On November 4, 2008, the International Press Center (IPC) of the foreign ministry invited Deputy Director General Huang Yanxin of the Department of Policy and Regulation of the Ministry of Agriculture to hold a briefing on the issues concerning rural reform and development. Over 30 foreign journalists based in China attended the meeting.

Huang said that the Third Plenary Session of the 17th Communist Party of China (CPC) Central Committee was held at a moment when China's reform and development entered a critical stage. The Decision on Major Issues Concerning Rural Reform and Development (hereinafter referred to as the Decision) adopted by the meeting fully reflects the firm determination of the CPC to solve the issues of agriculture, rural area and farmers and the common aspiration of all the Chinese people, especially the millions of farmers. It is a guiding document on pushing forward rural reform and development under new situations.

The first part of the Decision explains the significance of promoting rural reform and development under new situations, lists the five major achievements of rural reform and development, analyzes the four contributions of rural reform and development to the overall economic system and economic development, summarizes five experience on rural reform and development, points out four main issues for the next stage of reform and development and makes a scientific judgment about the development stage of Chinese agriculture. According to the Decision, China has generally entered into the development stage in which industry feeds agriculture and urban area elevates rural area, a critical moment of accelerating traditional agriculture restructuring and pursuing a path of agricultural modernization with Chinese characteristics and a key period of breaking down the urban-rural dual structure and building a new pattern of integration of rural and urban economic and social development. It shows that conditions and external environment have been ready to accelerate rural reform and development in China.

The second part of the Decision defines the guiding thought, objectives and major principles of rural reform and development. What is new about the guiding thought is that it requires implementing comprehensively the scientific concept of development, takes the building of socialist new rural area as the strategic task, the following of the agricultural modernization path with Chinese characteristics as the basic direction and the accelerated building of a new pattern of integrated rural and urban economic and social development as the basic requirement and insists on the principle that industry feeds agriculture, cities support villages and the policy of giving more, taking less and being flexible. This is the overall deployment in order to solve the issues of agriculture, rural area and farmers. By giving more, it means granting more subsidies to the famers so as to increase their income; by taking less, it means asking less from the farmers to reduce their burden; and by being flexible, it means emancipating the rural productivity and activating the rural production factors. The ultimate goals are to encourage farmers to be more active, proactive and innovative through reform, strengthen agricultural foundation, increase farmers’ income, protect their right and interest, promote harmony in the rural area and push for faster and better development of the rural economy. The Decision defines the tasks of rural reform and development as follows. As required by the 17th CPC meeting, by 2020 the rural economic system should be improved, the system of integrated economic and social development in the rural and urban areas be basically established, remarkable achievements be achieved in agricultural modernization, comprehensive agricultural productivity enhanced greatly and national food security and main farm products supply effectively guaranteed. Compared with 2008, the per capita disposable income of farmers in 2020 will double. The per capita disposable income of Chinese farmers was RMB4,140 last year and will reach at least over RMB8,300 by 2020. Readjusting to price rise, the normative per capita disposable income of farmers should reach about RMB10,000. The five principles summarize the 30-year experience of rural reform and development and must be followed in order to accelerate reform and development. The following are the five principles. First, we must consolidate and strengthen the fundamental position of agriculture and always give top priority to feeding the more than one billion of population. Second, we must effectively protect the right and interest of farmers and take realizing, maintaining and developing their fundamental interest as the starting point of our rural undertaking. Third, we must emancipate and develop the rural social productivity and take reform and innovation as the basic driving forces for rural development. Fourth, we must coordinate the rural and urban economic and social progress and implement the strategy of building a new type of relationship between workers and farmers, villages and cities. Fifth, we must ensure that CPC is in charge of the rural undertaking and always take strengthening and improving the leadership of CPC of the rural undertaking as the political guarantee for pushing forward rural reform and development.

