farming land. The PRC Land Administration Law passed in 1998 aims to formulate the overall planning of land use through regulations on land purposes, take back the arable land approval right and carry out the dynamic total amount balance system for arable land of “occupying one and supplementing one”, thereby implementing the “most stringent arable land protection system”. In 2004, the State Council released the No. 28 Document reaffirmed to strictly carry out the land administration law, review and approve the land strictly according to the power as prescribed by the law, strictly implement the compensation system for arable land occupation, and strengthen the implementation and management of overall planning of land use, city planning, countryside and market town planning. In 2006, the State Council issued the No. 31 Document, further making clear the responsibilities of land management and arable land protection and proposing that major owners of the local people’s governments at various levels should be responsible for the amount of arable land reserved, basic protection areas of arable land, overall planning of the land use, and annual plan implementation within the responsible administrative regions.

3.2 Management System for Rural Collective Construction Land

In 1958, the people’s commune system was established in rural areas and the rural construction land was turned over to the collective. Before 1981, the rural collective construction land had long been used for free. In 1982, the State Council issued the Administrative Regulations on Land Used for Building Houses in Villages and Towns to require each local government to carry out the land use planning for village and town construction, strictly follow the land use approval procedure, and control the area of construction land targeting at problems such as farmers building houses and construction land use of commune- and brigade-run enterprises and public institutions. The PRC Land Administration Law that has been formally implemented since 1987 stipulates that corresponding compensation should be paid when township enterprise construction or non-farming population in cities and towns building houses has occupied the collective land.

Since 1999, important adjustment has been made to the rural collective construction land system. First, the rural collective construction land was included into the annual plan management of land use. Second, except the land use by establishing township enterprises, building houses by farmers, and carrying out public welfare undertakings, any other institution or individual must use only the state-owned construction land. The collective land-use right cannot be sold, transferred or rented out for non-farming construction purposes. Third, the rural collective economic organizations are endowed with the right to take back the right to use the original land.

3.3 Rural Land Expropriation System

The Regulations Concerning Land Expropriation for State Construction issued in 1982 stipulated that the ownership of the land expropriated by the state belongs to the state and the land-use institutions have only the land-use right; for the leased and borrowed temporary land, after the period of use expires, the farming conditions should be restored and the land should be returned back to the original production team (i.e. land owners). These provisions were subsequently adopted by the PRC Land Administration Law and continued to be used till 2004. In 2004, the State Council released the Decision of the State Council on Furthering the Reform and Intensifying the Land Administration. It requires further enhancing the most stringent land administration system in keeping with China's national conditions.

According to China’s Land Administration Law and relevant provisions issued by the State Council, the main content of the existing rural land expropriation system includes the following aspects. First, before the agricultural land is shifted to the construction land, the ownership of the land should be first taken over by the state. Second, compensation should be made according to the original purposes of the appropriated land in case of appropriating the rural collective land. Third, for projects with stable revenues, farmers can price and convert the land-use right that is approved as prescribed by law into the share to participate in such projects. Fourth, the right to know and the right to be heard of farmers need to be guaranteed. Fifth, the land compensation fees are mainly used for the farmers whose land is appropriated.

4 Policies for Agricultural Research and Education

The Chinese government, relying on the advance of science and technology as a major strategic measure to vitalize agriculture, has issued a series of policies to deepen the reform in agricultural science and technology and promote the development of agricultural science and technology.

4.1 Policies for Agricultural Science and Technology

1. In 1978-1984, the Chinese government reconstructed agricultural research institutions and completed the scientific research system. In order to reconstruct the agricultural scientific research system seriously damaged during the Cultural Revolution. In 1978, the State Council approved the reconstruction of the Chinese Academy of Agricultural Sciences and the Chinese Academy of Forestry Sciences, and the establishment of the Chinese Academy of Fishery Sciences by the State Aquatic

Product Bureau. In order to guide agricultural science and technology in China, the National Science and Technology Conference held in the same year passed the Outline of 1978-1985 National Science and Technology Development Planning, in which agriculture as an integrated discipline of overall significance was listed in the 17 key projects. In June 1979, the Ministry of Agriculture released the 1978-1985 National Agriculture and Animal Husbandry Science and Technology Development Planning, forming a more detailed plan for the development of agricultural science and technology. China initially formed the agricultural scientific research system set in the light of natural divisions and economic characteristics and managed at central and local levels.

2. In 1985-1991, the Chinese government revamped thoroughly the agricultural science and technology system. In January 1985, the State Scientific and Technological Commission first promulgated “Chinese Technology Policies” in agriculture. It outlined the essentials of Chinese agricultural technology policies in the next decade or so. In March 1985, the Central Committee of the Communist Party of China issued “Decision on the Reform of Science and Technology System”, pushing the reform of China’s agricultural science and technology system from the pilot stage to the overall stage. In November 1991, the Central Committee of Communist Party of China issued “Decision on Further Strengthening Agriculture and Rural Work”. It explicitly pointed out the immediate implementation of the development strategy for invigorating agriculture through science and technology and education, and putting forward new requirements to further speed up and deepened the reform of agricultural science and technology in China.
3. In 1992-1999, the Chinese government continued to deepen the reform of agricultural science and technology system, shifted the focus of agriculture to high yield, high quality and high efficiency. In 1993, the Third Plenary Session of the 14th Central Committee of the Communist Party of China made complete arrangements to deepen the reform of economic system, and defined explicitly the reform of science and technology system as a supporting project of the economic system reform. In June 1992, the Ministry of Agriculture released “Decision On Further Strengthening the Work of Revitalizing Agriculture through Science and Education”. It stressed the need to strengthen the work of agricultural scientific research, and enhance the technical reserves of revitalizing agriculture through science and education. In January 1998, the Central Committee of the Communist Party issued “Decision on Major Issues about Agricultural and Rural Work”, emphasizing the reform of agricultural science and technology system, adjusting division of labor and layout, highlighting key projects, encouraging innovation and jointly tackling crucial problems. While deepening the reform of agricultural science and technology system, the State Scientific and Technological Commission issued the new “China’s Agricultural Science and Technology Policies” in January 1998. It defined direction, principles, key areas, crucial technologies and policy measures of China’s agricultural science and technology development by 2010. Faced with the deficiency of creative abilities in China’s agricultural science and technology, in August 1999, the Central Committee of the Communist Party of China and the State Council made requirements in “Decision on Strengthening Technology Innovation, Developing High-tech and Realizing Industrialization”. It includes speeding up innovation, dissemination and application of key technologies in the development of agriculture and rural economy; strengthening the combination of information technology and biotechnology with traditional agriculture technologies to research and developing a large number of key technologies, especially concentrate on new breakthroughs as quickly as possible in two large areas of fine varieties cultivation and water-saving agriculture to offer powerful technological support for agricultural modernization in China.

4. The Chinese government constructed modern agriculture technology system, and strived to realize the breakthrough of agricultural science and technology innovation abilities from 2000. In April of 2001, the State Council printed and distributed the “Program for Development of Agricultural Science and Technology (2001-2010)”, putting forward policies, principles, target tasks, and key emphases in work in the future ten years of the development of agricultural science and technology. In July 2001, the Ministry of Science and Technology released “Guide to Agricultural Science and Technology Parks” and “Administrative Measures for Agricultural Science and Technology Parks (for trial implementation)”, requiring to adopt the modes of operation such as making experiments first, summarizing experience and steadily pushing forward the construction of China’s agricultural science and technology parks. In October 2006, the Ministry of Science and Technology issued “Eleventh National Five-Year Science and Technology Development Planning”, putting forward concrete requirements for agricultural science and technology innovation. In order to meet the needs of the construction of modern agriculture, since 2007, the central government has repeatedly emphasized speeding up the agriculture science and technology research and application, and enhancing the construction of service system of agriculture science and technology. In 2012, the No. 1 Central Document put it focus on speeding up the agricultural science and technology innovation, defined explicitly the agriculture science and technology innovation as the key work of “countryside, agriculture and farmers”, and made overall arrangements for mechanism innovation of agricultural science and technology system, increasing investment in agricultural science and technology, and promoting leaping development of agricultural science and technology in a certain future period.

4.2 Farmers’ Education and Training Policies

Agricultural education is the foundation of the development of agricultural science and technology. As a result of 30 years’ reform and opening up, China has basically formed an agricultural education and training system with tertiary agricultural education as leading, secondary specialized education, farmers’ vocational education and farmer training in an all-round way.

 

1. Restoration and development of tertiary agricultural education. During the period of “Cultural Revolution”, agricultural colleges and universities moved down to local areas, which brought agricultural tertiary education to stagnation. In November 1978, in accordance with the unified arrangements of the State Council, 12 colleges and universities like Beijing Agricultural University moved back one after another. In a few years, most of colleges and academies were restored and some new colleges and universities were established. In mid 80s, tertiary agricultural education just recovered was facing with how to adapt as quickly as possible to the immense challenge of the booming agriculture and rural economic situation after the reform and opening up. A series of reforms were conducted in tertiary agricultural education in terms of recruitment, teaching and employment arrangement. Problems such as small scale and single subject prevailed in agricultural colleges and universities in 80s, was unfavorable for the agricultural talent cultivation. To solve this problem, under the unified arrangement of central government since 1994, the tertiary education management system reform began with “joint-construction, adjustment, cooperation and merger” as main contents and forms. 14 agricultural colleges and universities participated in the consolidation. The number of independent agricultural colleges and universities was adjusted from 67 in 1993 to 50 by the end of 1998. 18 agricultural colleges and universities affiliated to the Ministry of Agriculture reduced to 12.
2. Popularization of rural compulsory education. Since the recovery of teaching order in 1978, the rural education management system reform and the rural education structure reform have been conducted by the country. During the period of the Tenth-Five Plan, the direction of rural compulsory education management system reform was defined clearly by the country. In 2001, the State Council issued “Decision on Foundation Education Reform and Development”, defining explicitly the reform of rural compulsory education management system with townships and villages as responsibility main body, establishing the system of “administration at different levels of local governments, mainly at the county level under the leadership of the State Council”. During the period of “Eleventh Five-Year Plan”, in view of the imperfect safeguard mechanism of rural compulsory education expenditure and the imbalance of education development between urban and rural areas and between regions, the country further push the education management system reform and the rural education structure reform, and introduced relevant policies. First, make more clear rules for obligation education responsibility of governments at all levels, and bring the rural compulsory education into line with public finance security. Second, build strong governments’ support for distressed areas and groups with financial difficulties, eastern regions’ support for the rural education development in western regions, and cities’ support for oriented rural schools to advance elementary and secondary school education informatization in an all-round way and promote the balanced development of compulsory education. Driven by a series of policies and measures, remarkable achievements have been made in China’s rural basic education. At the end of the “Eleventh Five-Year Plan” period, both the coverage of nine-year compulsory education population and the junior high school gross enrollment rate researched above 95%.
3. Reform and development of rural secondary vocational education. Since the reform and opening up, a series of reforms has been carried out in agricultural secondary technical education to adapt to the needs of rapid agricultural and rural economic development, one of which is to reform enrollment and distribution system. Since the early 80s, the Ministry of Agriculture put forth that agricultural secondary technical schools should train and deliver talents available and retainable for the front line of agricultural production, put forward reform suggestions that agricultural technical secondary schools recruit “some students with no guarantee of job assignments”, and a variety of forms were taken to guide and promote this reform. The second reform is to advance comprehensive reform in the field of teaching, adjust professional settings in agricultural technical secondary schools, and form at present a basic professional system, involving extensive fields, rational layout and distinctive specialty to meet the need of rural economic development. The number of majors has increased from 40 at the end of the 70s to the current 120. The third is to reform training modes. “Three-combination” teaching method was adopted to combine learning with practice, learning with business and learning with technology. Meanwhile, another “trilateral” teaching method is to learn over practice and service. After the 90s, some school students began to carry out the “double card system” or “lifetime multi-card system” to boost talents’ applicability and adaptability. During the period of the “Eleventh Five-Year Plan”, the secondary vocational education suited to rural students was put priority on by the country to give great impetus to the development of rural secondary vocational education from the following aspects: increase investment, improve professional teachers’ quality, and perfect education and teaching system and talent training modes, and so on, which was guided by laying stress on practical applicability and promoting employment. So far, in view of the initial formation of framework of rural vocational education system, and the construction of an aid system to cover all secondary vocational school students, the overall development trend of rural secondary vocational education has been good.
4. Farmers’ skill education and training in a deep-going way. With the reform and opening up, farmers have been the main part of agricultural production and operation, so peasants’ cultural quality and their scientific and technological level directly affect the development of China agriculture rural economy. The country has always attached great importance to farmers’ vocational skill education, and adopted a series of measures, mainly involving: (1) Set up farmers’ technical schools, reconstruct the original farmers’ technical night classes, and carry out cultural education and agricultural technical education. (2) Found agricultural broadcasting television education. In 1980, 10 ministries and commissions jointly established the Central Agricultural Broadcasting and Television School, which is directly affiliated to the Ministry of Agriculture, and now has developed into an agricultural distance education school covering the nationwide rural areas. (3) Carry out green certificate projects. In 1989, the Ministry of Agriculture used the experience of other countries for reference to launch a pilot program for farmer technical qualification certificate (hereinafter referred to as “green certificate”). The pilot program has now become an educational project directly under the people’s governments at various levels with the Ministry of Agriculture as the initiator, to conduct the post system training in an organized and planned way. (4) The cross-century youth farmer science and technology training project which began in 1999, jointly organized and implemented by the Ministry of Agriculture, the Ministry of Finance and the Central Committee of the Communist Youth League of China, aiming at cultivating youth backbone farmers for rural areas. (5) Agricultural science and technology entering household demonstration project, which was initiated in 2005 by the Ministry of Agriculture, with a pilot county as a unit, put priority on the use of agricultural leading varieties and main technologies. The expert group composed of experts at ministerial, provincial and county levels entered demonstration households to carry out agricultural technical guidance and services, and accelerate scientific and technological achievements transformation and practical technologies spread. (6) Rural labor force transfer training sunshine project, which was started and implemented in 2003 by the Ministry of Agriculture, etc. According to the principle that “the project is initiated by governments, hosted by schools, supervised by sectors and benefits farmers”, adopt the mechanism to “invite public bidding for the training base, contribute financial capital for farmers as direct subsidies and guarantee that farmers obtain employment” and conduct non-agricultural employment training for farmers. In recent years, to adapt to the new situation that rural labor force transfers from one job to another, the sunshine project gradually adjusts the focus of training to the rural labor force that arranges their transfer to a new job locally or in the neighborhood, and thus plays a positive role in farmers’ employment and income.

