oecd rural policy reviews oecd rural policy reviews: china

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OECD Rural Policy Reviews

CHINAWith more than 700 million residents living in rural areas, China is still a predominantly rural country. Despite substantial improvements in standards of living, the Chinese countryside is largely lagging behind. Rural-urban disparities in income and services and subsequent migration trends pose great challenges to sound development. The Chinese government’s recent strategy, “Building a New Socialist Countryside”, and related governance and fiscal reforms, represent an innovative approach to tackle these challenges and have brought substantial investments in rural areas.

This report analyses the key socio-economic forces at work in China’s rural areas and discusses the current government strategy for rural development. It argues that in order to bridge rural-urban divides the current policy approach needs to go further in recognising rural-urban complementarities beyond agriculture and that food-security targets need to be balanced with wider rural development objectives. This will entail a greater focus on investment rather than redistributive measures. Action is needed to: optimise land use and strengthen land-related rights; improve rural service delivery in education, health care and business and financial services; develop a stronger strategy of rural economic diversification, drawing on the potential of rural China’s rich natural and cultural amenities; and address serious environmental challenges with a view to the local-level implementation of national laws. Realising the potential of rural China through a more comprehensive, co-ordinated and better funded rural development policy will require important governance reforms at all levels. Experience across OECD countries, as well as many success cases and policy experiments in China, show that if these conditions are met, the Chinese countryside can increasingly become a source of balanced national development and growth.

The report will be of interest to policy makers, researchers, NGOs and others interested in the dynamics of China’s economic and policy development.

French and Chinese translations of the Assessment and Recommendations have been included in this volume.

ALSO AVAILABLE:The New Rural Paradigm: Policies and Governance (2006)OECD Rural Policy Reviews: Germany (2007)OECD Rural Policy Reviews: Mexico (2007)OECD Rural Policy Reviews: Finland (2008)OECD Rural Policy Reviews: Scotland, UK (2008)OECD Rural Policy Reviews: Italy (2009)OECD Rural Policy Reviews: Spain (2009)

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CHINA

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The OECD is a unique forum where the governments of 30 democracies worktogether to address the economic, social and environmental challenges of globalisation.The OECD is also at the forefront of efforts to understand and to help governmentsrespond to new developments and concerns, such as corporate governance, theinformation economy and the challenges of an ageing population. The Organisationprovides a setting where governments can compare policy experiences, seek answers tocommon problems, identify good practice and work to co-ordinate domestic andinternational policies.

The OECD member countries are: Australia, Austria, Belgium, Canada, theCzech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland,Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand,Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey,the United Kingdom and the United States. The Commission of the EuropeanCommunities takes part in the work of the OECD.

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necessarily reflect the official views of the Organisation or of the governments

of its member countries.

é

FOREWORD

Foreword

With gains in agricultural productivity leading to a dramatic reduction in farmemployment, rural regions across the OECD now depend on a wide range of economicengines for growth. Increasing globalisation, improved communications and reduced

transportation costs are additional drivers of economic change in rural areas.Traditional policies to subsidise farming have not been able to harness the potential ofthese economic engines. In 2006, the OECD published a thematic report The NewRural Paradigm: Policies and Governance, which seeks to explain the shift in ruraldevelopment policies to account for these important economic changes and the need fora new approach to governance.

Policies to develop rural places are beginning to take into account the diversity ofeconomic engines as well as the diverse types of rural regions. In aggregate, rural regions

face problems of decline with out-migration, ageing, a lower skill base and lower averagelabour productivity which then reduce the critical mass needed for effective publicservices, infrastructure and business development, thereby creating a vicious circle.

However, there are many rural regions which have seized opportunities and built ontheir existing assets, such as location, natural and cultural amenities and social capital.The success of such dynamic rural regions is evident in regional statistics.

Promoting rural development poses numerous policy and governance challengesbecause it requires co-ordination across sectors, across levels of government andbetween public and private actors. OECD countries have therefore been undergoing a

paradigm shift in their approaches to accommodate such important challenges. Themost defining characteristics of this shift are a focus on places rather than sectors andan emphasis on investments rather than subsidies.

The multi-disciplinary nature of rural development has contributed to the lack ofcomprehensive analytical frameworks to analyse and evaluate multi-sectoral, place-based approaches. To fill this knowledge gap, the OECD co-operates with stakeholders

worldwide. Its work on rural development was intensified with the creation in 1999 ofthe Territorial Development Policy Committee (TDPC) and its Working Party onTerritorial Policy in Rural Areas. These bodies provide governments with a forum for

discussing regional and rural development. In early 2006, under TDPC’s guidance theDirectorate of Public Governance and Territorial Development (GOV) launched a seriesof national rural policy reviews, such as this one on the People's Republic of China, to

deepen international knowledge in this field.

OECD RURAL POLICY REVIEWS: CHINA – ISBN 978-92-64-05956-6 – © OECD 2009 3

FOREWORD

Since the drafting of this report, the macroeconomic context in China and globallychanged substantially. In this situation, its recommendations such as those related to

enhancing domestic demand are becoming even more relevant.

OECD RURAL POLICY REVIEWS: CHINA – ISBN 978-92-64-05956-6 – © OECD 20094

ACKNOWLEDGEMENTS

Acknowledgements

This Review was elaborated by the OECD Directorate for Public Governanceand Territorial Development (GOV) in co-operation with the OECD Trade andAgriculture Directorate (TAD). The Secretariat would like to thank theGovernment of the People's Republic of China and in particular Mr. Han Jun,Director General of the Research Department of Rural Economy at theDevelopment Research Center of the State Council (DRC) and Mr. Lu Mai(Secretary General, China Development Research Foundation, CDRF). Peerreviewers in this process were Mr. Richard Wakeford, Director GeneralEnvironment (Scotland, UK) and Mrs. Sabrina Lucatelli, Ministry of EconomicDevelopment (Italy).

The Review was co-ordinated by Mr. Nicola Crosta (Head, RuralDevelopment Programme, Regional Competitiveness and Governance Division,GOV). The final report was drafted by Mr. Nicola Crosta, Mr. Markus Berger(Consultant, GOV) and Mr. Andrzej Kwiecinski (Senior Agriculture PolicyAnalyst, OECD Trade and Agriculture Directorate, TAD), with contributionsfrom Mr. José Antonio Ardavín (Administrator, GOV) and Mr. KrzysztofMichalak (Administrator, OECD Environment Directorate, ENV). Additionalinputs were provided by Ms. Irène Hors (SGE), Mr. Nikolai Malyshev (GOV) andMs. Elsa Pilichowski (GOV).

The Review benefited from the substantive inputs provided by externalexperts. Policy information and data were provided by Mr. Li Ping (RuralDevelopment Institute), Mr. Li Xiande (Chinese Academy of AgriculturalSciences, CAAS), Mr. He Gaochao (Sun Yat-sen University), Mr. Wang Dewen(Chinese Academy of Social Sciences, CASS), Mr. Wen Tiejun (RenminUniversity of China), Mrs. Pang Xiaopeng (Renmin University of China), Mr. BaiNansheng (Renmin University of China), Mr. Cheng Guoqiang (DRC), Mr. GuoJianjun (DRC), Mrs. Stéphanie Balme (Sciences Po), as well as from Ms. SolangeGuo Châtelard, Mr. Gerrit Reininghaus, Mr. Guo Qiang, Ms. Isabel Huber, Mr. HansSteinmüller and Ms. Maelys de la Rupelle (consultants). Additional supportfrom the OECD Secretariat was provided by Mrs. Florence Bossard (TAD), aswell as by Mrs. Jeanette Duboys, Mrs. Erin Byrne and Ms. Sophia Katsira (GOV).

Valuable information was provided by Chinese experts from DRC, as wellas from the Office of the Central Leading Group on Financial and EconomicAffairs (CLGFE), the Ministry of Agriculture, the National Development and

é


ACKNOWLEDGEMENTS

Reform Commission (NDRC), the Chinese Academy of Sciences (CAS),Chongqing University, as well as from the Hanns Seidel Foundation (HSS), theBavarian State Ministry of Agriculture and Forestry (StMLF), CEFRIO, and themunicipalities of Chongqing, Nanzhanglou/Heguan (Shandong province),Beijiao and Foshan (Guangdong province). The Review was made possiblethrough voluntary financial contributions by the Government of Scotland, UK.

This report was discussed at a roundtable co-organised by the OECD andDRC in Beijing in October 2008. It was approved by the OECD TerritorialDevelopment Policy Committee (TDPC) under the Chairmanship of Mr. MarkDrabenstott (United States) in December 2008.


TABLE OF CONTENTS

Table of Contents

Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Terms in Chinese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Assessment and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 1. Profile of Rural China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

1.1. Key points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501.2. Population and migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511.3. Socioeconomic trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561.4. Service delivery: access and quality . . . . . . . . . . . . . . . . . . . . . . . . . . . 601.5. Economic structure and performance . . . . . . . . . . . . . . . . . . . . . . . . . 641.6. Unexploited potential and environmental threats . . . . . . . . . . . . . . 691.7. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Annex 1.A1. Additional Boxes, Tables and Figures . . . . . . . . . . . . . . . . . . . 76

Annex 1.A2. Measuring “Rural” in China . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Chapter 2. Policy Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

2.1. Key points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002.2. Approach to rural policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1012.3. Rural policy and governance challenges . . . . . . . . . . . . . . . . . . . . . . . 107

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124Annex 2.A1. Additional Boxes, Tables and Figures . . . . . . . . . . . . . . . . . . . 126

Chapter 3. Policy Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

3.1. Key points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1383.2. Multi-level governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1393.3. Land use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1543.4. Service delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1573.5. Economic diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1663.6. Environmental protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1733.7. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176


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Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Annex 3.A1. Additional Good Practice Boxes . . . . . . . . . . . . . . . . . . . . . . . . 179

Annex 3.A2. Laws, Provisions and Central Documents Related to Chinese Rural Land Use PolicyAvailable online: (http://dx.doi.org/10.1787/548456516500)

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

Évaluation et recommandations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

评估与建议 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

Boxes1.A1.1. Definitions of rural migrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 761.A1.2. The reform of the hukou system . . . . . . . . . . . . . . . . . . . . . . . . . . 791.A2.1. China’s census-based methodology for measuring rural

population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911.A2.2. OECD regional classification and its application for China . . . . 94

2.1. Recent policy objectives and measures targeting rural areas . . 1042.2. Implementing NSC policies in Yu Lu village . . . . . . . . . . . . . . . . 1062.3. The institutional framework for rural policy . . . . . . . . . . . . . . . . 1102.4. The territorial administrative divisions . . . . . . . . . . . . . . . . . . . . 119

2.A1.1. The theoretical framework for the reform period . . . . . . . . . . . . 1262.A1.2. No. 1 Documents targeting rural areas . . . . . . . . . . . . . . . . . . . . . 1272.A1.3. The Chinese political system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1302.A1.4. The tiaokuai guanxi, lines of authority linking vertical

and horizontal bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1332.A1.5. “Farmers’ burden” before implementing the RTFR . . . . . . . . . . . 135

3.1. The Law for Sustainable Rural Development (Spain) . . . . . . . . . 1413.2. Rural Proofing by the Commission for Rural Communities (UK) 1423.3. Rural budgeting through the Programa Especial Concurrente

(Mexico) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1443.4. The LEADER Initiative (EU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1463.5. The Quality Reform Initiative for sub-national officials

(Denmark) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1483.6. Civil service recruitment at sub-national levels

of government (France) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1493.7. Innovative community-based rural governance schemes

(Scotland, UK) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1503.8. Social witnesses on public procurement (Mexico) . . . . . . . . . . . 1513.9. Village development and land reallocation in Shandong (China) . 155

3.10. Teacher training in remote rural Xinjiang (China) . . . . . . . . . . . 1583.11. École éloignée en réseau (Quebec, Canada) . . . . . . . . . . . . . . . . . 1593.12. The Micro-regions Strategy for rural development (Mexico) . . . 1613.13. WDC (Ireland) and BITC (England, UK) on business services . . 162


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3.14. Initiatives of banks and savings banks for rural entrepreneurship (Spain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

3.15. The Monte dei Paschi di Siena (Italy) . . . . . . . . . . . . . . . . . . . . . . 1653.16. The role of the Highlands and Islands Enterprise

(Scotland, UK) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1673.17. The Eifel region’s rural-urban tourism linkages plan

(Germany) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1693.18. The Proeftuin Amsterdam local food chains project

(The Netherlands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1703.19. Strategies to link rural tourism with regional development

and poverty reduction (China) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1713.20. Community support – compensation for environmental

services (Korea) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1743.21. Agro-environmental incentive programmes

(United States) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1753.A1.1. The Law for Sustainable Rural Development (Mexico) . . . . . . . . 1793.A1.2. The role of DEFRA (UK) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1803.A1.3. The establishment of a national agenda for rural areas

(Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1803.A1.4. Rural budgeting and incentives within the Lively Countryside

Plan (The Netherlands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1813.A1.5. The Negotiated Planning and Performance Reserve (Italy) . . . . 1823.A1.6. The Rural Lens system (Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . 1833.A1.7. The role of the Rural Policy Committee (Finland) . . . . . . . . . . . . 1843.A1.8. The Active Regions programme (Germany) . . . . . . . . . . . . . . . . . 1853.A1.9. The PRODER programme (Spain) . . . . . . . . . . . . . . . . . . . . . . . . . . 186

3.A1.10. Public consultation for a White Paper on Rural Development (Ireland) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

3.A1.11. The Net on Wheel programme (Portugal) . . . . . . . . . . . . . . . . . . . 1883.A1.12. The “Practical Solutions to Close Broadband Supply Gaps”

pilot project (Germany) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1883.A1.13. The Rural Transaction Centres (Australia) . . . . . . . . . . . . . . . . . . 1893.A1.14. The Rural Transport Fund (Scotland, UK) . . . . . . . . . . . . . . . . . . . 1903.A1.15. The experience of the Cajas de Ahorro (Spain) . . . . . . . . . . . . . . . 1913.A1.16. USDA’s programme to support rural lenders and entrepreneurs

(USA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1913.A1.17. The Kobra 2010 Rural-Urban Co-operation Project (Slovakia) . . 1923.A1.18. Developing the rural “silver economy”: Seniorpolis (Finland) . . . 1933.A1.19. Income generation through environmental programmes

(Mexico) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1943.A1.20. Water trading under the National Water Initiative (Australia) . 195


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Tables1.1. Educational attainment in cities and rural areas, %, 2006 . . . . . 611.2. Share of villages with access to basic infrastructure, %, 2006 . . 631.3. Credit constraints for agriculture and rural enterprises . . . . . . 64

1.A1.1. Spatial distribution of rural migrants at destination (%) . . . . . . 771.A1.2. Distribution of rural outmigrants by age, 2006 . . . . . . . . . . . . . . 781.A1.3. Distribution of rural migrants by level of education, 2005 . . . . . 781.A1.4. Rural enterprises’ performance, 1985-2006 . . . . . . . . . . . . . . . . . 831.A1.5. The ownership structure of rural enterprises, %, 1985-2006 . . . 851.A1.6. Rural enterprises’ performance by region, 2006 . . . . . . . . . . . . . 851.A1.7. Development of rural enterprises by province, 1990-2006 . . . . . 861.A2.1. Summary by province of the results of the OECD rural

definition and regional typology applied to China . . . . . . . . . . . 972.1. Evolution of the Chinese approach to rural areas . . . . . . . . . . . . 1032.2. Public expenditure for rural development, 2004-07 . . . . . . . . . . 1082.3. Farmers’ tax burdens before and after the rural tax and fee

reform (RTFR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1162.4. County and township governments’ fiscal gap, 1998-2004 . . . . 116

2.A1.1. Public expenditure on social development in rural areas, 2004-07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

2.A1.2. Public expenditure on agriculture, 2004-07 . . . . . . . . . . . . . . . . . 1322.A1.3. Public expenditure on rural infrastructure, 2004-07 . . . . . . . . . . 1332.A1.4. The growing importance of transfers . . . . . . . . . . . . . . . . . . . . . . 135

Figures1.1. Countries with the largest rural population in the world,

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521.2. Rural population in China across provinces . . . . . . . . . . . . . . . . 531.3. Total number of rural migrants, 2000-06 . . . . . . . . . . . . . . . . . . . 531.4. Provincial distribution of rural migrants by source

and destination, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541.5. Age distribution of China’s urban and rural population, 2005 . 551.6. Rural household net income per person, 1981-2007 . . . . . . . . . . 571.7. Poverty incidence in rural China, official definition, 1978-2006 581.8. Urban to rural per capita income and living expenditure ratios,

1978-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591.9. Per capita annual net income of rural households by province,

CNY, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591.10. Rural poverty incidence and the share of agriculture in rural

employment, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601.11. Level of education of rural population across provinces, %, 2006 611.12. Evolution of sectoral composition of rural employment in China,

1985-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65


TABLE OF CONTENTS

1.13. Share of wages in rural net income and level of rural net income per person across provinces, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . 66

1.14. Agricultural labour productivity across Chinese provinces and in OECD countries, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

1.15. Rural enterprises: real yearly growth rates of value added, exports and profits, 1987-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

1.16. Density of rural population and the degree of rurality . . . . . . . . 711.17. Per capita annual net income of rural household and the degree

of rurality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721.18. Percentage of rural population working in agriculture

and the degree of rurality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731.19. Percentage of inland area under protection and the degree

of rurality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731.20. Five rural Chinas – typology at the province level . . . . . . . . . . . . 74

1.A1.1. Ratio of outmigrants to local rural workers by age, 2000-06 . . . 771.A1.2. Ratio of outmigrants to local rural workers by age, 2006 . . . . . . 781.A1.3. Rural poverty incidence across provinces, official definition,

2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811.A1.4. Rural poverty incidence and agricultural labour productivity,

2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811.A1.5. Sectoral composition of rural employment across provinces,

2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 821.A1.6. Classification of Chinese provinces: role of agriculture in rural

employment, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 821.A1.7. Rural households’ net income by source, 1985-2006 . . . . . . . . . . 831.A1.8. Rural enterprises’ employment by sector, 2006 . . . . . . . . . . . . . . 841.A1.9. Rural enterprises’ output value by sector, 2006 . . . . . . . . . . . . . . 84

1.A1.10. Distribution of forest area across provinces, 2006 . . . . . . . . . . . . 871.A1.11. Percentage shares of inland area under protection across provinces,

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871.A1.12. Share of combustible renewable and waste in total primary energy

supply, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 881.A2.1. Rural population in China, 1978-2006 . . . . . . . . . . . . . . . . . . . . . . 931.A2.2. Rural population and territory in China and in OECD countries

measured at the local level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951.A2.3. Territory, population and GDP in China and in OECD countries

measured at regional level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 962.1. CPC institutions involved in rural policy . . . . . . . . . . . . . . . . . . . 1092.2. Central-level institutional framework for rural policy . . . . . . . . 1103.1. Projected production changes of key agricultural commodities

in China by 2017 compared to 2005-07, % . . . . . . . . . . . . . . . . . . . 166


ACRONYMS AND ABBREVIATIONS

Acronyms and Abbreviations

ABC Agricultural Bank of ChinaACWF All-China Women’s FederationADBC Agricultural Development Bank of ChinaCCCPC Central Committee of the Communist Party of ChinaCLGFE Central Leading Group on Financial and Economic AffairsCLGRW Central Leading Group on Rural WorkCNAO China National Audit OfficeCNY Yuan renminbiCPC Communist Party of ChinaCPI Consumer price indexCPSB China Postal Savings BankCYLC Communist Youth League of ChinaDRC Development Research Center of the State CouncilFAO Food and Agriculture Organisation of the United NationsGAO Gross agricultural outputGDP Gross domestic productGW GigawattGWEC Global Wind Energy CouncilHPRS Household production responsibility systemHRM Human resource managementICT Information and communication technologyMCA Ministry of Civil AffairsMEP Ministry of Environmental ProtectionMHURC Ministry of Housing and Urban-Rural ConstructionMHRSS Ministry of Human Resources and Social SecurityMLR Ministry of Land and ResourcesMOA Ministry of AgricultureMOE Ministry of EducationMOF Ministry of FinanceMOH Ministry of HealthMOST Ministry of Science and TechnologyMOT Ministry of TransportMWR Ministry of Water ResourcesNBSC National Bureau of Statistics of China


ACRONYMS AND ABBREVIATIONS

NDRC National Development and Reform CommissionNGO Non-governmental organisationNPC National People’s CongressNRCMS New rural co-operative medical schemeNSC (strategy) “Building a New Socialist Countryside” strategyOECD Organisation for Economic Co-operation and DevelopmentPBC People’s Bank of ChinaPPP Purchasing power parityPSU Public service unitRCCs Rural credit co-operativesR&D Research and developmentRTFR Rural tax and fee reformSCLGPAD State Council Leading Group on Poverty Alleviation

and DevelopmentTVEs Township and village enterprisesUNDP United Nations Development ProgrammeUSD US DollarVAT Value-added tax


TERMS IN CHINESE

Terms in Chinese

chujia nü Married-out womencunrong zhengjie Orderliness of the village landscapedibao Subsistence allowance programmefaguan Judgefaguan weimin Bringing judges closer to the citizensfayuan gancha Cadres and police personnel of courtsganbu Cadreguanli minzhu Democratic governancehexie shehui Harmonious societyhukou (system) Household registration (system)kexue fazhan guan Scientific development conceptluanfei unauthorised or illegal feesnongcun shequ Rural social communitiesnongmin fudan Farmers’ burdensange daibiao Three representssanjiang yibu “Three rewards and one subsidy” programmesannong (issues) “Three rural” (issues)shangfang Citizens-petition systemshehui zuzhi Social organisationshengchan fazhan Increased agricultural productionshenghuo kuanyu Well-off standard of livingshengzhi guan xian Direct provincial rule of county governmentsshenpanyuan Adjudicatorsige xiandaihua Four modernisationswaijia nü Married-out womenwenbao wenti Problem of inadequate clothing and foodwu baohu Five guarantees for householdsxiangfeng wenming Civilised countryside lifexianxiang caizheng tizhi County-township fiscal systemxiaokang (society) Moderately well-off societyyixian weizhu (reform) Reform to assign teachers’ salaries to county levelzhongyang caijing lingdao xiaozu

Central Leading Group on Financial and Economic Affairs

zhongyang nongcun gongzuo huiyi

Central Conference on Rural Work

zhongyang nongcun gongzuo lingdao xiaozu

Central Leading Group on Rural Work


ISBN 978-92-64-05956-6

OECD Rural Policy Reviews: China

© OECD 2009

Assessment and Recommendations

17

ASSESSMENT AND RECOMMENDATIONS

Rural China is home to over 700 million people, nearly twice the size of rural population across all OECD countries.

According to the census-based definition, the rural population of the People'sRepublic of China (hereafter: China) was 737 million in 2006, accounting for56% of the national total. China is thus still a predominantly rural countrywith the second largest rural population in the world, after India. The ruralpopulation is unevenly distributed across China’s territory: half of it isconcentrated in eight provinces. In contrast, the three largest provinces interms of area, namely Xinjiang, Tibet and Inner Mongolia, represent morethan 40% of the national territory, but their rural population accounts for lessthan 4% of the total. Rural population density is highest in coastal Shandong,Tianjin, Jiangsu and in centrally located Anhui and Henan where it exceeds oris close to 300 persons per km2 and lowest in Tibet, Qinghai and Xinjiang, alllocated in the west, where it is below ten persons per km2. Low density in thelargest provinces results in a relatively low average density of rural populationin China at around 75 persons per km2.

Outmigration flows have increased substantially…

Until mid-2008, China’s economic expansion, massive job creation in the citiesand low unemployment rates in urban areas provided strong pull factorsattracting rural migrants into cities and coastal provinces. Push factors

included very low per capita cultivated land availability, scarce non-agricultural job opportunities (in particular in central and western provinces),environmental degradation and natural disasters affecting around a quarter ofthe country’s sown area every year. As a result, the number of rural migrantworkers increased substantially, contributing to the fall of rural populationfrom a maximum of 859 million in the mid-1990s to the current 737 million. Inline with the most commonly used definition, it may be assumed that thenumber of rural migrants increased from around 2 million in 1983 to78.5 million in 2000 and then to 132.1 million in 2006. While around 70% ofrural migrants moved to or within eastern regions, the remaining 30% movedwithin or to central and western provinces. Similarly, while 71% of ruralmigrants moved to urban areas, still a large share (29%) moved within rural



areas. The top sending province (Sichuan) is not surprisingly located in thewest, but other key sending provinces are located in the centre and in the east.Migrants from Sichuan and central provinces moved to the east, whereas thedominant part of migrants from the east (Guangdong, Jiangsu, Zhejiang)moved within their province of origin or to other eastern provinces. All majorrecipient provinces are located along the coast.

… distorting the demographic composition of rural areas, but also bringing positive impacts on rural income, consumption and investments.

The population of rural migrants is dominated by young, relatively welleducated working age population. Migration has an important impact on agepyramids for rural and urban populations. The outflow of young workersmakes the rural age pyramid much thinner for those between 20 and 34 years.In turn, their inflow to urban areas compensates to a large extent the impactof a stricter one-child policy on the demographic structure of urbanpopulation. Aging concerns both rural and urban areas, but tends to be fasterin rural areas: it is found that 70% of the elderly live in the countryside. This isparticularly challenging for major sending provinces such as Anhui, Hunanand Sichuan. As migrants are discouraged from bringing their families to thecities (despite gradual steps to reform the hukou [household registration]system), a disproportionate percentage of children remain in rural areas.There might be about 20 million of so called left-behind children. As a result ofthese trends, the dependency ratio has increased from 40.4% in 1982 to 43.2%in 2006 for rural areas. In contrast, due to a large inflow of migrants and afalling fertility rate, it declined from 45.4% to 32.3% for urban areas over thesame period. The outmigration dominated by male workers has alsocontributed to the feminisation of the rural population, in particular for thosebetween 20 and 34 years. Migration has also positive impacts on rural areas.Remittances from migrants help alleviate rural poverty, increase the self-financing ability of rural households and increase consumption. Householdsurveys find that the additional income earned through migration raiseshousehold income per capita by between 8.5 and 13.1%. In some provinceswith high rates of outmigration, remittances accounted for 30-40% ofhousehold income in 2001. Productive investments by migrant householdstend to be higher than by rural households without migrating members.Migrant households have more durable goods, larger houses and moreproductive machines than purely agricultural households. As outmigrationreduces the quantity of agricultural surplus labour, it may contribute toimproved agricultural labour productivity in the long term, despite difficultiesto meet seasonal labour demand due to imperfect rural labour markets.



Taking into account limited amount of agricultural land, the prospects forsubstantial gains in agricultural labour productivity and higher incomes perperson from agriculture reside in the outflow of labour from agriculture intoother economic sectors, including through outmigration.

Average rural income increased constantly, and rural poverty rates fell dramatically during the last three decades…

During the last 30 years, China made remarkable progress in raising averagerural incomes and in combating rural poverty. A large part of China’s successin raising rural incomes originates from a series of reforms in agriculture inthe late 1970s and early 1980s, including the gradual dismantling of thecollective farming system, replacing it with use rights to collectively ownedland allocated to individual farmer households for private farming. Sincethen, other reforms such as the development of rural enterprises, a relaxationof the hukou system, rural tax reforms and the gradual opening to globalcompetition, as well as continuing land reforms designed to enhance tenuresecurity for farmers' land rights, have contributed to a stronger differentiationof economic activities in rural areas and to a continued increase in ruralincomes. As a result, real incomes per capita in rural households increasedalmost five-fold between 1980 and 2007, representing an impressive annualrate of about 6%. The overall increase of rural incomes led to a dramatic fall inrural poverty, both in absolute and relative terms. No matter which definitionis adopted, be it the Chinese or the World Bank one, the trend is clear.According to the World Bank definition (income USD 1 per person per day atPPP), the number of people living in poverty in China fell from around530 million (both in rural and urban areas) in 1981 to 129 million in 2004 andpoverty incidence from 53% to 9.9%, respectively. The vast majority of thosebelow the poverty line live in rural areas as indicated by a poverty incidence at12.5% for rural China compared to 0.5% for urban China in 2001. Moreover,despite the progress made so far, a large part of Chinese population still livesjust above the absolute poverty line as shown by the share at 34.9% of thosewho lived below USD 2 per person per day in 2004.

… but disparities widened vis-à-vis urban areas, as well as across different rural regions.

The urban to rural income gap is large and has been increasing. The ratio ofnominal urban to rural income per person fell from 2.6 in 1978 to 1.8 in 1985,mostly due to a rapid increase in agricultural production. However, since thenthe downward trend has reversed, with the urban-rural income disparity



climbing to a record level of 3.3 in 2007. The recent increase in the gapoccurred despite a sharp increase in prices of agricultural commodities anddespite various policy measures adopted by the government to increase ruralincomes such as the elimination of agricultural taxes, increased inputsubsidies for agricultural production, increased direct payments for farmersand accelerated budgetary expenditure for rural development. The nominalincome gap becomes somewhat smaller if it is adjusted for lower living costsin rural areas, but still remains large and tends to increase over time. This gapbecomes even larger, if one takes into account implicit and explicit welfarebenefits as well as subsidies enjoyed by urban residents. The levels of rural percapita income are highly disparate across provinces, as availability of non-agricultural jobs in rural areas and agricultural labour productivity differstrongly. Success in eradicating absolute poverty in rural China was varying asdemonstrated by the poverty rates differing strongly across provinces andranging from below 0.5% in almost all coastal provinces to above 5% inwestern provinces in 2005 (above 11% in the western province of Qinghai).Rural areas dependent on agriculture are most vulnerable and are likely toevidence the highest poverty rates. This suggests that while traditionalagriculture was effective in combating absolute poverty in the early stages ofreforms, income diversification is now a key factor in eradicating theremaining niches of absolute poverty in China.

Despite recent improvements, large territorial divides still exist in terms of access and quality of services in the field of education and health care…

While China is among the countries with an almost 100% share of childrencompleting primary education, there are still strong differences in access toeducation between the rural and urban population and across provinces. Anaverage schooling period for rural population over 15 years is 7 years,compared to 10 years for urban population. The illiteracy rate in rural areas ismore than three times higher than in cities, affecting respectively 11.5% and3.6% of the population aged 6 or over. Similarly, the percentage of ruralpopulation having completed only primary education is more than twice ashigh as in cities. In contrast, education at the college and higher level is18 times more frequent in cities than in rural areas. There are also strongdifferences in the level of education of rural population across provinces. Thelevel of education in relatively rich coastal provinces is significantly higherthan in central and, in particular, western provinces. In such provinces asTibet, Qinghai, Gansu, Ningxia, Guizhou and Yunnan, the illiteracy rate is stillclose to or even above 20%. In these provinces, but also in Sichuan and



Chongqing, the share of illiterate population and those having only primaryeducation exceeds 60% and in Tibet, it is close to 90%. Interestingly, in somewestern provinces, such as Xinjiang or Shaanxi, and central provinces such asShanxi, Henan and Hubei, the level of education is close to or even aboveaverage. The provision of health care services in rural China is alsochallenging. It is estimated that per capita health care expenditure (public andprivate) in urban areas was four times higher than in rural areas in 2004. Whilepermanent urban population (with the exception of migrants) is covered bymedical insurance, the vast majority of rural population is not, as a result ofthe collapse of the rural co-operative health care system existing in Chinauntil the end of the 1970s and funded by collective farming revenue. Thusmedical treatment often involves high costs for rural families, serious debts ora withdrawal from the treatment. As a result, all health-related indicatorsshow significant rural-urban disparities. For example, child and maternalmortality rates are twice as high in rural areas as in urban areas. Life expectancyincreased in rural China to 69.6 years, but remains less than in urban areas,leading to a growing difference from 3.5 years in 1990 to 5.7 years in 2000.

… transport infrastructure and basic services…

Despite the difficulties related to its settlement structure and geography,China has also made significant progress in providing rural areas with basicinfrastructure. According to available data, 96% of so called administrativevillages and 83% of natural villages had access to the public road system by theend of 2006. Similarly, almost all villages, both administrative and natural,have access to electricity and to a phone network. Above 80% of townshipshad completed upgrading of their electricity network by the end of 2006.However, in absolute terms as many as 20 million people in rural areas still donot have access to electricity. On average above 80% of townships have a postoffice, but this percentage is smaller in western provinces at 67%. While thetotal length or density of roads is a useful indicator of the road infrastructureavailability in a country, it is equally important to account for quality of theroad system. In this respect, there is still a lot to be done. While in easternprovinces roads linking townships and administrative villages are mostlycemented or bituminised, in western provinces they are still mostly made ofbroken rocks and sand or without any hardened surface. Roads linking naturalvillages are usually of even poorer quality in all provinces, but still 60% of suchroads in eastern provinces are made of cement or bitumen compared to just15% in western provinces. As to basic services, a major challenge for thegovernment is to provide drinking water to the rural population. It is reportedthat by the end of 2005, about 312 million rural people did not have access to asafe water supply and many lacked access to piped water, particularly low-



income households. Even where piped water is supplied, drinking waterstandards are often violated due to inadequate treatment. Concerning non-piped water, monitoring data show large violations of guidelines for non-piped drinking water, mostly due to land-based contamination. As much as70% of the rural population lacks access to safe sanitation, many of them inwestern provinces. The use of untreated human waste on crops and itsrecycling as animal feedstock represent significant disease vectors. Modernmunicipal waste services which include a separate collection, use of landfillgas and incineration with energy recovery are often lacking in rural China.

... as well as access to credit and other financial services.

Economic diversification of rural areas is further slowed by theunderdevelopment of rural finance infrastructure. Despite various reformattempts and massive liquidity flooding the wider economy, the ruralfinancial sector in China continues to lag behind and remains structurallyweak, hampering rural development and diversification. Consolidated data onrural savings and loans indicate a net transfer of financial resources from ruralto urban areas. While it is difficult to determine the extent to which thisreflects the response of rational investors moving funds from low to highprofit sectors or results from institutional deficiencies in the financial andfiscal systems, it is apparent that both agriculture and rural enterprises faceimportant credit constraints. These constraints are demonstrated by asignificantly lower share of agriculture and rural enterprises in total lendingcompared to their contribution to China’s GDP. Access to credit is particularlydifficult for small-scale farmers. This is partly due to the fact that farmerscannot secure mortgages on their land and the high transaction costs involvedin obtaining formal credit, but also to the closing of many local branches offinancial institutions and the failure of new ones to emerge.

The economic profile of rural China is evolving: the primary sector remains key, but its importance tends to decline in terms of employment and share of rural income…

During the reform process the rural economy has gone through an importanttransformation with the shares of agriculture in rural employment and inrural GDP falling and a consequent increase in importance of non-agriculturalactivities such as industry, construction, transport and communication andcommerce. The share of agriculture (together with forestry and fishing) inrural employment declined from 82% in 1985 to 60% in 2005. Despite this



trend, agriculture remains the key activity for a dominant part of the Chineserural population. In several western and northern provinces, such as Xinjiang,Yunnan, Tibet, Inner Mongolia, Heilongjiang, Jilin, but also in Hainan,agricultural employment is above 70%. Reflecting the current structure andongoing changes in China’s rural economy, agriculture remains the mainsource of income for rural families, but its share in total income fell from 66%in the mid-1980s to 42% in 2006. In contrast, the share of wages from industryand from migrants’ remittances more than doubled from 18% in 1985 to 38%in 2006. The importance of agriculture in rural households’ incomes as well asthe speed of its fall over time varies across provinces. While in central andwestern provinces agriculture still provides 40-70% of rural net incomes, in thecoastal provinces the share ranges from 25-45%. While the share in coastalGuangdong more than halved from 54% in 1990 to 25% in 2006, in centralHenan it remained high, but fell from 72% to 54% over the same time. Non-agricultural incomes are becoming more important for the level of rural netincomes. Indeed, the higher the share of incomes originating from wages andsalaries, the higher the level of net income per person in rural households.

… and, despite high rates of growth and significant restructuring, agricultural labour productivity remains low.

Agriculture itself has gone through an important restructuring processcombined with phenomenal rates of growth since the reform period. Between1990 and 2006, China’s Gross Agricultural Output (GAO) increased in real termsby 162%. During this period crop production increased by 98% and livestockproduction by 278%, reflecting changes in consumers’ demand. Therestructuring process slowed in recent years, in particular after 2003, probablydue to much stronger government intervention to stimulate grain production asapplied since 2004. A high level of self-sufficiency in grain production is one ofthe key objectives of China’s agricultural policy. This results in the application ofa number of policy measures such as direct payments for grain producers,minimum purchase prices for grains, input subsidies targeting grain producersand state trading for grains. These measures distort market signals and slowthe market-driven shift towards higher-value and labour-intensive productssuch as fruit, vegetables and livestock in which China has a comparativeadvantage. The recent increase in prices of agricultural commodities on globalmarkets has reinforced this policy drive which may further hamper thediversification of agricultural production in China. The shares of agriculture intotal employment at 43% and at just 13% in national GDP in 2006 indicate thatlabour productivity in Chinese agriculture is low, at around 30% of the nationalaverage. While below average labour productivity in agriculture is quite



common in OECD countries, with the exception of New Zealand, in China thegap is particularly large and it is further aggravated by the fact that this lowproductivity sector still absorbs more than 40% of national occupied population.In many western, northern and central provinces, agriculture absorbs evenmore than 50% of labour, and agricultural labour productivity is between 25%and 50% of the province average, much lower than the national average.

Diversification of rural China’s economy is driven by the rapid development of rural enterprises, particularly in coastal provinces.

The rapid growth of rural enterprises (including both restructured townshipand village enterprises [TVEs] and newly established private enterprises inrural areas) has supported a structural transformation of China’s ruraleconomy. According to official data their number expanded 15-fold, from1.5 million in 1978 to 23 million in 2006, creating 119 million new jobs in theperiod. Rural enterprises have shown an extraordinarily strong performance atthe beginning of the 1990s, a significant slow-down in the second half of the1990s and a steady improvement in the first half of the 2000s with the annualgrowth rates of value added, exports and profits approaching 20%. Industry isthe most important rural enterprises’ activity accounting for 58% of totalemployment and for 76% of total output value in 2006. But rural enterprisesalso comprise tertiary sector activities, including (in order of employmentnumber) commerce, construction, transportation, housing and catering aswell as social services. Non-industrial rural enterprises accounted for 42% ofemployment and for 22% of output value in 2006. Rural enterprises are stronglyinvolved in the export sector. Between 1990 and 2006, their exports grew by20% annually (in real terms) and by 2006, 40% of China’s total exports had beenproduced by them. Light industry, textiles and clothing accounted for almosthalf of rural industries’ exports, followed by machinery, handicrafts and foodproducts. This structure confirms that rural industries’ exports concentrate onlabour-intensive industries in which China continues to have a strong relativecost advantage. Ownership restructuring of rural industries has almost beencompleted: in the second half of the 1990s and at the beginning of the 2000s,rural enterprises went through a profound restructuring process. A vastmajority of large and medium-sized collective rural enterprises weretransformed into share-holding or limited responsibility companies with themajority of shares owned by managers and employees. Rural enterprises in thecoastal provinces have always been privileged, with relatively easy access toboth export markets and to large domestic markets in the densely populatedand relatively rich eastern provinces. Among the top ten provinces by ruralenterprises’ output value, eight are located in the coastal region.



