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Beneath the Surface

Closed China Opens its Doors

by Abdul Bayes
***Chinese agriculture is gradually becoming hooked on to international market Whether in terms of exports or imports, Chinese influence can hardly be bypassed.***
TWO major convulsions swept China's agriculture and policy changes since 1980s and both succeeded in drawing world attention. A fundamental reform policy was enunciated in the first half of 1980s whereby a rigid, inefficient collective base production system yielded place to farmer's household-based production system. The transformation is reported to have mammoth production benefits in consecutive years. According to Chinese economist Ke Bingsheng. "Just in few years, the face of China's agriculture had changed completely and great achievements had been accomplished. One of the greatest symbolic achievements of the reform policy was that for the first time in New China's history a surplus supply situation of agricultural products occurred in the mid-1980s. At the same time, farmers' income and living conditions were improved remarkably."
The whole world was amazed by the wonder. China's agriculture soon became a topic of vast academic interests to researchers who sought to replicate Chinese ways in planned and developing economies. But now China's enviable success imposes a different kind of concern: China's agriculture is growing fabulously, being integrated with world mar ket but seemingly posing a threat to the world market stability. China registered a net grain export of 8 million tons in
1993. and then recorded a net import ol 18 million tons in 1995. Is there sufficient space in the world market to accommodate the big player?
The recent agricultural policies and institutional change in China is poised to ensure food security in the 21st century. The market reforms entail: abolition of the grain ration system, direct government controls of markets replaced by indirect means such as price support and stabilisation, decentralisation of decisionmaking to provincial and municipal levels, removing bans or inter-provincial movement of foodgrains, provision of preferential treatment in transportation arrangements and subsidised loans to selected agricultural products.
Under the Household Responsibility System, the government has lengthened the tenure of contracted-out public land to Individual farmers from 15 to 30 years. The extended tenure that extended security of ownership, reportedly triggered rapid growth in agricultural productivity in early 1980s. On the external trade front, reform measures included the abolition of a two-tier foreign exchange system, elimination of export subsidies and reduction in import duties.
China had already liberalised markets for almost all non-grain agricultural products and the gap between the state-set quota procurement price and the market price has Deen substantially reduced. However, the international trade in grains is still controlled by the central government.
The enviable performance of China in the realm of food and agriculture is reflected by the fact that China is able to feed one-fifth of world population with only one-fifteenth of world s
arable land in possession. China had a consistent surplus in food trade since 1984 Even the huge imports of 18 million tons that we mentioned earlier include wheat and corn but inclusion of exports of meat, eggs and poultry could speak of a net surplus!
The Chinese government foresees only a moderate growth in the demand for grains: Grain yields by 1.0 per cent per year in the 1996-2010 period and 0.7 per cent in the 2010-2030 period, to match the growing demand. The target is not daunting given the Chinese record of a growth rate of 3.0 per cent plus over the past four decades.
Like in other growing societies, per capita consumption of grain has waned, albeit marginally. It is not surprising that more deceleration is in the offing with prosperity on the horizon. Per capita grain consumption as direct human food is 20 per cent higher than Korea and 54 per cent higher than Japan. The present level of vegetable consumption in China is one-third lower than that in Korea implying that China would have to lay more lands to increase vegetables production, otherwise the erstwhile exporter might turn out to be an importer. Per capita consumption of meat and fish has been surging at 9 per cent per year > since early 1980s • but the present level is still 53 per cent lower compared to Japan and 45 per cent lower compared to Korea. So the fu-
■ lure pressure • would spring from supply side of the products.
China's share of global production is reported to be 34 per cent for rice. 20 per cent for maize and 19 per cent for wheat. According to Dr Mahabub Hossain, "if China decides to procure 10 per cent of Its consumption requirements for each of these grains from the world market, the import demand will increase by 67 per cent for rice and 11 per cenl for wheat and maize which Is expected to put substantial upward pressure on prices."
The rural-urban income disparity that has been widening over the years has become a major source of 'sour' for Chinese policy makers, for example. In 1995, the per capita income for urban areas was 120 per cent higher than for rural areas and during 1985-95 period, urban real income grew at staggering 78 per cent compared to 35 per cent for rural nouseholds The rural-urbar Income disparity is much higher than Bangladesh. To the critics, the discriminatory «rowth of Chinese agricultural affluence is trowing the whole reform agenda into serious question.
By and large. Chinese agriculture is gradually becoming hooked on to international market. Whether in terms of exports or imports. Chinese influence can hardly be bypassed. Chinese economists are of the view that domestic agricultural policies should be turned to market orientation, friendly cooperation be established with food producing countries and irritant and Irrelevant interventions should be avoided to pave ways for smooth functioning of market The heavily sheltered market thus awaits a open door policy. Capitalism Inside communism?