Over the past more than three decades of reform and opening up, China’s agricultural science and technology has developed in an all-round way, and the contribution rate of science and technology to agricultural growth has been going up rapidly. More than 1500 new species and new combinations of major crops have been produced. The year 2011 witnessed 85.8% contribution rate of per unit growth yield to the total yield of grain growth, 53.5% of science and technology to agriculture growth, and 54.5% of comprehensive mechanized farming level. Agricultural science and technology progress has contributed much to guarantee of national grain safety, promotion of agricultural structure adjustment and realization of faster and better development of agricultural and rural economy.

5 The Agricultural Socialization Service System

The establishment of agricultural socialization service system to provide farmers with comprehensive production and operation services is a valuable means to improve the degree of agricultural systematization, and clear up the contradiction between agricultural small production and large markets, a substantial guarantee to stabilize and improve the rural basic management system and safeguard their legitimate rights and interests, and an inevitable requirement to ensure national food safety and realize agricultural modernization. Since the reform, policies for agricultural socialization service system construction in China have roughly passed through three stages:

 

Initial stage (1980s). In 1980s, with the establishment of household contract management system and the fall of the people’s commune system, issues concerning agricultural production services presented themselves. In this context, the central government put forth to develop agricultural socialization service, and begin to explore its content and constructing approaches. During this period, agricultural socialization service system construction is focused on transformation of functions of original agricultural service organizations. In 1983, it extended to the scope of services that agricultural producers are in urgent need of. In 1986, the No. 1 central file further explicitly pointed out that “to develop rural commodity production requires production service socialization”, and put forward that it was essential to transform the existing cooperation economic organizations, set up new service organizations, and gradually develop professional cooperation organizations. Meanwhile, relevant departments in governments at all levels adopted a series of measures, mainly including: township and village collective economic organizations carried out united seed supply, unified drainage and irrigation, unified plant protection, unified harvest and other services; perfect grass-root agro-technical stations, agricultural machinery station, water carrier station, forest station, animal husbandry and veterinary station, management station and other functions to provide various kinds of services for agriculture; mobilize agricultural scientific research institutions to conduct technical consultation, group contracts, talent training and other services; and develop professional technical associations to provide special services for agriculture.

 

Great development stage (1990s). In the 1990s, the central first put the agricultural socialization service system on the same height of stable household contract management, further defining clearly contents, forms and specific policies of agricultural socialization service system construction, and stressing the focus of agricultural socialization service system construction was to develop professional economic technical department. In 1991, the State Council issued “Circular about Strengthening Agricultural Socialization Service System Construction”, pointing out, “Agricultural socialization services are services that professional economic technical departments, rural cooperation economic organizations and other social aspects provide for the development of farming, forestry, animal husbandry, and fishery industries”. “Agricultural socialization services take rural collective or cooperative economic organizations as foundation, professional economic technology departments as support, farmers’ self-run services as supplement, and thus formed a multi-sector, multi-channel, multi-form and multi-level service system”. By the end of the 1990s, there were only 150 000 farmers’ professional technology associations in rural areas in China, more than 5 million farmers, merely accounting for about 2% of the total number of households across the country.

 

Improving stage (from the 21^st century). In 1998, the 3^rd Plenary Session of the 15^th

 

 

Communist Party of China put forward that by 2010 the rural economic system would have been established to meet the requirements of the socialist market economy, with household contract management as its foundation, and agricultural socialization service system, agricultural product market system and national support protection system as props for agriculture. Starting from 2004, the central has made repeated requests to “perfect agricultural socialization service system”. In 2008, the 3^rd Plenary Session of the 17^th Communist Party of China passed the Decision on Major Issues of Promoting Rural Reform Development, which explicitly pointed out to accelerate the establishment of new agricultural socialization service system, with public service organizations as backing, cooperation economic organization as foundation, leading enterprises as backbone, other social forces as supplement, the combination of public benefit services and operating services and the coordination of special services and comprehensive services. The so-called new agricultural socialization service system mainly includes agricultural technology extension system, animal and plant disease prevention and control system, agricultural product quality supervision system, agricultural product market system, agricultural information collection and release system, agricultural financial and insurance service body, etc.

 

The important content of agricultural socialization service system construction was to reform professional economic technical departments in this period. In April 2001, the Outline of Agricultural Science and Technology (2001-2010) issued by the State Council, proposed actively promoting the agricultural extension system reform on the safe side, mobilizing farmers, enterprises and other social forces to participate in agricultural technology extension work, and gradually form the new agricultural technology extension system by combining national support with market guidance, and combining paid service with free service. In 2003, related ministries and commissions organized and conducted agricultural technology extension system reform pilots, with “public security mode”, “Jiangyan mode” and “Xinchang mode”, etc. cropping up.

Supporting the development of farmers’ specialized cooperative economic organization is a new thinking of this period. In 2001, in “Opinions on Doing Well Agricultural and Rural Work in 2001”, the Central Committee of the Communist Party of China and the State Council put forth that for any cooperation organization “as long as there is market and benefits, and as long as farmers’ income goes up, it should be equally treated without discrimination and be given support”. In 2004, the central and local governments mapped out special funds, and supported farmers’ specialized cooperative organizations to conduct services such as information, technology, training, quality standards and certification, marketing to properly reduce related taxes. In October 2006, the promulgation of the Farmers’ Professional Co-operative Law of the People’s Republic of China propelled farmers’ professional cooperative organizations into the rapid developmental stage. The central and local has promulgated a series of involving the fiscal, taxation, market and talent to support policies.

The agricultural socialization service system in China has gradually formulated. It keeps improving as it takes public service as main body, business service as supplement, puts priority on agricultural technology extension, agricultural economy management, agricultural machinery services, agricultural materials supply, agricultural products circulation. Thus, it basically formed a multi-agricultural technology extension service system constituted by the state public welfare agricultural technology extension, enterprise profit-making agricultural technology extension and nonprofit agricultural technology extension for professional cooperation organizations; preliminarily established central-provincial-county-township animal epidemic disease prevention and control system; by and large formed an agricultural product quality certification system with product certification as the focus, system authentication as supplement, etc., and played an important role in the process of promoting the transformation from traditional agriculture to modem agriculture.

6 Policies for Agricultural Product Processing, Marketing and Trade

6.1 Agricultural Product Processing

Since the late 1990s, the supply of major agricultural products in China has significantly improved. To increase added value of agricultural products and farmers’ income, and to transfer rural surplus labor force, China has attached more and more importance to the development of agricultural product processing industry and formulated a series of supportive policies.

In 2004, the No. 1 Central Document suggested, according to the state industrial policy requirements, the government guided a reasonable layout of agricultural product processing industry, and helped main producing areas develop agricultural product processing industry with grain as main raw materials, especially deep processing. Through the technical improvement loan discount, investment and purchasing shares, tax policies and other measures, support main producing areas to establish and transform a number of major agricultural product processing, seed marketing and agricultural science and technology enterprises. The newly established small and medium-sized agricultural and sideline products processing enterprises strengthened their business support and services. No matter what kind of ownership and management form it is, any leading enterprise that set up reasonable benefit coupling mechanism with farmers and bring benefits to the farmers, should be supported without discrimination in terms of finance, taxation and banking, etc.

In 2007, in accordance with the No. 1 Central Document, through interest subsidy, investment and purchasing shares, tax incentives and other policies, support the development of agricultural products processing industry. The central and provincial finance should map out subsidy funds to support agricultural product processing, and support leading enterprises to be engaged in technological introduction and technical transformation. Improve policies for agricultural product processing industry value-added taxes, and reduce agricultural product processing enterprise tax bearing. Financial institutions should intensify leading enterprises’ credit aid, and focus on the solution of money problems in agricultural products acquisition. In 2012, the No. 1 central file proposed an aid to the construction of producing area agricultural products collection, processing, packaging, storage and other supporting facilities, putting priority on subsidies to preliminary working and storage facilities in farmers’ professional cooperative construction.

In 2012, “Opinions on Supporting the Development of Agricultural Industrialization Leading Enterprises” issued by the State Council put forward clearly to strive to develop agricultural products processing to promote industrial optimization; improve conditions of processing facilities and equipment, plan as a whole and coordinate agricultural product processing, encourage leading enterprises reasonable development of agricultural product deep processing, extend industry chains, and increase added value of products. These policies marked a significant milestone for promoting the development of agricultural product processing industry, and laid a solid foundation for further improving the supportive system of agricultural product processing industry policies.

Over the past decade, China’s agricultural product processing industry has developed so rapidly that it has become one of the most energetic industries in national economy. In 2003-2010, the total value of the processing industry of agricultural products increased from 2.75 trillion Yuan to 12.27 trillion Yuan, annually up 23.8% on average. The ratio between the agricultural product processing industry output value and the agricultural output value rose from 0.6:1 to 1.7:1.

6.2 Agricultural Product Marketing

Since reform and opening up, China’s agricultural product circulation system reform has experienced four stages.

1. Increasing purchase prices, and enlivening the circulation of agricultural products (1979-1984). From 1979, China increased purchase prices of 18 kinds of main agricultural products including grain, cotton and oil under the plan of monopolizing the purchase, gradually narrowed the scope of agricultural product mandatory plan acquisition, and expanded the market adjusting proportion. Restore the purchase of grain, oil, and other agricultural products at a negotiated price, allow state-owned commercial corporations to buy or sell at a negotiated price according to the floating range of the specified price on the market.
2. Revamping the system of state monopoly over purchasing and marketing of agricultural products and fostering of agricultural product markets (1985-1991).

