Will the interests of farmers be forgotten in China’s urbanisation push?

Urbanisation is transforming the lives of China's rural population. Zhong Ang of the Economic Observer questions whether it is also improving them

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This year China has raised the curtain on its blueprint for urbanisation reform. The central government has already said that it regards urbanisation "not only as a historic mission of modernising infrastructure" but also as the best way to expand domestic demand.

An investment boom is about to begin. As forecast in the Plan For Promoting Healthy Urban Development (2011-2020) which is being led by the National Development and Reform Commission, Chinese urbanisation will result in 40 trillion yuan (US $6 trillion) of investment over the next decade.

Most of the urbanisation pilot projects being trialled around the country are top-down arrangements, with the government the driving force behind the push. Although each region has its own initiatives, the basic outline of what is happening across the country follows this formula: urbanisation = the consolidation of land + the concentration of populations.

The essence of urbanisation is to reform the relationship between people and the land. To begin with, the transfer and concentration of rural land will put an end to the existing method of farming which is based on small scattered family plots. 

The use of machines and modern techniques will increase the scale of farming, the crop yield and release a great amount of surplus labour. The surplus labour will in turn be resettled in concentrated and newly built towns. Meanwhile, the sale of land plots resulting from the merging of villages will bring money into the various levels of government.

China’s rural residents

This will result in a significant changes in both farming methods and the lifestyles of rural families that have developed over thousands of years.

But as people enthusiastically talk about how domestic demand is to be stimulated, how macroeconomic development is to be maintained, how there are business investment opportunities and good prospects for related industries, it becomes obvious that those who will be most affected by these reforms — the agricultural sector, villages and farmers — are scarcely talked about.

As one businessman put it, this is similar to the policy of Electrical Goods to the Countryside, in which subsidies were provided to rural residents who bought designated home appliances. Though the government put in billions to subsidise these rural dwellers of very modest income, they nonetheless still questioned whether it was really for them or simply a ploy to help the appliance businesses. One farmer complained that the solar water heater he bought did not function with rural water and broke very quickly. And of course it was extremely troublesome to get it fixed in the countryside.

Likewise, it’s not hard to understand why the urbanisation push in some areas of the country has resulted in farmers having their houses forcibly demolished or being forced into high-rise apartments.

These relocated farmers will find that they can’t dry their grains in the modern apartments that they’ve been settled in, and that there are no places to rear their livestock and park their farming machinery. Meanwhile, the authorities can reap huge profits, by obtaining farming land on the cheap and then selling if for ten to perhaps a hundred times that amount at auction.

One Zhejiang official responsible for land affairs worries that while various local authorities demolish villages and build apartments, they are not considering the farmers’ real needs. He says that without jobs farmers won’t stay in these new towns. They are bound to leave for bigger cities and these new places will become ghost towns.

It is fair to say that urbanisation will release a potential "land dividend" and provide a new impetus for China’s future development. And it’s also true that urbanisation will free farmers from the land, pushing them to work in cities and boost their productive capacity and wages. The problem is — and nobody can deny this — that farmers are not likely to be the big winners from urbanisation.

Even though the farmers are relocated to large 120 square metre apartments and are given 200,000 to 300,000 yuan in compensation, they are still not getting their full share of the spoils of urbanisation. The government is able to acquire land on the outskirts of towns and cities on the cheap and then, by re-zoning the land, auction it off at market value. However, farmers are prevented from selling their land directly due to the current land administration rules.

Any reform should take into account the interests of those directly affected. Alas, in China, the reality is that "people who never take public transport are studying the public transport pricing policy and people who eat specially supplied foods are the ones formulating food safety policy".

When the people responsible for China’s massive urbanisation push are viewing the policy from a macro-economic level and promoting it from the angle of solving the challenges facing urban and local governments and how it can contribute to industrial development, how are we able to ensure that the interests of rural residents are not being overlooked?

At this moment, when a new round of urbanisation is about to be unleashed, all levels of government ought to change their top-down approach. 

They should consider the real needs and interests of rural residents: improve their employment prospects, reform the household registration system and address issues related to housing, education, social security and health care. 

After all, the main battlefield of urbanisation is taking place on land that farmers have lived off for generations.

This article first appeared in 
The Economic Observer