OECD-China Meeting: Demographic Change and Agricultural Modernization

Posted by on November 13th, 2013 | 0 Comments »

Last week, Margaret Zeigler, executive director of the Global Harvest Initiative (GHI), took part in a workshop in China hosted by the Organization for Economic Cooperation and Development (OECD). The goal of this partnership between OECD and GHI is to foster dialogue with the government of China on innovation in agro-economic policy. Dr. Zeigler, a vocal advocate for market- and investment-led agricultural productivity growth, helped represent the private sector voice, and presented this year’s GHI GAP Report®. GHI member companies also made presentations at the meeting and engaged directly with Chinese policymakers about new approaches to improving agricultural productivity.

One issue that came up frequently at the meeting was the need for China’s multifaceted agricultural and economic modernization, and the economic and demographic issues this has created. These challenges, and their policy solutions, were discussed at length during the workshop. One issue that has received particularly strong attention lately is China’s new urbanization policies influenced by demographic pressures.

Mr. Ni Xongxing, Director General of the Agricultural Trade Promotion Center of the Ministry of Agriculture, Mr. Zhang Hongyu, Director General of the Ministry of Agriculture, and Mr. Tang Shengyao, Deputy Director General, Department for International Cooperation, Ministry of Agriculture

(left to right) Mr. Ni Xongxing, Director General of the Agricultural Trade Promotion Center of the Ministry of Agriculture, Mr. Zhang Hongyu, Director General of the Ministry of Agriculture, and Mr. Tang Shengyao, Deputy Director General, Department for International Cooperation, Ministry of Agriculture

Demographic Pressures in China

Demographic pressures exist in China on scales that are difficult to imagine in other parts of the world and drive its agricultural and domestic policies. China is a nation of 1.35 billion people, and today has approximately 250 million active smallholder farmers with less than one hectare of land per household. Importantly, rural farmers, particularly young rural farmers, are moving away from their rural villages to seek higher wages in cities. At the meeting, Professor Zhong Funing of the Nanjing Agricultural University noted that this movement constitutes the largest peaceful migration in human history.

In 1978 (before Deng Xiaoping’s economic reforms took effect) a full 70% of China’s population depended on agriculture for a living. Today, that percentage has decreased to 35%. One problem that arises from this shift is an increasingly elderly farmer population. Today, 60% of those working in agriculture in China are over the age of 45, whereas only 13.8% are under 35. The outmigration from rural areas of youth contributes to a massive, volatile population of migrant workers who travel between cities and the countryside. Chinese migrant workers constitute part of a major demographic problem that must be factored into policy decisions as Chinese policymakers lay the framework for a successful agro-economic future. Farmers are aging, and as the youth migrate to cities, land in rural areas must be consolidated and managed in more innovative ways to produce more food for the growing urban centers. 

Urbanization and Economic Growth

In the meeting, Mr. Tang Shengyao, deputy director general of the Department for International Cooperation of the Ministry of Agriculture (see photo), said, “Urbanization provides an engine for economic growth and will provide the impetus for modern agricultural growth and productivity in China.” China seeks to promote and facilitate this urbanization. The recent Chinese emphasis on urbanization has been described in many western media sources as a monolithic, even Maoist[1] attempt to stimulate growth through massive government planning. Recent articles in the New York Times as well as Forbes and many other media sources have oversimplified the issue. China, through its policies, seeks to solve several issues at once. It hopes to legitimize and make orderly the natural process of urbanization that is already happening in China, stimulate urban and rural demand, and to simplify and reform the government household registration (Hukou) system. The new system will emphasize “small” and “medium” sized cities. As Mr. Tang Shengyao mentioned, China hopes that these new cities will help promote a healthier agricultural sector in their surrounding peri-urban areas.

GDP growth is absolutely a major goal of increasing urbanization. Mr. Zhang Hongyu, director general of the Ministry of Agriculture, predicted that urbanization will foster the consumer demand that China hopes will drive continuing GDP growth in the future. Government urbanization policy is also designed to simplify and make more equitable the process of urbanization. Today, under the Hukou system, there are many migrant laborers working in cities in China who cannot receive social services and other benefits because they are still registered as rural residents. Their status is comparable to that of illegal immigrants. The current Hukou system differentiates people based on residence (urban or rural), and offers drastically different benefits for Urban and Rural registrations. Reform of the system could help decrease the divide between urban and rural areas, and facilitate economic growth.

Agricultural Growth and Innovation

By moving people into cities, China seeks to create dynamic economic centers that promote consumption, and stimulate economic growth in the surrounding rural environments. China, as mentioned in its first Central Party Policy Document for 2013 hopes that this urbanization will increase the average amount of arable land available per each family farm, promote mechanization, and increase average rural income.[2] All of China’s policies, if implemented well, are intended to create a more modern, prosperous agricultural sector with larger, (although not necessarily corporate) farms. It will be important for China to promote technological modernization and attract foreign investment to ensure that agricultural productivity remains high during the process of urbanization. China’s agricultural sector is currently reliant on a rapidly diminishing supply of human labor. There will be increasing room for cooperation between China and OECD countries in the future, and China should promote the mutually beneficial exchange of ideas and technology.

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