From 1985, except some individual varieties, China’s government changed its monopolized procurement of agricultural products to carry out contract and market order instead. Except that the government made the purchase price of grain, cotton, etc., other fresh agricultural product prices are determined by the market. The country completely lift the control over the primary agricultural products market, allowing vegetable growers and vendors to sell vegetables in the city, and the country build non-staple food wholesale markets in large and medium-sized cities. Wholesale markets become the main channels of the circulation of agricultural products except only a few other varieties like cotton.

3. Exploring to set up macroeconomic regulation measures adapting to market economy (1992-2001). The government gradually abolished the state monopoly grain procurement system, lifting control over grain purchasing and selling prices. At the same time, the country adopts the policy of purchase at protected prices, have an open-ended purchase of farmers’ surplus grain, and according to market price fluctuation, increase purchase prices repeatedly. Carry out the system of provincial governors assuming responsibility for “rice bag”, ensure food balance between regions. It is local administrators that ensure the local grain sowing area, complete national acquisition plan and provincial food redistribution tasks. Establish special food reserve system and food risk funds for grain purchasing and reserves. Speed up agricultural product market network construction and gradually improve agricultural product market construction with wholesale market as the center, and set up agricultural product futures market.
4. Improving Macro-control system under market economy conditions (2002-present). Deepen the grain circulation system reform, and completely liberalize grain purchasing market. Encourage and support the development of diversified market main body, allow all kinds of qualified business entities to enter the market, and actively cultivate the farmers’ professional cooperatives and the development of agricultural product trade associations. Construct rural modern circulation system, implement multi-channel management, and promote various circulation forms. Strengthen all kinds of market construction, strive to develop spot markets, strengthen upgrading of agricultural product markets, support large agricultural product wholesale market construction, explore to establish agricultural product futures market and strengthen management, and open up “green channels” for fresh produce circulation. Conduct macro-control over key agricultural product markets, perfect agricultural product market information system, strengthen agriculture information service, carry out minimum purchasing price, temporary purchasing and storage, pre-arranged planning regulation and control and other price support policies, and reserves regulation and control, import & export policies and other reservoir policies.

The gradual improvement of agricultural product circulation policy system promotes the more rapid development of China’s agricultural product markets. Agricultural wholesale market construction gets further strengthened, monomer market transaction size gets significantly increased, and market radiation driving force is obviously increased. Agricultural product futures market scale is being unceasingly expanded, and price discovery and hedging function began to bring into play. Agricultural product electronic commerce gradually rises, and informatization level of agricultural production and operation continuously improves. Obvious diversification trend of circulation main body, farmer agents, transportation, marketing major clients, cooperation organizations and new large market main body grow stronger and stronger. Modern modes of circulation such as “farmer-supermarket partnership” and “farmer-community partnership” are developing rapidly. The pattern that multiple modes of circulation are adopted side by side has to certain extend formulated.

6.3 Agricultural Trade

Since the reform and opening up, reforms in agricultural product trade system and policies in China have experienced three stages as follows.

1. 1979-1991: Plan & market dual management. Reform a management system of single mandatory plans, implement the combination of mandatory plan, guiding plan and market regulation, reintroduce import & export license system, and build up an approval system of foreign trade rights.
2. 1992-2001: Preparation for China’s entry into WTO. China gradually reduced agricultural product import tariff rates, abolished part of non-tariff barriers, conducted a bidding system for export quotas on some agricultural products, sped up animal & plant health inspection & quarantine construction system, and strengthened agricultural product bilateral trade negotiations and anti-dumping investigation.
3. Overall opening up stage since China's accession to WTO in 2002. Changes in China’s trade policies mainly can be seen from the following four points: 1. Continue reducing agricultural product tariffs. 2. Abolish agricultural product export subsidies. 3. Introduce tariff quota management of some important agricultural products. 4. Built up management system of agriculture product import tariff quotas.

Currently, China’s agricultural product trade policies mainly include import policy, export policy and regional free trade arrangement. In terms of China’s import policy, China introduced tariff quota management of some important agricultural products, and made respective commitment to each tariff quota product’s state-run trade proportion and specific trade enterprise. In terms of export policy, China abolished agricultural products’ import and export subsidies, and at the same time, abolished railway construction funds of rice, wheat and other major agricultural products so as to keep fair to both domestic products and international products in transportation costs and tax bearing. In terms of free trade arrangement, China added the “Asia-Pacific Trade Agreement”, and actively conducted free trade area negotiations with countries all over the world. So far, China has set up 15 free trade areas with 28 countries and regions in five continents. Meanwhile, China has completed regional trade arrangement joint research with India, and free trade area joint research with South Korea, and is conducting government-business-academia joint research in China-Japan-South Korea free trade area.

 

7  The  Agricultural  Investment  and  Rural  Infrastructure

Construction in China

Agriculture Input Policies

The implementation of household contract management system has changed the form of agricultural micro economy organization. In response, diversity of investment structures has gradually come into being, mainly involving farmers, communities and the country. Since the reform and opening up, policies for financial input in agriculture evolve through the following process:

1. During 1979-1991, the Chinese government increased central investment in agricultural sector, ensured that agricultural loan growth was higher than that of bank loan, and began to utilize foreign capital. Main policies include: establish special funds, increase national input in agriculture; speed up rural financial system reform, expand the scale of credit aid for agriculture; improve the investment system of state, collective and individual combination, ensure farmers as the main part of increasing agricultural inputs, attract farmer and collective investment; attract and utilize overseas investment.
2. During 1992-1998, the Chinese government increased financial credit input, encouraged and guided rural collective economic organizations, farmers, social capital and foreign capital to increase capital input in agriculture. Main policy measures include: a. With the increase of financial resources, gradually increase central and local agricultural infrastructure investment and fiscal agriculture-supporting funds. b. Give the initiative of agricultural banks and rural credit cooperatives into full play, increase credit input in agriculture, adopt joint stock partnership and other forms to raise money. c. Actively guide rural collective economic organizations and farmers to increase investment in, and lead social capitals to agriculture, strengthen agriculture support of the second and third industry. d. Increase trade in agriculture, introduce foreign capital, technologies and management experience from multiple channels and in various forms, and speed up agriculture development and construction.

 

3. During 1991-2003, the Chinese government continued to increase financial and credit input in agriculture, guide individuals and the collective to increase input in agriculture, and encourage social capital to invest in agriculture. Main policy measures include: a. Finance at all levels is required to, according to the principle of public finance, gradually increase input rural public infrastructure construction below the county level. b. deepen rural financial system reform, rectify rural financial order, guard against and defuse financial risks, improve the level of service of rural financial institutions of all kinds. c. Encourage individual, the collective and all kinds of economic entities to invest in the construction of small and medium-sized rural infrastructure from multiple channels, and implement the principle that whoever invests benefits.

 

4. Since 2004, in accordance with the requirements of integrated urban and rural development, the financial and credit investment has been strengthened to gradually establish stable growth mechanism for agricultural-support input. The Chinese government invested from the aspect of finance, adhering to the guideline of "give more, take less, and made it flexible", and increased the national financial investment to agriculture and rural area. Agricultural tax was fully abolished in 2006 and the agricultural subsidy policy which takes "four subsidies" as representative method was issued. All these show that the direct subsidy provided to the farmers directly is enlarged year by year. In the aspect of credit investment, the rural financial system is reformed and innovated, the reform strength of rural credit cooperatives is enlarged, thus to ease the rural capital flowing-out situation. For the aspect of social capital investment, agricultural and rural area infrastructural facility investment fields are further widened. Measures like interest so deducted, subsidy, and taxes are adopted to encourage social capital to be positively invested in agriculture and rural area infrastructural facility construction.

 

Based on the continuous carrying-on of the existing policies and measures, in 2012, the central government proposes the requirements of "three keeps", namely "keep enlarging the financial expense on "farmer, rural area, and agriculture", keep enlarging the national fixed assets investment to agriculture and rural area, and keep enlarging the investment on agricultural technology, to guarantee that both the increment and proportion can be raised." In the aspect of credit, it is required to "strength the financial support for rural area, keep increasing the investment for rural area credit, and guarantee that the increase speed of banking industry's loan concerning agricultural aspect be higher than the average increase speed of all loans. Keep develop the small amount credit business for farmers and strengthen the credit to large family of planting, professional farmer cooperatives, and township small scale enterprises. Meanwhile, it is required to "positively guide the farmers and social capital to invest in aspects of agriculture, rural area, and farmer, effectively integrate the national resources, raise the utilization rate of the capitals, and practically supervise the utilization of national investment and subsidies to the aspects of agriculture, rural area, and farmer.

 

Since the start of reform and opening-up to the outside world policy, China's total investment on agriculture keeps increasing, investment channels keep being widened, and the sources of capital keep spread. Up to now, the new format of diversified agricultural investment which takes the state, collectivity, farmer, and enterprise as the main bodies has been gradually formed. The central government's financial investment in agriculture reaches 1040.86 billion Yuan in 2011 from the original 15.07 billion Yuan in 1978, which shows an annual increase rate of 13.7%. For the agricultural credit investment, though it fluctuates a lot, in general, it keeps rapid increasing trend since 2001, reaching 399.4 billion Yuan in 2009 from the original 82.3 billion Yuan (see Figure 2). The investments for farmers and agriculture kept increasing, especially during the period from 2004. The increasing speed was accelerated obviously. Per capita family operating expense and expense for purchasing production fixed assets of farmers reached 1901 Yuan from the original 1032 Yuan, showing an annual increase of about 13% (see Figure 3).

 

Figure 2 Agricultural Credit Investment Changes from 1980 to 2008

Source: Almanac for Investigation of Chinese Rural Resident

Figure 3 Farmers’ Agricultural Investment from 1981 to 2008

Source: Almanac of Chinese Statistics

7.2 Construction of Agricultural Infrastructural Facility

Since the start of reform and opening-up to the outside world, the state has implemented a series of major projects concerning agricultural infrastructural facility construction, mainly including:

1. Launch the commodity grain base construction in mid-1980s. From 1984, the state started the construction project of commodity grain base. In 1986, the cotton base county construction project was started. Meanwhile, constructions of 5 million tons commodity grain base land reclamation, caoutchouc base, "vegetable basket" project, muscle type commodity pig base, and ocean fleet were implemented.

2. Carry out Comprehensive agricultural development projects in 1988. The comprehensive agricultural development refers to the activity that the state sets special capitals to comprehensively develop and utilize the agricultural resources in the aim of protecting and supporting the agriculture development, improving the agricultural production basic conditions, optimizing the agricultural and rural area economic structure, and improving the comprehensive agricultural production capacity and comprehensive profits. Since 1994, the comprehensive agricultural development project had been divided into two categories, including farmland treatment project and diversified operating project. Since 1999, the comprehensive agricultural development project had been divided into three categories, adding the technical exemplary project. Since 2004, the comprehensive agricultural development project has been divided into two categories: farmland treatment project and industrialization operating project.
3. Promote "seven major systems’ construction" of agriculture. In 2003, the state summarized the agricultural support systems as "seven major systems" for the first time, namely "planting and raising industry excellent seed system, agricultural technical innovation and application system, animal and plant protection system, agricultural product quality and safety system, agriculture product market information system, agricultural resource and ecological protection system, and agricultural socialized service and management system."
4. Implement excellent commodity product industry project and large scale commodity grain base construction. The National Excellent Grain Industry Project Construction Plan (2004-2010) was started for being implemented in 2004 when it was approved by the State Council. Four major categories constructions, including excellent seed breeding, grain diseases and insect pests' prevention and control, standard grain farmland, and modern agricultural machine promotion were promoted as key points.
5. Stably promote the "six small projects" construction. In order to strengthen the rural area production and living facility construction, the central government rural area work meeting proposed the "six small project" for the first time in 2001, including: water saving irrigation, human and animal drinking water, rural area roads, rural area firedamp, rural area water and electricity, and grassland fence. During the "11th Five-year Plan" period, the central government emphasized to further strengthen the rural area infrastructural facility construction. Base on this, relevant departments issued a lot of specified policies and measures during the "Eleventh Five-year Plan" period which takes the project construction of "water, electricity, road, firedamp, and house" as the base to further increase the investment on rural area infrastructural  facility construction, gradually optimize the construction management system, thus to obviously improve the level of rural area infrastructural facility.