The unexploited potential for further rural economic diversification is enormous, especially in terms of natural, cultural and energy resources…

China is one of the most environmentally diverse countries in the world andranks first in the northern hemisphere in terms of biodiversity. Rural China hasabout 10% of the world’s plants, mammals, birds, reptiles and amphibians.While the world’s forest area continues to shrink, China’s forest area isincreasing and now ranks fifth in the world. It covers 175 million hectares oraround 18% of China’s land area, compared to 14% at the end of the 1980s.Chinese forests, including 12 million hectares of primary forest, are rich inbiodiversity (2 500 native tree species). Also, China has a particularly richcultural heritage to be discovered in rural areas, including tangible andintangible monuments, memorials and achievements as well as handicrafts,ethnic festivals, regional musical, dramatic and storytelling art forms.Renewable energy resources are abundant, but still significantly under-utilised.In 2006, China’s energy use was already the second highest in the world, havingnearly doubled in the last decade. While the energy mix is dominated by coaland oil, China is an important user of combustible renewables and waste, whichaccounted for 13% of the total in 2005, significantly more than for countriesgrouped in the International Energy Agency. The government has set targets togenerate 10% of the total energy supply from renewable resources (includinghydro) by 2010 and 15% by 2020. Apart from large scale grid-connectedinstallations, China is the world’s fastest growing wind energy market and hasover 200 000 small-scale wind turbines providing electricity to households inrural areas. Wind power is planned to grow from 6 GW in 2007 to 50 GW in 2015.Other promising renewable energy sources include solar, hydropower andbiomass energy which can contribute to environmental protection and toboosting social and economic development.

… although serious environmental threats put this potential at risk.

The rapid economic growth of China during the past three decades has putconsiderable pressure on the environment with consequent damage to healthand natural resources. Despite progress over the last years, water scarcity andwater pollution in rural areas are still serious. Per capita water resources areonly between one third and one quarter of the world average. The annualshortage of water is estimated at 36 billion m3, of which agriculture accountsfor 30 billion m3. Water shortage is particularly severe in the northern region(Songhua, Liao, Hai, Yellow and Huai river basins) with 44% of China’spopulation and 65% of its cultivated land. The northern region has only 13% of



water resources. Intensity of groundwater use frequently goes beyond thethreshold for freshwater ecosystems to remain healthy. Water shortages arecompounded by the increasing demand from urban households, services,industries and poor efficiency of irrigation in agriculture. The water resourcecrisis has become a major constraint to economic development and isestimated at between USD 14 and 27 billion per year in lost economic activity.About a third of China’s waterways and about three quarters of China’s majorlakes are highly polluted by diffused agricultural pollution and untreatedhousehold and industrial wastewater. The impact of irrigating with pollutedwater was estimated to reach CNY 7 billion in 2003, considering the impact onyields and produce quality, but not on human health. Water pollution andpoor sanitation means that water-borne and other diseases, such asschistosomiasis, are endemic in some areas. Land scarcity is acute andexacerbated by soil erosion. 58% of China's land area is classified as arid orsemi-arid and only one-fifth of cultivated land is classified as high quality. Inper capita terms, China’s cultivated land area is only one-third of the worldaverage. More than 12% of this land has been lost in the last decade due toindustrialisation and urbanisation. Intensive cultivation has reduced soilfertility and organic content and polluted soils and water. Soil erosion is acommon problem, affecting 356 million hectares in 2003, particularly inmountainous and hilly areas. Most soil erosion is due to overgrazing,inappropriate land reclamation practices and deforestation. Like water, soilsare also contaminated by open discharge of household and industrial waste,especially in rural areas lacking waste collection and treatment services.Desertification is another problem, especially in the north and northwest:desert land area covers 9% of the total area and has been expanding at a fasterrate in recent years. Over the years, industrial pollution, particularly by ruralenterprises, has posed a burden on the rural environment, partly because ofthe relocation of urban production activities to rural areas. A recent reductionof industrial discharges to water results from the closure of many inefficientand polluting industries in small towns and villages, particularly paper mills.

In sum

The analysis of rural China reveals a high degree of spatial heterogeneity. Thiscalls for a flexible policy, tailored to the opportunities and needs of differentplaces. The heterogeneity of rural China across provinces is furtherexacerbated by the diversity within provinces. Very different ‘rural Chinas’ canbe found in relatively close proximity to each other. Against this background,the following section discusses the most defining characteristics of thecurrent Chinese approach to rural development and its capacity to cope withcomplexity, diversity and a fast developing rural environment.



China’s approach to rural policy is rapidly evolving and has recently taken the form of an ambitious strategy, “Building a New Socialist Countryside” (NSC).

China’s new policy approach to rural areas began with the reform period,starting in 1978. The period initiated under a new political leadership after theCultural Revolution and directed by Deng Xiaoping involved importantpolitical transformations. As part of the “four modernisations” targetingagriculture, industry, national defence as well as science and technology topromote the Chinese economy’s long-term rise, substantial changes in theapproach to developing rural areas were implemented. People’s communeswere abolished and gradual moves towards a more market-based approachinvolved a relaxation of agricultural controls and a less centralised productionsystem called household production responsibility system (HPRS). The HPRSprovided individual farm households with land use rights through contractsand farmers became more autonomous in their production and businessmanagement decisions. Related reforms allowed local governments topromote economic diversification through rural enterprises and introduced amore autonomous rural governance system based on counties, townships andvillages. The Guidelines of the 11th Five-Year Plan (2006-2010) include as a keyobjective a new strategy for rural development which calls for “Building a NewSocialist Countryside” (jianshe shehui zhuyi xin nongcun – NSC from now on).This approach to rural areas recognises China’s economic and socialtransformation and follows increasing concerns about rural-urban and rural-rural imbalances. Aiming to solve the “three rural” (or sannong) issues whichconcern agriculture, rural communities and farmers, the NSC strategybroadens the scope of rural policy and targets, together with agriculturalproductivity, land use, rural residents’ income, local governance reforms andthe delivery of rural public services.

A stronger focus on territorial imbalances has brought increased public expenditure for rural areas…

In line with the central government’s NSC strategy, public expenditure forrural areas has been increasing in recent years. Available data suggest thatexpenditure on rural areas almost doubled in nominal terms representing anincrease of 75% in real terms (CPI used as deflator) between 2004 and 2007.Moreover, the share of expenditure on rural areas in the total budgetexpenditure increased from 8.2% in 2004 to 9.1% in 2007. The largest part ofsupport is provided through agricultural policy measures which accounted for



55% of the total in 2007 followed by rural infrastructure (23%) and socialdevelopment (20%). Social development spending combines support for ruraleducation, health care, rural poverty alleviation and rural social security.

… but the implementation of the NSC strategy is still hampered by a number of policy challenges. First, rural policy coherence and effectiveness suffer from a complex governance system and sector by sector segmentation...

Within the institutional framework for rural policy, the Central Committee of theCommunist Party of China (CCCPC) and two related Leading Groups (CLGFE andCLGRW) play a decisive role. Advised by influential think tanks (such as theDevelopment Research Center of the State Council [DRC]), they determine generalprinciples for rural development and work jointly with key State Councilinstitutions. A large number of agencies are involved in providing support to ruralareas and the most important ones are the Ministry of Finance (MOF) and theNational Development and Reform Commission (NDRC) accounting for aroundtwo-thirds of the total budgets, followed by the Ministry of Communications (nowmerged into Ministry of Transport), Ministry of Health and Ministry of Education.While the Ministry of Finance is by far the most important provider of funds foragriculture, important programmes are also under the responsibility of the NDRCand the Ministry of Transport. The Ministry of Agriculture is responsible for arelatively large number of programmes focusing on technological improvementsand on extension services, but fiscal transfers linked with these programmes aresmall (less than 1% of the total). Currently, there is no single institution or formalmechanism in charge of integrating the most important NSC policies. The NDRCand the MOF are key bodies for rural policy-making and implementation, but theyonly deal with parts of the policies affecting rural areas. Co-ordination betweenthe different Party and government actors at the highest level is facilitated byformal and informal meetings of top senior leaders. Also, the two Party LeadingGroups play a key role in bridging between leaders at the apex of the politicalsystem, in facilitating the transfer of the Party system’s decisions to the centralgovernment and in expediting decision-making. However, due to the LeadingGroups’ relatively limited resources and to the large number of actors involved,horizontal co-ordination in actual policy design remains modest and challengedby sector policy fragmentation. The difficulties in co-ordinating governmentpolicies along the lines indicated by the NSC strategy are then reproduced atlower levels of government where the central government’s targets are conveyedand local rural development plans are designed. Part of the central governmentdirections get lost through the complex five-layer administrative structure (fromcentral to township level) impeding effective implementation.



Second, a dysfunctional intergovernmental transfer system and the unintended effects of recent reforms, such as the rural tax and fee reform, do not allow for an appropriate distribution of resources...

Despite important progress in the past years, China’s highly decentralised fiscalsystem is still characterised by little local autonomy, increased dependency ontransfer payments and large disparities across localities. In recent years, acomprehensive rural tax and fee reform (RTFR) succeeded in responding towidespread complaints of farmers about excessive fiscal burdens. However, thisreform also reduced local governments’ possibilities to generate self-raisedfunds, resulting in fewer fiscal resources. With insufficient fiscal transferpayments, especially for poorer localities, and increasing responsibilities, gapsbetween expenditure and financial resources of local governments arise. Thegrowth in overall transfers has largely taken the form of earmarked grants, whichincrease dependency from central resources and place a heavy administrativeburden on local governments. Whereas the competences at the county level havebeen strengthened by recent reforms, the township level and villages facefinancial restrictions and often continue to raise extra-budgetary income. Despitethe government’s attempt to introduce fiscal equalisation, disparities in percapita fiscal expenditure across rural governments are stark and have strongimplications on service delivery. At the intermediate level of the administrativesystem, the provinces have particularly powerful means to determine how muchto allocate to prefectures (and they in turn to the county level and so on). Thesemeans are given by delegation and often implicitly, as neither the Constitutionnor the Budget Law (1994) contain any formal assignment of specific authoritiesto them or to prefectures. The large disparities across provinces in shares ofrevenue and expenditure at the disposal of local governments can largely beexplained by this little formalised and decentralised approach. Dysfunctionalitiesin the intergovernmental transfer system may also be linked to the weakrepresentation of rural interests. According to the present Election Law for theNational People’s Congress (NPC) and local people’s congresses, the number ofpeople a rural NPC deputy represents is four times the number for an urbandeputy. The current institutionalised urban-rural ratio of 4:1 is increasinglyconsidered unfair and inefficient to help solving rural development problems.

… seriously hampering the capacity of sub-national authorities to face increased responsibilities.

The deficiencies of the intergovernmental fiscal system discussed above andthe stark differences in growth performances across the country often resultin a substantial lack of resources with respect to responsibilities at county and



township level and in villages (local government levels). Following recentreforms and also in light of NSC policies, the county-level administrative unitshave become the most important local government level. Its expenditureresponsibilities now include free nine-year compulsory education, the newrural co-operative medical scheme (NRCMS) or social security policies such asthe “five guarantees for households” (wu baohu) or the subsistence allowanceprogramme (dibao). The fiscal and transfer-system reforms have resulted in anincrease in county-level financial resources, even if counties’ own resourceshave decreased in relative terms. On the one hand, with the implementationof the tax-for-fee reform, county-level governments have little leverage toraise extra-budgetary funds. On the other hand, many richer counties arecollecting considerable off-budget revenues which mainly come from land-related transactions. Also, to counter their poor financial situation and copewith unpredictable needs to match higher-levels transfers, counties andtownships resort to debt, most of which illicit, with wage arrears probablybeing the most visible and most discussed form of local debt. The lack offinancial resources is a key issue also at the township level and in villages andit is aggravated by the unclear “county-township fiscal system” (xianxiangcaizheng tizhi), whereby a county and its different townships negotiate thedetails of revenue sharing and expenditure assignments, which might differeven among the townships within the same county. Similar to townships,villages’ financial resources increasingly depend on fiscal transfers fromhigher levels of government. Transfer payments are not sufficient tocompensate for eliminated official sources of revenue and do not representthe major part of resources. Income from land-related transactions (sales andcontract payments for land) increased by almost 50% between 2000 and 2004,illustrating the fact that villages try to tackle financial gaps with revenue fromland and asset sales.

Third, local governance weaknesses challenge the actual implementation of central directives.

Analysis reveals several main weaknesses in rural China's local governance:

Modest administrative capacity of local officials. Apart from the highlyeducated officials of central ministries and of richer provincial governments,the quality and capacity of the civil service varies greatly across China. Thisrepresents a major obstacle to the implementation of NSC policies requiringbetter co-ordination and strategic capacity than traditional sectoral policy.Non-competitive and often opaque processes characterise the filling ofpositions, particularly at local levels of government. Moreover, cadres aremoved from rural enterprises to civil service posts without respecting thecentrally determined competitive processes. Fieldwork shows that many



rural cadres are insufficiently prepared to deal with public policy issues. InShaanxi, Gansu and Henan provinces for example, township cadres are oftenformer technical college and vocational middle school graduates andsometimes farmers. Also, the turnover and transfers from otheradministrations remain very high and limit the officials’ understanding ofthe specific local environment in which they operate. With some exceptions,empirical studies show the absence of clearly articulated roles and functionsagainst which officials can be held accountable or receive incentives for. Inprinciple, local rural cadres are paid as public officials according to a strictlyhierarchical scale. However, differences in remuneration are significantbetween provinces and also from one city or county to another within thesame province. Available statistical data shows that local officials’ salariesare not sufficiently competitive which in turn can become an incentive forcorruption.

Low accountability and weak rule of law in rural regions. Local-levelaccountability is very low in rural China both vis-à-vis higher administrativelevels and vis-à-vis the citizens. The centralisation at the county and higherlevels of political, administrative and fiscal powers which accompanied therural tax and fee reform may reduce local governments’ accountability to theircitizens and weakens officials’ incentives to spend efficiently and effectively.Higher levels of government struggle to adequately track where, how muchand how public money is spent, what public services are delivered or howmany people the state employs. Local governments conduct monitoring andaudits of lower-level officials using the target responsibility system whereofficials sign a political performance contract with their immediate superiorauthorities. Reporting requirements under this system have been extendedand performance is mostly evaluated in a top-down approach by certain“core” indicators which are relatively easy to monitor, but risk being rathersimplistic. To improve monitoring, the Ministry of Finance has enforced itsstatistical capacities. Still, top-down monitoring mechanisms tend to measurethe gap between what has been decided at the top and how it is implementedon the ground. Local governments competing for higher-level transfers havestrong incentives to showcase fiscal spending and investment which oftendoes not bring even short-term benefits to the local population. A bottom-upapproach to monitoring through increased local budget transparency isbasically non-existent. Low accountability is linked with a weak rule of law inthe countryside. Courts are a key institution in turning the laws into reality,but they remain weak and have a low status in the political system. Localcourts in China are subsumed under the jurisdiction of the local governmentin which they are embedded. Since 1978, reforms of the judiciary system havemainly focused on national and province-level jurisdictions. However, thelargest numbers of litigations in China occur at the village and county levels,



for the most part in the countryside where the fewest professional lawyersand judges are available.

Limited citizens’ representation and participation. Democratic self-governanceof villages is one of the key principles within the NSC strategy. Studies haveshown that the direct election of village heads and village committees leads tothe implementation of more and better public goods projects and investmentsthan in the case of appointed village heads. However, the elected villageinstitutions are subordinate to township governments, as well as to the ‘core’leadership of the village CPC branch and its Party secretary, who is anominated official. In many places, relations between village committees onthe one hand and township governments and the village CPC branches on theother hand have been strained. The strategy pursued in some localities ofconferring the two top positions in a village on one elected official could be away to further democratise local governance, but it also risks blurring thevillage head’s responsibility. Other election problems include governmentintervention in the process of nominating candidates, poor monitoring andevaluation mechanisms in the post-election period as well as vote purchasing,especially in more developed rural areas. At the township and county level,elections or other formal mechanisms for holding officials accountable tocitizens for their performance are still lacking, except for some interestingexperiments. The participation of vil lagers in planning, design,implementation and monitoring of local-level decisions varies significantlybut its importance is increasingly recognised in reports made by theleadership. This mainly takes the shape of legislative hearings and advocacyfor issues such as environmental protection and public service provision. Theso called yishi yiyi participatory budgeting arrangement involving ruralresidents in the selection of investment projects is an example of thegovernment’s efforts to increase citizens’ participation, but its application isnot yet sufficient. Since independent organisations emanating from the civilsociety are essentially illegal under current Chinese law, non-governmentalorganisations (NGOs) need a government-approved “supervising organisation”from the Party or government for registration. Among the 387 000 non-profitsocial organisations (shehui zuzhi) registered in 2007 by the Ministry of CivilAffairs, only a small minority are active in rural areas, illustrating the weakinstitutionalisation of citizens’ participation in the countryside. To solve theproblem of rural producers’ market access and assist them to organise intomarketing associations, the government started to support farmers’professional associations or co-operatives. In 2003, however, only about 7% ofvillages had functioning professional associations. A regulatory frameworkwas voted in 2007: this Rural Co-operatives Law is meant to improve theefficiency of the agro-food market. A public evaluation of the law byprofessional co-operative stakeholders has not been undertaken to date.



The NSC is a sound strategy but its full implementation will require a more effective and inclusive multi-level governance system.

Despite an innovative and far-reaching strategy, Chinese rural policy showslimitations in terms of capacity to tackle the urgent challenges and to exploitthe large potential of its rural areas. A top-down fragmented approach andmodest fiscal and administrative capacity at local levels of government make itdifficult to translate central directives into coherent implementation. Tacklingthese challenges entails redesigning the distribution of responsibilities andresources of different levels of government over rural development policy aswell as the respective roles of public and non-governmental actors. Sub-national governments (especially at the county and township level) are keyplayers in rural areas. They are responsible for the delivery of the mostimportant government policies and custodians of key knowledge as todevelopment challenges and opportunities. Making the most of theirknowledge is crucial, especially in a country as large and fast developing asChina. In this framework, actions are needed to address the weaknesses ofChinese multi-level governance of rural policy, including institutional, fiscal andadministrative aspects. Reforms in these fields are, to a large extent, a pre-condition to the successful implementation of Chinese rural policy.

First, efforts are needed to strengthen rural policy co-ordination and rural proofing at the central level

Implementing the innovative NSC strategy entails moving from a top-down,sectoral focus towards a more integrated, strategic approach to ruraldevelopment. A common challenge in OECD countries is how the centralgovernment can progressively shift away from a command and control role toone that facilitates knowledge pooling and shared decision making. At thecentral level, the main challenge is to strengthen and formalise cross-sectoralco-ordination, oversight and financial assignments beyond the current systemof state and Party leaders’ meetings in different overlapping bodies andbeyond the Leading Groups’ weaknesses in terms of personnel resources. Thesheer number of ministries and agencies involved in rural policy design,implementation and monitoring should be reconsidered and more formalcontacts between them established. Useful examples are offered by recentexperiences in various countries and range from national level rural policy co-ordination mechanisms defined by law to the creation of an integratedministry and to more flexible, but formalised co-ordination tools. There arealso great margins to increase the capacity of central ministries through “ruralproofing” mechanisms which check respective sectoral policies for their



impact on rural areas and established NSC or other rural policy goals. Proofingmechanisms are showing important results across OECD countries in terms ofintegrating line ministries into broad rural policy strategies and allowing themto adapt sectoral policies to the characteristics of different rural regions.

Second, reforms of the inter-governmental fiscal system will need to include revised expenditure assignments, increased local revenues and a more effective transfer system.

A redefinition of expenditure assignments that aims at matching responsibilitieswith administrative and financial capacity in a more transparent, streamlinedsystem is needed. The role of the central government should be to set ‘therules of the game’ and ensure that sub-national authorities have appropriateresources to meet their obligations, rather than being directly involved inspending. An exception would be represented by direct central investmentsin ‘pilot projects’ or in activities of national relevance such as research ornetwork-building programmes. The preparation of a ‘rural budget’ at thecentral level should also be considered. Even if spending for sannong issues isindicated by the central government, this does not include all central andsub-national expenditure targeting rural areas. The assignment ofresponsibilities across levels of government should be guided by a carefulbalancing of equity and efficiency objectives. A realistic evaluation of thecurrent capacity at different levels of government should also be taken intoaccount. In terms of revenue-raising, capacity should be increased at locallevels of government in order to foster a more effective use of resources. Localtaxes, revenues from land transactions and user fees should all be part of atransparent local taxation system which is linked to actual local investmentsand submitted to citizens’ scrutiny. Also, legal borrowing should be allowed,at least in areas possessing stronger capacity, and measures should be takento increase debt management capability at the local level. Finally, the size anduse of fiscal transfers should be reconsidered to increase equity andeffectiveness. The focus should not just be on “how much” but also on the“how”, which is the conditionality accompanying transfers. To this extent,block transfers linked to general NSC objectives should be increased andearmarked grants reduced. This should be accompanied by appropriateinvestments in technical assistance as well as in setting up monitoring andevaluation systems which will provide for a new focus on strategic outcomes(economic, social, environmental…) rather than on traditional “simplistic”output-based evaluations. Streamlining transfers should also reduceoverlapping and inconsistent expenditure as well as reduce red tape andadministrative burdens on local governments.



Third, a wider use of place-based policies could be promoted to further tailor central directivesto local conditions…

There is great scope at sub-national levels of government for i) better tailoringcentral directions to local circumstances via place-based policies,ii) increasing the administrative capacity and accountability of local officialswhich greatly influences the understanding and then implementation ofcentrally defined policies and iii) supporting public consultation andparticipation. Place-based policies have been tested through pilotprogrammes. Based on lessons learned from these practices and from theabundant experience available internationally, these programmes can now bestrengthened, mainstreamed and extended to the wider Chinese countryside.These policy innovations may involve a new way of defining target areas asfunctional areas and more creative local development strategies supported bypartnership between public, private and non-governmental actors. Businessleaders for instance can become important partners for the public actors whowish to engage in more open, innovative governance. In this perspective,governments should not just focus on “fiscal contributions” but rather on thewider role businesses can play in their rural community.

… and should be coupled by explicit efforts to increase local administrative capacity and accountability…

At the basis of stronger capacity of local officials, more progress is needed inon-going personnel reforms whose positive results have been seen more inurban and coastal areas than in most of China’s rural regions. One of thepriorities lies in improving human resource management (HRM) across levelsof government and finding a framework which would help the centralgovernment ensure that sub-national governments manage their workforceproperly. Another priority lies in the need for improved workforce andcompetency planning, with clear linkages made between public policies andservice delivery and needs in terms of workforce size and skills. Stricter hiringprocedures and more competitive salaries should be considered to furtheradapt the skills of rural officials to the scope of the mandate that the NSCattributes to them. Local level capacity in rural policy making can bestrengthened through targeted training programmes, transfers to poor ruralareas of more experienced officials as well as facilitated networking and theexchange of good practices with other localities in China and abroad. Inparallel to the above changes, more flexibility in terms of recruitment andremuneration at county and township level could be considered to overcome



the rigidities of the current personnel system in favour of a better adaptationto local conditions. In addition, current performance measurement systems,such as the target responsibility system should be revised to further diffuse a“culture of evaluation” and to assess local officials’ performance against moresophisticated targets referring to social, environmental and good governanceobjectives rather than simplistic objectives such as the economic growth rateor birth rate. Finally, enhanced and more regular audits would help to reducecorruption and to better control the use of public funds provided for ruraldevelopment projects.

… as well as to support citizens' representation and participation.

Achieving a better representation of rural citizens’ interests has at least twodimensions. On the one hand, as proposed in a resolution approved by the10th NPC in 2007, a revision of electoral rules should aim at balancing thecurrently differing rural-urban representation in people’s congresses in orderto enhance the articulation of rural citizens’ concerns. On the other hand, andcoherent with recent central government statements, public participationcould receive even stronger support in order to promote open and inclusivepolicy making at different levels of government. Villagers should be able todirectly nominate candidates for elections without government interventionand post-election monitoring and evaluation mechanisms need to be furtherinstitutionalised. This includes increased citizens’ rights to access informationand to participate in village self-governance, for example through publishingthe village committees’ annual budget and actual spending. There is also aneed to better inform villagers about election rules and procedures and to findsuitable candidates, as many capable people are migrating to urban areas.Social organisations should be promoted in rural areas to foster a more orderlyand transparent representation of citizens and interest groups. Reforms couldintroduce policies to support women farmers and reduce regulatory burdens ofNGOs (sponsorship requirements, required amount of registered capital, etc.).This would entail to institutionalise already existing farmer organisations, toconsider formalising some rural social movements and to attribute a legalstatus to civil society associations in rural areas. The objective would be tofacilitate the gradual emergence of bottom-up and intermediary structuressuch as rural federations, associations or local NGOs to interact withpolicymakers. Along the direction of more and better representation andparticipation at the local levels of government, reforms should also considerincreased opportunities for public evaluation of services and prices, forexample through price hearing systems which are already common practice inmany Chinese provinces but almost exclusively in urban areas.



Fourth, improved accountability and rule of law call for a more professional and coherent rural judicial system.

Many problems faced by judicial institutions in rural areas are already wellidentified and targeted by recent government regulations and decisions.Recurrent slogans insisting on “bringing judges closer to the citizens” (faguan

weimin) show how local and ordinary judges are intended to play a key role inenforcing the reform. However, there is still a need to enhance judicialindependence and authority of courts, both vis-à-vis Party bodies and localgovernments. The Party’s role and power in rural policy should be more clearlydefined, keeping a reasonable degree of separation between law and politics.To fight local governments’ interference and protectionism and to strengthencourts, changing the procedures for court funding and appointment of judgesmight be further discussed. Also, in light of the urgency to cope with socialunrest linked with the increasing number of disputes notably related to landuse, the implementation of two major reforms could be accelerated tostrengthen rule of law in the countryside: i) enhancing the quality of the mostbasic level jurisdictions; and ii) enforcing the coherent implementation of lawsacross the territory.

A reformed rural governance system will create the necessary pre-condition to address more effectively rural China’s most pressing challenges and realise the objectives of the NSC. Key priorities for Chinese rural policy include: i) land use,ii) service delivery, iii) economic diversification and iv) environmental protection.

Land use: Progress is needed to fully implement laws on farmland rights,allow residential land to become marketable and mortgageable and embodyinto law the recently improved policies on land expropriation.

Improving land use and strengthening land related rights are urgent prioritiesfor rural China. The availability of land represents a significant comparativeadvantage for rural regions and citizens. There are 121.7 million hectares ofcollectively owned farmland allocated to farmers for private farming for aterm of 30 years and 12.3 million hectares of residential land assigned to ruralresidents for a “long term without change”. However, the value of land-relatedrights and the development potential associated with them are substantiallyconstrained by legal impediments. A strategic policy approach to land reformshould include measures in the following fields:



● Farmland use rights are well established in Chinese laws such as the PropertyLaw (2007) and the Rural Land Contracting Law (2002), but problems arisewhen it comes to implementation. Defined as usufructuary property rights,farmland rights assigned to farm households are renewable upon expiration.Recent central government decisions call for securing farmers' present landrights for a “long term without change”. Important economic potential forrural areas may be realised if these rights were free from administrativeinterferences with respect to their length, breadth and assurance. Despitetightened legal restrictions, however, land readjustments remain animportant challenge in many rural areas, compromising farmers’ confidenceand expectations. Responding to changes in households’ size or to the overallreduction of a village’s land due to land expropriation, local governmentbodies frequently readjust the size of farm households’ landholding. In orderto encourage farmers to invest in their land and facilitate the development offarmland rights markets, better legal enforcement requires increasingfarmers' awareness of their land rights under the law through strongpublicity of land use rights, regular and extensive monitoring of lawimplementation and violations, as well as effective dispute resolutionmechanisms such as “land dispute panels” and legal aid services for farmers.Moreover, farmland use rights should become mortgageable in order toenhance farmers' access to credit. Finally, it is necessary to address theproblem of “rent seeking” by local officials who often enforce farmland rightstransactions to obtain financial gains.

● Residential land is classified as construction land suitable for non-agricultural development and can therefore have an important marketvalue. Rights to residential land are defined as property rights for a “longterm without change”. But existing residential land laws and policies fallshort of treating such rights as meaningful property rights. Unlike forfarmland, laws do not specify whether rural residents have the right to“profit from” residential land. Under such legal ambiguity, governmentdecrees go further to prohibit transactions of rural residential land rights.As a result, residential land rights are essentially neither marketable normortgageable. Due to the lack of effective legal rules protectingresidential land rights, such rights risk becoming prey to urban sprawl.There are frequent cases where local-level governments and commercialdevelopers take the land with insufficient compensation for ruralresidents. Reforms of the existing new legal framework to protectresidential land rights could meet these challenges. These should focuson three areas: i) to define “long term” residential land rights as perpetualusufructuary property rights; ii) to make residential land rights fullymarketable, explicitly permitting the transfer of rural residential landrights; and iii) to allow rural residential land rights to be mortgaged, in



order to improve farmers’ access to credit for rural development or non-agricultural endeavours.

● Land expropriation. Changes in policy directives introduced in recent yearshave brought important improvements, especially in terms of compensationand procedures for expropriation of farmland and residential land. However,these improvements need to be embodied into law to have judicial force.Existing eminent domain laws echo the constitutional requirement that anyexpropriation of collectively owned land must be “in the public interest”. Butthese laws give no precise definition of public interests under which theeminent domain power may be exercised. Under the current system, thestate enjoys a monopoly over land markets for non-agricultural uses andcommercial developers must rely on the state to expropriate the land fortheir commercial development. However, the recent land reform decisionsannounced by the central government begin to break up this monolithicsystem by allowing market transactions of collectively owned constructionland for commercial purposes without government intervention. Farmersshould be permitted to directly negotiate with the commercial user on issuessuch as compensation and resettlement benefits. In line with the recentpolicy document, new legislation and regulatory measures should be adoptedto narrow the scope of expropriations of farmland and residential land bystrictly and clearly defining the use of land for “public interest” under whichthe state may exercise its eminent domain power, for example by adopting aninclusive list of specific permissible public purposes. The state may bepermitted to expropriate land only for the listed purposes. Taking farmlandor residential land for commercial purposes would be deemed illegal, asstated in the Constitution and the 1998 Land Administration Law. Othermeasures realisable in the short run would be beneficial: i) compensationneeds to be substantially increased by introducing a replacement valueapproach along with minimum compensation standards; ii) the holder ofrights to the expropriated farmland should be entitled to the largest part ofthe compensation; iii) social security benefits for affected rural citizensshould be funded as a supplement rather than a replacement ofcompensation, according to the central government’s objective to graduallyestablish a rural social security system; and iv) land takings proceduresrequire better, legally enforceable guarantees of farmers’ rights to notice, toparticipation and to appeal.

Service delivery: There is a need for a more coherent, better funded ruralservices strategy to bridge rural-urban and rural-rural gaps…

Improved public service delivery is crucial to ensure social cohesion andrespond to the needs and challenges of a countryside that is evolving from atraditional farming-based society to a more diversified society. Rural services



score badly in comparison with urban areas in spite of remarkable progressmade in expanding compulsory education, the provision of health care,transport and basic services, and notwithstanding government announcementsto invest in water supply, sanitation and social security. For instance, access toeducation still varies greatly across provinces, with many central and westernregions performing significantly worse than the rest. It remains to be seenwhether the funds for free nine-year compulsory education allocated todifferent levels of government will be adequate and sustainable. Enhancedfunding for vocational education is needed, in order to train farmers andfacilitate their transfer into other sectors. Following the implementation of theNRCMS, health care services are relatively accessible to rural citizens, but poorquality and relatively high prices as well as insufficient budgetary support stillhamper the achievement of desired outcomes. Infrastructure and basic servicesare often lacking: increased investment in transport services to upgrade thequality of rural roads is needed. The cost-benefit ratio could be particularly highin terms of poverty alleviation, especially if these investments are part of a moreintegrated local development strategy. Large parts of rural China still do nothave access to safe water supply, as water is often contaminated by thedischarge of pollutants and of untreated waste and wastewater. Also, sanitaryconditions remain unsatisfactory, particularly in poorer regions. As to new ruralsocial security and subsistence allowance programmes, it is unclear whetherpoor local governments have sufficient resources to match central funds. Asdiscussed previously, rural-urban and rural-rural gaps in services are often theresult of dysfunctional fiscal arrangements that have led to under-investmentand unfunded mandates over local authorities.

... to be implemented via more careful, place-tailored investments andinnovative service delivery modes...

Although necessary, increased investments in rural services will not be sufficientto close the existing gaps. As discussed above, improvements in the fiscalarrangements across levels of government could bring undisputed benefits toservice delivery. However, given the size and diversity of the Chinese territory, itappears crucial to adopt a more flexible, place-tailored approach fuelled bycontinuous innovation in delivery modes. A modern rural service deliverystrategy entails: appropriate analytical tools to determine the right mix ofservices and matching them to the right regions, in a manner that considersefficiency/equity trade-offs and is coherent with the overall regional strategy.Investments in transport infrastructure for instance should integrate a morecareful, ex ante and ex post cost-benefit analysis, integrating economic, social andenvironmental objectives and balancing local needs with national priorities. Aholistic investment strategy for rural regions should thus consider several factorsincluding the appropriate time to invest and how the investment fits within the



wider framework of strategies and links with other investments. Effective “onesize fits all” approaches to service delivery do not exist. In order to respond todiversity and to the fast evolving rural environments, service delivery in ruralregions needs to encourage reliable local feedback and continuous innovation.There is abundant evidence that many of the structural barriers to deliveringservices in rural areas can be reduced through the development of differentmethodologies of approach. It is important to ensure that innovative servicedelivery schemes are not just one-time investments but provide opportunities forlearning and scale-up. Also it is important to move beyond the existing urban biaswhich emphasises the high costs and low benefits of rural services, recognisinginstead the complementarities of rural and urban services within a well thought-out regional strategy. ICT (information and communication technology) offersgreat opportunities, especially to the remotest Chinese regions. A key objectivefor rural policy is to make ICT available to rural populations overcomingdifficulties linked with the high cost of infrastructure development in sparselypopulated areas. This can be done in different ways depending on differentcircumstances, including subsidised supply, direct public provision or enhancedprivate competition. Low cost and reliable ICT infrastructure is essential but notsufficient. Research shows that there are necessary conditions for rural areas tobenefit from ICT. These include: intelligent use of technology by government (e-government etc.); an institutional framework which encourages inter-firm andpublic-private co-operation and a minimum level of R&D capacities. A policy ofstrategic, place-based investment by national and local governments is thusneeded in both “hard” and “soft” technology infrastructure.

... and open to market opportunities and a more strategic role of non-governmental providers, including rural co-operatives and financialinstitutions.

Effective rural service delivery calls for the active role of a wide range of ruralstakeholders. The current system of delivery centred on PSUs (public serviceunits) needs to be reconsidered. On the one hand, there are ample margins inimproving PSUs’ effectiveness, efficiency and accountability, especially viamarket-like incentives. On the other hand, more can be done in terms ofinvolving non-governmental actors such as rural co-operatives, NGOs andprivate businesses in service provision. Financial institutions can play a keyrole: The availability of financial resources can be the critical determinant ofwhether rural assets are turned into marketable opportunities or not.However, as in many other countries, there are several deterrents for privatefinancial markets to operate in rural areas. These include: limited presence offinancial institutions' branches, especially in remote localities; lack of secureproperty rights and a properly functioning legal system; small size andvolume of deals; high default rates and difficulties for recovering credit; small



size loans and the high “cost” of information. Development Banks andagencies may thus play a crucial role in mitigating the risks and establishingincentives for financial institutions to serve this segment of the market.Experience across the OECD shows that there are many ways to foster theavailability of funding for rural development. Business networks can helpbuild scale and reduce costs, develop information flows and trustmechanisms. Also, business development programmes can contribute tobuilding an entrepreneur skills set and boost the number of viable rural start-ups. Several recent and on-going governmental initiatives attempt to addressthese issues and to strengthen rural financial networks. These include relaxedconditions for establishing financial institutions in the countryside,regulations allowing foreign financial institutions to operate in rural China,reforms of the rural credit co-operatives (RCC) and efforts to develop the roleof the China Postal Savings Bank (CPSB) and of the Agricultural Bank of China(ABC). It is crucial to continue these reform efforts which should aim at thecreation of a network of viable financial institutions able to provide loans todynamic parts of the rural economy. This includes both non-agriculturalactivities and competitive parts of Chinese agriculture, which would be themain source for growth, job creation and sustained increase in income for therural population.

Economic diversification: Changes on both the demand and supply side…

It is unlikely that China can sustain such high rates of agricultural productionas it did over the last 30 years of economic reforms. Some slow down hasalready been observed since the second half of the 1990s. As vast portions ofthe population become wealthier, growth in demand for agricultural productsin quantitative terms decelerates and changes in consumer preferences willcontinue to determine an evolution in the structure of agricultural productionin China. The OECD/FAO projections by 2017 indicate that grain production forhuman consumption (wheat and rice) will even fall in China as consumers areswitching to higher value products such as meat and milk. Overall, China ispredicted to meet domestic demand for grains and meat products from ownproduction, but will import more oilseeds, dairy products and sugar. China isalso expected to increase its biofuel production by above 80% although food-security concerns reinforced by the recent sharp increase in food prices, andinternational reports, showing strong impact of biofuel production on globalfood prices and a mixed net impact on environment, have mitigated the focuson ethanol production particularly from grains. China also faces a number oflimiting factors on the supply side. Water in the northern half of China isscarce. Arable land availability has been shrinking every year by 0.5-1.0 millionhectares over the last decade and this trend is likely to continue given thegrowing pressure to turn agricultural land to non-agricultural uses and to



reforestation of farmland. China’s land productivity is already high andfurther intensification of land use through chemical enhancement risksfurther increase in environmental problems. In this context, further growth inagricultural production is expected through land reforms which encouragefarmers to invest in their land, wider application of new biotechnologies, theintroduction of labour-augmenting technologies and innovation combinedwith the consolidation of fragmented farms and further pursuit on reallocatingresources to less land-intensive products such as fruits, vegetables andlivestock.

