Freeing China farmers from communes created wealth -- and new problems


GUANGHAN COUNTY, China -- After decades of tilling the earth with little to show for it, Wu Daifu is finally living up to the meaning of his name, "bringer of wealth."

But it is not in his fields of wheat, rice and rapeseed that this peasant-turned-entrepreneur finds the way to a better life.

Mr. Wu -- a shrewd 49-year-old who served 25 years as his district's Communist Party secretary -- has become a one-man capitalist conglomerate, relying much more on sideline enterprises than farming.

PD He earns more than $2,000 a year by hiring others to collect and

sell back to a paper mill its waste pulp. He makes another $2,000 by transporting goods in a 1-ton truck driven by his son.

He takes in a couple of hundred dollars from managing the local agricultural cooperative. His six slivers of farmland totaling less than 1 acre bring in a few hundred dollars more -- as well as more grain than his family of four can eat.

One man cannot adequately represent the profound changes that the 900 million inhabitants of rural China have undergone in the past 15 years. But Mr. Wu's diverse pursuits aptly reflect the energy unleashed with the dismantling of China's agricultural communes -- an historic move that officially began in this Sichuan Province county in 1978 and one that has brought once unimagined gains to the countryside.

Mr. Wu's collection of enterprises also illustrates the critical crossroads to which this revolution has brought many Chinese farmers. As he puts it: "Agriculture is the foundation of China. It must be maintained. But you can't get rich if you only rely on farming."

At least 60 million peasants, mostly in northwest and southwest China, remain mired below the Chinese poverty line, set at an annual per capita income of $55. But almost everywhere in rural China, the fruits of allowing farmers to work land individually under state contracts are abundantly evident in the form of new brick houses, bustling markets and bright clothes.

Feeding the masses

Perhaps never in human history have so many people improved their lives so fast. Grain production has increased by a third since 1980. Rural income has more than doubled. Rural savings have increased more than tenfold.

Almost 100 million peasants have moved into 18 million rural enterprises. Eighty-thousand country markets have sprung up. Much of rural China is urbanizing at an unprecedented rate, with villages turning into towns and towns into cities.

These changes help to explain the continued hold of the Communist Party on China. Political stability here directly depends on providing a rising standard of living to China's peasants and ensuring that they continue to produce enough food for the nation's 250 million urban residents.

But maintaining both the remarkable pace of this transformation and a sufficient food supply for 1.15 billion people may prove more daunting than the original freeing of farmers from China's failed experiment in radical socialism.

These new challenges involve a particularly Chinese calculus -- too many people, too little land, not enough investment, uneven political control and increasing economic deregulation:

* Grain production has reached record levels in recent years. But China's population grows by 15 million annually. Per capita grain supplies peaked in 1984, and a greater reliance on imports came in later years -- a dependence that is expected to increase in the 1990s.

* Twenty percent of China's grain crop is wasted every year because of poor distribution and storage. The state-controlled grain system -- with low prices to producers and subsidies to consumers -- devalues grain, thereby encouraging waste.

* Chinese leaders still assert, much as Mao Tse-tung did, that grain is the "key link." But less land is sown in grain every year, as farmers move to more lucrative, decontrolled crops. Moreover, China loses 500,000 acres of farmland annually to erosion and the phenomenal growth of rural industries and housing -- devastating losses for a nation feeding 22 percent of the world with 7 percent of the world's arable land.

* The growth of rural incomes -- now averaging $129 per person a year -- has stagnated since the mid-1980s. Higher production gluts markets in some grain-rich regions, depressing prices. Costs of necessities such as fertilizer are rising. Corrupt officials further deplete farmers' profits with dozens of illegal levies.

* State agricultural investment fell drastically in the 1980s. With land-use rights still uncertain, peasants have not plowed their rising savings back into the land. Collective irrigation systems -- perhaps the greatest achievement of China's communes and the lifeblood of Chinese agriculture -- have widely deteriorated.

* Only 7 percent of China's crops are mechanically harvested. More mechanization could reduce waste and increase yields in some areas. But the rural reforms have left much of the Chinese countryside carved into tiny plots of individually-farmed land -- 00 divisions that make mechanization impractical.

* The loosening of grass-roots political control with the end of the communes also meant diminished family-planning controls. In the 1980s, farmers again found that more children means more hands to earn more money.

But rural China already has more than 100 million excess laborers. More than half have fled to China's cities where they threaten urban stability. And over the next decade, the countryside faces having to absorb an additional 100 million laborers.

Farms to factories

Experts point to three ways out of these difficulties: increasing farm efficiency, deregulating grain sales and supporting the growth of rural industries. Each entails risks; none can be achieved easily.

The Communist Party last fall endorsed raising farm efficiency by sticking with the current system of individual contracts, while strengthening such collective services as technical advice, fertilizer application and mechanized harvesting.

However, that idea provoked fear among many peasants, who saw it as a harbinger of recollectivization. And with good reason: In northeast China's Liaoning Province last fall, authorities used the order to "strengthen the collective economy" as an excuse to break some farmers' contracts and take back their land.

Initial attempts to deregulate parts of China's grain system have gone smoothly but very slowly, as they rely on weaning hard-pressed city consumers from heavily subsidized grain rations.

Guanghan County last year became the first place in China where virtually all farmers' grain could be sold on free markets, a trend that is spreading to other areas in Sichuan Province. Meanwhile, from Beijing to southern Guangdong Province, the prices of grain and other staples for non-farmers are rising rapidly, creating the risk of urban turmoil.

In the end, much of rural China, like Guanghan County's Mr. Wu, is now looking to industry for an improved life, not farming. Rural enterprises -- seldom involving state investment and often privately owned -- are growing by more than 30 percent a year, the fastest expanding sector of China's economy except for foreign-funded companies.

Rural China now produces more value in its factories than its fields. Rural industries already account for one-third of industrial output, and they are expected by the end of this decade to outproduce mostly urban, state-owned industries.

Many Chinese experts believe continued industrialization could not only solve rural China's labor problems and meet peasants' rising expectations, but also pave the way for greater farm mechanization. As more farmers give up their land to work in factories, superior farmers or collectives could take over and farm larger tracts.

This already has happened in some places, mostly in coastal areas where export-oriented enterprises are flourishing.

But in many landlocked, densely populated regions, such as Sichuan, rural industries have not expanded fast enough to absorb the peasants. Sichuan alone contributes an estimated 40 percent of the rural laborers floating through China's cities.

The costs of this second rural transformation also are high, as the low-tech, inefficient industries springing up in the countryside are often heavy polluters -- creating pollution that is already degrading the water and soil.

And even such peasants as Mr. Wu, who see their future as entrepreneurs rather than farmers, remain loath to give up the security represented by their small plots.

Mr. Wu now plans with several other farmers to invest about $60,000 in a plastic factory to make military ammunition boxes. He figures they can repay their loans and investment in just a few years.

But having survived four decades of radical shifts in China's rural policies, Mr. Wu is still bound to the soil -- as evidenced by the huge mound of rice that he stores at his house.

The rice is enough to feed his family for several years. The room in which it is stored is the only one in his house ever locked. For good measure, a fierce dog sleeps on the rice pile at night.

"This," Mr. Wu said, "is my insurance."

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