THIS October marks the 70th anniversary of the founding of the People’s Republic of China. Like other aspects of the country, the agricultural sector has made remarkable achievements despite some twists and turns over the past years, supporting a huge population with limited resources.

Evolution of the Operational System

The land reforms after the founding of the PRC established the basic operational system in rural China. The reform in the early years of the PRC gave farmers equal land rights, and created the system of private ownership and operation of farmlands. The cooperative movement between 1953 and 1956 was aimed to establish mutual-aid and cooperative production among farmers on the basis of private ownership of lands. From 1957 to 1978, China applied the people’s commune system, under which rural lands were owned and operated collectively, and farmers were remunerated according to their “work points.”

After the reform and opening-up was initiated in 1978, the rural household contract responsibility system replaced the people’s commune system, initiating a two-tier management system that integrated unified alongside separate management on the basis of household contract management. The rural household contract responsibility system greatly aroused the enthusiasm of farmers, and remarkably increased the efficiency of agricultural production. Studies show that it was responsible for about 50 percent of agricultural growth and 35 percent of grain output growth in the early stage of reform and opening-up.

In the 1990s, the rural household contract responsibility system continued to be strengthened and improved, adding vigor to Chinese agriculture. In the 2010s, China’s central authorities made clear the direction of separating the three rights – ownership right, contracting right, and management right – reform in the countryside in response to farmers’ desire of retaining the contracting right but transferring the management right over their lands as more of them migrated to cities for job opportunities. This reform is a major institutional innovation in Chinese agriculture and the self-improvement of its basic operational system. It conforms to the law that the relations of production must adapt to the development of the productive forces, and attests to the vitality of the basic operational system of Chinese agriculture.

The 19th National Congress of the Communist Party of China (CPC), convened in October 2017, declared, “Rural land contracting practices will remain stable and unchanged on a long-term basis; the current round of contracts will be extended for another 30 years upon expiration.” This strategic decision will further consolidate and improve the basic operational system of Chinese agriculture, which has underpinned the strong growth of the sector since the founding of the PRC, especially since the commencement of reform and opening-up. As China endeavors to rejuvenate its countryside, this system of collective ownership and contracted management of farmlands will be maintained for a long period to come.   

In recent years, on the basis of the rural household contract responsibility system, rural reforms are going to greater depths in light of the circumstances of changing situations in rural areas: More farmers are working in cities and non-farming sectors; contracted lands change hands at a higher frequency; there are more intensive agricultural operations that are specialized, well organized, and commercialized; new types of entities of agricultural production and services are cropping up including large family farming businesses, family farms, farmers’ cooperatives, leading agricultural enterprises, and service-providing agribusinesses; and new modes of agricultural operation are maturing.

Large family farming businesses and family farms are the main force in the production of grains and other key produce. Family operation of farmlands is fundamental to China’s agricultural production. Farmers’ cooperatives play the role of networking, organizing, serving, and guiding individual farmers. Leading agricultural enterprises lead the way in the production of high-end agricultural products. And service-providing agribusinesses provide assistance to all kinds of agricultural entities.

In short, agricultural entities in China have changed from predominantly famers’ collectives in the beginning of the PRC to individual families in the early stage of reform and opening-up, and later to greater diversities of players who coexist, divide the labor, and collaborate with each other. Consequently, a multi-dimensional, composite system of modern agricultural operations has come into being that is based on family operation, bonded by cooperation and association, bolstered by commercialized services, and allows the development of all operation modes.

New Industries, New Forms of Business, and New Growth Drivers

Prior to the reform and opening-up, the government set the prices for farm products and monopolized procurement from farmers and retail. The surplus of the agricultural sector was diverted to the industrial sector to fuel the latter’s development. By contrast, agriculture received considerably less fiscal support from the state. From 1952 to 1978, the spending on agriculture from the state budget amounted to a total of RMB 157.7 billion or RMB 5.4 billion on average per year. During this period, RMB 391.5 billion was funneled from the agricultural to the industrial sector at the rate of RMB 13.5 billion annually.

In addition to the rural household contract responsibility system, since the start of reform and opening-up, China has rolled out a number of policies to support agriculture and farmers, constantly optimizing and strengthening the agricultural support and protection system. They include establishing a circulation system of farm produces in line with WTO rules, setting minimum state grain purchase prices among other pricing reforms, improving the ways that subsidies are granted under the system of guaranteed base prices for agricultural products, the policy on the state purchase and storage of major agricultural produces, steadily increasing state inputs in agriculture, optimizing these inputs, and reforming the methods of agricultural investment and financing. China has also lightened the burden of farmers by rescinding the agricultural tax and reducing or exempting agriculture-related taxes, reformed the fiscal system at the county and township levels, steadily improved the public finance system and agricultural subsidy policies, developed rural financial organizations, renovated rural credit and agricultural insurance products and services, hence intensifying the support for and protection of agriculture and farmers.

In the early years of reform and opening-up, Chinese agriculture was dominated by production of primary produces of agriculture, forestry, animal husbandry, and fisheries. Controlled environmental agriculture (or protected agriculture) and agritourism were almost nonexistent, and agricultural product processing industry was retarded. With the establishment and improvement of the rural household contract responsibility system, reform of the purchase and sales system for agricultural produces, and fast development of small and medium-sized rural enterprises, the agricultural sector moved beyond the production of primary produces, and saw the rise of various new industries and new business forms, which have become the key driving force of the development of agriculture and rural areas, especially in the new century.