… require to look beyond agriculture for the future of rural China…

All in all, rural labour will continue to be released from the further agriculturalsector and its role in providing employment in rural areas will decline over time.This fall has accelerated considerably in the current decade as indicated by thefall in the share of agriculture in rural employment from 68% in 2000 to 60% in2005, thus by 1.6 percentage points per year. If this trend continues over the next15 years, the share would fall to around 35%, thus close to the current levels insome OECD countries such as Mexico, but still much more than the OECDaverage of 6%. Among OECD countries, Korea provides an interesting example ofthe possible scenario for the evolution of agriculture’s role in the Chineseeconomy. In the mid-1970s, Korean agriculture’s shares in total employment andin GDP were even above the current Chinese levels. Over three decades, the shareof Korean agriculture in total employment declined from 46% in 1975 to 8% in2005 and its contribution to GDP from 24% to 3%, correspondingly. Assuming thatthe share of Chinese agriculture in total employment will fall to 8% by around2040 and that China’s total labour force will be at 750-800 million by that time,the total number of those employed in agriculture would need to decline fromthe current 326 million to around 60-65 million. More than 260 million peoplecurrently employed in agriculture would still need to find non-agriculturalemployment either in rural or in urban areas or to retire. This shows thechallenge for the government to create non-agricultural employmentopportunities in rural areas, to absorb rural migrants into urban areas, to preparesocial security systems to absorb a growing number of retired farmers and tofurther diversify the structure of agricultural production to allow producinghigher value products from a shrinking amount of arable land.

… and to invest more decidedly in opportunities lying in rural-urbanlinkages and emerging in sectors such as tourism, energy production andhigh-value added typical products.

Culture, landscapes and biodiversity are but a few of the assets Chinese ruralareas can offer to urban citizens in a closer rural-urban relationship. There aremany possibilities for rural-urban linkages in terms of business clusters, cross-



border tourism initiatives, local food chains and better integrated transport andother services’ networks. As migration dynamics in many other countries haveshown, substantial opportunities will arise as congestion in cities increases andas diseconomies of agglomeration will provide incentives for people andbusiness to relocate or commute from rural areas. For example, rural tourismholds great promise. According to statistics, rural tourism served more than400 million tourists in 2007 and earned over CNY 3 000 billion of whichCNY 1 200 billion directly benefited farmers. The perspectives are positive:Chinese per capita leisure time and habits are evolving and, according to severalforecasts, China could become the first tourist destination and the fourthsource of tourists by 2015. Also, the development potential of renewable energyproduction still seems to be largely unexploited despite the fact that cleanerenergy is promoted by the central government. This approach offersconsiderable opportunities for the development of rural areas. Methane frombiomass is particularly promoted, offering an alternative for villages which arenot connected to the electricity grid. Wind power, hydro power and thermalsolar energy are other promising renewable energy sources and often located inareas with low income. Similarly, Chinese rural areas have great potential in thegrowing market of certified high-value added typical food, agricultural andforest products for both exports and domestic consumption. Natural andcultural resources are often abundant in lagging rural areas. A lot has been donein recent years to support development in these sectors and many policyexperiments are on-going to better exploit rural-urban linkages. However,current policies would benefit from stronger government investment towardsrural economic diversification and the extension of existing specified standardssuch as organic and fair-trade. In terms of policy co-ordination, for example, themany existing tourism development initiatives could be further integrated withtypical food production programmes through territorial marketing policies andas part of integrated local development strategies. In this framework, the key todiversification is not individual policies targeting one specific sector but ratherthe capacity to provide the right mix of framework conditions that allow neweconomic activity to flourish.

Environmental protection: A sound environmental policy is a preconditionfor sustainable development and rural economic diversification. It shouldaddress challenges rural China is facing in terms of natural amenities, waterpollution and water use efficiency, as well as rural enterprises pollution.

Rural China has exceptional environmental conditions which offer substantialunexploited opportunities for rural development and represent assets for thecountry as a whole. New opportunities for rural areas are emerging through anincreased environmental consciousness, the enlargement of forest areas andof protected natural reserves and through the establishment of a modern and



comprehensive legal framework for managing nature and biodiversity, as wellas for water, waste and air management. However, there is a gap between thelegal framework and actual implementation, particularly at local levels ofgovernment. Also, opportunities are put at risk through serious environmentalchallenges, ranging from water shortages and pollution, land scarcity, soildegradation and non-point pollution from agricultural activities, to therelocation of polluting industries from urban to peri-urban and rural areas.Taking into account these challenges, a modern policy approach to ruralChina’s development should include spatially differentiated measures in thefollowing areas:

● Natural amenities. An effective use of rural China’s richness in naturalamenities and biodiversity can be a driver for economic and socialdevelopment. In particular, nature protection concerns should be betterintegrated into rural development plans, especially in poorer western andcentral regions with abundant biodiversity. The loss of biodiversity alsoinvolves potential risks for breeding new varieties of plants resistant todisease. There is a need for more institutional co-ordination and enhancedcapacities of central and sub-national agencies in order to better managebiodiversity protection of existing reserves and to integrate natureconservation and afforestation with other rural development projects outsideprotected areas. Also, increased financial and human resources for theprotection of nature and biodiversity and a better involvement of localresidents in patrolling, monitoring and habitat enhancement couldcontribute to further successes in rural poverty alleviation. Higher prioritycould be assigned to co-ordination of afforestation, nature conservation andsustainable rural development to address desertification and soil erosionproblems. Application of the “polluter pays” and “user pays” principlesthrough economic instruments, such as payments for environmentalservices, will contribute to addressing different environmental challengesand offer new opportunities for employment in rural areas.

● Water pollution prevention and water use efficiency. Efforts should becontinued to improve water pollution prevention and water use efficiencyin agriculture. The establishment of water user associations responsible forrecovering the cost of providing irrigation could decrease demand andincrease efficiency in water use. This should help to reduce overexploitationof groundwater aquifers. Creation of buffer zones along rivers and lakes,treatment of intensive livestock effluents and efficient application of agro-chemicals should help to prevent agricultural run-off into aquifers, riversand lakes. Current plans to increase subsidies on fertilisers in order topromote higher productivity in agriculture stand in contrast to efforts toreduce negative impacts of the use of chemical fertilisers and pesticides onfreshwater sources.



● Rural enterprises. While rural enterprises provide development andemployment opportunities for smaller towns and rural areas, theiroperations often lead to extreme pollution problems. Efforts are required tostrengthen monitoring, inspection and enforcement capabilitiesthroughout the country. This would maintain the level playing field andprevent the creation of “pollution havens”. Rates of pollution chargesshould be increased to internalise environmental externalities. Theimplementation of the “circular economy” concept should be furtherstrengthened, promoting waste reduction, reuse and recycling (“3R”concept) and further developing “circular economy” pilot projects in rural(as in urban) industry. Further raising environmental consciousness amongrural residents and expanding their participation in local environmentalgovernance could enhance the control of and action against pollution.

Summing up

Rural China represents an important resource for national development andgrowth, but a large unexploited potential remains. The NSC strategy is a soundand innovative approach, but it will need to go further in recognising rural-urban complementarities beyond agriculture. Food-security targets need to bebalanced with wider rural development objectives in order to bridge rural-urban divides. This can be achieved through a more decided focus oninvestments in rural areas rather than on redistributive measures. Priorityaction is needed to i) optimise land use and strengthen land related rights;ii) improve rural service delivery in key fields such as education, health care aswell as business and financial services; iii) develop a more decided strategytowards rural economic diversification by tapping into the potential offered bythe rich natural and cultural amenities of rural China; and iv) address seriousenvironmental challenges with a specific view to local-level implementationof national laws in rural areas. Realising the potential of rural China through amore comprehensive, co-ordinated and better funded rural developmentpolicy will require important governance reforms. First, stronger, more formalco-ordination at the central level is needed to overcome sectoralfragmentation as well as “rural proofing” mechanisms of sectoral policies.Second, an improved inter-governmental fiscal system is required to matchresponsibilities with resources at all levels. Third, a set of local governancereforms should be introduced to allow for greater consultation andparticipation as well as increased capacity of rural actors. Experience acrossOECD countries, as well as many success cases and policy experiments inChina, show that if these conditions are met, the Chinese countryside can beincreasingly turned into a source of balanced national development andgrowth.



While the macroeconomic context in China and globally changed quitesubstantially since this report was drafted, its recommendations arebecoming even more pertinent. For example, stimulating provision of publicservices in rural China would increase the rural population's purchasingcapacity, thus enhancing domestic demand and at least partly substituting fora weaker demand for Chinese exports on international markets. Moreover, thereturn flow of rural migrant workers makes it imperative to pursue new ruralemployment opportunities.


ISBN 978-92-64-05956-6


© OECD 2009

Chapter 1

Profile of Rural China

49

1. PROFILE OF RURAL CHINA

1.1. Key points

● Despite rapid urbanisation, China is still a predominantly rural country. Itsrural population is the second largest in the world at 737 million in 2006,accounting for 56% of the national total. The rural population is unevenlydistributed across the territory with the highest density exceeding300 persons per km2 in several coastal and central provinces and the lowestat below 10 persons per km2 in western provinces.

● Both pull and push factors contributed to growing migration flows mostly fromrural to urban areas. The accumulated number of rural migrants reached132 million in 2006, contributing to the fall in the total rural population sincethe mid-1990s. While migration has multiple demographic, social andeconomic impacts on rural areas, it contributes to the economic developmentof rural areas and to the diversification of income sources. In particular,remittances from migrants help alleviate rural poverty, increase the self-financing ability of rural households and enhance consumption.

● China has made remarkable progress during the reform period in raisingaverage rural incomes and in combating rural poverty. Real incomes percapita in rural households increased almost five-fold between 1980 and2007, representing an impressive rate of about 6% per year. According to theWorld Bank definition, the absolute poverty incidence in China fell from53% in 1981 to 9.9% in 2004. As urban incomes increased at even higherrates, the ratio of nominal urban to rural income per person climbed to arecord level of 3.3 in 2007. Moreover, the levels of rural income per capita arehighly disparate across provinces as the availability of non-agricultural jobsin rural areas and agricultural labour productivity differ strongly. Ruralareas dependent on agriculture are most vulnerable and are likely to beaffected by the highest poverty rates.

● Despite recent improvements, there are strong territorial differences in termsof access to and quality of public services such as education, health caresystem, transport infrastructure, safe water supplies and sanitation. Ruralfinance infrastructure remains underdeveloped which slows economicdiversification of rural areas. Consolidated data on rural savings and loansindicate a net transfer of financial resources from rural to urban areas. Accessto credit is particularly difficult for small-scale farmers. This is partly due tothe fact that farmers are not allowed to secure mortgages on their land andto the high transaction costs involved in obtaining formal credit.



● During the 30-year period of economic reforms, the rural economy has gonethrough an important transformation with the shares of agriculture in ruralemployment and in rural GDP falling. However, agriculture remains the keyactivity for a dominant part of the rural population, in particular in severalwestern and northern provinces where the share of agriculture in ruralemployment still exceeds 70%. Despite impressive growth of agriculturalproduction and ongoing restructuring, agricultural labour productivityremains very low at around 30% of the national average. In western, northernand central provinces, this gap is even larger. This is due to the dominantsmall scale farming, high labour to land ratios, distant urban markets, thusweak demand for higher value products, low level of technology and limitedaccess to non-agricultural employment opportunities.

● Diversification of the rural economy, particularly in coastal provinces, isdriven by the rapid development of rural enterprises. According to officialdata, their number expanded from 1.5 million in 1978 to 23 million in 2006,creating 119 million new jobs in this period. Further rural economicdiversification may originate from still unexploited potential of China’snatural, cultural and renewable energy resources. Rural China is rich inbiodiversity and in cultural heritage. Inland area under protection in Chinais almost the same as the OECD average. Its forest area is increasing incontrast to the global trend of deforestation. However, this potential isthreatened by rapid economic growth that has put considerable pressure onthe environment. In particular water scarcity, water pollution, soil erosionand desertification create serious problems in various parts of rural China.

● The profile of rural China reveals a high degree of spatial heterogeneity.Province-level data allow distinguishing at least five “rural Chinas”: therural poor, the rural with strong outmigration, the rural dependent on grainproduction, the rural diversified and the rural peri-urban. This province-level heterogeneity is further exacerbated by the diversity within provinces.This calls for a flexible policy, tailored to the opportunities and needs ofdifferent localities.

1.2. Population and migration

Rural China is home to over 700 million people, nearly twice the size of rural population across all OECD countries.

According to the census-based definition,1 China’s rural population was737 million in 2006, accounting for 56% of the national total (on measuring“rural” in China, see Annex 1.A2). China is thus still a predominantly ruralcountry with the second largest rural population in the world (see Figure 1.1),after India. The rural population is unevenly distributed across the territory:half of it is concentrated in eight provinces.2 In contrast, the three largest



provinces in terms of area, namely Xinjiang, Tibet and Inner Mongolia,represent more than 40% of the national territory, but their rural populationaccounts for less than 4% of the total. According to OECD definitions (seeAnnex 1.A2, Table 1.A2.1), rural population density is highest in coastalShandong, Tianjin, Jiangsu and in centrally located Anhui and Henan where itexceeds or is close to 300 persons per km2 and lowest in Tibet, Qinghai andXinjiang, all located in the west, where it is below 10 persons per km2. Lowdensity in the largest provinces results in a relatively low average density ofrural population in China at around 75 persons per km2 (see Figure 1.2).

Outmigration flows have increased substantially…

Until mid-2008, China’s economic expansion, massive job creation in thecities and low unemployment rates in urban areas provided strong pull factorsattracting rural migrants into cities and coastal provinces. Push factors

included very low per capita cultivated land availability, scarce non-agricultural job opportunities (in particular in central and western provinces),environmental degradation and natural disasters affecting every year aroundone-fourth of the country’s sown area (Ministry of Agriculture, 2007). As aresult, the number of rural migrant workers increased substantially,contributing to the fall of rural population from a maximum of 859 million inthe mid-1990s to the current 737 million. In line with the most commonlyused definition (see Annex 1.A1, Box 1.A1.1), it may be assumed that thenumber of rural migrants increased from around 2 million in 1983 to78.5 million in 2000 and then to 132.1 million in 2006 (see Figure 1.3). While

Figure 1.1. Countries with the largest rural population in the world, 2006

Source: World Bank, World Development Indicators, 2008.

0

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900

0 10 20 30 40 50 60 70 80

Rural population share in total population, %

Rural population, million

GermanyMexico Russia

Japan

Philippines

Indonesia

China India

Nigeria EgyptPakistan

Bangladesh

Vietnam

Afghanistan

Thailand

Myanmar

SudanTurkey

IranBrazil

United States



000

ruraltions

400

Figure 1.2. Rural population in China across provinces A. Share of China’s rural population, %, 2006 B. Density of rural population, persons/km2, 2

Note: In panel A, China’s rural population is defined in line with the Chinese census-based definition; in panel B, population in each province is divided by rural area in each province, both defined according to the OECD defini(see Annex 1.A2, Box 1.A2.2). Panel B is based on the 2000 population census data. Source: NBSC, China Statistical Yearbook, 2007; OECD database, 2008.

0 1 2 3 4 5 6 7 8 9

TibetShanghai

BeijingTianjin

QinghaiNingxiaHainan

Inner MongoliaXinjiang

JilinChongqing

LiaoningHeilongjiang

GansuFujian

ShanxiZhejiangShaanxiJiangxi

GuizhouGuangxiYunnan

HubeiGuangdong

JiangsuAnhui

HunanHebei

ShandongSichuan

Henan

0 50 100 150 200 250 300 350

TibetQinghaiXinjiang

Inner MongoliaHeilongjiang

GansuChina

NingxiaSichuanYunnan

JilinShaanxiShanxiFujian

LiaoningHebei

GuangxiGuizhou

HainanGuangdong

JiangxiHubei

ZhejiangBeijingHunan

ChongqingHenanAnhui

JiangsuTianjin

Shandong

Figure 1.3. Total number of rural migrants, 2000-06

Note: Including rural to urban and rural to rural migrants.

Source: NBSC, China Rural Household Survey Yearbook 2007.

50

60

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80

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130

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2000 2001 2002 2003 2004 2005 2006

Million



around 70% of rural migrants moved to or within eastern regions, theremaining 30% moved within or to central and western provinces. Similarly,while 71% of rural migrants moved to urban areas, and in particular toprefecture-level cities (possibly because of their relative proximity and a lessstringent application of the hukou system compared to the province capitalcities, see Annex 1.A1, Table 1.A1.1), still a large share (29%) moved withinrural areas. The top sending province (Sichuan) is not surprisingly located inthe west, but other key sending provinces3 are located in the centre and in theeast. Migrants from Sichuan and central provinces moved to the east, whereasthe dominant part of migrants from the east (Guangdong, Jiangsu, Zhejiang)moved within their province of origin or to other eastern provinces. All majorrecipient provinces are located along the coast (see Figure 1.4).

… distorting the demographic composition of rural areas, but also having positive impacts on rural income, consumption and investments

The population of rural migrants is dominated by a young, relatively welleducated working age population (see Annex 1.A1, Figures 1.A1.1 and 1.A1.1).Their average age is 28 years and those who are 30 and below accounted for53% of the total in 2006 (see Annex 1.A1, Table 1.A1.2). According to a 2005survey, 56% of rural to urban migrants had a middle school educationcompared to the 45% share for rural local residents and their average years ofschooling was 1.5 years longer (see Annex 1.A1, Table 1.A1.3). While the levelof education of migrants improves and is even higher than the Chinese

Figure 1.4. Provincial distribution of rural migrants by source and destination, 2005

Source: NBSC, 2005 One Per cent Population Sample Survey Data, 2007.

Major

Source Destination

MinorIntermediate



average, it is still lower than for urban local residents. Migration has animportant impact on age pyramids for rural and urban populations. Thegrowing outflow of young workers makes the rural age pyramid much thinnerfor those between 20 and 34 years. In turn, their inflow to urban areascompensates to a large extent for the impact of a stricter one-child policy onthe demographic structure of urban population (see Figure 1.5). Agingconcerns both rural and urban areas, but tends to be faster in rural areas: it isfound that 70% of the elderly live in the countryside (Xiang, 2005). This isparticularly challenging for major sending provinces such as Anhui, Hunan

Figure 1.5. Age distribution of China’s urban and rural population, 2005

Source: NBSC, 2005 One Per cent Population Sample Survey Data, China Statistics Press, 2007.

6 4 2 0 2 4 6

Under 55-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-94

Rural femaleRural male

6 4 2 0 2 4 6

Under 55-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-94

Urban femaleUrban male



and Sichuan. As migrants are discouraged from bringing their families to thecities (despite gradual steps to reform the hukou [household registration]system, see Annex 1.A1,Box 1.A1.2), a disproportionate percentage of childrenremain in rural areas. There might be about 20 million of so called left-behindchildren (Ye et al., 2005). As a result of these trends, the dependency ratio hasincreased from 40.4% in 1982 to 43.2% in 2006 for rural areas. In contrast, dueto a large inflow of migrants and a falling fertility rate, it declined from 45.4%to 32.3% for urban areas over the same period. The outmigration dominated bymale workers has also contributed to the feminisation of the rural population,in particular for those between 20 and 34 years (see Figure 1.5). Migration hasalso positive impacts on rural areas. Remittances from migrants help alleviaterural poverty, increase the self-financing ability of rural households andincrease consumption (de Brauw and Rozelle, 2005). Household surveys findthat the additional income earned through migration raises householdincome per capita by between 8.5 and 13.1% (Du et al., 2005). In some provinceswith high rates of outmigration, remittances accounted for 30-40% ofhousehold income in 2001 (Wang Y.P., 2004). Productive investments bymigrant households tend to be higher than by rural households withoutmigrating members. Migrant households have more durable goods, largerhouses and more productive machines than purely agricultural households(Zhao, 2002). As outmigration reduces the number of agricultural surpluslabour, it may contribute to improved agricultural labour productivity in thelong term, despite difficulties to meet seasonal labour demand due toimperfect rural labour markets (Rozelle et. al., 1999). Taking into accountlimited amount of agricultural land, the prospects for substantial gains inagricultural labour productivity and higher incomes per person fromagriculture reside in the outflow of labour from agriculture into othereconomic sectors, including through outmigration (OECD, 2005b).

1.3. Socioeconomic trends

Average rural income increased constantly and rural poverty rates fell dramatically during the last three decades…

During the last 30 years, China made remarkable progress in raisingaverage rural incomes and in combating rural poverty. A large part of China’ssuccess in raising rural incomes originates from a series of agriculturalreforms in the late 1970s and early 1980s, including the gradual dismantling ofthe collective farming system, replacing it with use rights to collectivelyowned land allocated to individual farmer households for private farming.Since then other reforms, such as the development of rural enterprises, arelaxation of the hukou system (see Annex 1.A1, Box 1.A1.2), rural tax reformsand the gradual opening to global competition, as well as continuing land



reforms designed to enhance tenure security for farmers’ land rights, havecontributed to a stronger differentiation of economic activities in rural areasand to a continued increase in rural incomes. As a result, real incomes percapita in rural households increased almost five-fold between 1980 and 2007,representing an impressive annual rate of about 6% (see Figure 1.6).

The overall increase of rural incomes led to a dramatic fall in rural poverty,both in absolute and relative terms. This trend is clear, no matter whichdefinition is adopted, be it the Chinese (see Figure 1.7) or the World Bank one.

According to the World Bank definition (income USD 1 per person per day atPPP), the number of people living in poverty in China fell from around 530 million(both in rural and urban areas) in 1981 to 129 million in 2004 and povertyincidence from 53% to 9.9% respectively. Using China’s definition of poverty(CNY 300 per person per year at 1990 prices; equivalent of USD 0.6-0.7 per capitaper day at PPP), the number of people below the poverty line in rural areasdeclined from 250 million in 1978 to 21 million in 2006 and the poverty incidencefell from 31% to 2% respectively. The vast majority of those below the povertyline live in rural areas as indicated by a poverty incidence at 12.5% for rural Chinacompared to 0.5% for urban China in 2001 (Ravallion and Chen, 2007). Moreover,despite the progress made so far, still a large part of Chinese population lives justabove the absolute poverty line as shown by the share at 34.9% of those wholived below USD 2 per person per day in 2004 (World Bank, 2008).

Figure 1.6. Rural household net income per person, 1981-2007

Source: NBSC, China Statistical Yearbook, various editions.

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

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Real income growth rates (right scale) Index of real income 1980 = 1 (left scale)

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8119

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9119

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… but disparities widened vis-à-vis urban areas, as well as across different rural regions.

The urban to rural income gap is large and has been increasing. The ratioof nominal urban to rural income per person fell from 2.6 in 1978 to 1.8 in1985, mostly due to a rapid increase in agricultural production. However, sincethen the downward trend has reversed, with the urban-rural income disparityclimbing to a record level of 3.3 in 2007 (see Figure 1.8).

The recent increase in the gap occurred despite a sharp increase in pricesof agricultural commodities and despite various policy measures adopted bythe government to increase rural incomes such as the elimination ofagricultural taxes, increased input subsidies for agricultural production,increased direct payments for farmers and accelerated budgetary expenditurefor rural development. The nominal income gap becomes somewhat smaller ifit is adjusted for lower living costs in rural areas, but still remains large andtends to increase over time (Sicular et al., 2007). In turn, the gap becomes evenlarger, if one takes into account implicit and explicit welfare benefits as wellas subsidies enjoyed by urban residents (Li and Luo, 2007). The levels of ruralper capita income are highly disparate within China (see Figure 1.9),4 asavailability of non-agricultural jobs in rural areas and agricultural labourproductivity differ strongly across provinces. Success in eradicating absolutepoverty in rural China varied as demonstrated by poverty rates differingstrongly across provinces and ranging from below 0.5% in almost all coastalprovinces to above 5% in western provinces in 2005 (above 11% in the western

Figure 1.7. Poverty incidence in rural China, official definition, 1978-2006

Source: NBSC, China Statistics Abstract 2007.

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Rural poor (million), left scale Poverty incidence (%), right scale



province of Qinghai) (see Annex 1.A1, Figure 1.A1.3). Rural areas dependent onagriculture are most vulnerable5 and are likely to evidence the highest povertyrates (see Figure 1.10). This suggests that while traditional agriculture was

Figure 1.8. Urban to rural per capita income and living expenditure ratios, 1978-2007


0.0

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Urban to rural net income ratio Urban to rural living expenditures ratio

Figure 1.9. Per capita annual net income of rural households by province, CNY, 2006

Source: NBSC, China Statistical Yearbook 2007.

0

1 000

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Guizho

uGan

su

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n

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iTib

et

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g

Ningxia

Guang

xi

Chong

qingAnh

ui

Sichua

nSha

nxi

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Henan

Inner

Mongo

liaHun

anHub

ei

Jiang

xi

Heilong

jiang

Nation

al ave

rage

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ei

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ing

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ong

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Guang

dong

Jiang

suTia

njin

Zhejia

ngBeiji

ng

Shang

hai



effective in combating absolute poverty in the early stages of reforms, incomediversification is now a key factor in eradicating the remaining niches ofabsolute poverty in China (see Annex 1.A1, Figure 1.A1.4).

1.4. Service delivery: access and quality

Despite recent improvements, large territorial divides still exist in terms of access to and quality of services in the field of education and health care…

While China is among the countries with almost an 100% share of childrencompleting primary education (World Bank, 2008), there are still strong differencesin access to education between rural and urban population and across provinces.An average schooling period for the rural population over 15 years is 7 years,compared to 10 years for the urban population. The illiteracy rate in rural areas ismore than three times higher than in cities, affecting respectively 11.5% and 3.6%of the population aged 6 or over. Similarly, the percentage of the rural populationhaving completed only primary education is more than twice as high as in cities.In contrast, education at the college and higher level is 18 times more frequent incities than in rural areas (see Table 1.1). To address these rural-urban differences,the implementation of free nine-year compulsory education in rural areas is animportant measure. There are also strong differences in the level of education ofthe rural population across provinces. The level of education in relatively richcoastal provinces is significantly higher than in central and, in particular, western

Figure 1.10. Rural poverty incidence and the share of agriculture in rural employment, 2005

Source: NBSC, China Statistical Yearbook 2006; CDRF 2007.

Beijing

y = 1E-17x9,465

R2 = 0.6953

0

2

4

6

8

10

12Rural poverty incidence, %

Qinghai

Guizhou

Gansu

Shaanxi

Jiangxi

Shanghai

GuangxiNingxia

Hubei

CHINAAnhui

ChongqingHebei Sichuan

Tibet

Xinjiang

Heilongjiang

HainaHenan

Hunan ShandongJilin

Inner Mongolia

Yunnan

0 10 20 30 40 50 60 70 80 90Share of agriculture in rural employment, %

ZhejiangJiangsu

Tianjin Guangdong

LiaoningShanxi

Fujian



provinces. In such provinces as Tibet, Qinghai, Gansu, Ningxia, Guizhou andYunnan, the illiteracy rate is still close to or even above 20%. In these provinces,but also in Sichuan and Chongqing, the share of illiterate population and thosehaving only primary education exceeds 60% and in Tibet, it is close to 90%. In somewestern provinces, such as Xinjiang or Shaanxi, and central provinces such asShanxi, Henan and Hubei, the level of education is close to or even above average(see Figure 1.11). The provision of health care services in rural China is alsochallenging. It is estimated that per capita health care expenditure (public andprivate) in urban areas were four times higher than in rural areas in 2004 (Li, 2007).While permanent urban population (with the exception of migrants) is covered by

Table 1.1. Educational attainment in cities and rural areas, %, 2006

Note: Per cent of population aged 6 or more. Figures in the table do not cover towns. The educationalattainment of town inhabitants (about 10% of China’s population) generally falls between the figuresshown for cities and rural areas. Source: NBSC, China Population and Employment Statistics Yearbook 2007.

China City Rural areas

Illiterate 8.8 3.6 11.5Primary 33.1 18.2 40.6Junior secondary 39.0 35.3 39.8Senior secondary 12.9 24.5 7.1College and higher 6.2 18.4 1.0

Total 100.0 100.0 100.0

Figure 1.11. Level of education of rural population across provinces, %, 2006

Source: NBSC, China Population and Employment Statistics Yearbook 2007.

0

10

20

30

40

50

60

70

80

90

100

BeijingSha

nxi

Henan

Shang

hai

Tianji

nHeb

ei

Liaon

ing

Hainan

Shand

ong

Heilon

gjian

gJil

in

Shaan

xi

Hunan

Xinjian

g

Guang

dong

Guang

xi

Inner

Mongo

liaHub

ei

Jiang

suChin

aAnh

ui

Zheji

angFu

jian

Jiang

xi

Ningxia

Chong

qingGan

su

Sichua

n

Guizho

u

Yunn

an

Qingha

iTib

et

Illiterate Primary Junior middle school

Senior middle school College and high level



medical insurance, the vast majority of the rural population is not, as a result ofthe collapse of the rural co-operative health care system existing in China until theend of the 1970s and funded by collective farming revenue. Thus medicaltreatment often involves high costs for rural families, serious debts or awithdrawal from the treatment. As a result, all health-related indicators showsignificant rural-urban disparities. For example, rural child and maternalmortality rates are twice as high in rural areas as in urban areas. Life expectancyincreased in rural China to 69.6 years, but less than in urban areas leading to agrowing difference from 3.5 years in 1990 to 5.7 years in 2000 (UNDP, 2005).

… transport infrastructure and basic services…

Despite the difficulties related to its settlement structure and geography,China has also made significant progress in providing rural areas with basicinfrastructure. According to available data, 96% of so called administrativevillages6 and 83% of natural villages7 had access to the public road system bythe end of 2006. Similarly, almost all villages, both administrative and natural,have access to electricity and to a phone network. Above 80% of townships hadcompleted upgrading of their electricity network by the end of 2006. However, inabsolute terms as many as 20 million people in rural areas still do not haveaccess to electricity. On average above 80% of townships have a post office, butthis percentage is smaller in western provinces at 71% (see Table 1.2). While thetotal length or density of roads is a useful indicator of the road infrastructureavailability in a country, it is equally important to account for quality of the roadsystem. In this respect, there is still a lot to be done. While in eastern provincesroads linking townships and administrative villages are mostly cemented orbituminised, in western provinces they are still mostly made of broken rocksand sand or without any hardened surface. Roads linking natural villages areusually of even poorer quality in all provinces, but still 60% of such roads ineastern provinces are made of cement or bituminised compared to just 15% inwestern provinces (see Table 1.2). As to basic services, a major challenge for thegovernment is to provide drinking water to the rural population. It is reportedthat by the end of 2005, about 312 million rural people did not have access tosafe water supply and many lack access to piped water, particularly low-incomehouseholds. Even where piped water is supplied, drinking water standards areoften violated due to inadequate treatment. Concerning non-piped water,monitoring data show large violations of guidelines for non-piped drinkingwater, mostly due to land-based contamination.8 As much as 70% of the ruralpopulation lacks access to safe sanitation, many of them in western provinces.The use of untreated human waste on crops and its recycling as animalfeedstock represent significant disease vectors. Modern municipal wasteservices which include a separate collection, use of landfill gas and incinerationwith energy recovery are often lacking in rural China.



... as well as access to credit and other financial services

Economic diversification of rural areas is further slowed by theunderdevelopment of rural finance infrastructure. Despite various reformattempts and massive liquidity flooding wider economy, the rural financialsector in China continues to lag behind and remains structurally weak,hampering rural development and diversification. Consolidated data on ruralsavings and loans indicate a net transfer of financial resources from rural tourban areas. While it is difficult to determine the extent to which this reflectsthe response of rational investors moving funds from low to high profit sectorsor results from institutional deficiencies in the financial and fiscal systems, itis apparent that both agriculture and rural enterprises face important creditconstraints (OECD, 2004). These constraints are demonstrated by asignificantly lower share of agriculture and rural enterprises in total lendingcompared to their contribution to China’s GDP (see Table 1.3). Access to creditis particularly difficult for small-scale farmers. This is partly due to the fact

Table 1.2. Share of villages with access to basic infrastructure, %, 2006

Note: East region includes here: Beijing, Tianjin, Hebei, Shandong, Jiangsu, Zhejiang, Shanghai,Guangdong, Fujian, and Hainan (10 provinces); Central: Shanxi, Anhui, Henan, Hubei, Hunan and Jiangxi(6 provinces); West: Inner Mongolia, Guangxi, Shaanxi, Gansu, Ningxia, Qinghai, Xinjiang, Chongqing,Sichuan, Guizhou, Yunnan and Tibet (12 provinces); Northeast: Liaoning, Heilongjiang and Jilin(3 provinces).

Source: NBSC, Second National Agricultural Census: Communiqué No. 3, Feb. 25, 2008.

China East Central West Northeast

Administrative villages having access to roads 95.5 98.2 96.1 91.2 98.1

Natural villages having access to roads 82.6 89.9 81.1 78.0 92.7Classified by road surface from townships to administrative villages

Cement 35.2 51.8 37.1 14.1 25.1Bituminous macadam 26.3 32.8 26.7 16.4 34.9Sand and rocks 25.7 10.8 26.3 42.7 32.7Bricks 1.1 1.2 1.1 0.6 2.4Other 11.7 3.4 8.8 26.2 4.9

Classified by road surface within administrative villagesCement 27.7 44.0 26.4 10.6 15.6Bituminous macadam 11.1 16.5 11.0 4.3 13.0Sand and rocks 35.7 24.1 38.9 43.5 57.0Bricks 2.7 3.9 2.7 1.1 2.6Other 22.8 11.5 21.0 40.5 11.8

Road lightening within villages 21.8 44.5 13.0 4.0 10.9Townships with upgraded electricity network 81.9 96.8 87.7 67.2 97.6Townships with post office 81.1 86.2 89.2 71.6 90.7Administrative villages with electricity 98.7 99.8 99.8 96.0 99.9Administrative villages with phone 97.6 99.6 98.6 93.8 99.6Natural villages with electricity 98.3 99.6 99.4 96.1 99.9

Natural villages with phone 93.7 97.0 95.2 89.6 98.9



that farmers cannot secure mortgages on their land (see below section on landuse policy) and the high transaction costs involved in obtaining formal credit,but also to the closing of many local branches of financial institutions and thefailure of new ones to emerge (OECD, 2004).

1.5. Economic structure and performance

The economic profile of rural China is evolving: the primary sector remains key, but its importance tends to decline in terms of employment and share of rural income…

During the reform process the rural economy has gone through animportant transformation with the shares of agriculture in rural employment andin rural GDP falling and a consequent increase in importance of non-agriculturalactivities such as industry, construction, transport and communication as well ascommerce. The share of agriculture (together with forestry and fishing) in ruralemployment declined from 82% in 1985 to 60% in 2005 (see Figure 1.12). Despitethis trend, agriculture remains the key activity for a dominant part of the Chineserural population. In several western and northern provinces, such as Xinjiang,Yunnan, Tibet, Inner Mongolia, Heilongjiang, Jilin, but also in Hainan, agriculturalemployment is above 70% (see Annex 1.A1, Figures 1.A1.5 and 1.A1.6). Reflectingthe current structure and ongoing changes in China’s rural economy, agricultureremains the main source of incomes for rural families, but its share in totalincome fell from 66% in the mid-1980s to 42% in 2006. On the contrary, the shareof wages from industry and from migrants’ remittances more than doubled from18% in 1985 to 38% in 2006 (see Annex 1.A1, Figure 1.A1.7). The importance ofagriculture in rural households’ incomes as well as the speed of its fall over timevaries across provinces. While in central and western provinces agriculture still

Table 1.3. Credit constraints for agriculture and rural enterprises

Source: China Township and Village Enterprise Statistical Yearbook; China Statistical Yearbook; China AgriculturalDevelopment Report; various editions.

Rural enterprises: share of GDP

%

Agriculture: share of GDP

%

Rural enterprises: share of total lending

%

Agriculture: share of total lending

%

1997 26.3 18.3 6.7 4.4

1998 26.3 18.0 6.4 5.1

1999 27.7 17.6 6.6 5.1

2000 27.4 16.4 6.1 4.9

2001 26.8 15.8 5.7 5.1

2002 26.9 15.3 5.2 5.2

2003 27.0 14.6 4.8 5.3

2004 26.2 15.2 4.5 5.5

2005 27.5 12.5 4.1 5.9



provides 40-70% of rural net incomes, in the coastal provinces the share rangesfrom 25-45%. While the share in the coastal Guangdong more than halved from54% in 1990 to 25% in 2006, in central Henan it remained high, but fell from 72%to 54% over the same time. Figure 1.13 shows the importance of non-agriculturalincomes for the level of rural net incomes. Indeed, the higher the share ofincomes originating from wages and salaries, the higher the level of net incomesper person in rural households.

… and, despite high rates of growth and significant restructuring, agricultural labour productivity remains low.

Agriculture itself has gone through an important restructuring processcombined with phenomenal rates of growth since the reform period. Between1990 and 2006, China’s Gross Agricultural Output (GAO) increased in real terms by162%. During this period crop production increased by 98% and livestockproduction by 278%, reflecting changes in consumers’ demand. The restructuringprocess slowed in recent years, in particular after 2003, probably due to muchstronger government intervention to stimulate grain production as applied since2004. A high level of self-sufficiency in grain production is one of the keyobjectives of China’s agricultural policy. This results in the application of a

Figure 1.12. Evolution of sectoral composition of rural employment in China, 1985-2005


0

20

40

60

80

100

%

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

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2003

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2005

Commerce

ConstructionIndustry

Other non-agricultural

Agriculture Transport and communication



number of policy measures such as direct payments for grain producers,minimum purchase prices for grains, input subsidies targeting grain producersand state trading for grains. These measures distort market signals and slow themarket-driven shift towards higher-value and labour-intensive products such asfruits, vegetables and livestock in which China has a comparative advantage(OECD, 2005b). The recent increase in prices of agricultural commodities on globalmarkets has reinforced this policy drive which may further hamper thediversification of agricultural production in China. The shares of agriculture intotal employment at 43% and at just 13% in national GDP in 2006 indicate thatlabour productivity in Chinese agriculture is low, at around 30% of the nationalaverage. While below average labour productivity in agriculture is quite commonin OECD countries, with the exception of New Zealand, in China the gap isparticularly large and it is further aggravated by the fact that this low productivitysector still absorbs more than 40% of national occupied population. In manywestern, northern and central provinces, agriculture absorbs even more than 50%of labour, and agricultural labour productivity is between 25% and 50% of theprovince average, much lower than the national average (see Figure 1.14).