 

Since the start of the reform and opening-up, the farmland irrigation works has always been the key point of agricultural infrastructural facility construction. In 1980s, the key point of farmland irrigation works referred to the repair, resuming, auxiliary construction, reconstruction, and improvement to the existing facilities. In 1990s, in order to settle the situation of natural disasters which was getting worse and worse, it included a serious shortage of water resource and flood disasters, the national transferred the key point of farmland irrigation works to the treatment of major rivers and construction of key irrigation works. After 1999, under the background of frequent happening of natural disaster and continuous reduction of grain output, middle and small scale of farmland irrigation works were developed at the time of keeping maintaining, updating, and construction auxiliary works for the original farmland irrigation works. After over 30 years of large scale farmland irrigation works construction, China has initially established the mechanism of using irrigation works to reduce disaster loss and promote agriculture development.

 

Currently, the main policies concerning the agricultural infrastructural facility construction include four aspects. (1) Enlarging the financial investment on the agriculture infrastructural facility construction. (2) Guiding the social capital investment on agricultural infrastructural facility construction. (3) Promoting the balance regional development. (4) Reforming the rural area small scale infrastructural facility property right system. With the continuous increase of agricultural investment, the agricultural infrastructural facility construction will be strengthened. In addition, the Chinese comprehensive agricultural production capacity will be raised obviously.

 

8  Agricultural   Environment   Protection   and   Ecological

Construction

For a long time, due to the continuous population increase and human factors such as deforestation and wasteland reclaiming, and unreasonable utilization of land resource, agricultural and ecological unbalance, blown sand hazard, and serious water loss and soil erosion have occurred in a lot of areas of China. It severely affects the agricultural and animal husbandry production. In order to change such a situation, the Chinese government has been strengthening ecological environmental protection since the reform and opening-up. From the large-scale shelter forest construction started from 1970s, voluntary tree planting movement participated by the whole people and main ecological engineering construction on forestry, to the ecological agriculture construction, biodiversity protection, natural forest protection and conversion of farmland to forest (grassland) in 1990s, the agricultural ecological construction of China has experienced a continually developed and improved process.

1. “Three-North” shelter forest project launched at the end of 1970s. Forestry plays a decisive role in keeping ecological balance and protecting natural environment. In 1979, the Central government determined to construct large-scale shelter forest engineering in regions with serious blown sand hazard and water loss and soil erosion in West China, the north of North China and the west of Northeast China in order to improve ecological environment and promote local economic and social sustainable development. In May 1980, the State Council approved Three-North Shelter Forest Construction Leading Group Meeting Minutes. It pointed out that the shelter forest system in West China, the north of North China and the west of Northeast China was a key engineering of China with strategic meaning. The 1982 Government Work Report and the Sixth “Five-Year” Plan for National Economy and Social Development specifically proposed that:

“We shall continue to construct the shelter forest system in West China, North China, and Northeast China to manage the water loss in the midstream of the Yellow River and the sand-blown-by-wind land in West China.”

In addition, local governments of 11 provinces (regions) in the “Three-North” area attached great importance to the engineering construction. They held meetings, introduced policies, and take measures to actively carry forward the engineering construction. The “Three-north” shelter forest system construction first promoted ecological improvement and environmental protection to a state will, leading the ecological construction of China.

2. Ecological agricultural construction project launched in 1980s. In 1980s, the Ministry of Agriculture raised the general thought to develop the ecological agriculture and started a series of pilot projects and demonstrations. It aimed at the trend agricultural ecological environment and production condition deterioration. Since 1994, seven national ministries, commissions, and bureaus have united to successively conduct 102 State-level ecological agricultural pilot county construction projects in China. The pilot counties, according to principles of ecology and economical economics, adjusted agricultural structure, and promoted technologies such as ecological restoration, resource protection engineering, and environmental harmlessness, achieving distinct economic, ecological, and social benefits, and preliminarily realizing the coordinated development of economy and ecological environment. At the end of 1990s, national ecological agriculture leading group formulated the Outline for National Ecological Agriculture Development Plan, proposed the recent plan and mid-term and long-term development objectives of China’s ecological agriculture, and raised a series of policy measures. The core of the plan outline was brought into national agricultural development “Ninth Five-Year” Plan and 2010 Plan, determining the direction for the ecological agricultural construction of China during Ninth Five-Year Plan” and for a period time in the future.
3. Agricultural sustainable development policy in 1990s. Since 1990s, the State Council has issued 21st Century Agenda in China and Ministry of Agriculture formulated Forestry Executive Plan in 21 Century Agenda in China which proposed the overall strategy, main fields, and policy measures of the future agricultural sustainable development of China. It aimed at a series problems caused by global climate change, atmospheric ozone layer depletion, land desertification, and biodiversity reduction. The Executive Plan is an important basis for the State and local governments to make policies related to agricultural and rural development. Ministry of Agriculture prepared Executive Plan for Biodiversity Protection of Ministry of Agriculture of China and Executive Plan for Wetland Protection of Ministry of Agriculture of China so as to protect biological species and the living environment of wild animals, promote the coordinated development of agriculture and ecosystem, and realize the sustainable development of agriculture and rural economy.

4. “One Return for Three” policy at the end of 1990s. After 1990s, owning to ecological environmental destruction and other reasons, natural disasters has frequently occurred in China, giving rise to huge loss. For this reason, the Central government determined to gradually convert farmland to forest, grassland, and lake on lands which are excessively reclaimed and enclosed for cultivation in a planned way. It also wrote related policies into National Ecological Environmental Construction Plan, and Regulation on Conversion of Farmland to Forest, and China's National Climate Change Program introduced by the Central government.

In order to improve the ecological environment of grassland, China has launched a series of engineering projects since 2000. These projects include natural grassland vegetation restoration, grassland fence, and grass seed base, carried out manual grass planting, aerial seeding of forage grass, and fence exclusion, constructed and protected the grassland, pushed forward grassland contract responsibility system, implemented paid use system, and improved the enthusiasm of herdsmen to protect and construct the grassland. From 2003, the Central government revised Grassland Law of the People’s Republic of China and provinces (autonomous regions) of animal husbandry also successively promulgated Regulations on Management of Grassland and Rules for the Implementation of Grassland Law, thus the ecological construction and management of grassland were legalized. In 2010, the State Council determined to comprehensively establish the grassland ecological protection subsidy and award mechanism in eight main provinces (regions) with grassland pasturing areas including Inner Mongolia, Xinjiang, Tibetan, Qinghai, Sichuan, Gansu, Ningxia, and Yunnan, marking that work on the pasturing areas of grassland entered a new stage.

5. Agricultural Non-point source pollution prevention policies since the beginning of 21st Century. As the large-scale livestock and poultry industry develops rapidly in China, the agricultural non-point source pollution is increasingly serious. In order to effectively reduce the pollution of waste and sewage on surrounding environment at the livestock and poultry farm, in March 2001, State Environmental Protection Administration promulgated Measures for the Administration of Livestock and Poultry Pollution Prevention and issued matched Livestock and Poultry Pollutant.  Discharge Standard and Technical Specification of Livestock and Poultry Pollution. Besides, Ministry of Agriculture also organized to formulate Large-scale and Medium Livestock and Poultry Farm Energy and Environment Demonstration Engineering Construction plan (2001-2005). On the farmland environmental evaluation of agricultural products, State Environmental Protection Administration formulated Farmland Environmental Quality Evaluation Standards for Edible Agricultural Products and Farmland Environmental Quality Evaluation Standards for Livestock and Poultry Production. Law of the People's Republic of China on Prevention and Control of Water Pollution revised in February 2008 regulated the prevention and control of agricultural and rural water pollution.

6. Rural renewable energy policy. China has rich waste resources with great development and utilization potential. However, these resources have not been effectively developed and utilized for a long term. It is partly due to the lack of investment and backward technologies, which seriously polluted the environment. Therefore, since the beginning of 21st century, the Central government has determined to vigorously carry forward the utilization of rural renewable energy. The Fifth Plenum of the sixteenth Central Committee of the Communist Party of China specified that “we shall strengthen the popularization on rural methane and develop clean energy which is suitable for rural characteristics”. In 2006, the Ministry of Agriculture launched an ecological home and people enriched action, which proposed we should vigorously popularize rural methane.

In March 2007, the Ministry of Agriculture promulgated National Rural Methane Engineering Construction Plan (2006-2010). It proposed, during “11th Five-Year plan”, the newly built rural methane users would come at about 23 million households. By the end of 2010, it would reach about 40 million households, about 30% against suitable peasant households. In April 2007, the Ministry of Agriculture and National Development and Reform Commission formulated National Rural Methane Service System Construction Scheme (for trial implementation). As China gradually strengthens the construction on rural methane, rural methane users are growing steadily with the speed of average annual five million households and large-scale methane engineering such as livestock and poultry farm also increases sharply. The rapid development of rural methane construction effectively improves rural living environment, saves large amount of traditional energy. More importantly, it plays an important role in relieving rural energy shortage, protecting ecological environment, developing rural economy, and improving farmers’ livelihood.

 

PART II

China's Rural Poverty Alleviation and Development²

9  History of China's Rural Poverty Alleviation, Development and Policy Changes

Along with China's reform and opening up, various macroeconomic reforms and development strategy changes have led to the poverty alleviation and development efforts in rural China to embark on a path with Chinese characteristics. China's rural poverty alleviation and development, especially poverty relief activities supported by pro-poor policies that target the really poor, began with the agricultural construction in the Three West regions in the early 1980s. After that, China has gradually clarified its direction of poverty alleviation and development policies in rural areas. In accordance with poverty alleviation and development policy and planning, China's rural poverty alleviation and development strategy can be divided into four stages: the start-up and regularization stage of poverty alleviation and development (1983-1993), the stage of the "Seven-Year Program to Help 80 Million People Out of Poverty", the stage of the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)" and the stage of "Outline for Poverty Alleviation and Development of China's Rural Areas (2011-2020)".

 

9.1 Start-up and regularization stage of poverty alleviation and development (1983-1993)

1. Background
1. This phase saw the implementation of the rural household contract responsibility system with the purpose of promoting the enthusiasm of farmers. After 1978, China started land reform in rural areas and implemented the rural household contract responsibility system across the country. As of the end of 1983, more than 98% of rural households in China had been involved in the reform. This system mobilized the peasants' enthusiasm for production, effectively alleviated the contradictions between the people and land, and greatly improved their productivity.
2. Reform of the agricultural price system to promote the circulation of commodities. In order to mobilize the farmers’ enthusiasm for production and develop agricultural industries, the government significantly raised the purchase prices of food, edible oil and cotton as well as other major agricultural and sideline products. At the same time， it also made initial reforms to the purchasing and marketing system and the circulation system of agricultural products.

² This part is written by Dr. Zhang Deliangand Dr. Xu Liping, research fellows from International Poverty Reduction Center in China.

