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Briefing Rooms

China: Policy

Contents
 

Policies Affecting Factors of Production and Inputs

Institutional constraints on agricultural production are an important feature of the Chinese rural economy that restrict the mobility of productive resources and influence the structure of agricultural production. The following table provides a brief overview of the Chinese government's main policies that affect agricultural land, labor and input use.

Summary of policies affecting China's agricultural inputs and factors of production

Measure

Description

Collective land ownership

Agricultural land is owned collectively by villages. Each household in a village is allocated a share of the village's land, which the household cultivates in exchange for a tax paid to village authorities. At present, households cannot sell their land but they are allowed to rent it to be cultivated by other farmers. Local authorities can sell farmland or convert it to nonagricultural uses. In such cases, compensation is paid to villagers.

Migration restrictions

China's national household registration system has historically limited rural-urban migration by preventing rural residents from legally residing in cities. In addition, cities often have local regulations, taxes, or fees that discourage rural migrants. Cities are gradually relaxing these restrictions and the national government is encouraging migration to small towns and "satellite cities" on the outskirts of large metropolitan areas.

"Grain for green"

Farmers cease cultivation of environmentally fragile land in exchange for in-kind payment of grain.

Seed subsidies

In 2004, the national government began giving subsidies for purchase of grain and soybean seeds that are considered "high quality." These include soybeans with high oil content, corn for industrial use, and wheat with high protein. Subsidies are offered only in selected major grain-producing counties and are paid to seed dealers, which should pass the savings on to farmers.

Machinery subsidies

In 2004, China began giving subsidies for purchase of farm machinery. Subsidies are offered only in selected major grain-producing counties and are paid to machinery dealers, which should pass the savings on to farmers.

Dairy breeding stock subsidy

In 2005, the national government announced subsidies for purchase of dairy breeding stock.

Fertilizer and chemical policies

In 2005, the national government announced that it will limit increases in fertilizer prices paid by farmers.

Water and irrigation policies

The national government provides preferential loans for construction of water-saving irrigation and water control projects, field irrigation, drainage works, and rural drinking water projects. Irrigation use of water is metered and controlled by quotas. In 2005, the national government will begin to subsidize purchase of water-saving equipment by farmers in selected areas.

More on China Agricultural Policy:

China's Market Stabilization Measures
China's Policies Affecting Factors of Production and Inputs
China's International Trade Policies
China's History of Agricultural Policy

 

For more information, contact: Fred Gale

Web administration: webadmin@ers.usda.gov

Updated date: January 23, 2008