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Development and Restructuring of Chinese Agriculture

Explore the evolution and challenges of Chinese agriculture over 50 years, focusing on growth rates, restructuring, sources of growth, and policy alternatives, with insights into diversification and future prospects.

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Development and Restructuring of Chinese Agriculture

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  1. Development and Restructuring of Chinese Agriculture Dr. Funing Zhong College of Economics & Management Nanjing Agricultural University Nanjing, China

  2. Outline of Presentation • Development of Chinese Rural Economy in the Past 50 years • Restructuring of Chinese Rural Economy During the Reform • Sources of Growth in Chinese Rural Economy • Challenges FacingChinese Rural Economy • Policy Alternatives

  3. Development in 5 Decades Growth rates in the past 50 years 1952-19781978-2003 Agricultural GDP 2.0% 4.5% Total output value 6.13% Cropping 4.26% Forestry 5.23% Animal 9.07% Fishery 11.45%

  4. Development in 5 Decades

  5. Development in 5 DecadesGrain production, mmt

  6. Development in 5 Decades Growth rates of per capita real net income in rural areas 1952-1978 1.0% 1978-2003 7.1%

  7. Development in 5 DecadesNominal annual net income per capita in rural areas, by sources yuan

  8. Restructuring of Rural Economy Diversification in Agriculture

  9. Restructuring of Rural EconomySown area structure, %

  10. Restructuring of Rural EconomyRural employment structure, %

  11. Rural employment structure Restructuring of Rural Economy

  12. Restructuring of Rural EconomyStructure of grain sown areas, %

  13. Restructuring of Rural Economy

  14. Restructuring of Rural Economy

  15. Source of growth • Land reform Incentives in early 1950s • Technology advancement Dwarf and semi-dwarf varieties in 1960s & 1970s Hybrid rice since 1970s Bt cotton in 1990s

  16. Source of growth • Irrigation and land improvement Irrigated areas(mh ): 45 in 1978, 54 in 2003 • Modern inputs Machine power(bw ): 117 in 1978, 604 in 2003 Chemical fertilizers(mt ): 9 in 1978, 44 in 2003 Electricity(bkwh): 25 in 1978, 343 in 2003

  17. Source of growth • Contribution of diversification in cropping sector Method of measurement: GOV = ∑(AREA×YIELD×PRICE) Indgov = Indarea×Indyield×Indprice Indprice = Indgov / (Indarea×Indyield) Result: Increase in sown areas 5.5% Increase in yields 53.2% Diversification 41.3%

  18. Source of growth • Contribution of diversification in agriculture Assumptions: Shifting of resources among sectors adds additional growth Method of measurement: Cont (%) = Conb (%) + Conc (%)×Coni (%) Result: Inter-sector diversification 43% Growth of each sector 57% Within-sector diversification 41% Overall diversification 66%

  19. Future Challenges • Rapid declining of agriculture’s share in total GDP 1952 50.5% 1978 28.1% 2003 14.6% • Relatively slow declining of agriculture’s share of employment 1952 83.5% 1978 70.5% 2003 49.1%

  20. Future Challenges • Agricultural GDP per worker as a percentage of national average 1952 84.4% 1978 39.9% 2003 29.7%

  21. Future ChallengesWidening rural:urban income gap

  22. Future Challenges • Increasing number of farmers despite declining share in total employment 1952 173 millions 1978 283 millions 2003 365 millions • 4.4 persons per household with 2.8 laborers working on 0.6 hectare of cultivated land

  23. Future Challenges • Annual production per farmer grain1362 kg cotton 15.4 kg oil-bearing crops 88.9 kg red meats 174.1 kg aquatic products 148.8 kg milk 55.2 kg

  24. Future Challenges • Continuing pressure on income and employment structure following economic growth and declining Engle coefficient • Increasing pressure on labor productivity and cost from imports • Continuing bias in public policy and investment towards modernized yet labor-saving technology

  25. Policy Alternatives • Future growth of agriculture and farmers’ income largely depends on public policy and investment • Transformation of employment structure will ensure a long-run healthy growth of the whole economy • Reducing the number of farmers will facilitate expansion of farm size, increasing labor productivity and competitiveness

  26. Policy Alternatives • Transformation of employment structure within agriculture is as important • Relocation of agricultural resources towards more profitable products is consistent with intensive use of labor • Relocation of agricultural resources towards more profitable products is consistent with comparative advantage

  27. Policy Alternatives • Policy and public investment needed: • 1.Encouraging establishment and development of private small enterprises that are relatively labor-intensive; • 2.Encouraging research, development, and extension of labor-intensive technology that may help absorb more laborers; • 3. Providing a better policy environment, and supporting it with increasing public investment and expenditure, that allows and increases labor mobility among regions and among sectors;

  28. Policy Alternatives • Policy and public investment needed: • 4. Increasing public investment and expenditure on infrastructures that may help creating more jobs; • 5. Increasing public investment and expenditure on rural education and career training that may help farmers grasp newly-created non-farm job opportunities; • 6. Increasing public investment and expenditure on rural institutions that may help farmers transform production and employment structure.

  29. Thanks!

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