3. Promoting the mobility of surplus rural labor forces, setting up coastal economic development cities and development zones, as well as developing an export-oriented economy. Before 1983, China's rural labor was not allowed to migrate freely. In 1984, the government began to relax restrictions on labor mobility in rural areas and farmers were allowed to work or do business in the city with their own food and capital. Subsequently, the Chinese government formulated policies and measures to allow and encourage the mobility of rural labor forces between regions. In order to promote the opening up, in 1978, four special economic zones were set up respectively in Shenzhen, Zhuhai, Shantou and Xiamen in the southeast coastal areas of China. In 1988, the Hainan Special Economic Zone was set up. In 1984, the Chinese government decided to open up 14 coastal cities. In 1985, it set up two coastal economic development zones respectively in the Pearl River Delta and the Yangtze River Delta. In 1988, the state again set up a number of coastal economic development zones.
4. Vigorously developing township enterprises to increase rural employment channels. Township enterprises grew out of commune and brigade enterprises, which witnessed renewed emphasis in the period from 1978 to 1983. In 1984, the commune and brigade enterprises were renamed as township enterprises and developed into an important part of the national economy. In 1985, the "Seventh Five-Year" Plan proposed to encourage the development of township enterprises. In 1986, the "Spark Program" was launched. In 1987, the state began to establish experimental zones of township enterprises. The implementation of these policy measures directly improved the policy environment for the development of township enterprises, which led township enterprises to enter a stage of rapid development.
5. The national economy entered a period of rapid growth. After reform and opening up, China's economic development has been greatly supported by systematic reforms. Except for a special year, economic growth has accelerated markedly and volatility has been lessened.

 

1. Major policy initiatives for poverty alleviation and development

 

(1) Organized the implementation of regional poverty alleviation and development programs focusing on agricultural construction in the Three West regions. To address problems of serious damage to vegetation, deterioration of the ecological environment and difficult living situations of the people in some areas of Gansu and Ningxia, the central government launched the agricultural construction program for Three West regions in 1983. It also began a comprehensive regional poverty alleviation and development program in 47 counties in the two west regions of Gansu (central arid regions represented by Dingxi and Hexi Corridor area) and Xihaigu Region of Ningxia. This program prioritized the objectives of "stopping destruction in three years, solving the problem of food and clothing in five years and consolidating the results and improving people’s living standards in two years". In order to ensure the implementation of this plan, the State Council set up the leading group for the "Three West" agricultural construction plan and established special funds for the program. 200 million Yuan was issued per year as subsidies for infrastructure construction, development of farming, aquaculture and a variety of businesses, technology promotion, training, as well as resettlement. The "Three West" poverty alleviation and development program was a prelude to regional poverty alleviation and development in China.

 

(2) Established poverty alleviation agencies, arranged special poverty-relief funds and started organized, large-scale poverty alleviation and development. In 1986, the state established a specialized poverty alleviation institution – the State Council Leading Group for Economic Development in Poverty-stricken Areas (renamed as the State Council Leading Group on Poverty Alleviation and Development in 1993) and the Leading Group Office. The vast majority of provinces, municipalities and counties also established poverty alleviation and development institutions, allocated special anti-poverty funds, developed special preferential policies, conducted a thorough reform of the traditional relief-type poverty alleviation approach and determined development-oriented pro-poor policies.

 

(3) Made a series of adjustments and reforms of development policies in relevant poverty-stricken areas. In 1984, the central government issued the "Notice on Helping Poverty-stricken Areas Change Poverty Situation As Soon As Possible" and called on party committees and governments at all levels to attach great importance to helping the people in these regions shake off poverty, improve production conditions and production capacities, develop production of commodities and thereby catch up with the pace of national economic development with a positive attitude through practical measures. Other development policies and measures are as follows.

 

26. Achieving a fundamental change from simple and dispersed relief to economic development.
26. Changing the average allocation of anti-poverty funds, integrating anti-poverty funds from various channels in accordance with the principle of "unified planning, coordinated arrangement, smooth channels, unchanged nature, relative concentration, supportive use, ensuring effectiveness and independent merit record", conduct project management and implement the project manager responsibility system.

 

26. Overcoming the drawbacks of only attaching importance to financial and material input and ignoring investment in science, technology and intellectual development, as well providing supporting financial, material, information, and personnel investment.

 

26. Changing the traditional practice of only addressing problems of poor households as well as the mode of poverty alleviation efforts completely relying on the allocation of money and material for the administrative system and rural cadres, formulating preferential policies, using anti-poverty funds and relying on rural capable brains and various types of rural enterprises, service organizations, civic associations to set up poverty alleviation economic entities and develop leading backbone enterprises, provide jobs for poor farmers and lead poor households to develop commodity production.
26. Organizing and guiding developed areas and poverty-stricken areas to jointly develop natural resources in poor areas to achieve large-span horizontal integration of the east and west.

 

4. Set up a series of special funds in early stages to help change the poverty situation of poor areas. The "Development Funds to Support Economically Underdeveloped Areas" established in 1980 were used to support poverty-stricken areas including old revolutionary base areas and minority autonomous counties. In 1984, loans for old revolutionary base areas, minority areas and remote regions were set up. In the same year, work-relief funds were established to address the serious shortage of infrastructure in impoverished areas (these funds have been maintained to the present). In 1984, poverty-relief loans were set up by the People's Bank and the Agricultural Bank to support the development of poverty-stricken areas.

 

5. Started to target the poor and identified 18 contiguous poverty-stricken areas and some poor counties in the country. In 1985, based on a large number of investigations and research, the government put forward three problems of farmers - "insufficient food, being dressed in rags, and not being sheltered from wind and rain" and identified 18 contiguous poverty-stricken areas in the country. In the same year, all the counties with per capita net incomes below 150 Yuan were identified as national poverty-stricken counties. In minority autonomous counties and old revolutionary base areas this figure was 200 Yuan, and in a few influential old revolutionary base areas and some pastoral areas this figure was up to 300 Yuan. From 1986 to 1993, 331 counties were identified as poverty-stricken counties. At the same time, the central government required the provinces (autonomous regions) to identify provincial (regional) poor counties in accordance with a certain income standard and support the poor counties relying on local financial departments. As of 1988, a total of 370 counties nationwide have been identified as provincial (regional) poverty-stricken counties.

 

6. The Ministry of Science and Technology, Ministry of Agriculture, various democratic parties and federations of industry and commerce actively participated in early fixed-point poverty alleviation. In 1986, ten ministries including the Ministry of Science and Technology, the Ministry of Foreign Affairs, the All-China Federation of Industry and Commerce and the army were appointed to support certain remote contiguous poverty-stricken areas along with early fixed-point poverty alleviation work of central state organs which was launched to support national poverty reduction. Democratic parties and federations of industry and commerce promoted poverty reduction and social development in old revolutionary base areas, minority and remote areas through the spread of science and technology and intellectual investment.

 

(7) Started to carry out large-scale training of cadres. In February of 1990, the State Council Leading Group Office of Poverty Alleviation and Development set up the National Training Center for Cadres of Poor Areas and began to organize the training of poverty alleviation and development for party and government leaders of poor areas across the country, as well as provide guidance on rural cadre training and practical technical training for farmers in poverty-stricken areas.

 

1. Progress and effectiveness

 

(1) Poverty-stricken population size and poverty rate. In the backdrop of the country's economic reform and opening up, through one decade of poverty alleviation and development efforts, by 1993 great changes had taken place in the poverty situation of rural China. Based on the poverty line set by the Chinese government, the number of poverty-stricken people dropped from 131 million in 1983 to 80.66 million in 1993, with a decrease of 50.34 million and an average annual rate of decline of 6.69%.

 

Table 2 Incidence of Poverty in Rural China (1984-1993) (%)

Year	National Bureau of		World Bank
	Statistics
	Incidence of	Poor	Incidence of	Poor
	poverty (%)	population	poverty (%)	population
		(million)		(million)
1984	15.1	128	-	-
1985	14.8	125	-	-
1986	15.5	131	-	-
1987	14.3	122	-	-
1988	11.1	96	-	-
1989	11.6	106	-	-
1990	9.5	85	31.3	280
1991	10.4	94	31.7	287
1992	8.8	80	30.1	274
1993	8.8	80.66	29.1	266

Source: Data of the National Bureau of Statistics are from the National Bureau of Statistics, data of rural population is from the China Rural Statistical Yearbooks.

(2) The regional distribution of the poor population changed. Despite a lot of efforts to alleviate poverty, due to the imbalance of economic development great changes took place in the distribution of poor people in the eastern, central and western areas. According to available data, the proportion of poverty-stricken people in the three major economic regions in 1988 was: 25% in the east, 37% in the central areas and 38% in the west. In 1993, however, the proportion of poor people in the east dropped to 20% and in the central areas decreased to 29%, while rising in the west to

 

51%. This indicates that during this period, the number of poor people decreased significantly in the east and central areas and slowly in the west, and the poor were gradually concentrated to the west (NBS).

 

9.2 Stage of "Seven-Year Program to Help 80 Million People Out of Poverty" (1994-2000)

 

1. Background

 

1. The national economy maintained rapid growth. From 1994 to 2000, the average annual growth rate of GDP per capita reached 7.56%. With rapid economic development, China bid farewell to the "shortage economy" in 1997, the market supply and demand relationship underwent a fundamental change from the seller’s market since the foundation of New China to a buyer's market, the living standards of Chinese people were significantly improved and a well-off society was being built.

 

2. With comprehensive reform of the national economic system, a series of adjustments and reforms were made to rural economic policies. In 1994, the state again raised the purchase prices of grain and cotton; established the "rice bag" governor responsibility system and "vegetable basket" mayor responsibility system; made a decision to further stabilize the household contract responsibility system and again extend the contract period for 30 years after the original arable land contract agreement expired. It also accelerated the adjustment of the structure of agricultural production and actively promoted the industrialized operation of agriculture.

 

3. The development of agriculture experienced a process of first rising and then falling fast. The growth of agricultural value added was slow compared to the rapid growth of GDP and the average annual growth rate was 3.71%. Moreover, since 1997 the growth rate of agricultural value added has decreased and grain output has witnessed significant fluctuation.

 

4. Township enterprises entered the adjustment period for development. After z rapid rise in 1983, the township enterprises made important contributions to rural economic development in China. With increasingly intense competition after the transition of Chinese economy from a seller’s market to a buyer's market, which coupled with the poor quality and ambiguous property rights of some township enterprises, the development of township enterprises was restricted and the number of township enterprises began to decrease in 1995, with the number of employees also significantly decreasing from 1997 to 1998. The growth of township enterprises’ value added slowed down with the average ancapita net income growth rate was first high and then low, for it dropped to 2% or so in 2000 after reaching 13.2% in 1996. After reform and opening up, the problem of burden on farmers became increasingly prominent. From 1983 to 1997, according to relevant data, with the exception of the first few years, farmers' per capita net income growth rates were lower than the growth rate of the burdens on farmers. Therefore, the burdens on farmers reached a high point in the late 1990s. In order to reduce them, the government adopted a series of measures. By 1999, the situation of increasing burdens on farmers changed to some extent.

 

1. Major policy initiatives for poverty alleviation and development

 

1. Formulated and implemented the "Seven-Year Program to Help 80 Million People Out of Poverty". The Chinese government formulated and implemented the "Seven-Year Program to Help 80 Million People Out of Poverty" in 1994 and clarified that it must concentrate human, material and financial resources, mobilize all social forces and spend seven years to solve the food and clothing problems of the rural poor by the end of 2000. The specific objectives were: annual per capita net income of the vast majority of poor households must reach 500 Yuan (based on 1990 constant prices); support must be provided to poor households in order to create basic conditions for steadily addressing the food and clothing problems; strengthen infrastructure construction; change the backwardness of education, improve cultural and health conditions; and be more concerned with poverty alleviation and development of special poverty-stricken groups. This was the first poverty alleviation and development program in the history of China with clear objectives, clear targets, explicit measures and a clear deadline. While implementing the "Seven-Year Program to Help 80 Million People out of Poverty" the state increased anti-poverty funds and adjusted regional investment structures, especially by reducing investment in the east and increasing inputs in western poor areas.

 

2. Re-identified national poverty-stricken counties. In order to make the poverty alleviation funds cover more poverty-stricken areas and poor people, the state readjusted the standard of national poverty-stricken counties in 1994. According to the new standard all the counties with per capita net incomes below 400 Yuan in 1992 were identified as national poor counties; all the original national poverty-stricken counties with per capita net income above 700 Yuan in 1992 were no longer supported by the government. According to this standard, there were a total of 592 national poor counties, which were scattered in 27 provinces, autonomous regions and municipalities across the country. Among them 82% were central and western counties. Statistics show that the 592 national poor counties covered 72.6% of the rural poor population at the time.