Diversification of rural China’s economy is driven by the rapid development of rural enterprises…

The rapid growth of rural enterprises (including both restructuredtownship and village enterprises [TVEs] and newly established private

Figure 1.13. Share of wages in rural net income and level of rural net income per person across provinces, 2006


y = 91.267x + 509.61R2 = 0.5334

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

0 10 20 30 40 50 60 70 80Share of income from wages and salaries, %

Annual net income per person

Xinjiang

HeilongjiangJilin

Hainan

Inner Mongolia

Yunnan

Tibet

Gansu GuizhouShaanxiGuangxiQinghai

Ningxia

SichuanAnhui

ChongqingShanxi

Hunan

JiangxiHebei

CHINA

HenanHubei

Liaoning

Shandong

Fujian

Guangdong

JiangsuTianjin

Zhejiang

Beijing

Shanghai



enterprises in rural areas) has supported a structural transformation ofChina’s rural economy. According to official data, their number expanded 15-fold, from 1.5 million in 1978 to 23 million in 2006, creating 119 million newjobs in the period (see Annex 1.A1, Table 1.A1.4). Figure 1.15 demonstrates theextraordinarily strong performance of rural enterprises at the beginning of the1990s, a significant slow-down in the second half of the 1990s and a steadyimprovement in the first half of the 2000s with the annual growth rates ofvalue added, exports and profits approaching 20%. Industry is the mostimportant rural enterprise activity accounting for 58% of total employmentand for 76% of total output value in 2006. But rural enterprises also comprisetertiary sector activities, including (in order of employment number)commerce, construction, transportation, housing and catering as well associal services. Non-industrial rural enterprises accounted for 42% ofemployment and for 22% of output value in 2006 (see Annex 1.A1,Figures 1.A1.8 and 1.A1.9). Rural enterprises are strongly involved in theexport sector. Between 1990 and 2006, their exports grew by 20% annually (inreal terms) and by 2006, 40% of China’s total exports had been produced bythem. Light industry, textiles and clothing accounted for almost half of ruralindustries’ exports, followed by machinery, handicrafts and food products.This structure confirms that rural industries’ exports concentrate on labour-intensive industries in which China continues to have a strong relative cost

Figure 1.14. Agricultural labour productivity across Chinese provinces and in OECD countries, 2005

Source: NBSC, China Statistical Yearbook 2006; World Bank, World Development Indicators, 2008.

0

10

20

30

40

0 10 20 30 40 50 60 70Share of agriculture in employment

Share of agriculture in GDP

BeijingShanghai

Korea

New Zealand

Tianjin

PolandZhejiang

JiangsuGuangdon

Turkey

Shanxi

Shandon QinghaShaanxiNingxia

HeilongjiangCHINAFujian

LiaoningHebeiChongqing

HubeiAnhui

Guizhou

YunnanXinjiangHunanSichuan

Jiangxi

Guangxi

Tibet

Gansu

Hainan



advantage. Ownership restructuring of rural industries has almost beencompleted: in the second half of the 1990s and at the beginning of the 2000s,rural enterprises went through a profound restructuring process. The vastmajority of large- and medium-sized collective rural enterprises wastransformed into share-holding or limited responsibility companies with themajority of shares owned by managers and employees.

… particularly in coastal provinces

Rural enterprises in the coastal provinces have always been privileged,with relatively easy access to both export markets and to large domesticmarkets in the densely populated and relatively rich eastern provinces (OECD,2002). Therefore, the concentration of rural enterprises on the coast is strongin terms of employment, value of production, value added, profits, assets andin particular exports (see Annex 1.A1, Table 1.A1.6). While the number of ruralenterprises in central provinces is even larger than on the coast, the coastalones are larger both in terms of number of persons employed and value addedper enterprise than in other parts of China. For example, coastal enterprises,on average, employ 8 persons and create around USD 50 000 of value addedper enterprise compared to 4 persons and around USD 10 000 per enterprise inwestern provinces. Export orientation of eastern enterprises is demonstratedby their 94% share in total rural enterprises’ exports and by a relatively highratio of exports to output value at 13% compared to around 2% in central and

Figure 1.15. Rural enterprises: real yearly growth rates of value added, exports and profits, 1987-2006

Source: China Township and Village Enterprise Statistical Yearbook, various editions.

0

10

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30

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70

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100

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

%

Profit growth rates, % Value added growth rates, % Export growth rates, %



western provinces. Not surprisingly, the importance of rural enterprises inrural employment is high in coastal provinces at 37% compared to 30% incentral and just 12% in western provinces. Among the top ten provinces byrural enterprises’ output value, eight are located in the coastal region (seeAnnex 1.A1, Table 1.A1.7). The first three provinces, namely Jiangsu,Shandong, Zhejiang (all coastal), contribute almost half and all ten 78% of thetotal output. During the period of 1990-2006, rural enterprises in almost allprovinces (with the exception of Beijing) enjoyed annual real growth rates ofoutput value at above 10%. A positive phenomenon is that in several westernand central provinces9 the rates were higher than the national average of15.5%. In terms of job creation, again coastal provinces take the lead but largenumbers of jobs were also created in several central and western provinces(see Annex 1.A1, Table 1.A1.7).

1.6. Unexploited potential and environmental threats

The unexploited potential for further rural economic diversification is enormous, especially in terms of natural, cultural and energy resources…

China is one of the most environmentally diverse countries in the worldand ranks first in the northern hemisphere in terms of biodiversity. RuralChina has about 10% of the world’s plants, mammals, birds, reptiles andamphibians (World Bank, 2000).10 While the world’s forest area continues toshrink, China’s forest area is increasing and now ranks fifth in the world. Itcovers 175 million hectares or around 18% of China’s land area,11 compared to14% at the end of the 1980s (NBSC, 2007c and Li, 2005) (see Annex 1.A1,Figure 1.A1.10). Chinese forests, including 12 million hectares of primaryforest, are rich in biodiversity (2 500 native tree species). Also, China has aparticularly rich cultural heritage to be discovered in rural areas, includingtangible and intangible monuments, memorials and achievements as well ashandicrafts, ethnic festivals, regional musical, dramatic and storytelling artforms (China Heritage Project, 2005 and 2006). Renewable energy resources areabundant, but still significantly under-utilised. In 2006, China’s energy use wasalready the second highest in the world, having nearly doubled in the lastdecade. While the energy mix is dominated by coal and oil, China is animportant user of combustible renewables and waste, which accounted for13% of the total in 2005, significantly more than for countries grouped in theInternational Energy Agency (see Annex 1.A1, Figure 1.A1.2). The governmenthas set targets to generate 10% of the total energy supply from renewableresources (including hydro) by 2010 and 15% by 2020 (NDRC, 2007). Apart fromlarge scale grid-connected installations, China is the world’s fastest growingwind energy market and has over 200 000 small-scale wind turbines providingelectricity to households in rural areas. Wind power is planned to grow from6 GW in 2007 to 50 GW in 2015 (GWEC, 2008). Other promising renewable



energy sources include solar, hydropower and biomass energy12 (Shu, 2007)which can contribute to environmental protection and to boosting social andeconomic development (NDRC, 2007).

… although serious environmental threats put this potential at risk

The rapid economic growth of China during the past three decades hasput considerable pressure on the environment with consequent damage tohealth and natural resources. Despite progress over the last years, waterscarcity and water pollution in rural areas are still serious. Per capita waterresources are only between one third and one fourth of the world average. Theannual shortage of water is estimated at 36 billion m3, of which agricultureaccounts for 30 billion m3 (OECD, 2005b). Water shortage is particularly severein the northern region (Songhua, Liao, Hai, Yellow and Huai river basins): with44% of China’s population and 65% of its cultivated land, the northern regionhas only 13% of water resources (OECD, 2007). Intensity of groundwater usefrequently goes beyond the threshold for freshwater ecosystems to remainhealthy. Water shortages are compounded by the increasing demand fromurban households, services, industries and poor efficiency of irrigation inagriculture (OECD, 2005b). The water resource crisis has become a majorconstraint to economic development and is estimated at between USD 14 and27 billion per year in lost economic activity (World Bank, 2007c). About a thirdof China’s waterways and about three quarters of China’s major lakes arehighly polluted by diffused agricultural pollution and untreated householdand industrial wastewater. The impact of irrigating with polluted water wasestimated to reach CNY 7 billion in 2003, considering the impact on yields andproduce quality, but not on human health (World Bank, 2007c). Waterpollution and poor sanitation means that water-borne and other diseases,such as schistosomiasis, are endemic in some areas (Chen et al., 2006). Landscarcity is acute and exacerbated by soil erosion. 58% of China’s land area isclassified as arid or semi-arid and only one-fifth of cultivated land is classifiedas high quality. In per capita terms, China’s cultivated land area is only one-third of the world average. More than 12% of this land has been lost in the lastdecade due to industrialisation and urbanisation (Warburton and Horn, 2007).Intensive cultivation has reduced soil fertility and organic content andpolluted soils and water. Soil erosion is a common problem, affecting356 million hectares in 2003, particularly in mountainous and hilly areas. Mostsoil erosion is due to overgrazing, inappropriate land reclamation practicesand deforestation (World Bank, 2000). Like water, soils are also contaminatedby open discharge of household and industrial waste, especially in rural areaslacking waste collection and treatment services. Desertification is anotherproblem, especially in the north and northwest of China. Desert land areacovers 9% of the total area and has been expanding at a faster rate in recent



years (OECD, 2005b). Over the years, industrial pollution, particularly by ruralenterprises, has posed a burden on the rural environment, partly because ofthe relocation of urban production activities to rural areas.13 A recentreduction of industrial discharges to water results from the closure of manyinefficient and polluting industries in small towns and villages, particularlypaper mills.

1.7. Summary

In sum, the analysis of rural China reveals a high degree of spatial heterogeneity, calling for a flexible policy, tailored to the opportunities and needs of different places

The above analysis has demonstrated strong heterogeneity of ruralregions in China. Province-level data (Figures 1.16 to 1.19) allow distinguishingat least five “rural Chinas” (Figure 1.20). i) The rural poor: these are provinceswith above 80% of population living in low density, low income, isolated areas,strong reliance on agriculture but rich cultural and natural amenities. Therural poor provinces account for 28% of total rural population and for as muchas 68% of total rural area in China. ii) The rural with strong outmigration: these

Figure 1.16. Density of rural population and the degree of rurality

Notes: Both variables are calculated on the basis of the 2000 population census. The upper limit of theintermediate level at 150 persons per km2 reflects the standard OECD threshold above which area isconsidered as urban, with the exception of China, Korea and Japan (Box 1.A2.2). Here this threshold hasbeen used to differentiate between high and intermediate levels of population density in rural China.The lower limit is fixed at around one-third below the Chinese average density in rural areas.

Source: OECD Regional Database.

0

50

100

150

200

250

300

350

400

450Density of rural population, persons per square kilometer, 2000

Predominantly urban Intermediate Predominantly rural

0 10 20 30 40 50 60 70 80 90 100%

Percentage of population living in local units below 500 inhabitants per square kilometer

HIGH

INTERMEDIATE

LOW

Shandong

Tianjin

JiangsuHenan

Beijing

Anhui

Zhejiang

Guangdong

Hebei

Sichuan

CHINA

Fujian Liaoning

Shaanxi

Chongqing

HubeiHunan

JiangxiHainan

GuangxiGuizhouShanxi

Jilin

Heilongjiang

YunnanNingxia

GansuInner Mongolia

Qinghai XinjiangTibet



are provinces with high or intermediate density of rural population andintermediate income levels. The weak diversification of rural economycombined with high land-productive but low labour-productive agriculturecreates strong outmigration pressures reinforced by relative proximity ofcoastal provinces or cities. These provinces account for 44% of ruralpopulation and for 17% of rural territory in China. iii) The rural dependent ongrain production: while agriculture remains the main activity absorbing above60% of rural labour and economic diversification of rural areas is weak, themajor difference compared to the previous category is that land availabilityper capita and per farm is relatively high. Production is however under thethreat of low level of precipitations and strong dependence on governmentpolicies. These provinces account for 11% of rural population and for 9% ofrural area in China. iv) The rural diversified: rural provinces with high orintermediate density of rural population and high or intermediate level ofincome per capita, low incidence of absolute poverty, and low percentage ofarea under protection. The basic feature of these areas is relatively weakdependence on agriculture. The rural diversified provinces account for 15% ofrural population and for 5% of rural area in China. v) The rural peri-urban: theseare predominantly urban provinces/municipalities with a strong urban

Figure 1.17. Per capita annual net income of rural household and the degree of rurality

Notes: The upper limit of the intermediate level of income is above the Chinese average for rural areas and isequal to USD 3.6 per capita at PPP in 2006. The lower limit is equal to USD 2.1 per capita at PPP, just above oneof the internationally recognised poverty lines.

Source: NBSC, China Statistical Yearbook 2007 and OECD Regional Database.

0

1 000

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3 000

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6 000

7 000

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9 000

0 10 20 30 40 50 60 70 80 90 100%


Per capita annual net income of rural households, RMB, 2006

HIGH

INTERMEDIATE

LOW

Beijing

Zhejiang

Tianjin

Jiangsu

Shandong

Henan

Guangdong

Hebei

Sichuan Anhui Chongqing

Shaanxi

Fujian

LiaoningCHINA

HubeiShanxi

Heilongjiang Jilin

Hunan

JiangxiInner Mongolia

HainanNingxia

TibetGuangxiXinjiangYunnan

GansuGuizhouQinghai

Predominantly Urban Intermediate Predominantly Rural



lity

oulde has

andge.

Figure 1.18. Percentage of rural population working in agriculture and the degree of rura

Note: In China, the percentage of rural population working in agriculture is still very high and using OECD criteria wnot be relevant as all provinces would fall into category high or intermediate at best. Therefore, the Chinese averagbeen applied as the only reference point with the upper limit fixed at above and the lower below the average.Source: NBSC, China Statistical Yearbook 2006 and OECD Regional Database.

ShaanxiHunan

0

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30

40

50

60

70

80

90

0 10 20 30 40 50 60 70 80 90 100Percentage of population living in local units below 500 inhabitants per square kilometer

% of rural population working in agriculture, 2005

Predominantly urban Intermediate Prodeminantly rural

HIGH

INTERMEDIATEHenan

Shandong

Sichuan

Hebei

Tianjin

Jiangsu

Beijing

Zhejiang

GuangdongFujian

AnhuiChongqing

CHINALiaoning

Hubei Shanxi

Heilongjiang Jilin

Qinghai

Jiangxi

GuizhouGuangxi

NingxiaGansu

Inner MongoliaHainan

YunnanXinjiang Tibet

LOW

Figure 1.19. Percentage of inland area under protection and the degree of rurality

Note: Average share of inland area under protection in China is almost the same as the OECD average. The upperlower limits of the intermediate level are determined at roughly five percentage points above and below the averaSource: NBSC, China Statistical Yearbook 2007 and OECD Regional Database.

Tibet

Gansu

0

5

10

15

20

25

30

35

0 10 20 30 40 50 60 70 80 90 100


SichuanCHINA

TianjinXinjiang

ChongqingLiaoning

Heilongjiang

Jilin

Yunnan

Jiangsu Beijing ShandongGuangdong

HebeiZhejiangHenan

Anhui

FujianShaanxi

HubeiShanxi

Hunan Hainan

NingxiaGuangxi

Guizhou

Qinghai

Jiangxi

LOW

INTERMEDIATE

HIGH

% of inland area under protection, 2006

Inner Mongolia

Predominantly ruralPredominantly urban Intermediate



centre(s) and a small percentage of population defined as rural. They arecharacterised by a high level of per capita income, economic activitiesdominated by industry and services and opportunities to develop intoresidential areas. The rural population within these provinces/municipalitiesrepresent 2% of total rural population and rural area less than 1% of total ruralareas in China.

While such typology may appear trivial, it provides a representation ofthe variety and scope of challenges faced by rural China today. Theheterogeneity of rural China across provinces is further exacerbated by thediversity within provinces. Very different “rural Chinas” can be found atrelatively close proximity to each other. Against this background, thefollowing sections discuss the most defining characteristics of the currentChinese approach to rural development and its capacity to cope withcomplexity, diversity and a fast developing rural environment.

Figure 1.20. Five rural Chinas – typology at the province level

The rural poor: Gansu, Inner Mongolia, Qinghai, Tibet, Xinjiang, Guizhou, Ningxia, Shaanxi, Shanxi, YunnanThe rural with strong outmigration: Anhui, Hebei, Henan, Hubei, Hunan, Jiangxi, Chongqing, Guangxi, Sichuan

The rural diversified: Fujian, Guangdong, Shandong, Zhejiang, Hainan

The rural peri-urban: Beijing, Jiangsu, Tianjin

The rural dependent on grain production: Heilongjiang, Jilin, Liaoning



Notes

1. This review mainly adopts the Chinese census-based methodology (seeAnnex 1.A2), using a combination of population size in administrative aggregatesand population densities in order to distinguish between urban and rural areas.The following territories are defined as rural areas: villages of a town or townshipwithin cities (shi) if these territories have a population density of less than1 500 persons per km2; townships of a county (xian). It is important to note that thecensus-based definition counts rural migrants as urban population if they live inurban areas for six months consecutively.

2. Henan, Sichuan, Shandong, Hebei, Hunan, Anhui, Jiangsu and Guangdong. Thefirst three account for almost one fourth of the total.

3. The top four sending provinces are Sichuan (including between- and within-province rural migrants), followed by Anhui, Hunan and Guangdong.

4. Excluding particular cases of rural areas in such municipalities as Beijing,Shanghai and Tianjin, it can be found that per capita annual net income of ruralhouseholds ranged from CNY 7 300 in coastal Zhejiang to CNY 2 000 in south-western Guizhou.

5. For example, the share of wages from non-agricultural activities ranged from 53%in the coastal Jiangsu to just 9% in the western Xinjiang in 2006.

6. Basic administrative units in the countryside, each of which may consist of severalnatural villages.

7. Naturally formed rural habitation concentrations.

8. This makes the rural population more susceptible to waterborne infectiousdiseases and cancers of the digestive system. The overall cost of health impactsare estimated at around 2% of rural GDP (World Bank, 2007b).

9. Such as Inner Mongolia, Guizhou, Chongqing, Yunnan, Shanxi, Ningxia, andHunan.

10. A total of 600 different categories of terrestrial habitats include forests, shrublands, meadows, marshlands, steppes, deserts and alpine tundras. About 16% ofChina’s territory is protected. Large areas have been allocated for wildlife reserves,including for the Giant Panda, the Tibetan antelope and the snow leopard.

11. Forest cover is concentrated in the southwest and northeast provinces with InnerMongolia, Heilongjiang, Yunnan, Sichuan and Tibet having almost half of China’stotal forest area.

12. China’s total biomass resource that can potentially be converted into energy isabout 500 million tce (tonnes of coal equivalent, NDRC, 2007).

13. Industrial operations are transferred to rural areas following the application ofstricter environmental regulations in urban areas. Many of them are labour-intensive industries associated with low resource efficiency and heavy pollution.



ANNEX 1.A1

Additional Boxes, Tables and Figures

Box 1.A1.1. Definitions of rural migrants

According to the definition applied by the Rural Household Survey of the

National Bureau of Statistics of China (NBSC), in a given year, migrants are

individuals who have been living at least six months outside their township

of residence as determined by their permanent household registration

(hukou). Individuals who succeeded in changing the status of their hukou and

managed to register in the city they are living in are not counted in the

migrant population. In line with this definition, the total number or rural

migrants (including rural to urban and rural to rural) was estimated at

132.1 million in 2006.

A very similar definition is applied by the Fixed Rural Household Survey of

the Research Center for Rural Economy of the Ministry of Agriculture. The

only difference is that while the NBS rotates its household samples every four

years, the Fixed Rural Household Survey does not rotate its samples over

time. According to this method the number of rural migrants was estimated

at 118.9 million in 2006.

The population census and population sample conducted by the National

Bureau of Statistics have adopted slightly different criteria: they are restricted

to the rural migrants who continuously stay in destination for more than six

months and for less than five years. They measure a migration flow at a

specific time point. Along with this definition, the number of rural migrants

(rural to urban and rural to rural areas) was estimated at 94.6 million in 2005.

Less restrictive approach has been applied by the recent second

agricultural census which defined rural migrants as those who stayed outside

their township for at least one month. The number or rural migrants

estimated by this method was 131.8 million in 2006.

Source: Wang (2008).



Table 1.A1.1. Spatial distribution of rural migrants at destination (%)

Note: East region includes Beijing, Tianjin, Hebei, Shandong, Liaoning, Guangxi, Jiangsu, Zhejiang,Shanghai, Guangdong, Fujian, and Hainan (12 provinces). Center region includes Inner Mongolia,Heilongjiang, Jilin, Shanxi, Anhui, Henan, Hubei, Hunan, Jiangxi (9 provinces). West includes Shaanxi,Gansu, Ningxia, Qinghai, Xinjiang, Chongqing, Sichuan, Guizhou, Yunnan, Tibet (10 provinces).

Source: NBSC, China Rural Household Survey Yearbook, editions: 2005, 2006, 2007.

2003 2004 2005 2006

Regions

East 68.0 70.0 70.5 70.2

Central 14.7 14.2 14.4 14.9

West 17.3 15.8 15.0 14.9

Administrative Level

Province capital cities 29.1 28.1 29.0 28.0

Prefecture-level cities 31.8 34.3 36.1 36.8

Counties and below 39.1 37.6 34.9 35.2

Figure 1.A1.1. Ratio of outmigrants to local rural workers, 2000-06

Note: Outmigration includes rural to urban and rural to rural migration.

Source: NBSC, China Rural Household Survey Yearbook, 2007.

14

16

18

20

22

24

26

28

30

2000 2001 2002 2003 2004 2005 2006

% of rural employment



Figure 1.A1.2. Ratio of outmigrants to local rural workers by age, 2006

Note: Distribution of provinces by regions as indicated in the note to Table 1.2.

Source: NBSC, Second National Agricultural Census: Communiqué No. 5, 25 Feb. 2008.

0 10 20 30 40 50 60 70 80 90

National

East

Central

West

Northeast

Under 2021-3031-4041-5051+

Table 1.A1.2. Distribution of rural outmigrants by age, 2006

Note: Distribution of provinces by regions as indicated in the note to Table 1.2.

Source: NBSC, Second National Agricultural Census: Communiqué No. 5, 25 Feb. 2008.

% Total East Central West Northeast

Under 20 16.1 14.2 17.6 16.1 16.7

21-30 36.5 36.1 36.6 36.7 35.4

31-40 29.5 27.3 29.3 32.2 25.4

41-50 12.8 15.4 11.9 11.1 15.3

50+ 5.1 7 4.6 3.9 7.2

Table 1.A1.3. Distribution of migrants by level of education, 2005

Source: NBSC, Micro-data of One Per cent Population Sample in 2005, 2007.

Urban local

residents

Rural to urban migrants

Urban to urban migrants

Rural local

residents

Rural to rural

migrants

Urban to rural

migrantsAverage

Illiteracy 3.7 3.8 1.0 10.4 4.7 2.3 6.9

Primary School 17.5 19.2 5.9 35.9 24.3 14.7 26.3

Middle school 41.3 55.6 27.9 45.0 53.3 45.0 43.8

High school 24.0 17.8 33.4 7.9 15.1 26.2 15.9

College 8.8 2.8 18.6 0.7 2.2 9.3 4.7

University 4.8 0.8 13.3 0.1 0.5 2.7 2.5

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Average years of schooling 9.7 8.8 11.8 7.3 8.5 9.9 8.5



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Box 1.A1.2. The reform of the hukou system

Context

The hukou system was introduced in the context of a command economy in the 1950s.

was designed to answer specific needs of a strategy of heavy industrial developmen

Urban and rural areas were administered on a different basis. Urban people were provide

with employment, whereas rural residents were farming collective land. Therefore, th

status of an individual was either agricultural or non-agricultural. Non-agricultural huko

holders had broader access to urban employment, basic social security and welfare

subsidised public services (education, health care, transportation) and subsidised housing

Agricultural hukou holders were entitled to a piece of land, upon which they had use rights

The hukou system was used as a population management tool, making spontaneou

moves almost impossible. In order to protect the interests of urban population, the system

prohibited the free mobility of people through strict control so as to keep rural labour forc

within agricultural sectors and to increase grain output.

Gradual loosening of constraints

Following the dismantling of collective farms and the liberalisation of the economy, th

constraints on population mobility have been progressively loosened. A growing numbe

of rural workers started to migrate, even if their stay in urban areas remained illegal. In th

mid-1980s, the implementation of two documents (identity card and temporary residenc

permit) gave an administrative existence to numerous rural migrant workers. In order t

meet the demand for labour in the quickly developing rural enterprises and in cities, th

central government took a gradual approach to relax the control of labour mobility instea

of totally abolishing the hukou system.

In 1998, a government document entitled “On solving top issues in hukou management

stated that migrants who had lived for a certain number of years in a city were permitte

to obtain a local urban hukou, as long as they had a permanent residence, a stable and lega

occupation or a source of income. In the same year, the Ministry of Public Security issue

new regulations allowing persons who joined parents, spouses and children in cities t

register with urban hukou. Regional pilot experiments which have been started in th

1990s were extended to several provinces, principally the eastern coastal area, but als

Sichuan and Anhui. Some localities are particularly liberal while others, including mos

big cities, are rather restrictive.

Reform steps since 2000

A number of positive changes have been implemented since 2000. From October 2001, a

towns and cities with up to about 100 000 inhabitants should give urban hukou to resident

with permanent jobs and residence (State Council Circular No. 6). In order to facilitate labou

mobility, a notice was issued in November 2001 requiring local governments to abolish a

types of fees levied on rural migrants, including temporary residence fees and managemen

fees, family planning fees, urban expansion fees, labour adjustment fees, management an

service fees and construction enterprises’ management fees.



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Box 1.A1.2. The reform of the hukou system (cont.)

In 2002 and 2003, two documents issued by the State Council and particularly the notic

on “good management and provision of services for rural migrant workers” (January 2003

outlines instructions to public officials to be taken towards abolition of all discriminator

regulations. These items were expanded in additional circulars issued in 2004 and 2005

and include the following:

● Abolish administrative controls (notably by Labour Bureaus) of enterprises hiring rura

workers; remove restrictions concerning the job categories in which rural workers ca

be hired; simplify the application process for rural migrants in search of work; abolis

procedures and fees that have been imposed only on rural workers.

● Enterprises must sign labour contracts with rural workers and give them all right

stipulated by the Labour Law. On dismissal, employers should pay them lump-sum

compensation. Labour Bureaus should reinforce their inspection of rural workers

labour contracts. Public employment agencies should provide migrant workers with jo

referrals and information about job vacancies and labour policies at no cost.

● Employers should compensate migrant workers for work-related injuries. If condition

permit, local governments should set up health care insurance for them. Free of charg

training of rural workers should be organised by local governments and employers

Rural workers’ children should be guaranteed education at no extra fees, and poo

families should be exempted from part of the fees.

In January 2006, the State Council promulgated a document regarding “Options o

solving some issues of rural migrant workers” which called for a comprehensive solutio

for rural migrants’ issues.

New “Employment service and employment management regulations” (October 2007

supplementing the Employment Promotion Law and issued by the State Council state tha

rural migrant workers should have the same rights as urban workers to enter cities t

work. However, these regulations do not explicitly prohibit discriminations against rura

migrants. Central or local authorities are likely to issue supplementary rules clarifying th

residence rights of rural migrant workers.

At present, permanent hukou changes are still accorded only under specific condition

which can be difficult to fulfill, especially for low-skilled and poor persons. In practice

over 20% of most big cities’ inhabitants have a rural hukou, and thus do not enjoy full right

to public services. For example, their children’s education often takes place in specia

schools that are less attractive than other schools in urban areas.

Source: Baker and McKenzie (2007); Chan and Buckingham (2008); OECD (2005a); Wang (2007) and Wang (2008



Figure 1.A1.3. Rural poverty incidence across provinces, official definition, 2005

Source: CDRF, 2007.

01

2

3

4

5

6

7

8

9

10

1112

Tianji

nBeij

ing

Shang

haiFu

jian

Guang

dong

Jiang

su

Zheji

ang

Shand

ongHeb

eiJil

in

Chong

qingHun

anHen

an

Sichua

n

Liaon

ing

HainanSha

nxiAnh

uiChin

a

Ningxia

Hubei

Heilon

gjian

g

Guang

xi

Jiang

xi

Xinjian

g

Inner

Mongo

lia

Yunna

nTib

et

Shaan

xi

Gansu

Guizho

u

Qingha

i

Poverty incidence (%)

Figure 1.A1.4. Rural poverty incidence and agricultural labour productivity, 2005

Source: NBSC, China Statistical Yearbook 2007; CDRF 2007.

0

2

4

6

8

10

12

14

Rural poverty incidence, %

Agricultural labour productivity by province, thousand RMB/person/year0 2 4 6 8 10 12 14 16 18 20

Liaoning

Shanxi

Qinghai

Gansu

Inner Mongolia

Xinjiang

Beijing

HebeiShandong

Guangdong Fujian

Hainan

Guizhou

TibetShaanxi

Yunnan

Ningxia

HenanHunanSichuan

Chongqing Zhejiang

Tianjin Shanghai

y = -3.8942 ln(x) + 11.271R2 = 0.3936

HubeiHeilongjiang

JilinJiangsu

Jiangxi

CHINAGuangxi

Anhui



Figure 1.A1.5. Sectoral composition of rural employment across provinces, 2005


0

20

40

60

80

100

Xinj

iang

Yun

nan T

ibet

Inne

r Mon

golia

Hain

an

Heil

ongji

ang J

ilin

Gan

su

Qing

hai

Ning

xia

Gua

ngxi

Sha

anxi

Hen

an

Hun

an

Guiz

hou

Liao

ning

Sha

nxi

Sich

uan

Anh

ui

Jian

gxi

Hub

ei

Cho

ngqin

g

Heb

ei

Sha

ndon

g

Fuji

an

Gua

ngdo

ng

Tian

jin

Jian

gsu

Zhe

jiang

Beij

ing

Sha

ngha

i

Agriculture Industry Construction

Transport and communication Commerce Other non-agricultural%

Figure 1.A1.6. Classification of Chinese provinces: role of agriculture in rural employment, 2005

Note: Rural population is defined here in line with the definition applied by the population census inChina, thus the degree of rurality shows some discrepancy with the OECD definition of rurality asintroduced in Section 1.1 and then applied in Section 1.3.Source: NBSC, China Statistical Yearbook, 2006.

0

10

20

30

40

50

60

70

80

90

0 10 20 30 40 50 60 70 80% of population living in rural areas

% of rural population working in agriculture

PredominantlyurbanPredominantlyagricultural

Intermediate ruralPredominantlyagricultural

Predominantly ruralPredominantly agricultural

PredominantlyurbanIntermediateagricultural

Predominantlyurbanpredominantly non-agricultural

Intermediate ruralPredominantly non-agricultural

Predominantly ruralPredominantly non-agricultural

Predominantly ruralIntermediate agricultural

Intermediate ruralIntermediate agricultural

XinjiangYunnan Tibet

GansuHainan

Inner Mongolia

Jilin

Heilongjiang

LiaoningGuizhou

SichuanHenan

GuangxiQinghai

ShanxiShaanxiNingxia

ChongqingCHINA

GuangdongTianjin

Beijing

Shanghai

ZhejiangJiangsu

AnhuiHunan

Hebei

JiangxiHubei

Fujian Shandong



Figure 1.A1.7. Rural households’ net income by source, 1985-2006


0

20

40

60

80

100%

Household-based non-agricultural

Wages

Transfers and property

Agriculture

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Table 1.A1.4. Rural enterprises’ performance, 1985-2006

1. Nominal values deflated by Ex-Factory Price Indices of Industrial Products.2. Rural enterprises’ export delivery value related to the total value of exports.

Source: China Township and Village Enterprise Statistical Yearbook, various editions.

Number(million)

Employment (million)

Share of national

employment %

Value added(2000 prices;

billion)1

Share of national GDP

%

Share of national industrial

value added %

Share of national exports2

%

1985 12.2 69.8 14.0 248 8.6 15.0 n.a.

1990 18.7 92.6 14.3 483 13.4 27.1 16.3

1995 22.0 128.6 18.9 1610 24.0 43.3 43.3

2000 20.9 128.2 17.8 2716 27.4 47.0 43.0

2005 22.5 142.7 18.8 4692 27.5 46.4 33.0

2006 23.1 146.8 19.2 4980 27.5 45.2 40.1



Figure 1.A1.8. Rural enterprises’ employment by sector, 2006

Source: China Township and Village Enterprise Statistical Yearbook 2007.

Housing and catering6%

Construction9%

Transportation6%

Commerce13%

Agriculture2%

Other2%Social services

4%

Industry58%

Figure 1.A1.9. Rural enterprises’ output value by sector, 2006

Source: China Township and Village Enterprise Statistical Yearbook 2007.

Housing and catering3%

Construction5%

Transportation4%

Commerce8%

Agriculture1%

Other1%

Social services2%

Industry75%



Table 1.A1.5. The ownership structure of rural enterprises, %, 1985-2006

Source: Calculated from China Township and Village Enterprise Statistical Yearbook, various editions.

Number Employment Value added

Collective Private Individual Collective Private Individual Collective Private Individual

1985 12.8 4.4 82.8 59.5 6.8 33.7 72.9 5.9 21.3

1990 7.8 5.2 87.0 50.1 7.8 42.1 66.8 7.9 25.3

1995 7.4 4.4 88.3 47.1 6.8 46.1 64.1 5.9 30.0

2000 3.8 9.9 86.3 29.9 25.4 44.7 34.7 27.4 37.9

2005 0.8 20.5 78.7 4.8 34.8 60.4 5.1 35.1 59.8

2006 0.7 21.3 78.1 3.6 37.4 59.0 4.7 35.4 59.9

Table 1.A1.6. Rural enterprises’ performance by region, 2006

Note: Distribution of provinces by regions as indicated in the note to Table 1.A1.2.

Source: Calculated from China Township and Village Enterprise Statistical Yearbook 2007.

National shares East Centre West China

Number (%) 40.6 43.5 16.0 100

Employment (%) 53.3 36.2 10.6 100

Output value (%) 71.4 23.3 5.3 100

Export value (%) 94.0 5.0 1.0 100

Value added (%) 67.2 27.0 5.8 100

Business revenue (%) 71.4 22.9 5.7 100

Profit (%) 67.6 25.3 7.1 100

Taxes paid (%) 73.3 20.7 6.0 100

Workers’ remuneration (%) 61.3 30.8 7.9 100

Total assets (%) 73.1 20.9 5.9 100

Fixed assets (%) 69.1 24.2 6.7 100

Total liabilities (%) 77.6 17.9 4.5 100

Share of rural employment (%) 37.4 29.5 12.0 28.3

Export value/output value (%) 13.4 2.2 1.9 10.2

Employment per enterprise (persons) 8.3 5.3 4.2 6.3

Value added per enterprise (CNY, ‘000) 414.5 155.6 91.2 250.4



Table 1.A1.7. Development of rural enterprises by province, 1990-2006

Note: Data not available for Tibet.

Source: Calculated from China Township and Village Enterprise Statistical Yearbook, 1991, 2001 and 2007.

ProvinceEmployment (million)

National share, 2006

2006/1990

Output value(2000 prices, billion CNY)

National share, 2006

Average growth rate 1990-2006

1990 2000 2006 % % 1990 2000 2006 % %

Beijing 1.1 1.0 1.4 0.8 25 44 94 208 0.9 9.6

Tianjin 0.9 1.2 1.0 0.6 9 43 160 270 1.2 11.5

Hebei 6.4 8.5 10.9 6.8 70 117 783 1 548 6.7 16.4

Shanxi 2.4 2.9 4.2 2.6 76 40 177 532 2.3 16.5

Inner Mongolia 1.0 4.0 2.4 1.5 146 11 306 252 1.1 20.3

Liaoning 3.1 4.6 6.4 4.0 110 88 710 1 351 5.9 17.4

Jilin 1.6 2.5 2.4 1.5 52 29 210 206 0.9 12.1

Heilongjiang 1.6 1.5 1.8 1.1 13 29 120 244 1.1 13.4

Shanghai 1.5 1.2 2.2 1.4 46 56 290 804 3.5 17.0

Jiangsu 9.0 8.6 13.2 8.2 47 279 1 139 3 481 15.1 16.0

Zhejiang 5.0 8.8 13.0 8.1 163 149 1 341 3 145 13.7 19.6

Anhui 4.6 4.8 5.5 3.4 18 61 243 375 1.6 11.3

Fujian 2.8 5.6 7.0 4.3 150 51 616 850 3.7 17.9

Jiangxi 2.3 3.1 4.4 2.7 90 30 161 338 1.5 15.3

Shandong 9.4 13.1 17.7 11.0 88 231 1 231 3 325 14.4 17.0

Henan 8.8 8.9 10.4 6.4 17 129 639 1 169 5.1 13.9

Hubei 3.9 6.3 6.4 4.0 66 71 471 658 2.9 14.0

Hunan 4.2 9.4 9.4 5.9 126 56 740 711 3.1 16.1

Guangdong 6.6 9.3 12.9 8.0 96 143 922 1454 6.3 14.6

Guangxi 2.0 3.5 4.0 2.5 103 18 181 241 1.0 16.6

Hainan 0.2 0.3 0.3 0.2 37 3 15 19 0.1 12.2

Chongqing 1.0 1.5 2.2 1.3 120 14 98 284 1.2 19.5

Sichuan 7.1 6.1 7.0 4.3 -1 104 442 586 2.5 10.7

Guizhou 1.1 1.4 2.7 1.7 150 9 69 181 0.8 19.6

Yunnan 1.5 2.7 3.8 2.4 156 19 129 261 1.1 16.8

Shaanxi 2.5 4.0 4.4 2.7 72 31 201 263 1.1 13.4

Tibet n.a. n.a. 0.03 0.0 n.a. n.a. n.a. n.a. n.a. n.a.

