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. |
