9 - China

Summary

Chinese agricultural policy has undergone some fundamental changes in the past decade, with major policy shifts in pricing, marketing, trade, investment, and technology. Most notably, China has implemented a series of new policies that directly favor the agricultural sector. These policies include direct payments to farmers, agricultural input subsidies, agricultural tax elimination, protective and minimum prices, dismantling of barriers to private entry into agricultural marketing channels, and increased spending on rural infrastructure, research and development. The policy changes have resulted in higher support for the agricultural sector, which has been documented in various studies. Considering this finding in combination with empirical evidence disclosing disprotection in agriculture in earlier periods, one can conclude that there has been a transition of government policy stance from taxing agriculture to supporting the sector. Recent economic growth has made these subsidy policy changes fiscally feasible.

The agricultural policy changes reflect the Chinese leadership's renewed attention to agricultural problems, concisely described in official documents as the San Nong issue (agriculture, rural areas, and peasants). The policy changes also arrived amidst a sharply widening rural–urban income gap as well as rising social unrest and political tension. In a series of No.1 Documents issued by the Central Committee of the Chinese Communist Party, it is reiterated that increasing farm incomes is at the top of the leadership's agenda.