Gansu 1.3 1.6 2.1 1.3 59 14 74 161 0.7 15.5

Qinghai 0.2 0.2 0.3 0.2 69 1 8 14 0.1 15.2

Ningxia 0.2 0.5 0.6 0.4 167 3 16 35 0.2 16.3

Xinjiang 0.5 0.8 1.0 0.6 113 5 30 48 0.2 14.4



Figure 1.A1.10. Distribution of forest area across provinces, 2006


0

10

20

30

40

50

60

70

Fujia

n

Zheji

ang

Hainan

Guang

dong

Guang

xi

Yunna

nHun

an

Heilon

gjian

gJil

in

Liaon

ing

Shaan

xi

Sichua

nHub

eiAnh

ui

Guizho

u

Chong

qingBeij

ingChin

a

Inner

Mongo

liaHeb

ei

Henan

Shand

ongSha

nxiTib

et

Tianji

n

Jiang

suGan

su

Ningxia

Qingha

i

Shang

hai

Xinjian

g

Jiang

xi

Forest coverage by province, % Share of national forest area, %

Figure 1.A1.11. Percentage shares of inland area under protection across provinces, 2006


0

5

10

15

20

25

30

35

Tibet

Qingha

iGan

su

Sichua

n

Shang

haiTia

njin

Xinjian

gJil

in

Heilon

gjian

g

Inner

Mongo

lia

Chong

qing

Liaon

ing

Yunna

n

Ningxia

Beijing

Shanx

i

Jiang

su

Shand

ong

Guang

xi

Jiang

xiHub

ei

Guizho

u

HainanHun

an

Shaan

xi

Guang

dongHen

anAnh

uiHeb

eiFu

jian

Zheji

ang



Figure 1.A1.12. Share of combustible renewable and waste in total primary energy supply, 2005

Source: OECD/IEA data, 2008.

0 5 10 15 20 25 30 35 40 45 50

Middle East

Former USSR

IEA total

OECD Europe

Non-OECDEurope

China

Latin America

Asia excludingChina

Africa

%



ANNEX 1.A2

Measuring “Rural” in China

In most countries, drawing a line between urban and rural areas is adifficult task, particularly since this line has blurred in the last decades as themovement of people and the interaction between these areas has increasedsignificantly. When referring to China, this task is even more challenging for anumber of reasons: First, the fact that China is the world’s most populouscountry implies a dimension many times larger than in any other country. Infact, its rural population of 737 million in 2006 (see Chapter 1) is nearly twicethe size of the rural population in all OECD countries, estimated around380 million in 2004 (based on the OECD Regional Classification, seeBox 1.A2.2). Second, China has experienced over the past two decades massiveprocesses of urbanisation and cyclical rural to urban migration, which hasbeen characterised by some observers as the largest population mobility inpeaceful periods of human history. This makes it difficult to determine theextent of the rural population at one given point in time.

A third element of complexity is the co-existence of three officialmethodologies for measuring the rural population in China: the tradition-based, the hukou-based and the census-based definition:

The tradition-based methodology, while relatively outdated, was stillpublished in the chapter on agriculture of the China Statistical Yearbook 2007.This indicator is calculated on the basis of the town classification standard of1964 which includes rural population in what are now established towns.Therefore, it overestimates the rural population, failing to consider thechanges in the administrative jurisdictions of the population and the transferof population from agriculture to other sectors.

The hukou-based methodology is a common source of rural populationstatistics which is widely used as a tool by local governments, especially citygovernments, in population control and management. Through the hukousystem, people who lived in cities and in the countryside were registered asnon-agricultural hukou and agricultural hukou (sometimes also called urban



hukou and rural hukou). After the hukou system was set up, the new-bornpopulation has been registered according to their parents’ hukou identity. Ifparents had non-agricultural hukou identities, people were registered as non-agricultural hukou (and the other way around). While at present, the systemallows for a greater flexibility, it has had and continues to have profound socialand economic implications, given that the hukou identities are attached tosocial benefits and welfare. Despite its wide dissemination in the variousChina Population Statistical Yearbooks, as a method for quantifying the ruralpopulation, the hukou-based methodology has lost much of itsmeaningfulness as a reference for statistical purposes because many peopleregistered with agricultural hukou no longer carry out this activity and nolonger live in rural areas.

The census-based methodology, which is mainly used in this review, is themost recent and technically-based methodology (see Box 1.A2.1). It wasintroduced with the latest population census in 2000, seeking to reflect thegeographic distribution of population based on its place of residence. For thispurpose, it uses a combination of population size in administrative aggregatesand population densities in order to distinguish between urban and ruralareas. The following territories are defined as rural areas: villages of a town ortownship within cities (shi) if these territories have a population density of lessthan 1 500 persons per km2; townships of a county (xian). It is important tonote that the census-based definition counts rural migrants as urbanpopulation if they live in urban areas for six months consecutively.

In a country with a population as large as China’s, the implications ofadequately measuring the extent of the rural population are significant. Whilein 1978, at the initial stage of the reform and opening up of China, the valuesof the three classifications presented above were very close (810 million,803 million and 790 million, respectively), they have sharply diverged over thepast 30 years. In 2006, the rural population reported by these classificationswas 954 million, 872 million and 737 million, respectively (see Figure 1.A2.1).In 2006, rural population measured by the traditional method accounted for72.6% of total population, the number measured by the hukou-based methodaccounted for 66.4%, while the one measured by the census-based methodonly accounted for 56.1 per cent.

The census-based definition, which introduces population density andtechnical parameters, represents a fundamental improvement compared tothe two other methods, linked to social aspects and economic activity. Thisdefinition, which is also the closest to international practices, has contributedto de-mystify the figures of rural population in China and has allowed a betterquantification of the dimension of the urbanisation trend that, asFigure 1.A2.1 shows, has accelerated since 1996. Notwithstanding, the



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Box 1.A2.1. China’s census-based methodology for measuring rural population

In its latest population census in 2000, China introduced a new way to measure th

composition of rural and urban population named the census-based methodology. Base

on the population of the census, the National Bureau of Statistics has made adjustment

on the figures of rural and urban population in other years without population census s

as to keep consistent statistics over time. Its statistical results are reported in Table 4-1 o

the population chapter in the 2007 China Statistical Yearbook.

This classification follows a relatively complex algorithm described in the figure below

which uses population levels in certain administrative aggregates and populatio

densities in cities (but not in counties) to distinguish between rural and urban population

Classifications of rural and urban areas and their populations

Note: C-represents juweihui (also named urban communities, shequ in Chinese), V-represents administrativvillages (xingzhengcun), U-represents urban population, R-represents rural population. * It is important to clarifthat while the cities and counties are placed in this graph at the same level, the word “city” (shi) is used for union different administrative levels (province-level municipalities, sub-province level cities, prefecture-levcities, county-level cities). ** when the density criterion applies.

Total population

Cities (shi)*

** **

Counties (xian)

Street(jie dao)

Town(zhen)

Township(xiang)

Town(zhen)

Township(xiang)

C C V V C V V

U U R R U R R

Urban population Rural population

Total territory

U U

District (qu)**



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Box 1.A2.1. China’s census-based methodology for measuring rural population (cont.)

The figure above shows the hierarchy structure of cities and counties at differen

administrative divisions (for territorial administrative divisions, see Chapter 2, Box 2.4):

Most cities belong to the prefecture level (dijishi), but some cities have a highe

administrative authority such as provincel-level centrally administered municipalitie

(zhixiashi) and some cities belong to the county-level administrative division (xianjishi). I

large cities, there are often three administrative divisions under the city governmen

including the district (qu), street (jiedao) and urban community (juweihui). Small cities ofte

have two administrative divisions, the street (jiedao) and urban community (juweihui

Some cities also have towns and townships under the district level. Under towns, the

have either urban communities or villages or both. Under townships, they have onl

villages. Counties have two levels under the county government, towns or township (th

higher levels), and urban communities or villages (the lower levels). In most cases, th

street, town and township are at the same administrative level.

As the basic administrative units, urban communities correspond to the statistics o

urban population and villages correspond to the statistics of rural population. However, th

hierarchy structure of cities and counties does not fully correspond to the statistica

definition of urban and rural population in the 2000 population census. As noted before th

classification uses population density for cities but not for counties. The logic is as follows

● For cities which contain districts, two cases apply based on a “density criterion” i) thos

territories with a population density greater than 1 500 persons per km2, are classifie

as urban areas, even if they are a village of a town (zhen) or a township (xiang) (this is th

case shown in the graph above with dotted lines and marked with two asterisks); ii) fo

those territories with the population density less than 1 500 persons per km2, if they ar

the city (district or town) government residential areas, streets, and a urban communit

of a town, they are classified as urban areas, but they are classified as rural areas if the

are a village of a town or a township.

● For cities without a district level, the same criteria as in the second case above apply

that is, the city (or town) government residential areas and a community of a town ar

classified as urban areas, and the villages of towns and townships are classified as rura

areas.

● For counties, the county (or town) government residential areas and communities o

towns are classified as urban areas while the townships are classified as rural areas.

● Rural migrants are counted as urban population if they consecutively live in urban area

for six months.

In 2006, the National Bureau of Statistics announced a new document to modify th

definitions of rural and urban areas, which will be adopted in the future of populatio

statistics.

Source: NBSC, The Temporary Regulation on the Statistical Classification of Rural and Urban Areas, 6 December, 1999



complex procedure for discriminating between rural and urban populationand the fact that it uses population density only in some cases, makes it notfully transparent and comparable to the methodologies used in othercountries. Therefore, for the purpose of this review, a first-of-its-kind exercisewas performed to construct a rural and urban typology at the county/districtlevel based on population density and at sub-regional (prefecture) andregional (province) level following the classification used by the OECD for allits member countries, described in Box 1.A2.2. This exercise should not beconsidered an official classification. As noted in Box 1.A2.2, a number ofadaptations were made to the standard OECD methodology, not withoutpossible controversy.1

The application of the OECD methodology for identifying rural areas inChina at the county/district level by their population density and thenclassifying regions (prefecture level) into predominantly rural (PR),intermediate (IN) and predominantly urban regions (PU) provides thefollowing results, which are not dramatically different from those reflected bythe Chinese census-based definition:

At the local level, 54.7% of the Chinese population lives in counties withless than 500 inhabitants per km2, which cover 93.6% of the territory. Thesefigures are compared to those of other OECD countries in Figure 1.A2.1. The

Figure 1.A2.1. Rural population in China, 1978-2006

Source: NBSC Statistical Yearbook (1982-2007), China Population Statistical Yearbook (1989-2006), ChinaPopulation and Employment Statistical Yearbook (2007), China Statistics Press, Beijing; Ministry of PublicSecurity, China City and County Population Statistical Data (1989-2001), The Mass Publishing House,Beijing.

700

750

800

850

900

950

1 000

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Number of rural population (million)

Census-based Tradition-basedHukou-based



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Box 1.A2.2. OECD regional classification and its application for China

The OECD has classified regions within each member country. To take account of th

differences and establish meaningful comparisons between regions belonging to the sam

type and level, the OECD has established a definition of rural which is applied at the “loca

level” and then a regional typology according to which regions have been classified a

predominantly urban (PU), predominantly rural (PR) and intermediate (IN) using three step

The first step consists in classifying at the lowest possible geographical level or “loca

units” (municipalities/counties) as rural or urban according to the OECD rural definition, tha

is, depending on whether their population density is below or above 150 inhabitant

per km2 (500 inhabitants for Japan and Korea, to account for the fact that its nationa

population density exceeds 300 inhabitants per km2. This higher threshold is also used fo

China). This first step already provides a first definition of rural areas at the “local level”.

A second step consists in aggregating this lower level into regions (at the Territorial Level

or TL3, which corresponds in most countries to sub-regions – prefecture level in China –

while the TL2 corresponds to regions – provinces in China) and classifying the latte

according to the percentage of population living in local units classified as rura

sometimes called “degree of rurality”. A TL3 region is classified as: Predominantly

Urban (PU), if the share of population living in local units classified as rural is below 15%

Intermediate (IN), if the share of population living in local units classified as rural i

between 15% and 50%; Predominantly Rural (PR), if the share of population living in loca

units classified as rural is higher than 50%. At present, the OECD does not use the regiona

classification at TL2 level; it is however used for China given that many indicators wer

only available at the province level.

An additional criterion is based on the size of the urban centres contained in th

TL3 regions: A region that would be classified as predominantly rural on the basis o

steps 1 and 2, becomes intermediate if it contains an urban centre of more tha

200 000 inhabitants (500 000 for Japan and Korea) representing at least 25% of the regiona

population. A region that would be classified as intermediate on the basis of steps 1 an

2 becomes predominantly urban if it contains an urban centre of more tha

500 000 inhabitants (1 000 000 for Japan and Korea) representing at least 25% of th

regional population. For China a number of regions were reclassified from predominantl

rural to intermediate and from intermediate to predominantly urban, rather than usin

the population levels – even those used for Japan and Korea are small in the case of China

by identifying the most relevant urban agglomerations in the different regions, an

reclassifying the region to the immediate next level when these agglomeration

represented more than 25% of the regional population.

Table 1.A1.1 provides a summary of figures of the application for China of the OECD rura

definition and the OECD regional typology.



share of rural population measured with this principle is higher in China thanin most OECD countries, with the exception of Norway and Sweden andpractically at the same level as Finland. In terms of rural territory, China isplaced towards the middle of the list, between the United States and Spain,both of which are relatively populated countries with respect to those thatappear at the top of the list (Ireland, Finland, Norway, New Zealand, Sweden,Iceland and Australia).

Figure 1.A2.2. Rural population and territory in China and in OECD countries measured at the local level

0 20 40 60 80%

Netherlands

Belgium

United Kingdom

Switzerland

New Zealand

Italy

Korea

Japan

Portugal

Spain

Australia

Luxembourg

France

Czech Republic

OECD total

OECD average

United States

Greece

Poland

Slovak Republic

Denmark

Austria

Mexico

Hungary

Ireland

TurkeyIceland

Finland

China

Norway

Sweden

0 20 40 60 80 100%

Netherlands

Belgium

Italy

Luxembourg

Switzerland

United Kingdom

Czech Republic

Denmark

OECD average

Japan

Slovak Republic

Portugal

Hungary

Korea

France

Turkey

Poland

Austria

Spain

China

United States

Greece

Mexico

OECD total

Ireland

Finland

Norway

New Zealand

Sweden

Iceland

Australia

Percentage of rural areaPercentage of rural population



Figure 1.A2.3. Territory, population and GDP in China and in OECD countries measured at regional level

Territory Population GDP

PR IN PU

0 20 40 60 80 100%

Netherlands

Luxembourg

New Zealand

Czech Rep.

UK

Belgium

Italy

Germany

Japan

Slovak Rep.

Switzerland

Spain

United States

Korea

Poland

Turkey

Hungary

France

Denmark

Greece

Portugal

OECD

Austria

Mexico

Norway

Australia

Finland

China

Sweden

Canada

Ireland

Iceland

Netherlands

Luxembourg

New Zealand

Belgium

UK

Czech Rep.

Switzerland

Italy

Germany

Spain

Japan

Korea

OECD

Australia

United States

Slovak Rep.

Portugal

Canada

France

Turkey

Mexico

Iceland

Denmark

Poland

Greece

Hungary

Austria

Norway

Sweden

China

Finland

Ireland

Netherlands

Luxembourg

Belgium

UK

Czech Rep.

Italy

Germany

Spain

Japan

OECD (22)

Korea

Portugal

Slovak Rep.

France

Mexico

Turkey

Hungary

Poland

Denmark

Austria

China (TL2)

Greece

Norway

Sweden

Finland

Ireland

0 20 40 60 80 100%

0 20 40 60 80 100%



any

CDssi-tion

2*

R

U

N

R

R

N

R

R

R

N

R

N

N

R

R

U

R

N

R

R

R

N

N

U

R

N

U

R

R

R

N

Table 1.A2.1. Summary by province of the results of the OECD rural definition and regional typology applied to China

* While in general the OECD does not use the regional classification at TL2 level, it is used for China given that mindicators were only available at the province level.

Provinces

Number of TL3 regions (prefecture level)

Area (km2)

Population (2000)

OEClafica

IN PR PU Total Rural Urban Total Rural Urban Total TL

Anhui 3 10 4 17 72.32% 27.68% 139 900 51.20% 48.80% 58 999 948 P

Beijing 1 1 73.74% 26.26% 16 808 22.73% 77.27% 13 569 194 P

Chongqing 1 1 79.55% 20.45% 82 400 56.46% 43.54% 30 512 763 I

Fujian 2 6 1 9 87.56% 12.44% 123 100 53.62% 46.38% 34 097 947 P

Gansu 1 13 14 99.77% 0.23% 366 500 92.75% 7.25% 25 124 282 P

Guangdong 1 12 9 22 78.94% 21.06% 197 100 36.75% 63.25% 85 225 007 I

Guangxi 14 14 98.58% 1.42% 220 400 93.01% 6.99% 43 854 538 P

Guizhou 9 9 98.72% 1.28% 174 000 91.88% 8.12% 35 247 695 P

Hainan 1 5 6 97.50% 2.50% 34 300 88.57% 11.43% 7 559 035 P

Hebei 4 5 2 11 73.81% 26.19% 202 700 39.85% 60.15% 66 684 419 I

Heilongjiang 1 12 13 98.84% 1.16% 463 600 79.04% 20.96% 36 237 576 P

Henan 6 3 10 19 49.99% 50.01% 167 000 27.29% 72.71% 91 236 854 I

Hubei 4 9 1 14 85.81% 14.19% 187 500 63.06% 36.94% 59 508 870 I

Hunan 1 13 14 93.90% 6.10% 210 500 80.58% 19.42% 63 274 173 P

Inner Mongolia 1 11 12 99.84% 0.16% 1 177 500 87.15% 12.85% 23 323 347 P

Jiangsu 7 6 13 29.61% 70.39% 102 600 14.57% 85.43% 73 043 577 P

Jiangxi 2 9 11 97.03% 2.97% 164 800 85.57% 14.43% 40 397 598 P

Jilin 1 8 9 97.59% 2.41% 187 000 80.30% 19.70% 26 802 191 I

Liaoning 4 9 1 14 91.80% 8.20% 151 000 56.87% 43.13% 41 824 412 P

Ningxia 5 5 99.47% 0.53% 66 400 94.79% 5.21% 5 486 393 P

Qinghai 8 8 99.94% 0.06% 721 000 82.28% 17.72% 4 822 963 P

Shaanxi 8 2 10 93.77% 6.23% 195 800 65.02% 34.98% 35 365 072 I

Shandong 8 2 7 17 43.23% 56.77% 153 300 29.31% 70.69% 89 971 789 I

Shanghai 1 1 0.00% 100.00% 6 200 0.00% 100.00% 16 407 734 P

Shanxi 10 1 11 95.46% 4.54% 157 100 76.07% 23.93% 32 471 242 P

Sichuan 3 12 6 21 86.47% 13.53% 488 000 42.21% 57.79% 82 348 296 I

Tianjin 1 1 49.12% 50.88% 11 300 21.45% 78.55% 9 848 731 P

Tibet 7 7 100.00% 0.00% 1 221 600 100.00% 0.00% 2 616 329 P

Xinjiang 1 14 15 99.90% 0.10% 1 646 900 87.01% 12.99% 18 459 511 P

Yunnan 16 16 99.47% 0.53% 436 200 93.48% 6.52% 42 360 089 P

Zhejiang 3 5 3 11 71.16% 28.84% 101 800 38.56% 61.44% 45 930 651 I

Total general 55 235 56 346 93.63% 6.37% 9 572 900 54.70% 45.30% 1 242 612 226



At the regional level, China was divided for this exercise in 31 TL2 regions(province level) and 346 TL3 regions (prefecture level). Of the latter, 235 regionswere classified according to their degree of rurality (see Box 1.A2.2) aspredominantly rural, which host 51.5% of the population and cover 89.5% ofthe territory; 55 regions were classified as intermediate, which host 22% of thepopulation and 6.3% of the territory; and 56 regions were classified aspredominantly urban, hosting 26.5% of the population and 4.2% of theterritory. These figures are compared to those of other OECD countries inFigure 1.A1.3. As can be seen, China occupies the 5th position of the list interms of the territory that its PR regions cover and the 3rd place with respectto population. A third indicator used in OECD Rural Policy Reviews forweighting the relevance of rural areas is GDP. Figure 1.A1.3 also shows thecomparative weight of the rural economy in China with respect to selectedOECD countries, although it is important to clarify that given that figures forGDP were not available at the sub-regional level in China, the figures for GDPfor China are at TL2 level, which is province level.

While for availability of information most of the analysis in the review isprovided using the census-based methodology, the OECD definition and typologynow applied to China could contribute to increase the comparability ofinformation and dialogue on rural and urban development between the OECDand China.

Note

1. For example, for the first criterion, although it might be argued that for China ahigher threshold than 500 inhabitants per km2 could be used, this thresholdwhich is already used for Japan and Korea was kept. In the same line of argument,a caveat of this approach is the fact that it could be argued that many rural areasin China have densities that in some other countries would be considered asurban, which are not easily identifiable under this methodology. For the third step,the criterion was not strictly applied since it would change many predominantlyrural regions to urban. A last caveat from this exercise is related to the availabilityof information. While for the vast majority of counties and districts informationwas available from the 2000 census, for a few of them a population estimate for2005 or 2006 was used, assuming that the population density would have notvaried substantially over the period as to change the local unit from urban to rural.


ISBN 978-92-64-05956-6


© OECD 2009

Chapter 2

Policy Assessment

99

2. POLICY ASSESSMENT

2.1. Key points

● With its most recent policy approach, the central government's broadensthe scope of rural policy and calls for “Building a New SocialistCountryside” (NSC). Aiming to solve the “three rural” (or sannong) issueswhich concern agriculture, rural communities and farmers, itparticularly targets agricultural productivity, land use, rural residents'income, local governance reforms and the delivery of rural publicservices. Starting with the reform period in 1978, China's policy for ruralareas has been rapidly evolving towards a more market-based approachand involved a relaxation of agricultural controls and a less centralisedproduction system called household production responsibility system(HPRS). Related reforms helped to promote economic diversificationthrough rural enterprises and introduced a more autonomous ruralgovernance system.

● Public expenditure for rural areas has been increasing in line with astronger focus on territorial imbalances. Expenditure on rural areas almostdoubled in nominal terms between 2004 and 2007, with the largest partbeing provided through agricultural policy measures (55% of the total in2007), followed by rural infrastructure (23%) and social development(combining support for rural education, health care, rural povertyalleviation and rural social security, 20%).

● Rural policy coherence and effectiveness suffer from a complexinstitutional and governance framework as well as sector by sectorfragmentation. The Central Committee of the Communist Party of China(CCCPC) and two related Leading Groups play a major role and work jointlywith key State Council institutions. However, horizontal co-ordination inactual policy design remains modest as there is no single institution orformal mechanism in charge of integrating the most important NSCpolicies. These difficulties are reproduced at lower levels of government.Although annual conferences on rural work are organised to designcentral and local rural development plans, vertical co-ordination iscomplicated by the fact that sub-national institutions often have theirown range of objectives, diverging from central government priorities.Conflicts of interest emerge among different levels, between sectoralagencies and within the complex “dualism” of Party and governmentbodies.



● A dysfunctional intergovernmental transfer system and the unintendedeffects of recent reforms hamper an appropriate distribution of resources.A comprehensive rural tax and fee reform (RTFR) succeeded inresponding to farmers’ complaints about an “excessive” fiscal burden.However, the reform also reduced local governments’ possibilities togenerate self-raised funds. Fiscal transfer payments have increased, but sohave responsibilities of local governments, resulting in gaps betweenexpenditure and financial resources, although the amount of revenuelosses is difficult to estimate. Despite attempts to introduce fiscalequalisation, disparities in fiscal expenditure across rural governmentsare stark. These dysfunctionalities in the intergovernmental transfersystem may also be linked to the weak representation of rural interests inpeople's congresses.

● Following the RTFR, local governments on the county and township level, aswell as villages, have fewer legal possibilities to raise extra-budgetary funds.However, many richer local governments are collecting considerable off-budget revenues mainly coming from land-related transactions or theyrecur to, often illicit, local debt. Higher levels of government mostly do notinterfere in the decentralised county-township system of revenue sharingand expenditure assignments, giving counties considerable leverage to usetownship resources for other purposes.

● Four areas of local governance weakness make the implementation ofcentral directives particularly challenging: i) Modest administrativecapacity of local officials, whose quality varies greatly across China andwho tend to be selected through non-competitive and opaque processes;ii) Low accountability in rural regions, particularly as governmentalstructures are often not yet developed enough to effectively monitor andevaluate policies besides top-down mechanisms which risk to besimplistic; iii) Weak rule of law, as local courts have a weak institutionalstatus in the political system and are subsumed under the jurisdiction oflocal governments; iv) Limited citizens' representation and participation,as elected village institutions are subordinate to townships and the Party's“core” leadership. The importance of public participation is increasinglyrecognised, but its actual application is not yet sufficient.

2.2. Approach to rural policy

China’s approach to rural policy has been rapidly evolving…

China’s new policy approach to rural policy began with the reformperiod, starting in 1978. Through the implementation of policy reforms, thecentral government gradually dismantled significant parts of the previouscollectivised system and its institutional arrangement consisting of:



i) common ownership of land and production means; ii) hukou (householdregistration) system restricting population mobility; and iii) the people'scommunes as an economic and production unit, but also an administrativeagent for rural society's internal management. The reform period initiatedunder a new political leadership after the Cultural Revolution and directedby Deng Xiaoping involved important political transformations, liberatingpeople from the preceding, more ideological environment. As part of the“four modernisations” targeting agriculture, industry, national defence andscience and technology to promote the Chinese economy’s long-term rise (onthe theoretical framework for the reform period, see Annex 2.A1, Box 2.A1.2),substantial changes in the approach to developing rural areas wereimplemented. People’s commune and the collectivised system with its lackof incentives to individuals were abolished. Moves towards a more market-based approach involved a relaxation of agricultural controls and, at the endof the 1970s, a less centralised production system called householdproduction responsibility System (HPRS). Gradually replacing the people'scommunes system, the HPRS provided individual farm households with landuse rights through contracts. Farmers became more autonomous in theirproduction and business management decisions and allowed to sell parts oftheir production on local markets at prices higher than those fixed by thegovernment. Related reforms allowed local governments to promoteeconomic diversification through rural enterprises and introduced a moreautonomous rural governance system based on local governments and CPCcommittees in counties and townships, as well as Party and “self-governing”bodies in villages (see Table 2.1). Reforms also included the introduction ofperformance measurement systems, such as the target responsibilitysystem aiming to quantify performance, e.g. achievement of a specificeconomic growth rate or amounts of taxes to be collected (Caulfield, 2006).The new rural policy approach was a top priority for the central governmentwhich, between 1982 and 1986, devoted five continuous annual No. 1Documents to rural and agricultural issues (see Annex 2.A1, Box 2.A1.2). TheNo. 1 Document is the first major policy directive of the year, issued jointlyby the CCCPC and the State Council. It is an important keynote for theforthcoming year and gives policy suggestions for the National People’sCongress (NPC).Three of the five No. 1 Documents focused on the HPRSwhich turned out to be the breakthrough for other rural reforms, such as therelaxation of the hukou system releasing large amounts of rural labour forcefrom land cultivation who in turn could be employed in TVEs and urbanbusinesses.



… and has recently taken the form of an ambitious strategy, “Building a New Socialist Countryside” (NSC)

The Guidelines of the 11th Five-Year Plan for the period 2006-2010 include asa key objective a new strategy for rural development which calls for “Building aNew Socialist Countryside” (NSC, jianshe shehui zhuyi xin nongcun). This approachto rural areas recognises China’s economic and social transformation and followsincreasing concerns about rural-urban and rural-rural imbalances. The strategy isincorporated in the more long-term goals of urban-rural integration and ofrealising a xiaokang society, in which all people can live a fairly comfortable life(see Annex 2.A1, Box 2.A1.1). The NSC combines already existing developmentobjectives with more immediate tasks, but it does not include all policy measuresand programmes aiming at rural areas. Nonetheless, the strategy broadens thescope of rural policy, aiming to solve the “three rural” (or sannong) issues whichconcern agriculture, rural communities and farmers. In line with earlier policyaction in the 1980s, five consecutive No. 1 Documents between 2004 and 2008 (seeAnnex 2.A1, Box 2.A1.1) focus on the sannong issues, aiming to address questions

Table 2.1. Evolution of the Chinese approach to rural areas

Policy approach Centralisedand collectivistapproach

Relaxationand marketisationapproach

Rural as partof overalleconomic reforms

Towardsa comprehensiverural policy approach

Theoretical framework

Policies and reforms Common ownershipof land and of meansof production;start of hukou system (late 1950s)andpeople’scommunes (1958);

Household productionresponsibility systemHPRS (1978);relaxationof hukou system;more autonomyfor townships, villages;

Tax-for-fee reform;legal protectionof HPRS and 30-yearsland-use rights (2002);gradual reformof hukou system;

Abolishment ofagricultural taxes;public service reforms(education, health…);protection of landuse rights;

Main ruraldevelopment issues

Shortages of food,weak agriculturalproductivityand efficiency;

Income increase,fall in absolutepoverty and narrowingof rural-urban gap;

Increasing rural-urban disparities,heavy fiscal burdensfor rural residents,frequent reallocationsof rural land;

Higher rural incomes,increasing disparities,diversificationof rural economy,declining roleof agriculture,continuedland reallocations;

Time Before 1978 1978-1992 1992-2004 Since 2004

No.1 Documents(1982-1986)targeting agricultureand rural areas

“New socialistcountryside” strategyin 11th FYP, No.1Documents(2004-2008) targeting agriculture and rural areas

Harmonious societyFour modernisations

Scientific developmentMaoist policy framework

Three representsXiaokang society



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of rural social welfare and income distribution. The NSC strategy is summarisedin five key principles which form the basis of the central government's ruralpolicy measures and programmes: i)increased agricultural production (shengchanfazhan); ii)well-off standard of living (shenghuo kuanyu); iii)civilised countryside life(xiangfeng wenming); iv)orderliness of the village landscape (cunrong zhengjie);v)democratic governance (guanli minzhu). The strategy symbolises the politicalleadership's objective to build a socialist harmonious society in the countryside.Different policy measures and programmes within the NSC strategy have beenannounced or implemented, targeting particularly agricultural productivity, landuse, rural residents’ income, local governance reforms and the delivery of ruralpublic services (see Box 2.1).

Box 2.1. Recent policy objectives and measures targeting rural areas

The following sectoral overview contains rural policy objectives, measures and programme

which have been announced (and partly implemented) by the Chinese leadership:

Agriculture: The NSC strategy promotes the transformation towards modern agriculture. T

ensure national food-security objectives, agricultural productivity shall be increased to reac

a grain output of 500 million tons by 2010 through government subsidies, agricultur

construction and industrialisation projects. A particular focus is put on the construction

water-saving farmland irrigation systems. Also, the marketing and commercialisation of hig

value-added products made in villages and townships should be further promoted.

Land use: Recent policy documents include specific mandates to protect rural resident

land use rights and tenure security. Leaders announce to define the use of construction lan

for public interest, aiming to gradually narrow the scope of land expropriation and to sto

illegal appropriation of land. Land rights certificates shall be issued to farm households an

a land rights registration system established in order to provide further assurance to farmer

Rural residents’ income: The central government targets to double per capita net incom

for rural residents between 2008 and 2020 and to eliminate absolute poverty in rural areas b

2020. For the poorest rural residents, efforts to alleviate poverty are strengthened b

supporting enterprises in underdeveloped areas and promoting training of labour. A

important rural tax and fee reform (RTFR) has been undertaken before and after releasin

the NSC strategy, consisting of two major steps: i)the tax-for-fee reform, aiming to mor

comprehensively include township and village finance into the budget; and ii) th

abolishment of all main agricultural taxes.

Public service delivery: To address the differences between urban and rural areas an

across provinces in the delivery of public services, several priorities are identified i

different service sectors:

● Rural infrastructure: The central government commits to providing 160 million rur

residents with safe drinking water by 2010 and safe drinking water for all by 2013. Rur



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Box 2.1. Recent policy objectives and measures targeting rural areas (cont

sanitation coverage is to increase to 65% by 2010 and direct recycling to end by allowin

waste to compost in storage before disposal. The construction and improvement o

additional 1.2 million kilometers of rural roads aims to connect all towns, township

and villages “where conditions permit” to the road network. As to ICT (information an

communication technology) services, the central government focuses on the availabilit

of telephone in all villages and of Internet access in all townships. 50 counties have bee

selected for green energy demonstration, extending power grids and generating powe

through renewable energies.

● Health care: To make access to health care more affordable and to reduce econom

burdens due to diseases, the new rural co-operative medical scheme (NRCMS) has bee

spread to 730 million residents and 86% of counties. Contributors to the NRCMS ar

entitled to discounts on their medical expenses. The annual cost of medical cover

CNY 50 per person, to be paid by the central (CNY 20) and the provincial (CNY 2

government, as well as rural residents (CNY 10). By 2010, the standard for financin

might be raised to CNY 100 per person, with central and local government contribution

to be raised to CNY 80. Also, some local governments have given financial support to

central programme sending urban doctors and nurses to rural areas in order to provid

assistance.

● Social security: The central government aims to gradually establish a rural social securit

system and has decided to cover all needy people in rural areas under a subsistenc

allowance programme (dibao), including the elderly, the disabled and those who ar

unable to work. Local governments are expected to increase their spending. The centr

government supports areas with financial difficulties.

● Education and training: A key objective is the realisation of free nine-year compulsor

education in rural areas by exempting rural primary and junior high school studen

from tuition fees and other educational expenses. A principle of free education wa

introduced in the revised Education Law of 2006. Also, programmes have been started t

enhance vocational education and training, such as the “Sunshine Project” to train an

transfer rural labour force.

● Financial services: Reacting to an inadequate supply of rural financial services, the centr

government targets at strengthening the role of the Agricultural Bank of China (ABC

the Agricultural Development Bank of China (ADBC) and the China Postal Savings Ban

(CPSB) in serving the sannong sectors as well as promoting new types of rural financi

institutions and reforming rural credit co-operatives (RCCs). The burden of financin

rural activities has mainly been left to RCCs, which operate in a risky sector for cred

provision, and to the postal savings system.

Source: OECD, based on CCCPC (2008); Guidelines of the 11th Five-Year Plan; No. 1 Documents (2006-2008); Ministof Finance (2008); Xinhua (2008); OECD (2007); OECD (2005b); World Bank (2007b).



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Box 2.2. Implementing NSC policies in Yu Lu village

In 2006, the mountain village of Yu Lu (4 262 inhabitants), located in Enshi Tujia an

Miao autonomous prefecture (Hubei province), set up a particular administrativframework to implement policies provided within the NSC strategy. The mai

implementing body was a “working group” into which cadres of the county, township an

village level were appointed by the county and township government. The only villag

cadres in the working group were the powerful local Party secretary and the village head

Whilst the working group is collaborating both with the township government and th

village committee, the members of the latter were clearly subordinated to higher levels o

government and could not make any decisions about the implementation process on the

own. The village committees’ main task was to mediate between the working group an

the recipients of the programme; its proximity with the villagers made it the preferre

interface offering real channels of communication between the two.

In Enshi prefecture, the NSC strategy translated into a plan called “five changes (wuga

three constructions (sanjian), two improvements (liangtigao) and one opening (yigongkai)

The programme broke down in the following way: “Five changes” relate to roads, wate

systems, kitchen, toilets, pig sties; “three constructions” target a hygienic school campu

individual household methane gas tanks and a more productive/market-oriente

agricultural industry; “two improvements” aim at local government co-ordination an

individual cadres’ “quality” (suzhi); finally, “one opening” calls for more transparency i

village government affairs.

This overall plan was designed by the prefectural government and Party branches. Th

details for funding and implementation plans in Yu Lu were determined by the county an

township government. As part of local development policies in Enshi, a network of “mode

villages” (shifan cun) was built up in the region since 2001. Based on Yu Lu’s successfu

conversion from local agriculture to tea plantation and tea processing industry, the villag

was selected to become a “model village” in 2001.

In 2006, the Yu Lu working group together with the township government determine

several guidelines for the distribution of money and material in the village. These include

detailed financing schemes for different programmes like house renovation, methan

tanks, water provision, etc. However, in the guidelines which were disclosed on publ

announcement boards there was no clear statement regarding the criteria of eligibility fo

these subsidies. It was difficult to follow the flow of resources from higher levels o

government down to individual households. This was primarily due to two reasons: firstl

different clusters of people were responsible for implementing different policies and as

result, many projects and responsibilities overlapped. This in turn made it difficult t

identify the central locus of accountability for each task. Secondly, every stage of th

implementation process required specific negotiations with different actors, namel

officials from different levels of the administrative hierarchy, the villagers themselves an

out-contracted workers. Many local actors were not only “beneficiaries” of the policies, bu

had active and on-going roles in the course of its implementation.



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2.3. Rural policy and governance challenges

A stronger focus on territorial imbalances has brought increased public expenditure for rural areas…

In line with the central government’s NSC strategy, public expenditure forrural areas has been increasing in recent years.1 Available data suggest thatexpenditure on rural areas almost doubled in nominal terms representing an

Box 2.2. Implementing NSC policies in Yu Lu village (cont.)

Households could benefit from partial subsidies (up to CNY 1 500 per household

according to interviews with villagers) to paint exterior or interior house walls, to renovat

the kitchen, toilet and pig sty, consistent with the “five changes” plan. Although

government assistance was theoretically available to all villagers, there were in effec

three principal conditions for obtaining help:

● Sufficient disposable income of villagers in order to finance part of the refurbishment

● Proximity to the main asphalt road: the more a house is visible from the main road, th

more likely it will benefit from subsidies;

● Proximity to the officials and good relationships (guanxi) with the local government: th

closer a family is to local officials and the more it can deliver “face”, honour and respec

to them and to the overall success of the project, the more likely the family will receiv

subsidies.

Although not mentioned in the local plan, one of the main projects in Yu Lu was t

deliver an architectural “facelift” to the village and in doing so to upgrade its image. Th

“facelift” included the construction of a new local government headquarter for the villag

committee and the painting of the exterior walls of the most prominent and visible home

from the main asphalt road. Selected houses are designed according to a generic “Tujia

minority design model offered by the local government to families who want and have th

means to construct a new home. This latter step was meant to deliver “face” (mianzi) to th

villagers and to the respective guests whom they in turn would host.