The third part of the Decision explains how to advance reform and innovation and accelerate rural system construction. It mainly elaborates the construction of six systems. First we should stabilize and improve the basic management system in the rural area, i.e. stabilizing the dual operational system based on household contract and combination of centralization and decentralization. It is the cornerstone of our Party’s rural policy and must be adhered to resolutely. The existing land contract relationship must be stabilized and remain unchanged. In addition, two shifts and one development should be boosted. The household operation should shift towards adopting advanced technologies and production means and become more intensive. The operational model should shift towards cooperation of rural households to build a diversified and multi-level operational service system. One development means supporting the faster development of farmers’ special cooperatives and turning them into modern agricultural operational organizations which are able to lead farmers to compete in both domestic and international markets. Second, we should strictly standardize the rural land management system by implementing two most stringent systems and building two markets. A most rigorous system of arable land protection must be insisted on. We must resolutely keep the alarm line of no less than 180 million mu of arable land and ensure the basic farmland aggregate does not decrease and quality increases. A most strict land saving system must be implemented. We should establish and improve the market of land contract management right transfer and allow farmers to transfer their land contract and management right in various forms of subcontract, leasing, exchange, transfer and shareholding cooperation legally and voluntarily with compensation and develop diversified moderate-scale operation. We should gradually develop a unified rural and urban land market for construction purpose. Third, we should improve the agricultural autonomy protection mechanism. Three systems should be built. First is to establish the agricultural input system to increase agricultural investment; second is to improve the agricultural subsidy system to raise subsidy; third is to build the farm products price protection system to steadily raise the minimum procurement price of grain. Fourth, we should build a modern rural financial system. Efforts should be made to renovate the rural financial system, relax the rural financial access system and improve rural financial services. Fifth, we should build the system of integrated rural and urban economic and social development. Quick breakthroughs must be made in terms of urban and rural planning, industrial layout, infrastructure construction and public service. It is important to promote the balanced allocation of public resources in the rural and urban areas so as to facilitate the free flow of production factors in them. Sixth, we should improve the rural democratic management system, including strengthening the rural grassroots power construction. It is made clear that the township institutional reform should be completed basically by 2010 and the social management and public service functions of township government should be strengthened. A vigorous villagers autonomy system led by the village CPC officials should be built and democratic election, decision-making, management and supervision be reinforced. Rural legal framework should be advanced, laws and regulations concerning the rural area be improved, the capacity of administrating in line with law be enhanced and law enforcement and judicial protection intensified.

The fourth part of the Decision is about developing modern agriculture and increasing the comprehensive agricultural productivity. There are 7 points in this part, including ensuring food security, readjusting agricultural structure, accelerating agricultural technological innovation, strengthening agricultural infrastructure construction, building a new type of agricultural service system, promoting sustainable development of agriculture and expanding agricultural opening.

The fifth part of the Decision: to accelerate the development of public welfare in and promote the all-round progress of the rural area. There are 8 points in this part, including promoting the prosperity of rural culture, improving education, healthcare, social security, infrastructure construction and environmental protection, enhancing poverty alleviation, building capacity of disaster prevention and relief and reinforcing social management in the rural area.

The six part of the Decision: to strengthen and improve the leadership of the CPC so as to provide strong political guarantee for rural reform and development. There are 5 points in this part, including improving the mechanism and system of CPC’s leadership of the rural undertaking and strengthening the rural grassroots construction, grassroots leaders’ capacity building, construction of rural CPC ranks and honesty of rural CPC organs.

Huang then answered questions of journalists.

Q: the rural land transfer market has existed legally for 20 years, but only 5% of land has been transferred. Could you confirm the correctness of this figure? Why only such a small proportion of land enters into the transfer market? What benefits does land transfer bring about to improve the liveliness of farmers? What measures is the Chinese government adopting to develop such a market?