Meanwhile e-commerce is booming in the countryside. According to the Ministry of Commerce, from 2014 to 2017 online retail sales in rural areas soared from RMB 180 billion to RMB 1.24488 trillion, growing by 96.23 percent year-on-year. And its share in the national total rose from just six percent to 17.4 percent, gaining 3.8 percent annually. Online sales of agricultural products in China are valued at RMB 243.66 billion, up 53.3 percent over 2016. As of the end of 2017, there were 9.856 million online stores based in the countryside, 2,118 Taobao villages (where 10 percent or more families run online stores), and 585 online markets for trade of agricultural products; online transactions of fresh agricultural produces reached RMB 139.13 billion.    

Agritourism is also thriving. In 2017, 330,000 businesses were engaged in agritourism and other forms of rural and countryside tourism, employing nine million people and receiving 2.2 billion visitors. Their revenues hit RMB 620 billion in 2017, compared with RMB 300 billion in 2014, growing at 28.33 percent year-on-year. Countryside tourism has provided employment to and increased the incomes of more than seven million rural families.

　In short, China’s agricultural sector has moved from production of primary produces to vertically integrated industrial chain development covering production, processing, and marketing, and taken on more functions including cultural heritage promotion, environmental protection, and tourism.

From Being Closed and Semi-closed to Wide Open

In the early years of the PRC, China’s agricultural sector was largely closed to semi-closed, with scant trade with the rest of the world. After the reform and opening-up set in, especially since China’s admission to the WTO, it has opened wider, bringing in foreign investment and businesses and also expanding presence in the international market.

From 1995 to 2017, the value of China’s agricultural imports and exports soared nearly seven fold from US $25.42 billion to US $201.39 billion, at an annual rate of 10.64 percent. In addition to foreign capital, China attracts advanced technologies and experts from abroad into its agricultural sector. From 1997 to 2016, foreign investment and the investment of foreign-funded businesses in China increased from US $628 million and US $12.5 billion to US $1.898 billion and US $81.4 billion respectively, marking an annual growth of 8.08 percent and 12.04 percent. Accumulatively they added up to US $24.278 billion and US $519.2 billion respectively. Meanwhile, China launched a number of cooperation projects that imported agricultural germplasm resources, technologies, machinery, managerial expertise, and professionals.

The other way round, in the 2004-2016 period, China’s outbound investment in agriculture grew from US $290 million to US $3.287 billion, at an annual rate of 33.53 percent, and the stock of this investment grew from US $834 million to US $14.885 billion, at an annual rate of 30.13 percent. By the end of 2016, China had established more than 1,300 businesses engaged in agriculture, forestry, animal husbandry, and fisheries in 100-plus countries and regions worldwide.

Scientific and Technological Innovation

Back in 1993, late Chinese leader Deng Xiaoping said that agricultural development depends first on policy and second on science. This was the truth in the past, holds true today, and will remain so in the future. Scientific and technological innovation is critical for agricultural development, improvement in agricultural production capacity, and advances in agricultural modernization as well. Formerly, Chinese farmers depended on nature, or upon “heaven,” for their harvests. Since the start of the reform and opening-up, China has accelerated the innovation of agricultural science and technology to unleash and build up agricultural productive forces and to reform the relations of agricultural production. Over the past 40 years, especially since the 18^th National Congress of the CPC (2012), China has ramped up fiscal support for agricultural scientific and technological innovation. From 1978 to 2015, state input in this area rocketed up to 75.39 times from RMB 720 million to RMB 55 billion, with the amount for R&D soaring by 184.71 times from RMB 140 million to RMB 26 billion. Institutional reforms of agricultural sci-tech research go deeper. Various kinds of agricultural entities and market players are showing more enthusiasm in entrepreneurship and innovation. And an agricultural sci-tech innovation system is coming into shape that meets the demand of high-quality economic development.    

As a result, China’s ability in agricultural scientific and technological innovation has improved significantly. Breakthroughs have been made in the fields of bio-breeding, cultivation of transgenic species, prevention and control of major crop and animal diseases, as well as remote sensing technology and information technology for agricultural operations. Many advanced technologies, such as those of water saving, formula fertilization based on soil testing, and systematic prevention and control of diseases and insects, have been applied nationwide. In 2017 science and technology contributed to as much as 57.5 percent of agricultural development, up four percentage points over that of 2012, and 9.5 percentage points from 2005. The coverage rate of improved varieties of major crops exceeded 96 percent. Sci-tech innovation underpins the transformation and upgrading of China’s agricultural sector, optimization of agricultural product supply, and cultivation of new growth drivers in the sector, adding momentum to its high-quality development and core competitiveness. 

In conclusion, since the founding of the PRC, Chinese agriculture has made remarkable achievements and tremendous contributions to world food security, poverty alleviation, and sustainable development of international agriculture.

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DU ZHIXIONG is a researcher with the Rural Development Institute of Chinese Academy of Social Sciences; XIAO WEIDONG is a faculty member of the School of Public Administration, Shandong Normal University.