Rather than a top-down policy unfolding according to the will of higher authorities, th

actual implementation process of NSC policies in Yu Lu was heavily dependent on loca

social dynamics and constantly shifting inter-personal relations. The different “projects

unfolded like a web of mutual, complex and overlapping negotiated relationships betwee

a large set of actors, each conveying their own set of personal or collective interests. A goo

part of the implementation depended on the agreements established between loca

officials and local inhabitants, or between government officials and sub-contractors (i.

construction companies, decoration businesses, carpenters, etc.). This in turn depende

on mutual trust, personal relations and proximity between the different actors concerned

Source: Châtelard Guo, Solange (2008), Formal Governance and Informal Practices: Politics at the Interfacunpublished paper prepared for the OECD.



increase of 75% in real terms (CPI used as deflator) between 2004 and 2007

(Table 2.2). Moreover, the share of expenditure on rural areas in the total

budget expenditure increased from 8.2% in 2004 to 9.1% in 2007. The largest

part of support is provided through agricultural policy measures which

accounted for 55% of the total in 2007 followed by rural infrastructure (23%)

and social development (20%). Social development spending combines here

support for rural education, health care, rural poverty alleviation and rural

social security (see Annex 2.A1, Table 2.A1.1).

… but the implementation of the NSC strategy is still hampered by a number of policy challenges :

First, rural policy coherence and effectiveness suffer from a complex governance system and sector by sector segmentation

Within the Chinese political system (see Annex 2.A1, Box 2.A1.3), the

institutional framework for rural policy (see Box 2.3) is rather complex. Adecisive role is played by the Central Committee of the Communist Party of

China (CCCPC) and two related Leading Groups called the Central Leading

Group on Financial and Economic Affairs (CLGFE, zhongyang caijing lingdao

xiaozu) and the Central Leading Group on Rural Work (CLGRW, zhongyang

nongcun gongzuo lingdao xiaozu) (see Figure 2.1). They determine general

principles for rural development and work jointly with key State Council

Table 2.2. Public expenditure for rural development, 2004-07

Source: OECD, based on Cheng, 2008.

Million CNY 2004 2005 2006 2007

Agriculture 124 911 147 477 198 085 252 998

Rural infrastructure 69 242 69 242 99 649 108 093

Social development 38 790 48 745 62 032 91 696

Other 0 0 1 341 1 491

Total 232 943 265 464 361 107 454 278

Including:

Ministry of Finance 128 378 150 541 200 481 249 217

Ministry of Communications 9 965 9 965 68 885 74 110

National Development and Reform Commission 71 437 72 537 44 929 53 272

Ministry of Health 13 934 14 772 23 575 38 127

Ministry of Education 7 730 14 130 16 225 26 650

Ministry of Civil Affairs 0 0 0 3 000

Ministry of Water Resources 0 850 1 700 2 830

State Administration of Radio Film and Television 490 490 2 277 2 650

Ministry of Agriculture 345 1 065 1 571 2 358

Ministry of Human Resources and Social Security 600 1 050 1 400 2 000

Ministry of Science and Technology 64 64 64 64

Ministry of Land and Resources 0 0 0 0



institutions, advised by influential think tanks such as the DevelopmentResearch Center of the State Council (DRC) (see Figure 2.2). A large number ofState Council agencies are involved in providing support to rural areas and themost important ones are the Ministry of Finance (MOF) and the NationalDevelopment and Reform Commission (NDRC) accounting for around two-thirds of the total budgets, followed by the Ministry of Communications (nowmerged into Ministry of Transport), Ministry of Health and Ministry ofEducation (see Table 2.2). While the Ministry of Finance is by far the mostimportant provider of funds for agriculture, important programmes are alsounder the responsibility of the NDRC and the Ministry of Transport. TheMinistry of Agriculture is responsible for a relatively large number ofprogrammes focusing on technological improvements and on extensionservices, but fiscal transfers linked with these programmes are small (lessthan 1% of the total, see Annex 2.A1, Table 2.A1.2). Currently, there is no singleinstitution or formal mechanism in charge of integrating the most importantNSC policies. The NDRC and the MOF are key bodies for rural policy-makingand implementation, but they are only dealing with parts of the policiesaffecting rural areas (World Bank, 2007a). Co-ordination between the differentParty and government actors at the highest level is facilitated by formal andinformal meetings of top senior leaders. Also, the two Party Leading Groups(CLGFE and CLGRW) play a key role in bridging between leaders at the apex ofthe political system, in facilitating the transfer of the Party system’s decisionsto the central government and in expediting decision-making (OECD, 2005a).However, due to the Leading Groups’ relatively limited resources and to thelarge number of actors involved, horizontal co-ordination in actual policydesign remains modest and challenged by sector policy fragmentation.

Figure 2.1. CPC institutions involved in rural policy

CPC National Congress(held about every five years)

Central Committeeof the CPC (CCCPC)

Central Commission forDiscipline Inspection

Central MilitaryCommission

Secretariat,headed by the CPCGeneral Secretary

Politburo and itsStanding Committee

Policy ResearchOffice

Office of the CLGRW

CPCleadinggroups:

CentralLeading

Group onFinancial

andEconomic

Affairs(CLGFE)

CentralLeading

Group onRural Work(CLGRW)

…

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Figure 2.2. Central-level institutional framework for rural policy

CPCinstitutions

including

CCCPC

and

CentralLeadingGroups(CLGFE

and CLGRW)

State Council

Setdirections

Submit

DRCand other

think tanks

State CouncilLeadingGroup

(SCLGPAD)

AgriculturalDevelopmentBank of China

(ADBC)

Massorganisations

(CYLC,ACWF)

National People’s Congress (NPC)Agricultural Sub-Committee

Key institutionsunder State

Councilleadership

Ministries withoperationalfunctions

• National Development and Reform • Ministry of Finance (MOF)• People’s Bank of China (PBC)

• Ministry of Agriculture (MOA)• Ministry of Civil Affairs (MCA)• Ministry of Education (MOE)• Ministry of Environmental Protection (MEP)• Ministry of Health (MOH)• Ministry of Housing and Urban-Rural Construction (MHURC)• Ministry of Human Resources and Social Security (MHRSS)• Ministry of Land and Resources (MLR)• Ministry of Science and Technology (MOST)• Ministry of Transport (MOT)• Ministry of Water Resources (MWR)

Commission (NDRC)

Box 2.3. The institutional framework for rural policy

Different Party and state institutions are involved in the rural policy framework, with th

Central Committee of the Communist Party of China and two related leading group

setting the broad policy directions:

● The Central Committee of the Communist Party of China (CCCPC) sets the country

broad policy directions. Elected by the Party, the CCCPC issues top priority politica

documents and determines the long-term strategy for the country’s social, econom

and political development. The CCCPC’s core decision making body is the Politbur

which includes the members of the Standing Committee of the Politburo.

● The Central Leading Group on Financial and Economic Affairs (CLGFE, zhongyang caijin

lingdao xiaozu) is a key co-ordination institution for economic policy working under th

CCCPC and ranking at ministerial level. With its working office (commonly referred to a

zhongyang cajingban), it is an effective channel to policymakers, The CLGFE is headed b

the Premier of the State Council and members include all vice premiers, the minister

from NDRC, Ministry of Finance (MOF), People’s Bank of China (PBC) and the financia

regulation agencies. Normally, the director of the CLGRW working office (see below)

also one of the deputy directors of the Office of the CLGFE.

● The Central Leading Group on Rural Work’s (CLGRW, zhongyang nongcun gongzuo lingda

xiaozu) function is to research, discuss and co-ordinate rural and agricultural affairs. Th

working office (zhongyang nonggongban) ranks at ministerial level and is located under th



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Box 2.3. The institutional framework for rural policy (cont.)

CPC Policy Research Office. The CLGRW has established itself as a platform for polic

discussions with relevant ministries. It is headed by a Vice Premier in charge of rural an

agricultural affairs. Members include the Minister of Agriculture, the Minister of Wate

Resources, the Vice Minister of the NDRC and the Deputy Director of the CLGFE office.

These three Party bodies work jointly with the following three key institutions under th

State Council leadership to develop the policy framework and specific instruments within i

● The National Development and Reform Commission (NDRC) plays a key role in th

management of China’s economy, setting broad targets for annual plans as well as th

core tasks for the medium and long-term plans. It is crucial for the implementation o

agricultural and rural policies. The NDRC’s Department of Rural Economy works on

long-term strategy for rural development, covering areas such as agriculture, forestr

water management or poverty reduction. Being responsible for infrastructur

investment in rural areas, it co-ordinates budgetary allocations from the MOF an

investments financed by banks operating in rural areas. Recently, the NDRC has los

several functions which have been integrated into new agencies and ministrie

particularly regarding energy supervision, industry and trade management.

● The Ministry of Finance (MOF) is responsible for overseeing and administering a

central financial expenditure. Its Department of Rural Finance is in charge of draftin

policies which support agriculture (agricultural development plans, financial funds o

agriculture, poverty reduction funds, etc.). Though an implementing body, the MO

plays an important role as various policy measures tend to be general, allowing fo

rather flexible interpretations, and are not always assured by sufficient allocation o

funds. This leaves ample room for the MOF with regard to the actual distribution o

funds. Since fiscal transfers to the less developed regions are increasing and as th

central government takes more financial responsibility to delivering public services, th

MOF’s role in allocating subsidies is key for implementing rural policy.

● The People’s Bank of China (PBC) is in charge of monetary policies and exercises macro

control of the monetary sector. It supervises rural financial institutional system

including rural credit co-operatives and two banks specialised in extending preferentia

credits for agriculture and rural businesses: the Agricultural Bank of China (ABC) an

the Agricultural Development Bank of China (ADBC).

Finally, the following ministries and agencies under the State Council’s leadership a

have operational functions involving them in day-to-day operations and the practica

implementation of rural policies and directives:

● Nominally, the Ministry of Agriculture (MOA) is responsible for a broad range of rur

issues, but its actual influence on rural policies is rather limited. Its scope of functions

sector- and production oriented, elaborating agricultural industrial policies and settin

standards for agricultural technologies and product quality. The responsibilities fo

activities prior and past the agricultural production process and for many kinds o

supportive policies and services for rural areas are under the authority of other ministries



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● The Ministry of Civil Affairs (MCA) is responsible for the construction of a democrat

political system on the grassroots level, “guiding” the election of village committees an

self-governance mechanisms. It also provides public funding for the rural subsistenc

allowance programme (dibao).

● The Ministry of Education (MOE) is in charge of basic, higher and vocational educatio

in rural areas. It is involved in implementing rural free nine-year compulsory educatio

and enhancing vocational education.

● The newly created* Ministry of Environmental Protection (MEP) is responsible fo

implementing an environmental protection action plan for the rural society. Its task

include the comprehensive control of the rural environment, the prevention and contro

of soil pollution, the control of agricultural non-point pollution, the development o

ecological agriculture, as well as the optimisation of the agricultural growth mode.

● The Ministry of Health (MOH) formulates working programmes and policies on rura

health and conducts research on the rural health care reform. It is also in charge o

building the new rural co-operative medical scheme (NRCMS).

● The Ministry of Housing and Urban-Rural Construction (MHURC) is responsible fo

drafting policies, laws and development plans related to city, village and town plannin

and infrastructure construction. The MHURC’s Department of Urban and Rural Plannin

participates in the review of land use planning.

● The Ministry of Human Resources and Social Security (MHRSS) is in charge of policie

regarding rural endowment insurance and develops a management system for rura

endowment insurance funds.

● The Ministry of Land and Resources (MLR) is responsible for the investigation

planning, management, protection and rational utilisation of natural resources. It

responsibilities also include the protection of the lawful rights and interests of th

owners and users of land and other natural resources, including mediating and comin

to decisions regarding major disputes over rights.

● With a specific rural department, the Ministry of Science and Technology (MOST

studies and elaborates the science and technology strategy to promote rural an

agricultural development. The MOST controls and organises major national agricultura

science and technology plans.

● The Ministry of Transport (MOT) integrates the functions of the former Ministry o

Communications (MOC) and of several other institutions, being in charge of rural roa

and highway construction. It manages and supervises the investment projects on rura

traffic financed by the central government, as well as the implementation of th

national project of linking each village to a highway. However, the new structure fails t

integrate conventional railway transportation, still administered by the Ministry o

Railways.



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The difficulties in co-ordinating government policies along the linesindicated by the NSC strategy are reproduced at lower levels of government whereeach ministry or bureau has entities, at least down to the county level. Theseentities are practically responsible for the same tasks than central-level agencies.Even if they do not have specific rights to develop own policies, their functions gobeyond mere implementation of policy decisions and frequently comprise thechannelling of funds and the allocation of fiscal resources at different levels ofgovernment. Variations exist across localities, generally due to historical reasons.For example, some provinces, prefectures or counties have established a RuralAffairs Office or an Agricultural Commission with larger, co-ordinating functionsacross sub-sectors (World Bank, 2007a). The central government’s targets areconveyed to the different levels of government through level-by-level delegation.This explains the relatively small size of the central government (core ministriesand state agencies): Whereas the whole public sector features a staff of 33 millionincluding public service units (PSUs), there are only 50 000 employees at the top(World Bank, 2007a). Vertical co-ordination is complicated by the fact that sub-national institutions have their own range of objectives, which might divergefrom the central government's policy priorities. To avoid conflict, an importantmechanism of vertical co-ordination is the annual Central Conference on RuralWork (zhongyang nongcun gongzuo huiyi), which is organised jointly by the CCCPCand the State Council. This conference maps out the strategy for agricultural and


● The Ministry of Water Resources (MWR) formulates policies and regulations for wate

conservation. Its mandate extends from the organisation of farmland wate

conservation constructions to rural electrification and rural water and electricit

supply. The Department of Irrigation, Drainage and Rural Water Supply, and the Burea

of Rural Electrification are in charge of providing basic water and electricity services.

● The State Council Leading Group on Poverty Alleviation and Development (SCLGPAD

is working directly under the State Council, but with its office being hosted by the MOA

The SCLGPAD has a special budget and is in charge of poverty reduction and econom

development in the most backward areas.

● Mass organisations active in rural development include the Communist Youth Leaguof China (CYLC), which provides training for young rural residents, and the All-ChinWomen’s Federation (ACWF).

* The National People’s Congress’ parliamentary session of 2008 concluded the State Council’s latest round reshuffle. Four ministries whose tasks and functions affect rural areas have been newly created: thMinistry of Environmental Protection (formerly State Environmental Protection Administration [SEPA]), thMinistry of Housing and Urban-Rural Construction, the Ministry of Human Resources and Social Securitand the Ministry of Transport.

Source: OECD, partly based on OECD, 2005a.



rural development and establishes main development targets, involving officials

in charge of rural development at different levels of government. Recent

conferences have focused on boosting infrastructure construction, modernising

the agricultural sector, increasing rural residents' income and livelihood, and“building a new socialist countryside”. After the central conference, comparable

rural work conferences are hold on the province level in order to design local rural

development plans. Still, part of the central government directions get lost

through the complex five-layer administrative structure (from central to

township level) before they reach the intended beneficiary, which impedes

effective implementation. In this regard, a recent reform initiative for sub-

national administrative divisions aiming at direct provincial rule over county

governments (shengzhi guan xian) might contribute to better policy

implementation by making sure that county-level governments receive resourcesallocated at higher levels without passing through the prefecture level. Although

interactions ideally involve only two tiers at the same time, the reality of

implementing policy is more complex. There are frequent conflicts of interest

among different levels, between sectoral agencies and within the Party and

government bodies’ “dualism” following a complex system of vertical and

horizontal relationships which risk contradicting with each other (see

Annex 2.A1, Box 2.A1.4). Party bodies play an important informal role in the

multi-level system of governance and wield considerable power besides the

administrative system. Each administrative level of the CPC committee has a

specific office in charge of the local strategy for rural and agriculturaldevelopment (local nongcun gongzuo bu), comparable to the function of the CLGRW

office on the national level. There is no direct relationship of responsibility

between these local offices and the bureaus within the administrative system.

Second, a dysfunctional intergovernmental transfer system and the unintended effects of recent reforms, such as the rural tax and fee reform, hamper an appropriate distribution of resources...

Despite important progress in the past years, China’s fiscal system is still

characterised by little local autonomy, increased dependency on fiscal transfer

payments and large disparities across localities. Although nominally

government expenditure and revenue is highly decentralised down to the lowest

levels, provincial governments cannot determine either the base or the rates of

local taxes. Sub-national governments’ role is limited to agents acting on behalf

of the central government. Moreover, different constraints affect local

governments’ autonomy, including the target responsibility system whichprovides incentives in terms of career possibilities for local officials to allocate

resources according to higher government levels’ preferences. Another

constraint on local autonomy has been unfunded mandates from higher levels

of government which distort the allocation of spending in favour of easily



measurable outputs. Central government norms on the local provision of publicgoods and services also reduce local autonomy. There are two main sources of

the local public finance system: i) revenues from central, sub-national andshared taxes and fees, particularly the VAT, the business tax, and corporate and

individual income taxes; and ii) three types of increasingly important fiscaltransfers (see Annex 2.A1, Table 2.A1.4) aiming to compensate for local

governments’ fiscal gaps and to equalise growing resource inequalities:i) Earmarked transfers, which in 2005, made up more than half (51.4%) of totaltransfers (OECD, 2006c). Poor local governments risk not to benefit from them, as

they are required to match central transfers with own funds. As the central leveldetermines policy mandates and key expenditure items, local fiscal autonomy

to channel funds to their own priority expenditure areas is constrained; ii) Tax

rebates, based on tax collection by origin. Their share has decreased recently, but

still was at 36.1% of total transfers (OECD, 2006c). They include VAT andconsumption tax rebates, and income tax subsidies; iii) General purpose transfers

represent a relatively low (12.5%, OECD, 2006c), but growing share in totaltransfers. They include block transfers and minority region transfers targeting

regions with substantial and generally poor minority populations.

In recent years, a comprehensive rural tax and fee reform (RTFR) wasimplemented in order to remove all informal fees and formal agricultural

taxes on farmers. Before this reform, local governments and in particulartownships heavily depended on extra-budgetary funds (informal fees, leviesand labour contributions), as well as on off-budget funds collected from land

transactions and by PSUs. The RTFR consists of i) a tax-for-fee reform,implemented step by step in the early 2000s and bringing previously extra-

budgetary revenue and expenditure on budget and banning extra-budgetaryfunds; and ii)the abolishment of all agricultural taxes, started in 2004 and

including the abolition of the agricultural tax, the special agricultural productstax and the animal husbandry tax. The objective was not only to reduce and

standardise the fiscal burden on farmers often considered as “excessive” (seeAnnex 2.A1, Box 2.A1.5), but also to impose a more structural framework for

local governments. Main elements of the tax-for-fee reform included themerger of agricultural taxes (which have later been eliminated) and townshipand village levies, the elimination of fees and levies, compulsory labour and

donations which local officials often used to fund capital investments andother extra-budgetary expenditure. The reform also set an upper limit for

farmers' tax obligations by fixing the tax rates and tax base. The RTFRsucceeded in responding to farmers' complaints: Between 2000 and 2004, per

capita taxes and fees dropped by more than half from CNY 145 to CNY 72, forfarmers surveyed across six provinces by the Chinese Academy of Sciences

(see Table 2.3). Other sources such as Han (2008) indicate similar, albeit slightlylower per capita burdens for these years. Farmers' total tax rate representing



the share of tax burdens in their net income declined from 6.5% to 2.4%. It wasthe “legally permitted taxes” (agricultural taxes, township pooling funds andvillage levies, agricultural tax supplement, and compulsory labour) whichallowed for this important reduction. However, “miscellaneous informallevies” such as local fundraising and administrative fees such as user chargesfor residential land, vehicle plate fees or marriage certificates did not changeaccordingly, even if the RTFR has formally prohibited most of these levies.

However, this reform also reduced local governments’ possibilities togenerate self-raised funds, resulting in fewer fiscal resources. The RTFR'simpact varies by region and by administrative level, as localities with animportant weight of agricultural taxes in their total revenue such as Anhui orHenan are hit in a much harder way. With insufficient fiscal transferpayments, especially for poorer localities, and increasing responsibilities, gapsbetween expenditure and financial resources of local governments havearisen, although the amount of revenue losses is difficult to estimate, as illegalfees and charges as well as compulsory labour are not listed in aggregatestatistics (see Table 2.4). It is also not clear whether the situation of local

Table 2.3. Farmers’ tax burdens before and after the rural tax and fee reform (RTFR)

Source: Lin et al., 2007.

Per capita tax burden Tax structure Tax rate

2000 (CNY)

2004 (CNY)

Changes (%)

2000 (%)

2004 (%)

Change (%)

2000 (%)

2004 (%)

Change (%)

Total tax burden 145 72 –51 100 100 6.5 2.4 –64

Legally permitted taxes 103 30 –71 71 41 –30 4.6 1.0 –79

Agricultural tax and supplement

63 19 –70 61 63 2

Township pooling and village levies

32 5 –85 31 16 –15

Compulsory labour 8 6 –25 8 21 13

Miscellaneous informal levies 42 42 0 29 59 30 1.9 1.4 –26

Local fundraising 15 16 4 36 38 2

Administrative fees 27 26 –3 64 62 –2

Table 2.4. County and township governments’ fiscal gap, 1998-2004

Note: The fiscal gap is measured as revenue share minus expenditure share.

Source: World Bank, 2007a.

Per cent 1998 2000 2002 2004

County and township share of total expenditure 28.2 26.2 28.6 31.3

County and township share of total revenue 20.3 19.7 17.1 17.2

Fiscal gap for county and township governments –7.9 –6.6 –11.6 –14.2

As % of GDP –1.0 –1.1 –2.1 –2.5



governments experiencing fiscal gaps has changed significantly since 2004,although different policies have been implemented, such as the “three

rewards and one subsidy” (sanjiang yibu) programme aiming to solve the

problems of fiscally poor counties.2 The growth in overall transfers has largelytaken the form of earmarked grants, which increase dependency from central

resources and place a heavy administrative burden on local governments.Whereas the competences at the county level have been strengthened by

recent reforms, the township level and villages face financial restrictions andoften continue to raise extra-budgetary income. Despite the government’s

attempt to introduce fiscal equalisation, disparities in per capita fiscal

expenditure across rural governments are stark and have strong implicationson service delivery. On the intermediate level of the administrative system,

the provinces have particularly powerful means to determine the amount ofshared taxes and transfers to allocate to prefectures (and they in turn to the

county level and so on). These means are given by delegation and oftenimplicitly, as neither the Constitution nor the Budget Law (1994) contain any

formal assignment of specific authorities to them or to prefectures. The largedisparities across provinces in shares of revenue and expenditure at the

disposal of local governments can largely be explained by this little formalised

and decentralised approach (World Bank, 2007a). Dysfunctionalities in theintergovernmental transfer system may also be linked to the weak

representation of rural interests. According to the present Election Law for theNational People’s Congress (NPC) and local people’s congresses, the number of

people a rural NPC deputy represents is four times the number for an urbandeputy. The current institutionalised urban-rural ratio of 4:1 is increasingly

considered unfair and inefficient to help solving rural development problems.

… seriously hampering the capacity of sub-national authorities to face increased responsibilities

The deficiencies of the intergovernmental fiscal system discussed above

and the stark differences in growth performances across the country oftenresult in a substantial lack of resources with respect to responsibilities at

county and township level and in villages (local government levels) (on

territorial administrative divisions, see Table 2.4). Following recent reforms andalso in light of NSC policies, the county-level administrative units have become

the most important local government level. Its expenditure responsibilitiesnow include free nine-year compulsory education, teachers’ salaries for rural

basic education (yixian weizhu reform), the new rural co-operative medicalscheme (NRCMS) or social security policies such as the “five guarantees for

households” (wu baohu) or the subsistence allowance programme (dibao). The

fiscal and transfer-system reforms have resulted in an increase in county-levelfinancial resources, even if counties’ own resources have decreased in relative



terms (World Bank, 2007a). On the one hand, with the implementation of thetax-for-fee reform, county-level governments have little leverage to raise extra-budgetary funds. On the other hand, many richer counties are collectingconsiderable off-budget revenues which mainly come from land-relatedtransactions. Also, to counter their poor financial situation and cope withunpredictable needs to match higher-levels transfers, counties and townshipsresort to debt (Zhang et al., 2006), most of which illicit, with wage arrearsprobably being the most visible and most discussed form of local debt (OECD,2006a). The lack of financial resources is a key issue also at the township leveland in villages and it is aggravated by the unclear “county-township fiscalsystem” (xianxiang caizheng tizhi), whereby a county and its different townshipsnegotiate the details of revenue sharing and expenditure assignments, whichmight differ even among the townships within the same county. To fightabuses at the township level, recent pilot programmes (xiangcai xianguan) shiftthe responsibility for township’s public finance to the county level while thetownships maintain the right to use this money. These programmes have beencontroversial as county-level governments risk to use resources for otherpurposes (He, 2008). With few exceptions, higher levels of government do notinterfere in the decentralised county-township system of revenue sharing andexpenditure assignments (World Bank, 2007a). Villages are not an official levelof state administration, but play a crucial role within the NSC scheme as thebasic rural unit of a xiaokang society, providing the platform for institutionalreform in order to build “rural social communities” (nongcun shequ). Villageshave important responsibilities for implementing central government policies(land administration, family planning, financing and provision of public goodsand services). Similar to townships, villages’ financial resources increasinglydepend on fiscal transfers from higher levels of government. Transferpayments are not sufficient to compensate for eliminated official sources ofrevenue and do not represent the major part of resources. Income from land-related transactions (sales and contract payments for land) increased byalmost 50% between 2000 and 2004 (World Bank, 2007a), illustrating the factthat villages try to tackle financial gaps with revenue from land and asset sales.This source of income might become more difficult to realise if recentlyannounced land use measures are fully implemented.

Third, local governance weaknesses challenge the actual implementation of central directives

Analysis reveals at least four main weaknesses in rural China's localgovernance:

● Modest administrative capacity of local officials. Since the beginning ofmarket reforms, the Chinese government has made great efforts inadministrative and civil service reforms aimed at building a “younger,



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Box 2.4. The territorial administrative divisions

China has four sub-national levels of state administration and a fifth level which i

essentially local. Each level has different types of administrative divisions. At the end o

2006, the numbers of units were as follows:

Province level (sheng): The 31 units of this first-level administrative division compris

22 provinces (sheng), five autonomous regions (zizhiqu, namely Guangxi, Inner Mongolia

Ningxia, Tibet and Xinjiang) and four province-level centrally administeremunicipalities (zhixiashi, that is Beijing, Chongqing, Shanghai and Tianjin). Provinces an

autonomous regions have an average population of 45.1 million inhabitants. Eigh

provinces have a population of more than 60 million inhabitants, four of them have mor

than 80 million inhabitants (Guangdong, Henan, Shandong, Sichuan), whereas some of th

western provinces and autonomous regions such as Tibet (2.81 million), Qingha

(5.48 million) or Ningxia (6.04 million) have much smaller populations (National Bureau o

Statistics of China, 2007). In terms of geographical size, the provinces and autonomou

regions vary between Hainan (33 920 km2, comparable to OECD countries such as Belgium

or Switzerland) and Xinjiang (1 660 000 km2, almost comparable to the size of Mexico).

Prefecture level (diqu): This second-level administrative division comprises 333 units an

has an average population of 3.7 million. Most provinces are entirely subdivided into th

283 prefecture-level cities (dijishi). 15 of them are called sub-provincial cities, administere

independently for economy and law. Prefecture-level cities are generally composed of a

urban centre with a non-rural population of more than 250 000, but also with surrounding

much larger rural areas. Prefecture-level cities are thus not “cities” in the usual sense of th

term, as they are often the results of previous mergers between former prefectures an

prefecture-level or even upgraded county-level cities. The remaining 50 units, mostly i

autonomous regions, have a different structure than the prefecture-level cities and ar

called prefectures (diqu), autonomous prefectures (zizhizhou) or leagues (meng).

County level (xian): The 2 860 units of the third-level administrative division compris

1 463 counties (xian), 856 districts under the jurisdiction of cities (shixiaqu), 369 countylevel cities (xianjishi), 117 autonomous counties (zizhixian) and several other special units

mostly in autonomous regions. This level has an average population of around 600 000

Counties are the most common county-level unit. County-level cities are, like prefecture

level cities, not “cities” in the usual sense, since they are large administrative regions tha

cover both urban and rural areas. With advanced industrialisation and urbanisation, man

counties have been transformed to county-level cities, featuring non-agricultural rura

population and a significant part of the tertiary sector in GDP. Counties, however, are sti

dominated by the agricultural sector.

Township level (xiang): After merging many smaller townships to larger ones

34 675 rural units remain at the fourth and lowest formal level of state administratio

(see 2.3.4). They include rural towns (19 369, zhen) and townships (15 306, xiang). In

addition, there are 6 355 mostly urban street communities (jiedao banshichu), resulting in

total of 41 030 units at the township level.



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better educated leadership” at all levels of government. A series ofinstitutional reforms in 1998 and 2003 aimed inter alia to restructure and

downsize local governments and modify the rigid personnel systems.

Indeed, the merger of smaller townships to larger ones has reduced thenumber of towns and townships considerably from 43 735 in 2000 to 34 675

at the end of 2006 (Zhao, 2005 and Han, 2008) and the merging of townships

and villages to form more viable administrations pursues this strategy.However, subsequently downsizing the number of local staff and posts has

proved very difficult as alternative jobs for redundant personnel are scarce,

particularly in less developed regions, and as financially stronger localadministrations have become less motivated to implement the downsizing.

As a result, apart from the highly educated officials of central ministries

and of richer provincial governments, the quality and capacity of the civilservice varies greatly across China. This represents a major obstacle to the

implementation of NSC policies requiring better co-ordination and strategic

capacity than traditional sectoral policy. Non-competitive and often opaqueprocesses characterise the filling of positions, particularly at local levels of

government. Moreover, cadres3 are moved from rural enterprises to civil

service posts without respecting the centrally determined competitiveprocesses (OECD, 2005a). Fieldwork shows that many rural cadres are

insufficiently prepared to deal with public policy issues. In Shaanxi, Gansu

Box 2.4. The territorial administrative divisions (cont.)

Village level (cun): There are some 550 000 administrative villages (xingzhengcun) in rura

areas, often consisting of several natural villages (zirancun). Supplementary, urban area

have an unknown number of neighbourhoods or communities (shequ). Formally belongin

to the township level, villages have limited administrative competences, mostly being a

organisational division (census, elections, mail system).

Source: OECD, based on National Bureau of Statistics of China, 2007; Han, 2008; OECD, 2006b.

Level of administrative division Units

National level Centre (population: 1.31 billion)

Province level (31 units) Province or autonomous region (average pop.: 45.1 million)

Centrally-administeredmunicipality

Prefecture level (333 units) Prefecture-level city or prefecture (average pop.: 3.7 million)

County level (2 860 units, avg. pop.: 600 000) County County-level city District District County

Township level (41 030 units) Township Town Street community

Street community

incl. Village level (550 000 rural units) Administrative village

Administrative village

Neighbourhood or community

Neighbourhood or community



and Henan provinces for example, township cadres are often formertechnical college and vocational middle school graduates and sometimes

farmers. Also, the turnover and transfers from other administrationsremain very high and limit the officials’ understanding of the specific local

environment in which they operate. With some exceptions, empiricalstudies show the absence of clearly articulated roles and functions against

which they can be held accountable or receive incentives for. In principle,local rural cadres are paid as public officials according to a strictlyhierarchical scale. However, differences in remuneration are significant

between provinces and also from one city or county to another within thesame province.4 Available statistical data shows that local officials’ salaries

are not sufficiently competitive which in turn can become an incentive forcorruption.

● Low accountability in rural regions. Local-level accountability is very low in

rural China both vis-à-vis higher administrative levels and vis-à-vis thecitizens. The centralisation at the county and higher levels of political,

administrative and fiscal powers which accompanied the rural tax and feereform risks to reduce local governments’ accountability to their citizens

and to weaken officials’ incentives to spend efficiently and effectively.Higher levels of government struggle to adequately track where, how much

and how public money is spent, what public services are delivered or howmany people the state employs. The China National Audit Office (CNAO),although a ministry under the State Council and therefore not an

independent institution, has become more visible in checkingaccountability and monitoring of government performance and reports on

frequent irregularities in the use of public resources, with widespreadwithholding and embezzlement of funds (Xinhuanet, 2008a). However,

follow-up procedures remain often weak and reveal shortcomings in theinstitutionalisation of accountability (OECD, 2005a). Local governments

conduct monitoring and audits of lower-level officials using the targetresponsibility system where officials sign a political performance contract

with their immediate superior authorities. Reporting requirements underthis system have been extended and performance is mostly evaluated in atop-down approach by certain “core” indicators which are relatively easy to

monitor, but risk being rather simplistic.5 In many areas, governmentalstructures are not yet developed enough to effectively monitor and evaluate

policies by fulfilling these auditing and reporting requirements. To improvemonitoring, the Ministry of Finance has enforced its statistical capacities.

Still, top-down monitoring mechanisms tend to measure the gap betweenwhat has been decided at the top and how it is implemented on the ground.

Local governments competing for higher-level transfers have strongincentives to showcase in fiscal spending and investment which often does



not bring even short-term benefits to the local population (Lin et al., 2007). Abottom-up approach to monitoring through increased local budgettransparency is basically non-existent (World Bank, 2007a).

● Weak rule of law6 in the countryside. Courts are a key institution in turningthe laws into reality, but they remain weak and have a low status in thepolitical system. Local courts in China are subsumed under the jurisdictionof the local government in which they are embedded. As such, they rarelyfunction as an independent branch of government. Local governments,which control the finances upon which the courts in their jurisdictiondepend, often choose to set aside or ignore court rulings (Mertha, 2007).While the situation is gradually improving, local-level courts remaininstitutionally weak instead of evolving into a source of overarchingauthority. Since 1978, reforms of the judiciary system have mainly focusedon national and province-level jurisdictions. However, the largest numbersof litigations in China occur at the village and county levels, for the mostpart in the countryside where the fewest professional lawyers and judgesare available. Following a reform which became effective in 2007, litigationfees have been harmonised and considerably reduced to facilitate access tojustice, approximating a virtual free of charge system. A large proportion oflitigation is related to issues such as land expropriations, women farmers’discrimination, unfair compensation and administrative lawsuit against“illegal fees” (luanfei) decided by local governments. These problems canaffect the stability of the Chinese countryside and the establishment of theframework conditions necessary to economic and social development.

● Limited citizens’ representation and participation. Democratic self-governanceof villages is one of the key principles within the NSC strategy. Studies haveshown that the direct election of village heads and village committees leadsto the implementation of more and better public goods projects andinvestments than in the case of appointed village heads (Rozelle et al., 2007).However, the elected village institutions are subordinate to townshipgovernments, as well as to the “core” leadership of the village CPC branchand its Party secretary, who is a nominated official. In many places,relations between village committees on the one hand and townshipgovernments and the village CPC branches on the other hand have beenstrained. The strategy pursued in some localities of conferring the two toppositions in a village on one elected official could be a way to furtherdemocratise local governance, but it also risks blurring the village head’sresponsibility (Tan and Xin, 2007). Other election problems includegovernment intervention in the process of nominating candidates, poormonitoring and evaluation mechanisms in the post-election period as wellas vote purchasing, especially in more developed rural areas. On thetownship and county level, elections or other formal mechanisms for



holding officials accountable to citizens for their performance are still

lacking. However, localities in different provinces have made experiments

by expanding grassroots democracy to the township level, directly electing

township Party secretaries and township heads. Striving to promote their

careers, local leaders pioneered in further developing local-level elections

through the empowerment of township governments (Lin et al., 2007).

Another experiment is the so-called wenlin model in Zhejiang province

inviting residents to deliberate on the allocation of the public budget (He,

2008). Public participation in legislative processes is not a legally guaranteed

right at present. Nevertheless, provisions for public consultation can be

found in the rules of national-level agencies and local-level governments

for drafting regulations.7 These provisions reflect the Chinese government’s

awareness of the necessity and importance of ensuring public openness.

However, current regulations do not provide complete guarantees.

According to the present regulations, a formal standard for determining

whether regulatory affairs are important or bear upon a citizen’s immediate

interests does not exist. The government agency has full control of the right

to decide whether a hearing is held and how the hearing is organised.

Despite the requirement that different opinions be recorded in the

regulation draft for examination, there are no requirements regarding the

authenticity and scope of the opinions recorded. No regulations are

available concerning participants in, or the effectiveness of, the hearing.

The hearing functions merely to provide information to the regulatory

department for decision making. Furthermore, a number of non-

compulsory clauses endow the investigating organ with large discretion,

which makes it possible to exclude the public from regulation drafting

procedures. At the same time, the public lack the means to appeal in such

cases. The participation of villagers in planning, design, implementation

and monitoring of local-level decisions varies significantly but its

importance is increasingly recognised in reports made by the leadership.8

This mainly takes the shape of legislative hearings and advocacy for issues

such as environmental protection and public service provision (Balme,

2008). The so called yishi yiyi participatory budgeting arrangement involving

rural residents in the selection of investment projects is an example of the

government’s efforts to increase citizens’ participation, but its application is

not yet sufficient. Once this policy is applied more commonly in villages,

citizens' participation in project selection and resulting improved allocation

efficiency might enhance policy implementation and become a source of

cost savings. Since independent organisations emanating from the civil

society are essentially illegal under current Chinese law, non-governmental

organisations (NGOs) need a government-approved “supervising

organisation” from the Party or government for registration. Among the



387 000 non-profit social organisations (shehui zuzhi) registered in 2007 bythe Ministry of Civil Affairs (MCA), only a small minority are active in ruralareas, illustrating the weak institutionalisation of citizens’ participation inthe countryside. In order to solve the problem of rural producers’ marketaccess and assist them to organise into marketing associations, thegovernment started to support farmers’ professional associations or co-operatives. In 2003, however, only about 7% of villages had functioningprofessional associations. Still, the existing ones have become importantmarket actors at the rural level. Professional associations do notsystematically depend on an official tutor and their internal organisation isincreasingly institutionalised. A regulatory framework was voted in 2007:this Rural Co-operatives Law is meant to improve the efficiency of the agro-food market. A public evaluation of the law by professional co-operativestakeholders would be necessary.

Notes

1. An assessment of the total amounts spent and their distribution across varioussubsectors is not easy as there is neither a separate budget line nor a selectedinstitution which would be in charge of co-ordinating budgetary expendituretargeting rural areas. Therefore, within this study an effort has been made tocollect necessary information on budgetary support to rural areas provided byvarious ministries. However, as such support is provided by numerousinstitutions, within a large number of programmes, and involves both the centralgovernment and sub-national budgets, the data collected should be interpretedwith caution.