 

3. Expanded the coverage of fixed-point poverty alleviation and started East-West cooperation in poverty alleviation. From 1994 to 2000 the party and government organs at all levels, as well as the democratic parties and the People's Liberation Army actively participated in fixed-point poverty alleviation efforts by using

their resources to support the development of some national poverty-stricken counties. As of 2000, a total of 138 central party and government organs, enterprises, institutions, democratic parties and social organizations had participated in fixed-point poverty alleviation, more than 3000 cadres had been sent to poor counties for poverty reduction, 4.4 billion Yuan of anti-poverty funds had been directly invested and 10.5 billion Yuan of funds had been raised for impoverished regions, which supported a total of 350 poverty-stricken counties.

 

The State Council made special deployments and specific arrangements on East-West cooperation in poverty alleviation in 1996. Under the principle of "advantage complementation, mutual benefits, long-term cooperation and common development", the collaborators carried out a full range of multilevel cooperation programs in poverty reduction, mainly in the following four ways:

 

• First, donate funds for education, health and other infrastructure construction;

 

• Second, donate production and living materials to support agricultural production of farmers or as relief to farmers' daily life;

 

• Third, emphasize economic technical collaboration and take advantage of the capital, technology, management and market of developed areas, as well as the resources and cheap labor in poor areas to conduct cooperation in production and operation;
• Fourth, promote a two-way exchange of personnel. Developed provinces and municipalities sent cadres, technicians and youth volunteers to serve with poverty-stricken provinces and autonomous regions, while poor provinces and autonomous regions sent administrative and technical cadres to receive training or take a temporary post in developed provinces and autonomous regions, as well as sending laborers to work in developed regions as well.

 

From 1996 to 1999, according to incomplete statistics, the government and all circles of society in the 13 eastern provinces and municipalities donated a total of more than 1 billion Yuan in kind or cash, signed more than 2600 project agreements and actually invested nearly 4 billion Yuan. Meanwhile, 250,000 laborers were transferred from impoverished regions and labor incomes totaled more than 800 million Yuan.

 

(4) Various sectors actively participated in poverty alleviation. The competent industrial departments carried out fixed-point poverty alleviation and conducted industrial poverty alleviation. The Ministry of Agriculture for example, focused on agricultural development in poverty reduction and the Ministry of Health focused on endemic disease control and the construction of grass-roots medical institutions. Water conservancy departments, gave priority to securing safe drinking water supply for humans and livestock, soil and water conservation, construction of small irrigation and water conservancy projects, rural water conservancy and hydropower development and construction. In order to change the backward educational situation in impoverished regions and speed up the pace of universalizing nine-year compulsory education in poverty-stricken areas, the Ministry of Education has been responsible for the implementation of the "Compulsory Education Project in National Poverty-stricken Areas" in 1995. From 1995 to 2000, the state invested a total of 12.462 billion Yuan of Central special funds and the projects were launched in 852 poor counties, of which 568 were national poor counties and 284 were provincial poor counties. The "Compulsory Education Project in National Poverty-stricken Areas" mainly undertook the task of building and rebuilding primary schools and junior middle schools; purchasing desks, chairs and books; purchasing teaching instruments and equipment; training teachers and headmasters, etc.

 

5. Actively explored the implementation of social poverty alleviation and foreign-funded poverty alleviation programs. Despite the small size and limited areas, non-government poverty alleviation activities directly or indirectly contributed to the "Seven-Year Program to Help 80 Million People Out of Poverty". During this period, the main non-government poverty alleviation activities included the Project Hope to support primary school education in impoverished areas, the Happiness Project to provide micro-credit for women, the woman poverty alleviation action of ACWF, the poverty reduction activities of China Disabled Persons' Federation, and the like. In this period, the Chinese government set up the Foreign Capital Project Management Center of the State Council Leading Group Office of Poverty Alleviation and Development

 

(LGOP) and strengthened cooperation with international organizations in the field of poverty reduction by expanding the scale, field and coverage of international cooperation in poverty alleviation. International institutions adopted different approaches to poverty reduction in China and their activities covered a variety of projects in most sectors, including microfinance, small-scale infrastructure construction, community development, environmental protection, technical assistance, capacity building and integrated rural development. Among them, the World Bank invested most and successively provided three loan projects for poverty reduction in the Southwest, Qinba and western regions.

 

6. Strengthened support for poor groups. At this stage, the Chinese government continued to attach importance to anti-poverty work for ethnic minorities, women, persons with disabilities and other special poverty-stricken groups.

 

1. Progress and effectiveness

 

(1) Made progress in reducing the size of poverty-stricken population and the incidence of poverty. At this stage, the number of poverty-stricken people in rural China continued to decline (see Table 2). Based on the national poverty line, in this period, the number of rural poor in China was reduced from 80 million in 1993 to 32.09 million in 2000, with a decrease of 47.91 million within 7 years, or in other words a decrease by 59.89%. The poverty rate also dropped from 8.8% in 1993 to 3.4% in 2000. According to the World Bank standard of one dollar a day, the number of rural poor residents declined from 237 million in 1994 to 111 million in 2000, which constituted a 53.3% decrease within 7 years, with an average annual decrease of 11.9%. The poverty rate also dropped from 25.9% in 1994 to 11.9% in 2000.

 

 

Table 3 Rural Poor Population and Incidence of Poverty in China (1994-2000) (%)

 

Year	National Bureau of		World Bank
	Statistics
	Incidence of	Poor	Incidence of	Poor
	poverty (%)	population	poverty (%)	population
		(million)		(million)
1994	7.6	70	25.9	237
1995	7.1	65	21.8	200
1996	6.3	58	15	138
1997	5.4	50	13.5	124
1998	4.6	42	11.7	108
1999	3.7	34	11.2	103
2000	3.4	32	11.9	110.7

 

Source: Based on the "Preliminary Study on the Poverty Standards and Poverty Situation in Rural China" by Tang Ping ("China's Rural Economy, 1994, 8), "China's Rural Poverty Monitoring Report 2002" of Rural Socioeconomic Survey Corps of National Bureau of Statistics, and data provided by the National Bureau of Statistics and the LGOP. The rural population data is from the "China Rural Statistical Yearbooks".

 

2. The regional distribution of poverty-stricken people changed. During this period, the steady decline in the number of poor people was coupled with the poor becoming increasingly concentrated in the central and western regions. The proportion of poor residents in the east decreased from 20% to 9%, the proportion in the central areas increased from 29% to 30% and that in the west rose from 51% to 61%.

 

3. The infrastructure in impoverished regions was improved. Significant achievements were made in infrastructure construction in national poverty-stricken counties. From 1997 to 2000, the proportion of villages with access to electricity, telephone lines, the postal service, roads and safe drinking water sources respectively increased from 92.85%, 49.43%, 70.76%, 88.21% and 70.13% in 1997 to 95.37%, 72.22%, 75.61%, 91.86% and 73.35% in 2000, with an increase of 2.52, 22.79, 4.85, 3.65 and 3.22 percentage points respectively.

 

4. Significant progress was also made in social development. From 1997 to 2000, the dropout rate of school-age children declined from 7.43% to 6.78%, the proportion of illiterate and semiliterate laborers decreased from 19.96% to 16.29%, the proportion of villages with kindergartens and junior high schools rose by 9.5% and 2.3% respectively, and the proportion of villages with hospitals and nursing homes respectively increased by 3.6% and 0.7%.

 

 

 

9.3 Stage of the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)"

 

1. Background

 

1. The economy witnessed rapid growth and the government began to adjust the national development strategy. Since the beginning of the 21^st Century, with support of high domestic saving rates, as well as due to high rates of investment and foreign direct investment, China's economy maintained rapid growth. With rapid economic growth and the accelerated pace of industrialization and urbanization, the industrial structure has undergone great changes. The Communist Party of China put forward the objective of building a moderately prosperous society on the Sixteenth National People's Congress convened in 2002 and the Chinese government also made adjustments to the economic development strategy in the process of formulating the 11^th Five-Year Plan (2006-2010) for national economic and social development. The state implemented some regional development strategies such as the Western Development Program and the strategy to revitalize the northeast old industrial base areas in order to narrow the development gap between regions.

 

2. China entered the WTO and actively developed foreign trade. China officially entered the WTO at the end of 2001, which was an important opportunity for comprehensive, multilevel, wide-ranging opening-up. Under the goal of implementing diversified strategies and expanding exports, China strived for a relatively favorable position in the international division of labor, laying a foundation for further rapid economic growth in China.

 

3. Implemented a series of policy measures to benefit agriculture. The state launched a plan for large-scale conversion of farmland to forests in 2001 and began to provide direct subsidies for grain production, seed subsidies and the subsidies for purchasing large farm machinery in 2004. The reform of rural taxes was fully implemented in 2003 and the agricultural tax was completely abolished in China in 2006. The new cooperative medical system was established in pilot rural areas in 2003 and the new rural cooperative medical system covered 96% of farmers nationwide by the end of 2010. The state implemented the second phase (2001-2005) of the "Compulsory Education Project in National Poverty-stricken Areas" and began to implement the "two exemptions and one subsidy" policy in pilot areas for students from needy families in poverty-stricken regions. This policy consisted of providing students with free textbooks, exempting their miscellaneous fees and providing subsidies for the living expenses of boarding students. The state continued to push forward the financial reform in rural areas. Under the premise of ensuring adequate capital, strict financial regulation and the establishment of a reasonable and effective mechanism for withdrawal, it encouraged the establishment of community financial institutions in diverse forms of ownership in counties and allowed private and foreign capital participation. The government adjusted the family planning policy in rural areas and began to establish the reward and assistance system for rural families involved in family planning, with the aim of helping farmers change their attitudes towards childbearing through economic means.

 

(4) Conducted new rural construction. The objective of the new socialist countryside construction program was to make rural areas grow into the new socialist countryside characterized by "developed production, affluent life, civilized customs, clean and tidy villages, and democratic management". Under this objective the framework of new rural construction was set up, with the following objectives:

 

• Adjusting national income distribution by modifying fiscal spending and investment in fixed assets and credit, in order to most effectively give priority to the "three rural issues".
• Expanding the coverage of public finance in rural areas, further strengthening the agricultural foundation and increasing the supply of public goods in rural areas.

 

• Creating a unified labor market and the employment system conducive for fair competition, cancelling various restrictions on farmers’ working in cities, organizing training on the employment and transfer of rural labor forces, and resolving the prominent problems of wage arrears for migrant workers, lack of protection for work-related injuries, etc..

 

• Further clarifying the responsibilities of governments at all levels for rural compulsory education and gradually establishing a unified urban and rural compulsory education management system.
• Increasing government financial investment in the rural cooperative medical system and establishing a mechanism for the treatment of major and serious illnesses in rural areas.
• Establishing a fair and unified social welfare system characterized by the convergence of urban and rural areas, exploring the establishment of the rural minimum living security system as well as the establishment and improvement of the rural social relief system.

 

1. Major policy initiatives for poverty alleviation and development

 

(1) Formulated and implemented the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)". At the end of 2000, more than 30 million poor rural residents in China had no adequate food and clothing, accounting for about 3% of the total rural population. There were a total of more than 60 million low-income people in the country at the time. The location of these poverty-stricken people showed features of "large dispersion, small concentration" which made it difficult to lift them out of poverty. To address this problem, the Chinese government promulgated the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)" in 2001. It adjusted the rural poverty alleviation modes and strategies to pay equal attention to addressing food and clothing problem and consolidating the results, attach greater importance to the development of poverty-stricken people in poor areas while paying attention to the incomes of the poor. It emphasized the development of human resources, expanded the regional target range from poor counties to impoverished villages to make anti-poverty investment cover all poor villages and directly benefit the poorest. The Chinese government insisted on the combination of development-oriented poverty alleviation and the establishment of rural social security systems and continued to adhere to the principle of self-reliance and hard work. In addition, the government also paid attention to the active involvement of the poor in the decision-making, implementation, management and evaluation of poverty-relief projects.