A: the rural land operational right transfer is advocated by the government and protected by law. I am not clear about the specific proportion. But I know the number is not very big. An important reason is related with the agricultural return. When the return is low, especially for small farmers, the contract-undertaking parties might be reluctant to manage their land but choose working in the cities. If other farmers do not want to contract their land either, the transfer proportion will be relatively low. As far as I know, the land contracted by farmers who have stable jobs has been transferred completely, but this part of land is not incorporated into the 5% you mentioned. For example, you find a job in the city and transfer your land to your brother or father. This land in principle is transferred, but it is not included in the proportion because it is not registered officially. Land transfer is beneficial to farmers. It promotes reasonable utilization of land resources. To build a standardized land contract right transfer market, we will be able to increase the transfer price which will help raise the income of farmers by transferring their land. In order to build such a market, the government needs to confirm the land contract management right of farmers and issue certificate to them. The Ministry of Agriculture has developed the rules on the management of land transfer to protect the right and interest of farmers.

Q: I have a question about land leasing. The period of land contract seems to be 30 years. Has it been extended to 70 years or even longer? Can farmers transfer their land to businesses directly or through cooperatives? Can they determine the period of leasing by themselves?

A: as to the period of land leasing, including rent, transfer and reletting, previously the policy provided 30 years of land contract management and the transfer shall not exceed such a period. The Decision says the land contract management period will remain unchanged. I personally believe it has three implications. First, rural land is collectively owned, and the household contract management system will remain unchanged; second, the relation of land contract management between farmers and collective economic organizations remains unchanged; third, the specific land block and contract period of farmers remain unchanged. By remaining unchanged, it does not mean 30 or 50 years, but throughout the primary stage of socialism. Originally the transfer of land contract management right is encouraged among farmers. Today, whether it is transferred to businesses or farmers is not so important, and it is critical to adhere to three principles. First, after transfer the collective ownership of land shall not be changed; second, after transfer the use of land shall not be changed; third, in the process of transfer farmers’ land contract management right and interest shall be protected.

Q: what kind of land transfer is regarded as irregular? The collective ownership of land often turns to ownership of village officials, which is detrimental to the interest of farmers. Why does not China privatize land ownership?

A: there are the following main types of irregular land transfers. For example, the farmers are reluctant to transfer their land but are forced to do so. This is a typical example of irregular transfer. Violation of law is another case. Land transfer should serve agricultural production. The non-agricultural development of the transferred land is a case in point. Another example is hurting the right and interest of the original contractors in the process of transfer. The farmers who transfer their land should get compensation, but part of that money is withheld by others, which is also irregular. By standardization, we emphasize law compliance, willingness of farmers and maintaining the right and interest of the contractors. Today, we advocate confirmation and qualification of farmers’ land contract management right which shall remain intact. It shall never be manipulated by a minority of people.

Now comes to the question whether or not land should be privatized. Chinese agriculture is less competitive than that of developed countries. The root cause is that China has a large population but scare land. Our agricultural operation is small in scale with a low productivity. There is no way for us to compete with large scale agricultural operations. Therefore, privatization cannot solve China’s agricultural issue. Today, our per capita land area is about 1.38 mu. Even after privatization, the agricultural operational scale remains small and we are still unable to compete with American farmers. We should increase the land utilization efficiency and expand operational scale moderately in order to enhance agricultural competitiveness. Some farmers want to work in cities and transfer their land to those who are willing to cultivate it. The latter can expand their operational scale and hence increase competitiveness. This is the right way of promoting agricultural development. As to how to protect the right and interest of farmers, the Decision makes it very clear to guarantee the right of usufruct, or to protect the right of farmers of holding, using of and benefiting from the transferred land. In this sense, by guaranteeing their contract management right, we can protect their land right. Whether privatization or not is not the core of the issue.

Q: What are the main aspects of rural financial reform? Is land considered as a financing instrument in the process of rural land reform?

A: the ongoing financial reform has many new contents and breakthroughs. For example, in order to solve the problem of inadequate rural financial services, we stress that the newly collected deposits of financial institutions should mainly be used to issue credit locally, which is clearly different from our old practice. The Decision also requires building various forms of rural financial institutions and small and medium-sized local banks to serve the rural area. It also allows the qualified farmers’ special cooperatives to conduct credit cooperation, which is another breakthrough.

