Development and Restructuring of Chinese Agriculture Dr. Funing Zhong College of Economics & Management Nanjing Agricultural University Nanjing, China
Development and Restructuring of Chinese Agriculture
Dr. Funing Zhong
College of Economics & Management
Nanjing Agricultural UniversityNanjing, China
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 Facing Chinese Rural Economy
Policy Alternatives
Development in 5 Decades
Growth rates in the past 50 years
1952-1978 1978-2003
Agricultural GDP 2.0% 4.5%
Total output value 6.13%Cropping 4.26%Forestry 5.23%Animal 9.07%Fishery 11.45%
Development in 5 Decades
I ndi ces of Gross Output i n Chi neseAgri cul tural , 1978- 2003
100
300
500
700
900
1100
1300
1500
1700
1978 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Total
Farmi ng
Forestry
Ani malHusbandry
Fi shery
Development in 5 Decades
Grain production, mmt
year total cereals rice wheat maize beans tubers
1978 304. 8 136. 9 53. 8 55. 9 31. 71980 320. 6 139. 9 55. 2 62. 6 28. 71985 379. 1 168. 6 85. 8 63. 8 26. 01990 446. 2 189. 3 98. 2 96. 8 27. 41995 466. 6 416. 1 185. 2 102. 2 112. 0 17. 9 32. 61998 512. 3 456. 2 198. 7 109. 7 133. 0 20. 0 36. 02000 462. 2 405. 2 187. 9 99. 6 106. 0 20. 1 36. 92003 430. 7 374. 3 160. 7 86. 5 115. 8 21. 3 35. 1
Development in 5 Decades
Growth rates of per capita real net income in rural areas
1952-1978 1.0%
1978-2003 7.1%
Development in 5 Decades
Nominal annual net income per capita in rural areas, by sources yuan
Net income by source 1985 1990 1995 2000 2003
total 397.6 686.31 1577.74 2253.42 2622.24
Wages income 72.15 138.80 353.70 702.30 918.38
Family business income 295.98 518.55 1125.79 1427.27 1541.28
from agriculture 263.81 456.04 956.46 1090.67 1195.58 from non-agriculture 32.19 62.51 169.33 336.6 345.68Transfer and propertyincome
29.47 28.96 98.25 123.85 162.58
Restructuring of Rural Economy
Shares of Gross Output Val ue i n Chi neseAgri cul tural , 1978-2003
0%
20%
40%
60%
80%
100%
1978 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Farmi ng Forestry Ani mal Husbandry fi shery
Diversification in Agriculture
Restructuring of Rural Economy
Sown area structure, %
year grain oil seeds cotton fiber sugar tobacco vegetables tea orchards
1978 80. 3 4. 1 3. 2 0. 5 0. 6 0. 5 2. 2 0. 7 1. 11980 80. 1 5. 4 3. 4 0. 5 0. 6 0. 3 2. 2 0. 7 1. 21985 75. 8 8. 2 3. 6 0. 9 1. 1 0. 9 3. 3 0. 8 1. 91990 76. 5 7. 3 3. 8 0. 3 1. 1 1. 1 4. 3 0. 7 3. 51995 73. 4 8. 7 3. 6 0. 3 1. 2 1. 0 6. 3 0. 7 5. 42000 69. 4 9. 9 2. 6 0. 2 1. 0 0. 9 9. 7 0. 7 5. 72003 65. 2 9. 8 3. 4 0. 2 1. 1 0. 8 11. 8 0. 8 6. 2
Restructuring of Rural Economy
Rural employment structure, %
year agriculture non-agriculture
1985 81. 9 18. 11990 79. 4 20. 61995 71. 8 28. 22000 68. 4 31. 62003 63. 8 36. 2
Rural employment structureRural Non- agri cul tural Labor Force(1985- 2003)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
198519901991199219931994199519961997199819992000200120022003Year
10, 000 Persons
OtherNonagr i cul turalTrades
Whol esal e, Retai lTrade and Cater i ngServi ces
Transport , storage,post andconmmuni cat i onservi cesConst ruct i on
I ndust ry
Restructuring of Rural Economy
Restructuring of Rural Economy
Structure of grain sown areas, %
year cereal rice wheat corn soybean tubers
1978 n.a. 28. 5 24. 2 16. 6 n.a. 9. 81980 n.a. 28. 9 24. 6 17. 1 n.a. 8. 71985 n.a. 29. 5 26. 8 16. 3 n.a. 7. 91990 n.a. 29. 1 27. 1 18. 9 n.a. 8. 01991 83. 8 29. 0 27. 6 19. 2 8. 2 8. 11995 81. 1 27. 9 26. 2 20. 7 10. 2 8. 62000 78. 6 27. 6 24. 6 21. 3 11. 7 9. 72003 77. 3 26. 7 22. 1 24. 2 13. 0 9. 8
Restructuring of Rural Economy
Income of Sources Within Agriculture
0 200 400 600 800 1000 1200 1400
1985
1990
1995
2000
2003
Yea
r
Yuan
Farmi ng Forestry Ani mal Husbandry Fi shery
2003
74. 1%
2. 4%
20. 5%2. 9%
By source: Share of I ncome Wi thi n Agri cul ture
1995
83.6%
1.4%13.4% 1.6%
Farmi ng
Forestry
Ani malHusbandryFi shery
Restructuring of Rural Economy
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
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
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%
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%
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%
Future Challenges
Agricultural GDP per worker as a percentage of national average
1952 84.4%
1978 39.9%
2003 29.7%
Future Challenges
Widening rural:urban income gap
year income ratio
1978 2. 571980 2. 501985 1. 861990 2. 201995 2. 712000 2. 792003 3. 23
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
Future Challenges Annual production per farmer
grain 1362 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
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
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
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
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;
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.
Thanks!