2. The “three rewards and one subsidy” programme defines “fiscally poor counties”as counties whose “available revenues” were insufficient to meet “basic fiscalneeds” in 2003 (World Bank, 2007a). The programme consists of four elements(Ministry of Finance, 2005; World Bank, 2007): i) an incentive programme for localgovernments to restore fiscal balance, consisting of a grant to county andtownship governments which improve their fiscal balance through above-averagerevenue mobilisation, and another grant to provinces which increase theirequalisation transfers to counties; ii) an incentive programme for counties andtownships to reduce the number of institutions (e.g. townships) and staff size; iii) areward programme for counties with important crop yields to encourage grainproduction and to keep land under agricultural use; iv) a subsidy programme forcounties and townships based on past achievements in easing financialdifficulties.

3. The term “cadre” (ganbu) refers to public officials holding a responsible position inthe Party or government.

4. As such, in July 2006, a report from the Central government recommendedcarrying a reform to unify the salary system (Report on the Decision by the CentralGovernment on the civil servant staff system, 7 July 2006, http://news.sina.com.cn/c/2006-07-06/192010351201.shtml).

5. An extreme example is the birth rate indicator, used to make the one-child policyeffective on the local level.



6. Rule of law defined by the following criteria: i) the principle of legality with localgovernment action based on laws; ii) the local government is subordinate to law;iii) a hierarchy of rules with national laws at the top; iv) a system to control thishierarchy, particularly through citizens’ possibility to appeal; v) an independentjudicial system (Balme, 2008).

7. These provisions include the Ordinance Concerning the Procedures for the Formulationof Administrative Regulations and the Regulation on the Procedures for the Formulation ofRules.

8. In his report to the 16th National Congress of the CPC in 2002, Jiang Zemin putforward that “decision-making organs at all levels should establish (…) a system ofreporting social conditions and public opinion, a system of keeping the publicinformed and a system of public hearings on major issues closely related to theinterests of the people”.



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ANNEX 2.A1

Additional Boxes, Tables and Figures

Box 2.A1.1. The theoretical framework for the reform period

The theoretical framework underpinning the reform period started with the concepof the “four modernisations” (sige xiandaihua), announced already by Zhou Enlai in thmid-1960s and revived by Deng Xiaoping to launch the economic reforms in 1978. Istipulated the development and rise of the Chinese economy until the middle of th21st century by modernising agriculture, industry, national defence, as well as sciencand technology.

In the mid-1980s, Deng Xiaoping elaborated a development strategy of “three stepsquantifying political and economic objectives. The first step or objective was to double thlevel of real GDP during the 1980s and thus solve the problem of inadequate clothing anfood (wenbao wenti). The second step was to build a xiaokang (moderately well-off) society bthe year 2000 by quadrupling the 1980 real GDP level. The third step was to raise the pecapita GDP within the following 30 to 50 years to the level of an intermediate developecountry.

The concept of “three represents” (sange daibiao) proposed by Jiang Zemin in 2000mainly served to re-orient and re-position the Communist Party of China, but it alsfurther legitimised private entrepreneurship and facilitated party membership foentrepreneurs.

The idea to build a xiaokang society in which all people can live a fairly comfortable life iparticularly interesting: after Deng Xiaoping’s first elaboration in the 1980s, it was reuse(and redefined) by former President Jiang Zemin and President Hu Jintao to describ“Chinese-style” modernisation and notion of prosperity. The 17th National Congress of thCPC in 2007 has reiterated the long-term objective of a xiaokang society to be reached in 202and included in the concept criteria for economic growth, establishing the objective tquadruple the GDP per capita of the year 2000 by 2020. Moreover, alternative notions aralso mentioned, such as the quality of life, a balanced environmental development anefforts to “build a new socialist countryside”.



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Box 2.A1.1. The theoretical framework for the reform period (cont.)

Throughout the 11th Five-Year Plan (2006-2010), two concepts put forward by the fourtgeneration leadership (President Hu Jintao and Premier Wen Jiabao) take on a morcomprehensive approach towards development: the “scientific development concept” (kexufazhan guan) and the goal of building a “harmonious society” (hexie shehui) complement thdiscourse about a Chinese path to modernisation with a social dimension and stress thneed to reconcile conflicts between rural and urban areas, between various regions, as weas between different social groups to promote social stability.

The “scientific development concept” moreover attaches great importance to the needs oindividuals (“putting people first”) and to a sustainable and co-ordinated developmentrespecting five balances: urban and rural development; development between variouregions; economic and social development; harmonious development of man and nature; awell as internal development and opening up to the world.

The “harmonious society” concept is further linked to notions of socialism, social welfarand more equal income distribution, and to the rule of law. As for the role of the governmenthe concept stipulates a closer relation between the government and the people.

For the leadership, scientific development and a harmonious socialist society are integrato each other and neither is possible without the other. The central government’s strategy forural development integrates both concepts, incorporating the NSC scheme in the morlong-term objective of realising a xiaokang society.

Source: OECD, partly based on OECD (2005a).

Box 2.A1.2. No. 1 Documents targeting rural areas

After the start of the reform period, ten No. 1 Documents (yihao wenjian) have targeterural areas. These documents, issued jointly by the CCCPC and the State Council in Januaror February, are the first major policy directives of the year and give policy suggestions fothe National People’s Congress (NPC). The first series of documents was issued between 198and 1986:

● 1982 No. 1 Document: This document is of great significance as it sums up the reformsteps implemented since 1978 and gives specifications. Particularly, the documenincludes the introduction of production contracts with households within the socialishousehold production responsibility system (HPRS).

● 1983: This document further affirms production contracts with households as thformal economic mechanism. Agricultural development is included in the concept osocialism with Chinese characteristics.

● 1984: In order to encourage farmers to increase investment in long-term and productivprojects, the third No. 1 Document guarantees a 15-year contract period for rurahouseholds’ land use rights. The document also “allows” farmers to go to the cities tseek work (without being offered social welfare or subsidies).



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Box 2.A1.2. No. 1 Documents targeting rural areas (cont.)

● 1985: With the fourth document, market regulation efforts are strengthened so thaagricultural production can better meet market demands. Unified procurement and salof agricultural products are abolished. The agricultural tax is collected in cash rathethan in kind.

● 1986: The fifth document affirms that agriculture is the basis of the national economywith the individual economy being a necessary complement to the socialist economyAs the material and technological foundation of agriculture is still fragile, the need for long-term policy strategy is expressed.

Between 2004 and 2008, a second series of five consecutive No. 1 Documents have focuseon rural areas and particularly on the sannong issues. Throughout the documents, a moderagriculture is considered to provide responses to all sannong issues and to be the basis foincreasing agricultural productivity and industrial development, maintaining food securityincreasing incomes of farmers, reducing poverty and improving environmental sustainability

● 2004 No. 1 Document: With this document, solving the sannong issues becomes a topriority. One major topic is the need to increase farmers’ income and to decrease thrural-urban income gap. To achieve this, the document calls for adjusting the ruraeconomic structure, accelerating scientific and technological progress, deepening rurareform, increasing input in agriculture and strengthening agricultural support.

● 2005: The second document within this series targets ways to raise the agriculturaproduction capacity by further intensifying rural work. Besides, it calls for controllinthe reallocation of farmland for non-agricultural purposes to avoid a decline in thamount of basic farmland.

● 2006: This document gives specifications on “building a new socialist countryside” ana co-ordinatedd economic and social development of urban and rural areas. Besidemeasures to support agricultural production, broader rural development measures arannounced, such as the strengthening of rural infrastructure (drinking water, energproduction, road construction), environmental protection, democratic governancecomprehensive rural reform, a well-off standard of living and a civilised life in thcountryside. Again, a strict control of farmland reallocations for non-agriculturadevelopment purposes is included.

● 2007: The fourth document focuses on the development of a modern agriculture as thprimary task for building a new socialist countryside. In a more general way, increaseexpenditure for the sannong issues is announced, as well as comprehensive rural reformaiming at improved rural public service and governance, sufficient funding for a bettesupply of public services and a reform of the rural financial system.

● 2008: To consolidate the base of agriculture, the fifth No. 1 Document reaffirms thimportance of the sannong issues. It calls for developing institutional mechanisms for theconomic and social integration of urban and rural areas. In an explicit way, the documenevokes enhanced ways to protect the land use rights of rural residents and betteenvironmental protection (particularly irrigation, water conservancy and soil protection).

Source: OECD, based on Xinhuanet (2008b)



2007

696

150

166

600

9780

180

000

470

000

000

650

800

100

166

066

400

900

200

680

200

380

000

200

700

200

000

000

100

Table 2.A1.1. Public expenditure on social development in rural areas, 2004-07

Million CNY 2004 2005 2006

Total social development

38 790 48 745 62 032 91

Including:

Rural education

8 330 16 180 18 752 31

Rural health care system

4 376 5 244 14 047 29

Rural poverty alleviation

21 374 22 173 22 593 21

Rural social security

4710 5148 6640

Including:

Ministry of Education

Rural education

Two eliminations (tuition and other fees, including textbooks charges) and one subsidy (on lodging expenditures)

0 6 400 8 495 21

Primary and middle schools' dangerous building reconstruction project

2 000 2 000 2 000 2

National compulsory education project in poor countrysides 1 470 1 470 1 470 1

Construction of rural boarding schools 3 000 3 000 3 000 1

Modern distance education in rural primary and middle schools 1 260 1 260 1 260 1

Subtotal 7 730 14 130 16 225 26

Ministry of Health New rural co-operative medical scheme 520 1 040 9 460 23

Rural medical assistance 1 353 1 505 1 888 2

Thousands of doctors and physicians aiding rural health project 0 166 166

Subtotal 1 873 2 711 11 514 26

Ministry of Finance


Poverty alleviation and development in rural areas 12 201 13 000 13 700 14


Aid and subsidy fund for severe natural disasters 4 000 4 048 4 900 4

Award and assistance for rural families carrying out pilot family planning system

210 600 1 200 1

Agricultural disaster assistance 500 500 540


“Low fertility and quick richness” poverty alleviation project in western area

170 200 200

Subtotal 17 081 18 348 20 540 21

National Development and Reform Commission


Work relief 7 833 7 833 7 833 6

Ecological resettlement pilot project 1 340 1 340 1 060 1


Rural health service system construction 2 333 2 333 2 333 2

Rural family planning service system construction 0 0 0

Rural education

Middle vocational education infrastructure and capacity building programme

0 1 000 1 000 1

Junior middle school sites and schoolhouse reconstruction project in the Middle West rural area

0 0 0 1

Subtotal 11 506 12 506 12 226 12



t.)

007

000

000

000

000

500

500

Table 2.A1.1. Public expenditure on social development in rural areas, 2004-07 (con


Million CNY 2004 2005 2006 2

Ministry of Civil Affairs


Rural minimum living standard security system0 0 0 3

Subtotal 0 0 0 3

Ministry of Human Resources and Social Security

Rural education

The “Sunshine” training programme for rural migrants 600 1 050 1 400 2

Subtotal 600 1 050 1 400 2

State Administration of Radio Film and Television

Rural education

Rural film projection project 0 0 127

Subtotal 0 0 127

Box 2.A1.3. The Chinese political system

The Chinese political system is characterised by the pre-eminence of the

Communist Party of China (CPC), which is leading all central and local-level

state organs within a socialist republic. State power is exercised in a dual,

parallel system with the CPC (dang) on the one side and the “government”

(zheng) including the central government and its sub-national counterparts

on the other side.

The Communist Party of China (CPC) claims to represent the population at

large and to interpret and express the will of the people. The Party exercises

political, ideological and organisational leadership and has organisations at

all territorial divisions. The CPC controls the number of established posts in

all CPC or government administrative organs, public service units (PSUs) and

working units. All important non-Party organisations at the district level and

above host Party groups. The Central Committee of the CPC (CCCPC) is elected

by the Party. It is the place where the broad policy directions are set and

contains leading figures of the Party, the state and the army. Issuing top

priority political documents, the CCCPC determines the long-term overall

strategy for the country’s social, economic and political development. The

CCCPC’s core decision making body is the Politburo, which consists of

22 senior leaders including the members of the Standing Committee of the

Politburo. The Politburo, its Standing Committee and the General Secretary

who is heading the CPC Secretariat are all elected by the CCCPC.

The National People’s Congress (NPC) is China’s legislative body. According

to the Constitution, the NPC is the “highest organ of state power”. Even if in



Box 2.A1.3. The Chinese political system (cont.)

reality, it has less power than other government and Party organs, it has

become increasingly active as a forum in which legislation is debated before

being put to a vote. Formally, the NPC and its Standing Committee exercise

the following powers: to amend the Constitution and supervise its

enforcement, to enact and amend basic laws, to approve the election of

leaders and to provide oversight of the state budget, economic and

development plans, as well as key decision-making bodies.

The President is the head of state, elected by the NPC for a five-year term.

In accordance with decisions made by the NPC and its Standing Committee,

he promulgates laws, appoints the Premier of the State Council, the vice

premiers, state councilors, ministers of various ministries and state

commissions. The Presidency is a key position of political power, particularly

when the person exerting the post also serves as CPC General Secretary and

as the chairman of the Central Military Commission.

The State Council or Central People’s Government is the chief body of state

administration, supervising ministries, commissions and bureaus. It is

appointed by the NPC and chaired by the Premier of the State Council. Policy

is operationalised by ministries, commissions and other governmental

agencies. Together with CPC senior leaders within the Politburo, the President

and members of the leading groups, the State Council performs the

leadership functions within China’s governing apparatus. Upon acceptance

of official CCCPC documents, the State Council and sub-national

governments follow these documents’ agenda, determining how to

implement their decisions and developing a budget for the proposals.

Leading groups (lingdao xiaozu) are ad-hoc supra-ministerial policy

discussion and co-ordination organs which cut across Party, government and

military bureaucracies, often dealing with a single broad field of policy. The

groups and their working offices (often just called “offices”) play a decisive

role inside the CCCPC’s decision making process, directly reporting to the

Politburo and its Standing Committee. Those decisions made by the groups

that are validated by the CCCPC’s annual plenary and issued as official CCCPC

documents give directions to the central and to local governments. Leading

groups are typically headed by the premier, a vice premier or state councillor

and its members include senior-level officials in the Politburo or well-

respected professionals from within the civil service, academia or think

tanks. Besides the very influential CPC leading groups, there are also State

Council leading groups which co-ordinate policy implementation for the

government. Leading groups are heading different groupings (xitong) of

functionally related bureaucracies of the Party, government or military.

Source: OECD, partly based on OECD, 2005a.



Table 2.A1.2. Public expenditure on agriculture, 2004-07


Million CNY 2004 2005 2006 2007

Total agriculture 124 911 147 477 198 085 252 998

Including:

Ministry of Finance

Reduction and elimination of agricultural tax 52 400 66 200 100 000 100 000

Comprehensive agricultural development 17 380 18 492 20 450 36 400

Returning cropland to forest project (“Grain for green programme”)

26 587 29 031 26 400 28 906

Input payments to grain producers (for fuel, fertilizes and other inputs)

0 0 12 000 27 600

Direct payments for grain producers 11 600 13 200 14 200 15 100

New variety extension payment 2 850 3 870 4 070 6 570

Payments for mechanization of farming 480 1 400 1 700 3 300

Other 0 0 0 8 840

Subtotal 111 297 132 193 178 820 226 716


High quality grain production project 7 825 7 825 7 825 7 825

Construction and water-saving modifications of large-scale irrigation systems

1 800 1 800 1 800 3 200

Returning grazing land to grassland project 2 800 2 800 1 800 2 200

Other 780 880 4 505 7 805

Subtotal 13 205 13 305 15 930 21 030

Ministry of Water Resources

Small-sized agricultural land water resource infrastructure support programme (“948” Scheme)

0 850 1 700 2 830

Subtotal 0 850 1 700 2 830

Ministry of Agriculture

Formula fertilization based on soil testing pilot programme

0 540 850 1 560

International advanced agricultural science and technology introduction program

181 181 200 200

Advanced cow breed subsidy 0 15 100 100

Agricultural technology entering household demonstration project

0 30 50 70

Other 164 299 371 428

Subtotal 345 1 065 1 571 2 358

Ministry of Science and Technology

Science and technology for high grain yield project

64 64 64 64

Subtotal 64 64 64 64



Table 2.A1.3. Public expenditure on rural infrastructure, 2004-07


Million CNY 2004 2005 2006 2007

Total rural infrastructure

69 242 69 242 99 649 108 093

Including:

Ministry of Communication

Rural road reconstruction project 0 0 45 000 50 100

Rural road construction project 8 060 8 060 20 000 20 000

Other 1 905 1 905 3 885 4 010

Subtotal 9 965 9 965 68 885 74 110


Quality drinking water project in rural area 4 400 4 400 8 000 13 000

Rural electricity network construction and modification project

41 200 41 200 5 710 3 929

Other 1 126 1 126 2 843 2 843

Subtotal 46 726 46 726 16 553 19 772

Ministry of Health Rebuilding rural water supplies and sanitation 12 061 12 061 12 061 12 061

Subtotal 12 061 12 061 12 061 12 061

State Administration of Radio Film and Television

Extending broadcasting and TV coverage to every village project

490 490 2 150 2 150

Subtotal 490 490 2 150 2 150

Box 2.A1.4. The tiaokuai guanxi, lines of authority linking vertical and horizontal bodies

Central government agencies and bodies at different sub-national levels of

government are linked following a complex pattern of vertical lines (tiao) and

horizontal pieces (kuai). The term tiaokuai guanxi, literally the relationships

between the vertical and horizontal bodies, refers to the pattern indicating

which authority has priority over others. Officials of any given office might

have a number of superiors in different places, resulting in a fragmentation

of actual authority.

To present this structure, we take the example of the agricultural

department of the county-level city of Qingzhou (Shandong province). This

hypothetical office would be subordinate both to the Qingzhou county-level

government and the agricultural department (nongye ting) under the

Weifang prefectural government. But these relationships of subordination

are of different nature, and it becomes important to determine which of the

superiors has priority over others. The body with priority over the county-

level agricultural department has what is termed a “leadership

relationship” (lingdao guanxi) with the department: this involves funding,

hjjj



Box 2.A1.4. The tiaokuai guanxi, lines of authority linking vertical and horizontal bodies (cont.)

appointment of staff including senior positions and supervisory functions.

The other body has a functional, nonbinding “professional relationship”

(yewu guanxi) with the county department. In recent years, direction of

authority of several sectoral departments such as land management and

environmental protection has been changed from horizontal to vertical

management, strengthening upper-level bodies’ authority. The sectoral

departments for agriculture and education are still working under

horizontal management.

At the same time, the Qingzhou county-level government must answer to

both the Qingzhou county-level CPC committee and the Weifang prefectural

government. In addition, the organisation department of the Qingzhou CPC

committee will strongly affect the career opportunities of the Qingzhou

agricultural department’s leaders, who might rather take orders of county-

level cadres, while ignoring directives from higher-level institutions. Finally,

the agricultural department’s leaders must also obey party discipline as

members of the CPC committee office for rural and agricultural

development.

Source: Based on Lieberthal, 1995 in OECD, 2005a.

Lines of authority to the hypothetical Qingzhou agricultural department

Prefecture level

Weifang prefecture-level government

Weifang agricultural department

County level

Qingzhou CPC committee organisation department

Note: Arrows indicate general direction of authority in practice.

Qingzhou agricultural department

Qingzhou county-level governmentQingzhou county-levelCPC committee



Table 2.A1.4. The growing importance of transfers

Source: World Bank, 2007a.

Total transfers from the central government (CNY billion)

As percentage of

GDP Central government revenues

1986 46.4 4.5 59.6

1992 59.7 2.2 60.8

1994 238.9 5.0 82.2

2000 474.8 4.8 67.9

2001 601.5 5.5 70.1

2002 736.2 6.1 70.9

2003 826.1 6.1 69.6

2004 1 037.9 6.5 71.7

2005 6.3 66.5

Box 2.A1.5. “Farmers’ burden” before implementing the RTFR

One main reason for implementing the RTFR was to address growing

complaints of farmers about excessive burdens of fees and levies (“farmers’

burden” or nongmin fudan). Until 2000, farmers have been subject to four

major types of taxes:

● government taxes (main agricultural taxes);

● official township levies (five tongchou levies) for education, public

transport, military expenses, family planning and social expenses;

● official village levies (three tiliu levies) for public accumulation fund, public

welfare fund and other administrative expenses;

● miscellaneous fees, levies and fines paid to various government

institutions at different levels;

Before the implementation of the tax-for-fee reform, many parts of

China’s countryside witnessed excessive rural taxation, while economic

growth slowed down compared to urban areas. Rural areas, particularly

those in agriculture-based regions, experienced a surge of diverse, local

illegal fundraising. These fees and charges were imposed on farmers

without explicit government regulations or legislation and for different

kinds of items, ranging from charges for local development projects such as

road and school construction, to the purchase of insurance, to charges for

marriage certificates or housing construction, to prohibitive prices for

electricity and tap water, and so on (Lin et al., 2007). Compared to urban

residents, exempt from personal income tax until a certain amount of

revenue, poor rural households had to pay a higher share of their income on

taxes and fees.



Box 2.A1.5. “Farmers’ burden” before implementing the RTFR (cont.)

Even though the state formal taxes, i.e. the agricultural taxes, were only

around 2-3% of farmers’ average income throughout China and 4-5% in less

developed agricultural regions, informal fees in many of those regions were

much higher, usually reaching 20-30% of poor farmers’ average incomes (Lin

et al., 2007). In addition, farmers were often obliged to provide unpaid

compulsory labour for local development projects.

With the emergence of non-agricultural economic activities since the early

1990s (rural enterprises, migrants’ remittances) which have not been subject

to state tax administration, the structure of rural tax payers changed,

affecting the economically weakest groups: since the poor usually comprise

the group of people with the lowest proportion of income from non-

agricultural sources, they are more vulnerable to rural direct taxes (Tao and

Liu, 2005).

Source: OECD, 2005b; Lin et al., 2007; Tao and Liu, 2005.


ISBN 978-92-64-05956-6


© OECD 2009

Chapter 3

Policy Recommendations

137

3. POLICY RECOMMENDATIONS

3.1. Key points

● A more effective and inclusive rural governance system is a pre-conditionfor addressing rural China’s most pressing challenges. In order to realiseenhanced multi-level governance, several measures are key: First, a moreintegrated, strategic approach to rural development at the central levelmight include the strengthening and formalisation of cross-sectoral co-ordination, oversight and financial assignments. Experience in OECDcountries with co-ordination mechanisms defined by law, the creation ofintegrated ministries or “rural proofing” mechanisms could be helpful.

● Second, the inter-governmental fiscal system needs further reform in orderto include revised expenditure assignments, increased local revenues and amore effective transfer system. The central government should providesub-national authorities with appropriate resources meeting theirobligations and limit central spending to activities of national relevance. Acomprehensive “rural budget” at the central level including central and sub-national expenditure might be considered, as well as a more transparentlocal taxation system linked to actual investment and submitted to citizens’scrutiny. Block transfers reflecting NSC objectives should be increased andaccompanied by investments in technical assistance and monitoring andevaluation systems.

● Third, at the local level, the use of place-based policies tailoring centraldirectives to local circumstances should be enhanced and coupled byenhanced administrative capacity and accountability, as well as a betterrepresentation and participation of citizens. Priorities include improvedhuman resource management (HRM) linked to stricter entry procedures andmore competitive and flexible salaries. The representation of rural citizens’interest could be supported through a more balanced rural-urbanrepresentation in people’s congresses and enhanced public participationmechanisms in accessing information as well as participating in villageself-governance and social organisations.

● Fourth, although government regulations and decisions have well targetedmany problems faced by judicial institutions, judicial independence andauthority of courts have to be further enhanced, both vis-à-vis Party bodies andlocal governments. In this regard, the implementation of two reforms couldstrengthen rule of law in the countryside: One, measures to enhance thequality of the most basic level jurisdictions, mostly located in the countryside.



Two, policies to enforce the coherent implementation of laws across theterritory.

● With a reformed rural governance system, key rural policy challenges couldbe addressed in the fields of land use; service delivery; economicdiversification; and environmental protection. As to land use, progress isneeded to fully implement laws on farmland rights which could facilitatethe realisation of important economic potential for rural areas. Residentialland rights should be clearly specified and made fully marketable andmortgageable. Finally, recent policy improvements on land expropriationhave to be fully embodied into law, permitting farmers to directly negotiateon compensation and clearly defining the scope of “public interest”.

● Service delivery has to be part of a more coherent and better funded ruralservices strategy in order to bridge rural-urban and rural-rural gaps. Inaddition to fiscal improvements across levels of government, a moreflexible, place-tailored approach seems to be necessary, considering localfeedbacks and continuous innovation and benefitting from theopportunities offered by information and communication technology (ICT),particularly for remote regions. Such a strategy should be open to marketopportunities and the role of non-governmental service providers, such asrural co-operatives and financial institutions.

● Economic diversification beyond agriculture will be decisive as this sector’srole in providing employment will decline over time. There are considerableopportunities for rural-urban linkages in business and services, given ruralareas’ assets such as culture, landscapes and biodiversity. Emerging sectorswhich hold great promises include rural tourism, renewable energyproduction and high-value added typical food, agricultural and forestproducts.

● Sustainable development and economic diversification depend on a soundenvironmental policy. It is crucial to address the challenges rural China isfacing as to the protection of natural amenities and a better managementof biodiversity protection. Efforts should be continued to improve waterpollution and water use efficiency in agriculture. Also, rural enterprisespollution needs better monitoring, inspection and enforcementcapabilities.

3.2. Multi-level governance

The NSC is a sound strategy but its full implementation will require a more effective and inclusive multi-level governance system

As discussed in the previous section, despite an innovative and far-reaching strategy, Chinese rural policy shows limitations in terms ofcapacity to exploit rural areas’ large potential and to approach their urgent



challenges. Translating central directives into coherent implementation risksto be complicated by a top-down, fragmented approach and modest fiscaland administrative capacity at local levels. Tackling these challengesinvolves redesigning the distribution of resources and responsibilities ofdifferent levels of government over rural development policy as well as therespective roles of public and non-governmental actors. Sub-nationalgovernments, particularly those on the county and township level, are keyrural players. They are in charge of delivering the most importantgovernment policies and custodians of key knowledge as to opportunitiesand development challenges of rural China. It is indispensable to make themost of their knowledge, especially given China’s size and rapiddevelopment. In this framework, actions are needed to address thecountry’s weaknesses in terms of multi-level governance of rural policy,including institutional, fiscal and administrative aspects. Reforms in thesefields are, to a large extent, a pre-condition for successfully implementingChinese rural policy.

First, efforts are needed to strengthen rural policy co-ordination and rural proofing at the central level

The implementation of the innovative NSC strategy entails moving froma top-down, sectoral focus towards a more integrated, strategic approach torural development. In OECD countries, a common challenge concerns the waythe central government can progressively shift away from a command andcontrol role to one that facilitates knowledge pooling and shared decision-making. At China’s central level, the main challenge consists in strengtheningand formalising cross-sectoral co-ordination, oversight and financialassignments. These adaptations should go beyond the current system of stateand Party leaders’ meetings in different overlapping bodies and beyond theLeading Groups’ weaknesses in terms of personnel resources. The sheernumber of ministries and agencies involved in rural policy design,implementation and monitoring should be reconsidered and more formalcontacts established between the different actors. Recent experiences invarious countries offer useful examples, ranging from national level ruralpolicy co-ordination mechanisms defined by law (see Box 3.2), to the creationof an integrated ministry and to more flexible, but formalised co-ordinationtools. Also, there is considerable scope to increase the capacity of centralministries through “rural proofing” mechanisms which check respectivesectoral policies for their impact on rural areas and established NSC or otherrural policy objectives (see Box 3.3). Proofing mechanisms are showingimportant results across OECD countries in terms of integrating lineministries into the broad rural policy strategies and allowing them to adaptsectoral policies to the characteristics of different rural regions.



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Box 3.1. The Law for Sustainable Rural Development (Spain)

The Law 45/2007 on sustainable rural development, approved on 13 December 2007 i

considered a basic norm and of co-ordination, which implies that it provides a framewor

for the concert of actions and co-ordination among the public administrations in Spain i

a matter which is mainly competence of the Autonomous Communities as is rura

development. The law defines itself as a law with territorial orientation, multi-sectoral an

with a high degree of governance.

The main features of the law are the following:

● Rural Development Objectives and Actions: The law establishes three main objectives, on

economic (keep and broaden the economic base in rural areas), one social (maintain an

increase the level of population and its welfare in rural areas) and one environmenta

(preserve and recuperate the natural and cultural assets). It also establishes four genera

actions of sustainable rural development: support to territorial agriculture, promotio

of economic activity in rural areas, provision of infrastructure and environmenta

planning.

● Definition of rural and classification of territories: The law provides official definitions of rura

areas and rural environment and defines three types of rural area for differentiated polic

actions: rural zones to revitalise (RZR), intermediate rural zones (IRZ) and peri-urban rura

zones (PRZ), which should be defined by the autonomous communities.

● RD programming instruments: It establishes the Sustainable Rural Development Programm

(SRDP) as the “vertical column” of the law as a pluri-annual and multi-sectora

programme, whose elaboration is responsibility of the state, as well as the Plans b

Zone and the Strategic Territorial Rules for Rural Ordering (DETOR) to be approved b

the autonomous communities.

● Governance of rural policy: It establishes three collegiate institutions: the Inter-Ministeria

Commission for Rural Development (CIMR) as an instrument of horizontal co

ordination at the national level, the Council for Rural Development (CMR) as organ fo

vertical collaboration and co-ordination between the different public administration

(state, autonomous communities and municipalities) and the Table of Associations o

Rural Development (MADR) as organ for civil society participation, information an

consultation.

● Menu of possible interventions: The content of the law is markedly multi-sectoral a

highlighted by the fact that for each of the following sectors it provides a “menu” o

measures to be carried out through the SRDP: economic diversification; natur

conservation and management of natural resources; creation and maintenance o

employment; infrastructure, equipment and basic services; renewable energy; wate

ICTs; citizen safety; education; culture; health; public employment; social protection

and urbanism and housing.

Budgeting and financing: The law foresees the co-financing of the different measure

and state support through agreements with the autonomous communities.



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Box 3.1. The Law for Sustainable Rural Development (Spain) (cont.)

Other good practices for central-level co-ordination for rural policy (see Annex 3.A1

3.A1.1):

● The Law for Sustainable Rural Development and Programa Especial Concurrente (Mexico)

● The role of DEFRA (UK)

● The establishment of a national agenda for rural areas (Canada)

Source: OECD Rural Policy Reviews: Spain (forthcoming).

Box 3.2. Rural Proofing by the Commission for Rural Communities (UK

In England, the Government’s Rural White Paper (2000) obliges departments and publi

bodies to put a “rural-proofing” mechanism in place through which policy design an

implementation were systematically checked for their impact on rural areas, and to tak

action to mitigate adverse impacts where appropriate. The process has served a

mechanism for interdepartmental co-ordination in a similar way to the “rural lens

approach in Canada. Knowledge and interest in rural proofing has spread from the centra

Government and it is becoming a tool for analysing and improving rural services amon

local authorities, by making more public sector bodies aware of rural issues.

An annual “rural-proofing report” is published by the Commission for Rura

Communities (CRC) which acts as a supervisory body to verify that rural-proofing has bee

undertaken. The CRC was established by an Act of Parliament in 2006, which defines th

Commission’s general purpose as being to promote:

● awareness among relevant persons and the public of rural needs; and

● meeting rural needs in ways that contribute to sustainable development;

where “rural needs” means the social and economic needs of persons in rural England

The Act also directs the Commission to pay particular regard to the needs of:

● persons suffering from social disadvantage, and

● areas suffering from economic under-performance.

The Act specifies three key roles for the Commission, specifically:

● Rural Advocate: Representing rural needs to relevant persons.

● Expert Adviser: Providing relevant persons with information and advice about issue

connected with rural needs or ways of meeting them, and

● Independent supervisory body: monitoring, and making reports about the way in whic

relevant persons’ policies are developed, adopted and implemented (by rural proofing o

otherwise) and the extent to which those policies are meeting rural needs.



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Second, reforms of the inter-governmental fiscal system will need to include revised expenditure assignments, increased local revenues and a more effective transfer system

A redefinition of expenditure assignments should be targeted onmatching responsibilities with administrative and financial capacity in a moretransparent, streamlined system. The central government should aim atsetting “the rules of the game” and ensuring appropriate resources for sub-national authorities in order to meet their obligations, rather than beingdirectly involved in spending. An exception would be represented by directcentral investments in “pilot projects” or in activities of national relevancesuch as research or networks-building programmes. The preparation of a“rural budget” at the central level should also be considered (see Box 3.1).Spending for sannong issues is indicated by the central government, but thisdoes not include all central and sub-national expenditure targeting ruralareas. The assignation of responsibilities across levels of government needs tobe accompanied by carefully balancing objectives of equity and efficiency. Arealistic evaluation of the current capacity at different levels of governmentshould also be taken into account. In terms of revenue-raising, capacityshould be increased at the local levels of government in order to foster a moreeffective use of resources. Local taxes, revenues from land transactions anduser fees should all be part of a more transparent local taxation system whichis linked to actual local investments and submitted to citizens’ scrutiny. Also,policy should aim at allowing legal borrowing, at least in areas possessingstronger capacity, and measures should be taken to increase the debtmanagement at the local level. Finally, it is essential to reconsider the size anduse of fiscal transfers in order to increase equity and effectiveness. The focusshould not just be on “how much” but also on the “how”, which is theconditionality accompanying transfers. To this extent, block transfers linked

Box 3.2. Rural Proofing by the Commission for Rural Communities (UK(cont.)

A central task for CRC in delivering these responsibilities is to provide independen

advice to government and others to make sure that policies reflect the real needs of peopl

living and working in rural England (other parts of the UK are not within CRC’s area o

competence).

Other good practices for rural policy proofing (see Annex 3.A1, 3.A1.1):

● The Rural Lens system (Canada)

● The role of the Rural Policy Committee (Finland)

Source: OECD, The New Rural Paradigm: Policies and Governance; OECD, based on information from the Commissiofor Rural Communities.



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Box 3.3. Rural budgeting through the Programa Especial Concurrente (Mexico)

Mexico, as many other countries facing the multifaceted character of rural developmen

has searched for alternatives to provide consistence to the policies that differen

ministries pursue in rural areas. The first step in that process consisted in th

identification of policies and budgets oriented to rural territories.

In 2001, the new law on Sustainable Rural Development introduced the legal obligation fo

all ministries to conform to a concerted plan for rural policy. The Programa Especia

Concurrente (PEC) or Special Concerted Programme for Sustainable Rural Developmen

launched in 2002, includes objectives, strategies and programmes of several ministries an

was intended to constitute an element for integration and ordering of the actions o

14 federal entities involved in rural development. As a sub-product of this plan, since 2003

an accounting exercise has been done every year incorporating the budgetary allowances o

the different ministries to rural programmes or the “rural share” of their programmes. Thi

exercise has constituted since then an official “rural budget” that is incorporated as a

annex to the federal budget, portraying and adding together from an integral rural viewpoin

the budget allocations that are partially reflected in the sectoral parts of the whole budget

The introduction of a “rural budget” in Mexico was not without challenges. The mos

important lessons learnt about this process are the following:

● Accounting and transparency: The aggregation process has to be framed in clear an

transparent criteria of what programmes are rural and for the programmes that have bot

rural and urban impact, criteria for determining how the “rural share” should be calculated

● Inter-temporal comparability: Clear criteria for aggregation are also crucial for the rura

budget to be comparable over time. The incorporation and extraction of programme

should be clearly stated in order to allow comparisons, particularly from on

administration to the other.

● Sub-national impact: Since both revenues and expenditure are strongly centralised i

Mexico, the “rural budget” is mainly composed by federal budgetary allocations an

transfers to states and municipalities. These transfers however are not alway

earmarked. A decomposition of the “rural budget” by sub-national administrative unit

is important to take into account the heterogeneity present in rural areas.

● Political meaning of the “rural budget”: The rural budget constitutes an important tool fo

policy makers; however, it also represents a new political tool for negotiation with rura

constituencies. This aspect should be managed carefully, with mechanisms oriented t

improve the efficiency of the rural spending rather than the continuous aggregation o

resources and programmes to “inflate” for political reasons the “rural budget”.

● Synergies of rural policy: The most significant goal of having a rural budget is the one o

fostering synergies in the intervention of different agencies in rural policy. This implie

strengthening the dialog among the entities involved and a critical revision of the budge

oriented to merge, transfer or eliminate certain programmes impacting on rural areas.



l

to general NSC objectives should be increased while at the same time reducingearmarked grants. These changes should be accompanied by appropriateinvestments in technical assistance as well as in setting up monitoring andevaluation systems which will provide for a new focus on strategic outcomes(economic, social, environmental…) rather than on a traditional evaluationbased on rather “simplistic” outputs. Streamlining transfers should alsoreduce overlapping and inconsistent expenditure as well as reduce excessiveformalities and administrative burdens on local governments.

Third, a wider use of place-based policies could be promoted to further tailor central directives to local conditions…

After having successfully strengthened rural policy co-ordination andproofing at the central level, there are important margins at sub-nationallevels of government for i) better tailoring central directions to localcircumstances via place-based policies, ii) increasing local officials’administrative capacity and accountability which has considerable influenceon the understanding and then implementation of centrally defined policies,and iii) supporting public consultation and participation.1 Different pilotprogrammes and models have experimented with place-based policies. Basedon lessons learned from these practices and from the abundant experienceavailable internationally (see Box 3.4), these programmes can now bestrengthened, mainstreamed and extended to the wider Chinese countryside.Such policy innovation may involve a new way of defining target areas asfunctional areas and more creative local development strategies supported bypartnership between public, private and non-governmental actors. Forexample, business leaders can become important partners for the publicactors who wish to engage in more open, innovative governance. In thisperspective, governments should not just aim at businesses’ “fiscalcontributions” but rather on the wider role they may play in their ruralcommunity.

Box 3.3. Rural budgeting through the Programa Especial Concurrente (Mexico) (cont.)

Other good practices for improving rural budgets and inter-governmental fiscasystems (see Annex 3.A1, 3.A1.1):

● Rural budgeting and incentives within the Lively Countryside Plan (The Netherlands).

● The Negotiated Planning and Performance Reserve (Italy)

Source: OECD Rural Policy Reviews: Mexico.