 

2. Improved the pro-poor strategy and policy system, pushed forward the convergence of two systems and increased poverty alleviation efforts of industry sectors to help establish the pattern of large-scale poverty alleviation.

 

In order to effectively address the hardships of the rural poor, achieve equal treatment of urban and rural poor people in subsistence, relief and gradually narrow the gap between urban and rural public services, the government set up the rural minimum living security system in 2007 to promote the establishment of a new pattern of two-wheel drive. It focused on paying equal attention to development-oriented poverty alleviation and life relief. In 2008, the "Decision" of the Third Plenary Session of the 17th Central Committee clearly proposed to "improve the national pro-poor strategy and policy system and adhere to development-oriented poverty alleviation in order to achieve the effective convergence of the rural minimum living security system and pro-poor policies". When the rural minimum living security system was implemented, various sectors and social organizations also increased efforts to support poverty alleviation. At the later stage of the implementation of the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)", the pattern of large-scale poverty alleviation integrating special poverty reduction, industrial poverty relief and social poverty alleviation had been basically established.

 

3. Re-identified national poor counties, targeted at poverty-stricken villages and implemented entire village advancement. The Chinese government adjusted the key poor counties in 2001 according to changes in distribution of the rural poor. Meanwhile, the original national key poor counties were renamed as key counties for national poverty alleviation and development (key counties for short) to further highlight and strengthen the poverty relief responsibilities of county governments. These counties are required to give priority to poverty alleviation and development in economic and social development. Concentrated in 21 provinces (autonomous regions, municipalities) in the central and west area, all the 592 key counties are minority areas, old revolutionary base areas, border areas and special poverty-stricken regions. The poor living in absolute poverty in these 592 key counties account for 61.9% of the total impoverished people in the country. In order to better target at the poor, the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)" clearly stated that specific measures for poverty alleviation and development must be implemented in poverty-stricken villages. Under the guidance and organization of the LGOP, local governments at all levels identified a total of 150,000 key villages through a participatory approach, covering 76% of the poor people across the country. After targeting poor villages, the poverty alleviation system began to formulate village-level planning for poverty alleviation and development in order to implement entire village advancement.

 

4. Increased funding for poverty alleviation, strengthened management of poverty-relief funds and actively explored new channels of anti-poverty funding.

On the basis of increasing annual special poverty-relief funds, the state strengthened the management of anti-poverty funds such that the pre-allocation of financial anti-poverty funds provide timely funding, implemented announcement system, reimbursement system, filing system and bidding system to make use of anti-poverty funds under the supervision of various sectors and the masses. It also established the performance appraisal system for financial anti-poverty funds to combine the distribution of poverty-relief funds with the poverty reduction effect of the funds; reformed the discount loan pattern for poor households; set up the "Award and Subsidy Funds" to promote the implementation of pilot projects of small loans for poor households; established the tracking and monitoring network for the management and use of poverty-relief funds, and the like. In this period, the government also actively explored new channels for anti-poverty funding, such as the use of mutual funds in poor villages and entire village advancement in old revolutionary base areas with the Lottery Fund.

 

5. Vigorously strengthen labor training in impoverished areas to promote the development of vocational education. The LGOP actively encouraged and supported labor transfer training in poor areas and set up 30 demonstration bases for labor transfer training in impoverished areas (demonstration bases for short). County-level training bases were set up in most of the key counties and a training network had been established in poor areas nationwide. From 2001 to 2005, according to statistics, 14 central and western provinces issued a total of 610 million Yuan of poverty alleviation training funds to the provincial, municipal and county training bases, averaging 150 million Yuan per year. In the five years, a total of 3.18 million laborers received technical training and more than 90% of them achieved non-agricultural employment. After 2006, the government basically achieved the goal of training one million people per year.

 

6. Promoted poverty alleviation through industrialization. With increasing farmers’ incomes as the main goal, poverty alleviation by industrialization refers to the poverty reduction efforts that promote the adjustment of agricultural structures in poverty-stricken areas to develop backbone industries through supporting and cultivating leading enterprises, with the purpose of promoting regional economic development. Among them, the driving of leading enterprises is the key link. The LGOP and Agricultural Bank of China determined 625 national poverty alleviation leading enterprises and supported them in funding, credit funds and training.

 

7. Conducted poverty alleviation through relocation. For the poor living in places with harsh natural conditions that can hardly support local residents, according to the requirements of "making people able to move out, live a stable life and get rich", the state strengthened poverty alleviation through relocation by resettling the poor near their relatives or friends, establishing migrant development bases and allowing migrants to keep their old homes until the new settlements are well in shape for stable production and habitation. When poverty alleviation departments continued to implement poverty reduction by relocation, the National Development and Reform Commission organized the implementation of pilot projects of ex-situ relocation for poverty alleviation (ecological migration) in some western provinces and autonomous regions.

 

(8) Further promoted fixed-point poverty alleviation and further expanded international exchanges and cooperation in the field of poverty reduction. Since 2002, a large number of central enterprises have joined the fixed-point poverty alleviation team and gradually become an important force for fixed-point poverty alleviation. The pattern of poverty alleviation for 272 central ministries and enterprises to help 481 key counties has been gradually established. During the same period, when some international organizations provided assistance to China, the Chinese government set up the International Poverty Reduction Center in China (IPRCC) in 2005, beginning to introduce China's successful experience in poverty alleviation to the international community.

 

1. Progress and effectiveness

 

(1) Poor rural population dropped significantly. The number of the rural poor was reduced from 90.3 million in 2001 to 26.88 million in 2010, the poverty incidence declined from 9.8% to 2.8%, and the number of the poor in 592 key counties for national poverty alleviation and development programs decreased from 56.77 million at the end of 2001 to 16.93 million in 2010 (note: the poor included people living in absolute poverty and the low-income poor).

 

Table 3   Incidence of Poverty in Rural China (2001-2010)

 

Year	Absolute poverty		Low-income poverty		Poverty
	Incidence	Poor	Incidence	Poor	Incidence	Poor
	of poverty	population	of	population	of poverty	population
	(%)	(ten	poverty	(ten	(%)	(ten
		thousand)	(%)	thousand)		thousand)
2001	3.2	2927	6.6	6103	9.8	9030
2002	3	2820	6.2	5825	9.2	8645
2003	3.1	2900	6	5617	9.1	8517
2004	2.8	2610	5.3	4977	8.1	7587
2005	2.5	2365	4.3	4067	7.8	6432
2006	2.3	2148	3.7	3550	6	5698
2007	1.6	1479	3	2841	4.6	4320
2008	--	--	--	--	4.2	4007

 

2009	--	--	--	--	3.8	3597
2010	--	--	--	--	2.8	2688
Source: Poverty Monitoring Report of the National Bureau of Statistics.

 

2. Infrastructure in impoverished areas was significantly improved. From 2002 to 2010, the key counties increased 52,456,000 mu of basic farmland, built and rebuilt highroads of 952,000 kilometers, increased education and health care buildings by 35.061 million square meters, and solved the drinking water problems of 56.757 million people and 49.993 million heads of livestock. As of the end of 2010, the proportion of rural households in key counties drinking tap water and deep well water reached 60.9%. From 2002 to 2010, the proportion of natural villages in key counties with highroads increased from 72.2% to 88.1%, the proportion of natural villages with access to electricity rose from 92.8% to 98%, that of natural villages with access to telephone lines increased from 52.4% to 92.9%, and that of natural villages with access to broadcasting and TV program increased from 83.7% to 92%.

 

3. Quality of life of the farmers in poor areas was significantly enhanced. In the 21^st century, farmer per capita net income in key counties increased from 1,277 Yuan in 2001 to 3,273 Yuan in 2010, with an average annual growth of 8.1%, slightly higher than the national average, and farmer per capita living expenses amounted to 2,662 Yuan, with an annual real growth of 7.9%. In 2010, farmer per capita housing area in the key counties was 24.9 square meters, 4.8 square meters more than that in 2002, which was an increase of 23.9%. The consumption of other commodities also witnessed a substantial rise.

 

4. Poverty-stricken areas witnessed comprehensive development of social undertakings. In 2010, the school rate of school-age children reached 97.7%, close to the national average, and the dropout rate due to poverty declined from 9% in 2002 to 2.3% in 2010. In 2010, the average number of years of education for laborers reached 8 years and the illiteracy rate of young labors was 7%, down 5.4% compared to 2002. In 2010, all the towns in the key counties were equipped with hospitals, most of the poor villages were equipped with health clinics, the number of participants of the new rural cooperative medical system reached 835 million, and per capita financial assistance was increased from 20 Yuan to 120 Yuan.

 

5. County economy witnessed rapid growth. From 2001 to 2010, the county economy witnessed rapid development, per capita GDP of key counties increased from 2,658.1 Yuan to 11,170 Yuan, with an average annual growth of 17%, and the per capita local general budget income increased from 123 Yuan to 559 Yuan, with an average annual growth of 18.3%. In addition, the county industrial structure was further optimized and the proportion of primary, secondary and tertiary industries became more appropriate.

 

 

 

9.4 Stage of “Outline for Poverty Alleviation and Development of China’s Rural Areas (2011-2020)” in the new era

 

After years of economic development, China has successfully entered the ranks of middle income countries. In 2010, calculated at comparable prices, China's gross domestic product (GDP) was higher than that of Japan and its economic aggregate ranked second in the world. Meanwhile, with the completion of the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)" and the full implementation of the minimum living security system in rural areas, China had basically solved the absolute poverty problem in rural areas by the end of 2010. However since the global financial crisis of 2008, China's development model has been facing a series of tough challenges. At the same time, the problems of uneven development, the development gap and relative poverty become prominent. In order to further accelerate the development of poor areas and promote common prosperity so as to achieve the goal of building a well-off society in an all-round way by 2020, the central government held the anti-poverty meeting in 2011 and promulgated the Outline for Development-oriented Poverty Reduction Program for China's Rural Areas (2011-2020). This outline is another guiding document for the next ten year anti-poverty strategy which points out its objectives and missions, guiding principles, target scope and policy guarantees.

 

1. Positional Judgment

 

Poverty elimination and common prosperity are essential requirements of socialism. Since Reform and Opening-up, China’s development-oriented poverty reduction program has greatly progressed, poverty alleviation efforts have made great headway which has made great contributions to global efforts in poverty reduction. Now the primary task for the future ten years of poverty reduction has changed from ensuring peoples’ basic livelihoods to consolidating our accomplishments, helping people become well-off quicker, improve the ecological environment, enhance development capacity and narrow the development gap.

 

According to the national poverty line (set at 2300 Yuan per person per year) which was adjusted in 2011, there are still 122 million poor people in China, which means that development-oriented poverty reduction is a long-term mission. It shows that the country features a relatively low level of economic and social development, noticeable imbalances in regional development and deep-seated rural development bottlenecks. Rural China is plagued by the continued impoverishment of numerous residents, comparative deprivation, and frequent cases of falling back into poverty. The presence of underdeveloped areas that lie in contiguous poor areas with special difficulties renders the mission of reducing poverty particularly difficult.

 

For the above reasons, the central government put poverty reduction in a strategy perspective that points out the Development-oriented poverty reduction programming is critical to the consolidation of the basis for governance, the maintenance of political and social stability, and the advancement of the drive towards socialist modernization. Further facilitation of development-oriented poverty reduction is an important task for the building of socialism with Chinese characteristics, an inevitable requirement for implementation of Scientific Outlook on Development, and reflects an administrative mentality that puts people first. Such programming is also a key measure for achieving integrated urban and rural development, improving peoples’ livelihoods, bridging development gaps, and enabling all people to enjoy the fruits of Reform and Opening Up. It is urgently needed for the overall development of a well-off society and harmonious socialist society. We should therefore better position ourselves for a new round of strenuous effort with greater determination and enhanced effectiveness so as to ensure all-round prosperity for all Chinese people.

