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China's Market Economy Takes over the Rural Economy

The latest statistics from the National Bureau of Statistics (NBS) indicate that, increasingly, Chinese farmers are getting increasingly better off through the operation of small- and medium-sized business in rural areas, rather than from traditional farming activities.

According to the figures, in the 23 years since 1978, the year that China initiated economic reform, the added value created by small- and medium-sized rural businesses has multiplied by about 140 times. In 1987, the production value of rural, small- and medium-sized firms exceeded that of agriculture for the first time and, in 2001, the added value generated by the rural small and medium-sized enterprises reached 2,935.6 billion yuan (US$370 billion)

With the rapid commercialization of China's agriculture, the market has begun to determine Chinese agricultural production, and of course, farmer's income.

Qiu Xiaohua, deputy director of NBS, said the market economy has taken over the Chinese rural economy.

The surplus of agricultural products restricted the products' prices during the period from 1996 to 1999, Qiu noted, and the fact that foreign agricultural products are flooding China's domestic market following its WTO entry further lower the prices of farm produce in China.

"To meet this challenge, the market-oriented economy should prevail in the country's rural areas, and non-agricultural rural industries should be encouraged to lend strength to rural economy."

The latest statistics from the Ministry of Agriculture show that improvement in the structure of the Chinese agriculture sector has led to the improvements in the quality of its farm products, Qiu said.

He said Chinese agricultural production in recent years has responded well to changes in urban and rural consumers' needs and that the focus of farm production has "shifted from quantity to quality".

Meanwhile, the restructuring of the Chinese rural economy has also replenished farmers' bank accounts and laid a solid basis for further improvement in their standard of living.

According to the NBS's statistics, the annual per-capita income of rural residents in China reached 2,366.4 yuan (US$300) in 2001, 2.9 times that of 1989. Moreover, the Engle's coefficient, which indicates the proportion of food spending as a percentage of total consumption costs, dropped from 54.8 percent in 1989 to 47.7percent in 2001 for rural residents.

(People's Daily October 14, 2002)