Whether farmers’ land contract management right can be used as a financing instrument is an issue of collateral. I think it is one concept whether we allow or not and the other concept whether it is workable in real practice. According to the current provision, land shall not be used as collateral. However, think it in another way, will it be workable even if it is allowed? The answer is no. I once asked many bankers whether they agree to accept several mu of rural land as collateral for credit, and they all answered negatively. The reason is that rural land is very cheap while the cost of land management of bank is very high. In order to help farmers have access to credit, the Chinese government has adopted a series of policy measures, such as micro credit in the rural area without collateral; innovation of financial institutions, establishing rural credit companies, village banks and fund cooperatives to offer credit to farmers and guarantee companies to provide guarantee for them to apply for bank credit. Such measures have achieved effective results.

Q: many experts think that what is critical is not to increase government subsidy and output. They suggest relaxing control on grain price since the international grain price is relatively high. What is your comment?

A: currently the subsidies the Chinese government offers to farmers are fairly targeted. The fine variety subsidy aims at encouraging farmers to use superior varieties so as to increase grain output and improve grain quality. In response to the massive transfer of rural labor forces, the subsidy for agricultural machinery and tools is designed to increase the use of machinery in a bid to reduce the agricultural labor intensity.

Grain price is one of the determinant factors of grain return. Rise of grain price stimulates grain production, but excessively high price is not beneficial to the low-income urban population or the government policy of stabilizing price. In China, grain price is determined by market. The government procures grain at the minimum purchase price only on occasions of harvest or price drop. It will stop doing so once the market price reaches or exceeds the minimum purchase price. Therefore, grain price changes as market changes in China. Recently, in response to the change of grain supply and demand in the international market, the Chinese government increased temporarily the procurement amount of rice, maize and soybean to increase national reserve, and made a timely announcement to raise the minimum procurement price of wheat next year by 0.1RMB per jin of white wheat and 0.11RMB per jin of red wheat and colored wheat. It will help improve the grain productivity.

Q: after the Decision is adopted, will farmers be able to decide the transfer of land by themselves? Is the trend of illegally occupying land increasing or decreasing?

A: a comprehensive understanding of land transfer should be a legal and voluntary transfer with compensation. Under such a system, farmers can freely transfer their land, but they need to register in related government agencies so that the government can better manage the use of land. As long as the land transfer does not violate related national law or regulation, the village committee in principle does not have the right of refusing it. As to land occupation, China is experiencing accelerating industrialization and urbanization. City expansion needs land, so does railway construction. The Ministry of Land and Resources has the final say on the use of land.

Q: does the land contract management right certificate provide the expiry date? Can the right be inherited? Is there any change in China’s household registration system?

A: the land contract management right certificate previously set a 30-year period, but now it states the right will remain unchanged. There is no longer any provision on the expiry date. The certificate cannot be inherited. The certificate confirms the relations between farmers and collectives in a written form, which is beneficial to protecting the right and interest of farmers, encouraging them to increase farm input and increase land productivity. The household registration system has changed a lot. In the past, farmers who want to transfer their household registration location must have legal settlement in the cities, but it is very difficult to meet such a requirement in practice. The Decision now clearly requires relaxing control on the household registration system of small and medium-sized cities and allows those farmers who have stable job and settlement in cities to become city residents steadily. Such a move will effectively promote the transfer of farmers from villages to cities.

Q: What influence does land transfer exert on the Chinese economy?

A: the transfer of land contract management right is made by farmers with the basic purpose of reasonably using rural land resources. More than 200 million of Chinese farmers have moved from villages to work in cities and hence might no longer be able to cultivate land. Land transfer promotes better use of land resources. By readjusting related policies, the Chinese government is trying its best to increase the income of farmers, strengthen infrastructure construction in the rural area and improve rural consumption environment so as to further stimulate domestic demand which will boost China’s economic growth.