 

1. Guiding Ideology and Guiding Principles

 

In the next ten years the guiding ideology of China’s development-oriented poverty reduction program is that operating under the guidance of socialism with Chinese characteristics, the Deng Xiaoping Theory, the important thought of “Three Represents” and the Scientific Outlook on Development. Under this ideology, the government’s priorities include raising the standard of poverty alleviation, making the contiguous poor areas with special difficulties the key target areas for its efforts, and improving access to food and clothing as well as helping people escape poverty more quickly. The government will continue to play a leading role in striving for balanced development, transforming patterns of economic development, improving comprehensive quality of people’s lives, achieving an equal distribution of basic public services, tackling acute problems that restrict development, and striving for better and faster development.

 

The Guiding principle is adhering to the policy of development-oriented poverty alleviation, which includes: Connecting the development-oriented approach with the subsistence allowance system; Making development-oriented poverty reduction program the main channel for shaking off poverty; Encouraging and supporting able-bodied poor people to escape poverty through their own efforts; Making the social security network the basic means to ensure subsistence and improving this network gradually.

 

1. Objectives and Missions

 

The Outline (2011-2020) clearly points out the objectives for the new stage of poverty reduction that are to be attained by 2020, which are adequate food and clothing, compulsory education, basic medical care and housing being made available to the poor population; the per capita net income growth rate of poor peasants will be higher than the national average, leading indicators of basic public services to the national average, and the widening development gap bridged over time.

 

According to the above objectives, the missions can be summarized in the following four pillars and twelve tasks:

 

 

Pillar one: Economic Growth

 

Basic farmland, irrigation and water conservation: By 2015, basic farmland and water conservation facilities in poverty-stricken areas will be greatly improved to ensure per capita farmland for grain-growing. By 2020, quality of farmland infrastructure will be improved.

 

• Specialty and competitive industries: By 2015, the state will make every household benefit from at least one project designed to increase incomes. By 2020, a specialty and pillar industry system will be put in place.

 

Pillar two: Public Services

 

• Drinking water safety: By 2015, a basic level of access to safe drinking water in poor rural areas will be guaranteed. By 2020, drinking water safety and tap water coverage rates will be further improved.

 

• Electricity for production and residential use: By 2015, the state will ensure access to electricity in poor villages and will dramatically reduce the proportion of the population without access to electricity in remote Western areas and ethnic minority regions. By 2020, electricity will become accessible to all residents.

 

• Transportation: By 2015, the percentage of poor counties accessible by secondary roads, or roads with higher quality, will be increased. Asphalted (cemented) roads will be built in 80% of administrative villages in Western areas (except those in Tibet) and bus accessibility rates in poverty-stricken areas will be raised. By 2020, asphalted (cemented) roads will be constructed to reach administrative villages based on feasibility, upgraded and hardened roads will be built inside the villages, and regular coaches/buses will be made available in every village. The government will improve the level of rural road services as well as disaster prevention and relief capabilities of the road administrative system.

 

Pillar Three: Social Inclusion

 

• Renovation of dilapidated houses in rural areas: By 2015, 8 million dilapidated houses belonging to poor rural households will be rebuilt. By 2020, the living conditions of poor rural residents will be markedly improved.

 

• Education: By 2015, the gross enrollment rate at the kindergarten level in rural areas will be raised significantly; the gross enrollment rate at the high school level will reach 80%; the scale of ordinary high school and secondary vocational school enrollment will be kept at a similar level. The state will improve the quality of practical agro-techniques and focus on providing technical skills and practical agricultural techniques training for the labor force from poor rural families in order to improve their ability to find better-paying jobs. Illiteracy among middle-aged people will also be eliminated. By 2020, pre-school education will be popularized, the level of compulsory education will be further enhanced, senior high school education will be made accessible to everyone, distance-learning and community education will be further emphasized.

 

• Medical care and public health: By 2015, a medical care network at the county, township and village levels will be put in place; the quality of county-level hospitals will be markedly enhanced. There will be hospitals in every town and clinics in every village; the participation rate of villagers in the New Rural Cooperative Medical System will be stabilized at above 90%, outpatient services will be available to almost everyone. The government will secure treatment for children with critical illnesses, keep major infectious and endemic diseases under control, and ensure that every town has a general practitioner. By 2020, access to public health and basic medical care for poor rural residents will become more equal.

 

• Public culture: By 2015, radio, film and television service systems will be established, realizing total coverage in natural villages with less than 20 inhabitants and with access to electricity. The government will make radio and television available to almost every household and equip every county with one digital theater. Every administrative village will put on at least one digital movie every month. Broadband will be accessible in every administrative village and communication signals will be made accessible in natural villages and along roads. By 2020, the government will further improve radio, film and television service systems; ensuring radio and television services are available in every household and broadband in every natural village. It will also promote a rural public culture service system whereby every key county in the national development-oriented poverty reduction program (hereinafter referred to as key county) will set up a library, every town a comprehensive culture center and every administrative village an entertainment room. Public culture development will be utilized to foster a culture of clean government.

 

• Social security: By 2015, the subsistence allowance system, the “five guarantees” life-support system and the temporary relief system in rural China will be further improved. The new rural social endowment insurance system will be popularized. By 2020, social security service levels will be further upgraded.

 

• Population and family planning: By 2015, the natural growth rate of population in key counties will be kept under 8‰ and the total fertility rate at about 1.8. By 2020, the low birthrate in key counties will be further stabilized, so as to realize balanced population growth.

 

Pillar Four: Sustainable Development

• Forestry and ecology: By 2015, forest acreage will be 1.5 percentage points more than that at the end of 2010. By 2020, forest acreage will be 3.5 percentage points more than that at the end of 2010.

1. Target Scope

The Outline (2011-2020) designates able-bodied rural residents whose incomes are below the poverty line as the targets for poverty reduction programming. The government will establish and improve identification mechanisms, build up archives and manage them dynamically so as to ensure effective support for the target populations.

As the poor population are gathering in the contiguous areas with special difficulties, key destitute areas that will be mainly supported by the government include contiguous poor areas like the Liupan Mountain area, the Qinba Mountain area, the Wulin Mountain area, the Wumeng Mountain area; rocky desertification areas in Yunnan, Guizhou and Guangxi provinces; mountainous border areas in Western Yunnan, the south of the Greater Khingan Mountains, the Yanshan Mountain-Taihang Mountain area, the Luliang Mountain area, the Dabie Mountain area, and the Luoxiao Mountain area; as well as Tibet, Tibetan ethnic areas in Sichuan, Yunnan, Gansu and Qinghai provinces and Kashgar, Hotan and Kezilesu Kirgiz Autonomous Prefecture of Xinjiang.

The government will channel more resources to those identified regions, step up trans-provincial guidance and coordination, pool the strengths of different parts of the government and launch appropriate projects sequentially.

The state will continue to give considerable support to key counties and poor villages that are outside the areas that lie in contiguous stretches. The support policy for originally-identified key counties remains unchanged. However, provinces (as well as autonomous regions and municipalities directly under the central government) should design and adopt various measures in line with their actual conditions to gradually reduce the number of key counties. The previous levels of government support will remain unchanged in cases in which counties develop from key counties into normal counties.

1. Policy Guarantee

In order to further accelerate the development of poor areas and promote common prosperity in order to achieve the goal of building a well-off society in an all-round way by 2020, the new outline designates the following policies:

Improve anti-poverty strategy and policy system

The policy system will give play to the comprehensive benefits of special, industrial and social poverty alleviation efforts; integrate development-oriented poverty reduction projects with the social security system, and carry out impact assessments before initiating important policies and projects that might affect poverty reduction work.

Increase the central and local governments’ financial inputs

The additional poverty reduction funding from the central budget will be used in contiguous areas with special difficulties. General transfer payments from central and provincial budgets toward the poverty-stricken areas will be increased, as will the use of lottery proceeds for the purpose of poverty reduction. No tariff will be levied for state-approved domestic and foreign investment projects; foreign-funded competitive industry projects in Eastern and Central China; self-use equipment unable to be produced domestically; or technologies, accessories and spare parts imported alongside such equipment. If eligible, corporate donations to poor people can be deducted according to relevant tax regulations.

Intensify investment in infrastructure, ecological environment and welfare projects

The policy will promote more village-level roads and develop agriculture comprehensively. It will also protect land resources and small river basins, control water and soil erosion, and develop hydropower in rural areas. The state-arranged projects for the consolidation of dangerous reservoirs, ecological construction, drinking water safety, supporting transformation in large irrigated areas and other public benefits projects will not receive supporting funds from government agencies at or below county level nor government agencies of contiguous areas with special difficulties in Western China. Governments at all levels should intensify investment support for contiguous areas with special difficulties.

Improve national anti-poverty discounted-interest loan policies

Actively promoting innovation of financial products and service modes in poverty-stricken areas, encouraging development of small-sum credit loans, and satisfying poor peoples’ need for funds to develop production is another important dimension of the new policy system. It will carry out anti-poverty loan projects for rehabilitation of the handicapped, enable coverage of poor areas by financial institutions and financial services, and guide civil loans to develop normally. It will also widen financing channels of poor areas and encourage financial institutions incorporated at county level in poor areas to make over 70% of their additional loans locally. The state will energetically develop insurance services in rural areas by urging insurance institutions to establish grassroots service networks in poverty-stricken areas. It will also improve existing agriculture premium subsidy policies, inspire local communities to develop specialty agriculture insurance targeting specialty and leading industries of poor areas and strengthen the rural credit system.

Implement various industrial policies under the Western Development Project

Large-scale national projects, key projects and emerging industries should be arranged in favor of qualified poverty-stricken areas. Labor-intensive industries should be guided toward poor areas as well. Market development in poor areas should be reinforced. The state supports reasonable development and utilization of resources in poverty-stricken areas and will improve policies to support the development of specialty and competitive industries.

Improve land utilization

New land for construction should first be used to satisfy house-building requirements for those who are relocated from poor areas. The state will reasonably arrange land for construction in small towns and concentrated industrial parks, reclaim more land, favor eligible key counties in terms of project arrangement, and support poverty-stricken areas to utilize mineral resources in an eco-friendly and orderly way.

Protect ecological environment

The state will continue to launch grain-to-green, pastureland-to-grassland, water and soil conservation, natural forest protection, and shelter forest construction projects as well as controlling desertification in Karst areas and other regions. An ecological compensation mechanism favoring poverty-stricken areas will be created and ecological compensation for key ecological function areas will be intensified. Protection of biodiversity in poor areas will be prioritized on the agenda.

Guarantee of talents

The government will organize personnel from the education, science, culture and health sectors as well as volunteers to work in poverty-stricken areas. It will also formulate policy encouraging institutions of higher learning, research institutions and medical institutions to nurture talented individuals for poor areas. The government will guide college students to work or start businesses in poor areas, design incentive policies for officials who hold long-term posts in poor areas, and favor technicians of all sectors in terms of posts and job titles. It will show more care to officials who hold temporary posts in poor areas under targeted poverty reduction programs or the East-Help-West Program, making proper arrangements for their work and life so as to give full play to their advantages, engage with talents who start their own business in poverty reduction efforts and give more training to officials in poor areas.

Focus on key groups

Having incorporated development-oriented poverty reduction program schemes for ethnic minorities, women, children and the handicapped into its planning, the state will make unified arrangements for their implementation, give priority to their implementation when all conditions are equal, and strengthen support for these groups. It will organize the implementation of a special program to revitalize border areas, enrich the local people and help smaller ethnic groups shake off poverty. It will promote women of poor households to participate in the activity of learning culture and technology, comparing performance and contribution, and will pay attention to those women and children who are left in the countryside. The state will formulate and implement the Development-oriented Poverty Reduction Program for Disabled People in Rural Areas (2011-2020) to enhance their subsistence and development abilities.