History of Agricultural Policy
Historically, taxes on farmers were an important source of government
revenue. During the 1950s, China pursued a collective approach to
agriculture and taxed farmers implicitly by paying artificially
low prices for commodities. The Household Responsibility System
returned control of land to farmers in the 1980s, markets were gradually
liberalized, and agricultural taxes were restored.
Concerns about shrinking grain production and price inflation led
to a sharp increase in grain procurement prices during 1994-96 and
the introduction of the Governors' Responsibility System (also known
as the Governors' Grain Bag policy). These policies contributed
to record grain production and a build-up of grain stocks in the
late 1990s. Grain surpluses led to falling prices and authorities
introduced price supports and subsidies for grain storage, marketing,
and exports. These subsidies were paid to grain marketing bureaus
and were very costly.
In the 21st century, Chinese policymakers began seeking ways to
extend direct benefits to farmers. In 2004, China introduced the
first national direct subsidies to farmers and announced elimination
of agricultural taxes.
Brief history of China's
agricultural policy |
Period |
Policies |
Pre-1949 |
Taxes on agricultural land, often collected in
grain, plus a variety of other excise taxes |
1950s-1970s |
Socialized agriculture. Farmers organized into
communes; government monopolized agricultural marketing. Implicit
taxation through artificially low prices paid for commodities. |
1980s-1990s |
Household Responsibility System implemented.
Land leased to individual farmers; prices allowed to rise;
agricultural land taxes restored; implicit taxation diminished;
government monopolies and urban food rationing gradually
eliminated. State grain-reserve system introduced. |
Mid-1990s |
Sharp increase in grain and cotton procurement
prices and introduction of Governors' Responsibility System,
requiring each governor to ensure balance between grain supply
and demand within his province. |
Late 1990s |
"Protection prices" introduced to
support agricultural prices. Subsidies paid to grain marketing
bureaus
for grain procurement, storage, and export. |
2000-03 |
Increased reliance on markets; privatization of
grain and cotton marketing. Experimentation with rural tax reform
and direct subsidies. |
2004 |
Nationwide direct subsidies and agricultural tax
elimination initiated. |
More on China Agricultural Policy:
China's Market Stabilization
Measures
China's Policies Affecting Factors of
Production and Inputs
China's International Trade Policies
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