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Box 3.4. The LEADER Initiative (EU)

The LEADER Community Initiative is an EU development programme with a hybrid rura

regional policy approach involving the national Ministries of Agriculture i

implementation, but based on local private and public partnerships. These partnership

design a development project for a target area whose size is generally limited b

administrative boundaries. The main features of the LEADER approach are: i) a bottom-u

approach to decision making and management responsibilities; ii) integrated actions; iii)

multi-sectoral vision; iv) co-operation (local and transnational); and v) networking.

There are three main elements characterising the implementation of the LEADER method

i) a territory or LEADER area; ii) an integrated strategy relying on an endogenous approac

and innovative actions; and iii) a local action group (LAG) characterised by decentralise

financing, co-operation and partnerships between public and private stakeholders. Thes

elements operate within two alternative approaches. The first approach is redistributive an

perceives the programmes as a partial compensation to different rural territories for the

structural disadvantages. The second approach is more proactive and insists on the mos

innovative aspects of the LEADER method, aiming to facilitate the mobilisation of certai

actors who elaborate and apply a development strategy in each territory.

Since 1991, the LEADER Initiative has had three different editions. The initiative wa

launched with LEADER I which had a four year application period from 1991 to 1994. Du

to the successes of the first edition, LEADER II was developed for the period 1994-1999

Finally, LEADER+ continued for the period coinciding with the EU’s CAP period lasting from

2000-06:

● LEADER I (1991-1994) mark the initial implementation of the LEADER’s new developmen

philosophy, and as such was mostly dedicated towards establishing the initiative

framework within the participating areas. The number of projects approved was ver

limited.

● The second edition of the initiative, LEADER II (1994-1999), spread LEADER to a greate

proportion of rural areas with almost 1 000 projects approved across 15 EU countries

LEADER II followed up on the first edition adding greater importance to the innovativ

character of the projects to be assisted.

● LEADER+ (2000-06) was the last edition of LEADER as an EU rural development initiative

It placed special emphasis upon integrative strategies that connect together all aspect

of rural life. The main developmental aims revolved around four basic themes: use o

new knowledge and technologies; quality of life improvement; added value to loca

products; and increase the perceived value of natural and cultural resources.

In the period 2007-2013, LEADER is no longer a separate programme but is now

integrated (“mainstreamed”) into the national/regional rural development programmes

Specifically, LEADER has passed from being an EU initiative to being part of the secon

pillar of the CAP, represented as a development methodology under Axis 4 that coul

integrate any other rural development measures from the policy’s other Axes.



,

… and should be coupled by explicit efforts to increase local administrative capacity and accountability…

As regards local officials’ stronger capacity, more progress is especiallyneeded in on-going personnel reforms whose positive results have been seenmore in urban and coastal areas than in the majority of rural regions. Aparticular priority lies in enhancing human resource management (HRM) acrosslevels of government and finding a framework which would help the centralgovernment ensure that sub-national governments manage their workforceproperly. This concern for sub-national governments’ HRM is well justified,given the central government’s responsibility for macroeconomic development,its interest in the outcome of public service delivery and in assuring core values,trust and integrity in the public sector. Another priority lies in the need forimproved workforce and competency planning, with clear linkages madebetween public policies and service delivery and needs in terms of workforcesize and skills. Some of the work needed on designing job profiles could becarried out for a large number of positions across governments of a similar level.Like many other countries, governments in China could assess more carefullythe level at which salaries in the public sector become competitive enough toattract the best and the brightest, and high enough not to motivate officials tolook for other “rents” – and adjust their salaries to these levels. Suchimprovements should be coupled with changes to the financial system andstronger accountability across the different levels of government. Interestingexamples of good workforce planning for China can be found in different OECDcountries (see Boxes 3.5 and 3.6). In order for local governments to carry outgood workforce planning and management, incentives could be establishedsuch as increased managerial flexibility for those entities which restructuretheir workforce effectively.

Stricter entry procedures and more competitive salaries should beconsidered to further adapt the skills of rural officials to the scope of themandate attributed to them by the NSC or other rural policy objectives. Locallevel capacity in rural policy making can be strengthened through targetedtraining programmes, transfers to poor rural areas of more experiencedofficials as well as facilitated networking and the exchange of good practices

Box 3.4. The LEADER Initiative (EU) (cont.)

Other good practices for place-based policies for rural development (see Annex 3.A1

3.A1.1):

● The Active Regions Programme (Germany)

● The PRODER programme (Spain)



with other localities in China and abroad. In parallel to the above changes, itshould be envisaged to allow more flexibility in terms of recruitment andremuneration at county and township level in order to overcome the rigiditiesof the current personnel system and to better adapt to local conditions. This,however, necessitates improved HRM governance with more transparency inappointments, within precise financial standards and under clear rules ofreporting. Also, prevailing systems of performance measurement such as thetarget responsibility system need reviewing in order to further diffuse a“culture of evaluation” and to assess the performance of local officials againstsophisticated and more accurate targets referring to social, environmentaland good governance objectives rather than simplistic objectives such as therate of economic growth or natality. However, experience in OECD countriesshows that this is not an easy task and that it requires good standards ofperformance management, transparent recruitment and promotion systemsand a high quality and trusted management. Last not least, conductingenhanced and more regular audits would contribute to reducing corruptionand better controlling the proper use of public funds provided for ruraldevelopment projects.

Box 3.5. The Quality Reform Initiative for sub-national officials (Denmark)

The Danish government has launched a Quality Reform Initiative reinforcing

dialogue on HRM across levels of government and funding skills and competency

enhancing programmes at sub-national levels. The initiative contains 180 measures

aiming to ensure the public sector’s quality even despite decreasing public sector

workforce in the future due to demographic changes in the population.

Besides different schemes dealing with improved regulation or the promotion of

innovation, those measures targeting HRM include ways to improve public

employers’ image, incentives for older workers to stay on, improved management of

competencies, leadership trainings and increased social sector trainings.

Parts of the initiative will be funded by the government with a total amount of

DKK 10 billion (EUR 1.3 billion), to be distributed to cities and regions until 2015 and

with shared funding of individual projects.

The national government first presented the initiative in 2006, opening

exceptional negotiations with the unions. This negotiation process as well as

informal co-ordination and very similar legal rules for public service employment

across levels of government assure a high level of coherence, although the national

government imposes little regulation on regional and municipal governments’ HRM,

including remuneration.



… as well as to support citizens’ representation and participation

At least two dimensions need to be considered for achieving a betterrepresentation of rural citizens’ interests: First, following a resolutionapproved by the 10th NPC in 2007 (Balme, 2008), a revision of electoral rulesshould aim at balancing the currently differing rural-urban representation inpeople’s congresses in order to enhance the articulation of rural citizens’concerns. This is all the more important as, over the past years, the NPC andlocal people’s congresses have become more influential in legislating,ratifying appointments, reviewing budgets and policies as well asmonitoring and supervising the performance of government agencies andofficials (Yang, 2004). Second, and coherent with recent central governmentstatements,2 public participation could receive even stronger support inorder to promote open and inclusive policy making at different levels ofgovernment (for experience in OECD countries, see Boxes 3.7 and 3.8). Ruralcitizens in villages should be able to directly nominate candidates for

Box 3.6. Civil service recruitment at sub-national levels of government (France)

Civil service recruitment for French sub-national governments is done through a

national competitive examination which is similar to the exam for national civil

service recruitment. The national government retains responsibility for managing

sub-national civil service competencies. Civil servants having successfully passed

exam for sub-national governments can pursue a career at different levels (region,

département and municipality).

There are three types of entrance examinations to the civil service: external

competitions open to candidates with a given qualification; internal competitions

open to civil servants meeting certain conditions in terms of length of service; and

a third competition open to elected officials, managers of associations and the

private sector.

Unlike the national civil service, successful candidates for sub-national civil

service are not automatically assigned a post, but allowed to conduct a job search

for posts which may be located anywhere in France. A civil servant at sub-national

levels may perform different duties during the professional career and advance to

higher level jobs through internal competition, promotion, a professional

examination or according to seniority.

Employment conditions at sub-national levels are rather strongly regulated, with

employment frameworks being similar to the ones at the national level and across

different governments at the same level. This allows to maintain a level of fluidity

in the public sector labour market and builds on existing capacities in managing

human resources.



Box 3.7. Innovative community-based rural governance schemes (Scotland, UK)

In 2002, the Scottish government established the Rural Voices Action Research

Competition as a pilot funding programme to support community participation in

researching projects for rural communities. The central purpose for the programme

was to strengthen services to rural communities by having the communities consult

on aspects of local services. The competition encouraged individuals and groups

involved in community development to bid for action research projects that

entailed community consultation, to access, develop or design aspects of local

service provision. The objective was to develop expertise in community

participation that would lead to a bank of communities with consultation

techniques. Supported by the Governments Land Use and Rural Policy budget, it

tapped into the strong interest among communities and at its zenith brought

forward 145 funding bids totalling GBP 1.1 million. It recommended 26 projects for

approval and 24 received grant funding allocation totalling GBP 167 268, of which 21

completed the agreed activities.

In 2005, the On the Ground programme was introduced as a tool to improve the

interaction between the different actors on the ground in farm-related sectors. It

places emphasis on closer integration of activities and the goal was a more joined-

up and efficient public services delivery by improving interactions, encouraging

linkages as well as promoting efficiency in the way actors work together and the

way assets are utilised. It targets public bodies focused on the protection,

management and the enhancement of landscapes, environment and natural

heritage. To achieve this, it works with local government and CPPs giving advice to

farmers, land managers, communities or businesses, clarifying aims and objectives;

facilitating cross-agency working arrangements and providing more “one-stop

shop” for landowners and managers.

Community Development Trusts are community organisations. Their aim is to achieve

the sustainable regeneration of a community and they are concerned with the

economic, social and environmental and cultural needs of their community. Usually

based in communities with low service provision, or amenities, development trusts

are initiated by local people who seek a stake in the local process of change and

improvement. They work with other private and public sectors organisations and are

involved in a range of activities from: running a local post office; developing play parks;

managing housing developments to developing renewable energy projects. They stress

capacity building in rural communities, self-help and self-reliance and believe that

community regeneration achieved through community owned enterprise is the best

way.* To ensure sustainability and financial independence they engage in enterprise

activities like purchasing and developing local assets.

* www.dtascot.org.uk/whatis.cfm.

Source: OECD Rural Policy Reviews: Scotland, UK.



elections without government intervention. Also, monitoring and evaluationmechanisms after the election process need to be further institutionalised.This includes increased and secured rights of citizens to access informationand to participate in village self-governance, for example through thepublication of the village committees’ annual budget and actual spending.Villagers also need better information about election rules and proceduresand additional support in order to find suitable candidates, as many capablepeople are migrating to urban areas. Social organisations should bepromoted in rural areas to foster a more orderly and transparent

Box 3.8. Social witnesses on public procurement (Mexico)

In order to hold accountable the national government, to fight corruption

and to promote transparency, a Mexican initiative includes social witnesses

in public procurement processes. These witnesses assure information (e.g.

independent budget analysis, budget literacy) and consultation (e.g. citizen

feedback on multi-year planning). The initiative concerns public contracts

from state organisations which are main public buyers in Mexico (e.g. Federal

Commission of Electricity, Petroleos Mexicanos).

The social witnesses are representatives of the civil society of recognised

professional, ethical and moral prestige. They participate in the contracting

procedure as external observers and work with the individual/organisation

participating in the contracting procedure to devise the terms of tender and

even the emission of the corresponding award. The social witnesses make

recommendations to promote transparency, to diminish the risks of

corruption and increase efficiency and effectiveness. Once the procedure is

finished, the social witnesses release public testimony which describe what

has been observed during the process and make recommendations to

improve such processes.

Beneficial results indicate the success of the programme. For example, for

contracts with the Commission Federal de Electricidad, important savings

have been achieved, due to recommendations by the social witness to

eliminate requirement that increased prices and limited participation.

Moreover, because interest bidders’ questions were answered in a more

precise manner during meetings, the number of bidder participants

increased by over 50%.

Other good practices for increasing rural citizens’ participation (see

Annex 3.A1, 3.A1.1):

● Public consultation for a White Paper on Rural Development (Ireland).

Source: OECD/The World Bank (2007), Beyond Public Scrutiny: Stocktaking of Social Accountability inOECD Countries, WBI Working Papers.



representation of citizens and interest groups.3 Policy reforms could aim atsupporting women farmers and reducing regulatory burdens of NGOs(sponsorship requirements, required amount of registered capital, etc.). Thiswould involve the institutionalisation of already existing farmerorganisations, the formalisation of some of the existing rural socialmovements and the attribution of a legal status to civil society associationsin rural areas. The key objective would be to facilitate the gradual emergenceof bottom-up and intermediary structures such as rural federations,associations or local NGOs which increasingly interact with policymakers.Corresponding to the key objective of more and enhanced representationand participation at the local levels of government, reforms should alsoconsider increased opportunities for public evaluation of services and prices,for example through price hearing systems which are already commonpractice in many Chinese provinces but almost exclusively limited to urbanareas.4

Fourth, improved accountability and rule of law call for a more professional and coherent rural judicial system

There is a need to enhance judicial independence and authority of courts,both vis-à-vis Party bodies and local governments. Recent governmentregulations and decisions have well identified and targeted many problemsfaced by judicial institutions in rural areas.5 Recurrent slogans insisting on“bringing judges closer to the citizens” (faguan weimin) show how local andordinary judges are intended to play a key role in enforcing the reform.However, the Party’s role and power in rural policy should be more clearlydefined, keeping a reasonable degree of separation between law and politics.To fight interference and protectionism by local governments and tostrengthen courts, changing the procedures for court funding andappointment of judges might be considered (Peerenboom, 2007). Also, giventhe urgent necessity to cope with social unrest linked to the increasingnumber of disputes particularly related to land use, the implementation oftwo major reforms could be further accelerated to strengthen rule of law in thecountryside:

● Enhancing the quality of the most basic level jurisdictions. There areapproximately 3 000 Basic People’s Courts and 12 000 Basic People’sTribunals, mostly located in the countryside. Local judges are “generalists”as they have to litigate a large spectrum of legal issues, and their generallevel of legal training remains low. Countryside judges would need to beclearly differentiated from other local civil servants. They are rarely named“judges” (faguan) but more often the “cadres and police personnel ofcourts” (fayuan gancha) or simply “adjudicators” (shenpanyuan). Moreover, astheir salaries do not anymore reflect their level of responsibilities and



increasing level of education, the turnover rate is very high. The re-evaluation of their salaries (between CNY 900 and 2 500 contingent onprovinces and levels of jurisdictions) appears as an urgent necessity.Depending on local governments to run local courts budgets, andnominated by local congresses, the judiciary is hardly independent. Anationalised administrative organisation of the judiciary, in line with the2007 reform of the procuratorates, could enhance the quality of deliveringjustice as well as its independence. Rural courts for rural lawsuits couldalso be an option on the model of administrative courts for administrativedisputes or juvenile tribunals for youth delinquency. Scholars in Chinahave considered different models in foreign countries as the basis for apossible evolution of the traditional citizens-petition system (shangfang)into a Chinese-style Ombudsman structure. In OECD countries,Ombudsman offices are generally appointed by legislatures and provide animportant link between citizens’ complaints, appeal and claims for redresson the one hand and the public administration on the other hand. Even iftheir recommendations are rarely binding, they can exert pressure ongovernments to take remedial action. The introduction of an e-justicesystem (legal services through the Internet) and an “Observatory ofJustice” could also be considered to enhance the accessibility and quality ofjudicial services in the countryside.

● Enforcing the coherent implementation of laws across the territory. Asearly as 1999, an official report already outlined this issue.6 Since 2005,“justice and efficiency” is one of the Supreme People’s Court’s mainobjectives. Nevertheless, in 2003 an Implementing Law draft has not passedthe barrier of the NPC. An example is offered by the cases of the so-called“married-out-women” (waijia nü or chujia nü): only some rural courts (forinstance in Shaanxi or Gansu provinces) have recognised that, whenexcluding those women from compensation for communal landrequisition, villages are both violating the basic principle of gender equalityand property rights. This points out to the larger issue of the necessity of acompatible legal system both horizontally (between provinces) andvertically (from the upper to the lower levels). The consequence of the lackof a clear “hierarchy of norms”, i.e. systemic coherence, within the Chineselegal system is that, especially in rural areas, citizens often don’t have theircases litigated according to the law. Theoretically, article 64 of the ChineseLegislation Law, promulgated in 2000, specifies that local rules andregulations conflicting with national law are invalid. However, this lawprovides no enforcement mechanism. Instead, the law rather weaklysuggests that local legislatures and agencies should abolish any offendingrules. In theory, the NPC possesses the power to annul such regulations.



A reformed rural governance system will create the necessary pre-condition to address more effectively rural China’s most pressing challenges andrealise the objectives of the NSC. Key priorities for Chinese rural policy include:i) land use, ii) service delivery, iii) economic diversification and iv) environmentalprotection.

3.3. Land use

Improving land use and strengthening land related rights are urgentpriorities for rural China and their importance has been confirmed in a recentCCCPC (2008) policy document (see Annex 3.A2, 3.A2.5). The availability ofland represents a significant comparative advantage for rural regions andcitizens. There are 121.7 million hectares of collectively owned farmlandallocated to farmers for private farming for a term of 30 years and12.3 million hectares of residential land assigned to rural residents for a “longterm without change”. However, the value of land-related rights and thedevelopment potential associated with them are substantially constrained bylegal impediments. There are frequent cases of unpredictable landreadjustments, compulsory reassignments and government takings withoutadequate compensation. Use rights to collectively owned land are still non-alienable for non-agricultural commercial uses. With more secure tenure, theaverage farm household (who currently possesses use rights for 0.6 hectare offarmland and 0.06 hectare of residential land) could have considerableamounts of land assets, generate more annual income through productivity-enhancing investments and receive adequate compensation in case his landuse rights are taken. Such a development would contribute to the centralgovernment’s efforts to reduce rural-urban disparities in income andconsumption. In this context, optimising the use of land becomes a key pre-condition to tap into the economic potential of rural China. A strategic policyapproach should include measures in the following fields:

Progress is needed to fully implement laws on farmland rights…

Farmland use rights are well established in Chinese laws (see Annex 3.A2)such as the Property Law (2007) and the Rural Land Contracting Law (2002), butproblems arise when it comes to implementation. Defined as usufructuaryproperty rights (see Property Law [2007], Chapter 3, in Annex 3.A2, 3.A2.2),farmland rights assigned to farm households are renewable upon expiration.New central decisions call for securing farmers’ present land rights for a “longterm without change”. Important economic potential for rural areas may berealised if they were free from administrative interferences with respect to theirlength, breadth and assurance. Despite tightened legal restrictions, however,land readjustments remain an important challenge in many rural areas,compromising farmers’ confidence and expectations (for a promising Chinese


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example, see Box 3.9). Responding to changes in households’ size or to theoverall reduction of a village’s land due to land expropriation, local governmentbodies frequently readjust the size of farmer households’ landholding. In orderto encourage farmers to invest in their land and facilitate the development offarmland rights markets, better legal enforcement requires increasing farmers’awareness of their land rights under the law through strong publicity of landuse rights, regular and extensive monitoring of law implementation andviolations, as well as effective dispute resolution mechanisms such as “land

Box 3.9. Village development and land reallocation in Shandong (China)

In the 1990s and early 2000s, the village of Nanzhanglou (4 260 inhabitants)

in coastal Shandong province implemented wide-ranging village

development measures. Following a co-operation with German rural

development experts initiated in the late 1980s, a village development plan

was elaborated and implemented over a period of several years. This plan

included the following measures: the upgrading of roads (without enlarging

them); the promotion of traditional local construction methods and designs;

a new village centre; the construction of public service institutions such as a

kindergarten, a primary and middle school, a small hospital, a sport

compound and a community centre; the development of local businesses

without constructing a new commercial zone; and free space design

considering ecological needs.

A particular village development focus in Nanzhanglou was the

reallocation and re-cultivation of (mostly fragmented) farmland. Again,

villagers participated extensively in rearranging use rights for arable and

residential land. Voluntary trade-offs between villagers facilitated the

exchange of land use rights and the rearrangement of so called “husbandry

groups” (management organisations uniting each about 40 to 45 households).

The floor space required for the new construction of public service

institutions was provided by voluntary exchanges of land use rights. Key for

the project’s success was an intensive public participation: Through

meetings, talks and training measures, the local residents were constantly

involved in the re-shaping of their village and land.

Considering the experience gained through the co-operation project in

Nanzhanglou, the Chinese Ministry of Land and Resources (MLR) established

a Centre for Land Reallocation and Rural Development in the nearby city of

Qingzhou. By dealing with technical questions related to land reallocation, it

aims at training local government officials and village representatives from

all over China.

Source: OECD study mission; Bavarian State Ministry of Agriculture and Forestry (2008).



dispute panels” and legal aid services for farmers. Moreover, farmland userights should become mortgageable for loans. In order for farmers to make long-term, productivity-enhancing and income generating investments on land,enhanced access to medium-term or long-term credit is key. Secure propertyrights which can be pledged as collateral for loans would facilitate farmers’application for loans from financial institutions. Finally, it is necessary toaddress the problem of “rent seeking” by local officials who often enforcefarmland rights transactions to acquire financial gains.

… allow residential land to become marketable and mortgageable…

Residential land is classified as construction land (see LandAdministration Law [1998], art. 43, in Annex 3.A2, 3.A2.4) suitable for non-agricultural development and can therefore have an important market value.Rights to residential land are defined as property rights for a “long termwithout change”.7 But existing residential land laws and policies fall short oftreating such rights as meaningful property rights. Unlike for farmland, lawsdo not specify whether rural residents have the right to “profit from”residential land. Under such legal ambiguity, government decrees go further toprohibit transactions of rural residential land rights. As a result, residentialland rights are essentially neither marketable nor mortgageable. Due to thelack of effective legal rules protecting residential land rights, such rights risk itbecoming prey to urban sprawl. There are frequent cases where local-levelgovernments and commercial developers take the land with insufficientcompensation for rural residents. Following the direction announced in therecent CCCPC (2008) policy document, reforms of the existing new legalframework to protect residential land rights could meet these challenges.These should focus on three areas: i) to define “long term” residential landrights as perpetual usufructuary property rights; ii) to make residential landrights fully marketable, explicitly permitting the transfer of rural residentialland rights; and iii) to allow rural residential land rights to be mortgaged, inorder to improve farmers’ access to credit for rural development or non-agricultural endeavours.

… and embody into law improved policies on land expropriation

Changes in policy directives introduced in recent years have alreadybrought important improvements, especially in terms of compensations andprocedures in expropriations of farmland and residential land. However, theseimprovements need to be embodied into law to have judicial force. Existingeminent domain laws echo the constitutional requirement that anyexpropriation of collectively owned land must be “in the public interest” (seeAnnex 3.A2, 3.A2.1). But these laws give no precise definition of public interestsunder which the eminent domain power may be exercised. Under the current


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system, the state enjoys a monopoly over land markets for non-agriculturaluses and commercial developers must rely on the state to expropriate the landfor their commercial development. However, the recent land reform decisionsannounced by the central government begin to break up this monolithic systemby allowing market transactions of collectively owned construction land forcommercial purposes without government intervention. Farmers should bepermitted to directly negotiate with the commercial user on issues such ascompensation and resettlement benefits. This would reduce transaction costsand promote market efficiency. In line with the recent policy document, newlegislation and regulatory measures should be adopted to narrow the scope ofexpropriations of farmland and residential land by strictly and clearly definingthe use of land for “public interest” under which the state may exercise itseminent domain power, for example by adopting an inclusive list of specificpermissible public purposes. The state may be permitted to expropriate landonly for the listed purposes. Taking farmland or residential land for commercialpurposes would be deemed illegal, as the Constitution and the 1998 LandAdministration Law both require that taking be for the needs of public interest(see Annex 3.A2, 3.A2.1 and 3.A2.4). Other measures realisable in the short runwould be beneficial: i) compensation needs to be substantially increased byintroducing a replacement value approach along with minimum compensationstandards; ii) the holder of rights to the expropriated farmland should beentitled to the bulk part of the compensation; iii) social security benefits foraffected rural citizens should be funded as a supplement rather than areplacement of compensation, according to the central government’s objectiveto gradually establish a rural social security system; and iv) land takingsprocedures require better, legally enforceable guarantees of farmers’ rights tonotice, to participation and to appeal.

3.4. Service delivery

There is a need for a more coherent, better funded rural services strategy to bridge rural-urban and rural-rural gaps…

Improving the delivery of public services is crucial to ensure socialcohesion and respond to the needs and challenges of a countryside which isevolving from a traditional farming-based society to a more diversified ruralsociety. Rural services score badly in comparison with urban areas in spite ofremarkable progress made in expanding compulsory education, the provisionof health care, transport and basic services, and notwithstanding governmentannouncements to invest in water supply, sanitation and social security. Theaccess to education, for example, still varies greatly across provinces, withmany central and western regions performing significantly worse than therest (for projects on rural educational services, see Boxes 3.10 and 3.11). It


http://dx.doi.org/10.1787/548456516500


remains to be seen whether the funds for free nine-year compulsory educationallocated to different levels of government will be adequate and sustainable.8

Progress is also needed to enhance funding for vocational education to trainfarmers and facilitate their transfer into other sectors. There are valuableexisting programmes which might be further expanded, such as the“Sunshine Project for Training Rural Labour” including work skills training,free legal policy advice, employment information and support for farmers who

Box 3.10. Teacher training in remote rural Xinjiang (China)

The MTE (Modern Teacher Education) Project in the remote rural county ofHabahe in western Xinjiang promotes applying modern informationtechnology (IT), setting up a database of visual materials for rural and ethnicareas and exploring new teacher training methods based on interactivelearning. It has been developed by the Chinese NGO “Beijing HorizonEducation & Culture Development Center”.

Although the Chinese government has implemented different policies topromote IT-based education and to increase educational resources in ruralareas, there has been limited input on supplementary teaching materials andother resources suitable for basic education. Many computers and otherequipment provided have therefore been left unused in rural areas. Teachersgradually lose their knowledge acquired from training as materials arelacking and students’ capacities to practice and improve are restrained.

The MTE Project focuses on spreading the knowledge of moderneducational technology and teaching materials acquired by trainees to otherteachers who have not been in the training programme. These second andthird round trainings are conducted by first round seeded teachers andspread to different schools at the village level. The project supports Habahecounty to provide teacher training programmes with IT-based pedagogicalmethods and visual teaching material and to promote new teaching modesstressing participatory and independent learning, also through the use ofnew curriculum standards. The project co-operates with the localgovernment and educational authorities to develop a textbook for localteacher training and to establish a teacher training centre run by local staff.

The project was implemented between 2006 and 2008 and receivedimportant funding through the Ford Foundation. It has influenced the localand regional debate on teacher training and educational reform, even ifchanges in the county administration’s leadership have affected theschedule. A second term programme for Habahe county has been scheduledand other areas in Xinjiang have prepared their own applications toparticipate in the project.

Source: OECD study mission; Beijing Horizon Education & Culture Development Center.



leave their home for work. Following the implementation of the NRCMS,health care services are relatively accessible to rural citizens, but poor qualityand relatively high prices as well as insufficient budgetary support stillhamper the achievement of desired outcomes. Satisfaction surveys confirmrural residents’ discontent with the medical skills and services provided andwith the amount of charges to be paid (Guo, 2008). Infrastructure and basicservices are often lacking: increased investment in transport services isneeded in order to upgrade the quality of rural roads. The cost-benefit ratiocould be particularly high in terms of poverty alleviation, especially if theseinvestments are part of a more integrated local development strategy. Largeparts of rural China still do not have access to safe water supply, as water isoften contaminated by the discharge of pollutants and of untreated waste andwastewater. Also, the sanitary conditions remain unsatisfactory, particularlyin poorer regions. As to new rural social security and subsistence allowanceprogrammes, it remains to be seen whether poor local governments have

Box 3.11. École éloignée en réseau (Quebec, Canada)

To meet the challenges of demographic decline in rural Quebec, the localauthorities strive to innovate and re-organise educational services. The “Ecoleéloignéee en réseau” project aims at revitalising and re-professionalisingsmall rural schools through networking, the use of fibre optics andinformation and communication technology (ICT). Collaboration overdistance and joint elaboration of the knowledge taught in classes contributeto the project’s objectives.

Evaluation studies show that these approaches contribute to ensure afuture for small rural schools and to enhance pupil’s school achievements.The involvement of many different actors, from the Ministry of Education toschool commissions, teachers, pupils as well as local and regionaldevelopment authorities, has been crucial to identify their new roles andresponsibilities. Teachers and the local communities in general have becomeaware of the opportunities provided by ICT and broadband technologies andtheir possible effects on the quality of education. Moreover, the newlyestablished networks have offered new possibilities to get in touch withexperts located elsewhere and to enhance the quality and quantity of otherrural services.

The programme was launched in 2002 and is scheduled to end in 2010. Thegovernment of Quebec has investment about CAD 10 million (approx.EUR 6.5 million) of public funding to cover the expenses ranging fromresearch to the management and technological resources.

Source: CEFRIO (2008), Fiches de projet du CEFRIO, paper prepared for the OECD.



sufficient resources to match central funds. Already now, rural demand for theprogramme is significantly higher than available funding. As the previousassessment has shown, rural-urban and rural-rural gaps in services are oftenthe result of dysfunctional fiscal arrangements which have led to under-investment and unfunded mandates over local authorities.

... to be implemented via more careful, place-tailored investments and innovative service delivery modes...

Notwithstanding their necessity, increased investments in rural serviceswill not be sufficient to close the existing gaps. As discussed above,improvements in the fiscal arrangements across levels of government couldbring undisputed benefits to service delivery. However, given the size anddiversity of the Chinese territory, it appears crucial to adopt a more flexible,place-tailored approach fuelled by continuous innovation as to the modes ofdelivery. A modern strategy for rural service delivery involves appropriateanalytical tools to determine the right mix of services as well as an appropriatematching to the different regions, in a manner which considers efficiency/equity trade-offs and is coherent with the overall regional strategy. Investmentsin transport infrastructure, for example, should integrate a more careful, ex ante

and ex post cost-benefit analysis, integrating economic, social andenvironmental objectives and balancing local needs with national priorities.Experience in different OECD countries has shown the complexinterrelationship which exists between infrastructure investment and ruraldevelopment. While good infrastructural endowment is essential to achieveeconomic growth, the returns of additional investment will differ depending onthe characteristics of the region. For instance, peripheral areas which are moredisconnected from national and international networks often benefit less fromthe improved accessibility due to lagging human capital development. Thoseregions may be prematurely exposed to competition and experience negativeeffects like the out-migration of skilled labour. A holistic investment strategy forrural areas will thus have to consider several factors including the appropriatepoint in time to invest and how the investment fits within the wider frameworkof strategies and links with other investments. It appears that “one size fits all”approaches to service delivery are not effective. Therefore, in order to respondto diversity and to the fast evolving rural environments, service delivery in ruralareas needs to encourage reliable local feedback and continuous innovation.There is abundant evidence that many of the structural barriers to deliveringservices in rural areas can be reduced through the development of differentmethodologies of approach. It is important to ensure that innovative servicedelivery schemes are not just one-time investments but provide opportunitiesfor learning and scale-up. Also, it is advisable to move beyond the existing urbanbias which emphasises high costs and low benefits of rural service, recognising



instead the many complementarities of rural and urban services within a wellthought regional strategy (see Box 3.12).

ICT (information and communication technology) services offer greatopportunities, particularly to the remotest regions of rural China (seeBox 3.10). They can contribute to reduce costs associated with physicaldistances, facilitate access to information and substantially improve servicesthrough tele-work, e-education, health services delivered on the web, etc.These factors may also be considered as new indirect advantages forbusinesses to locate in rural areas. A key objective for rural policy is to makeICT available to rural populations in order to overcome difficulties linked tothe high cost of infrastructure development in sparsely populated areas. Thiscan be done in different ways depending on different circumstances,including subsidised supply, direct public provision or enhanced privatecompetition. Low cost and reliable ICT infrastructure is essential but notsufficient. Research shows that there are necessary conditions for rural areasin order to benefit from ICT. These include: intelligent use of technology bygovernment (e-government, etc.); an institutional framework which

Box 3.12. The Micro-regions Strategy for rural development (Mexico)

Mexico’s Micro-regions Strategy, launched in 2001, identified the 263 most

marginalised rural regions in the country and selected within these regions a

number of selected “micro-poles of development”, the so-called Strategic

Community Centres (CECs) based on their potential to assume local

leadership, economic development, and the ability to influence surrounding

areas from a commercial or cultural perspective. The strategy contemplated

an “all government approach” oriented to co-ordinate the efforts of

12 Ministries in the delivery of public services and infrastructure investment

in these CECs a minimum standard of services in 14 specific fields.

The specificity of the scope of the Micro-regions Strategy (263 regions,

14 indicators) allows monitoring the advances and deficits in each of the

areas of support through an objective and socially shared validation

mechanism: For each of the CECs, the stated objective is to reach 14 “banderas

blancas” (white flags). Each white flag certifies that a CEC has been endowed

with a certain level of infrastructure or service. In practice, fulfilling the

deficit of white flags in the 100% of the CECs has become a quantifiable

medium term goal that orients the direction of the strategy. By the end of

2006 close to 60% of the close to 33 000 required white flags had been

established.




encourages inter-firm and public-private cooperation and a minimum level ofR&D capacities. A policy of strategic, place-based investment by national andlocal governments is thus needed in order to enhance the infrastructure forboth “hard” and “soft” technology.

Box 3.13. WDC (Ireland) and BITC (England, UK) on business services

The Irish Western Development Commission (WDC) adopted an innovative

approach to enterprise development in rural regions through an investment

fund for its western region. The WDC, a statutory body charged with

promoting regional development, provides repayable funds for projects

which yield social dividends ranging from creating and sustaining

employment to the provision of services and infrastructure such as social

housing, enterprise space or childcare and elder care facilities.

The results of the projects supported by the fund have been two-fold: First,

with the WDC’s support, over 1 500 jobs have been sustained and newly

created in rural SMEs and social enterprises. Second, the commercial viability

of lending to social enterprises has been successfully demonstrated,

increasing commercial investment in this sector which provides important

rural services, strengthens social capital and offers employment

opportunities, often to marginalised groups.

Since 2001, the fund has invested EUR 27 million, largely in rural areas. The

project has received approval for its fund under the European Union’s

Regional Aid Guidelines.

The Business in the Community (BITC) movement has launched a Rural

Action programme to manage strong relationships between business and

rural enterprise and to highlight hidden problems of deprivation in rural

areas, working in partnership with companies and other rural stakeholders.

A toolkit for rural community councils has been elaborated by BITC to

enhance relationship-building between rural communities and local

businesses. It gives advice to third sector organisations on how to benefit

from private sector engagement, particularly targeting:

● Financial support by companies, e.g. through sponsorship or employee

volunteering.

● Strategic and professional advice to rural community councils, e.g. on

marketing to improve brand and profile, skills audit, finance review, HR

review, review of structure and governance.

● Mentoring and training to rural community council staff and members

and linking of business leaders with community leaders in a partnering/

coaching relationship.



... and open to market opportunities and a more strategic role of non-governmental providers, including rural co-operatives and financial institutions

The inclusion and active participation of a wide range of ruralstakeholders is indispensable for effective rural service delivery. Currently, thesystem of delivery is centred on PSUs, but this system calls for reconsiderationin at least two respects: First, there are ample margins for improving theeffectiveness, efficiency and accountability of PSUs, especially via market-likeincentives. Second, more can be done in terms of involving non-governmentalactors such as rural co-operatives, NGOs and private businesses in theprovision of rural services. Financial institutions do also play a key role: theavailability of financial resources can be the critical determinant of whetherrural assets are turned into marketable opportunities or not. However, as inmany other countries, there are several deterrents for private financialmarkets to operate in rural areas. These include: limited presence of financialinstitutions’ branches, especially in remote localities; a lack of secure propertyrights and a properly functioning legal system; a small size and volume of

Box 3.13. WDC (Ireland) and BITC (England, UK) on business services (cont.)

● Developing employee skills and experience, e.g. through practical community

projects and challenges, secondments of employees into a rural community

council on a specific assignment, senior managers as trustees, etc.

● Facilities and equipment to be shared, loaned or donated, e.g. meeting

rooms, IT equipment and services, materials, specialist equipment

provision or servicing.

● Issue specific and longer term partnerships, e.g. on transport, local service

provision, finance or insurance, diversity, climate change.

Other good practices for innovative rural service delivery (see Annex 3.A1,

3.A1.2):

● The Net on Wheels Programme (Portugal).

● The “Practical Solutions to Close Broadband Supply Gaps” pilot project

(Germany).

● The Rural Transaction Centres (RTC, Australia).

● The Rural Transport Fund (Scotland, UK).

Source: Buckley, Gillian (2008), Western Investment Fund. An Innovative Model for EnterpriseDevelopment in a Rural Region, paper prepared for the OECD Rural Development ConferenceInnovative Service Delivery for Rural Regions, 3-4 April 2008, Cologne, Germany; BITC/ACRE (2007),Building relationships between the third sector and the private sector. RCC toolkit,www.bitc.org.uk/community/rural_action/rural_enterprise.html, accessed 5 November 2008.



deals; high default rates and difficulties for recovering credit; small size loansand the high “cost” of information. Development banks and agencies maythus play a crucial role in mitigating the risks and establishing incentives forfinancial institutions to serve this segment of the market. Experience acrossthe OECD shows that there are many different ways to foster the availability offunding for rural development (see Boxes 3.14 and 3.15). Business networkscan help build scale and reduce costs, develop information flows and trustmechanisms. Also, business development programmes can contribute to buildan entrepreneur skills set and boost the number of viable rural start-ups (seeBox 3.13). In China, several recent and on-going governmental initiativesattempt to address these issues and to strengthen rural financial networks.

Box 3.14. Initiatives of banks and savings banks for rural entrepreneurship (Spain)

La Caixa, one of Spain’s leading savings banks, recently set itself the social

objective to “develop the rural territory with the aim of maintaining the rural

population as well as providing inhabitants with a standard of living similar

to that of urban areas. The bank believes it can contribute to achieving this

objective in an economically viable manner by playing an active role in

promoting entrepreneurs and entrepreneurship development in rural areas

through five main policies: 1) A campaign to promote investments in rural

areas that can be carried out by entrepreneurs and small business owners.

2) By entering into agreements with LAGs not only to become active members

of these groups but also to offer advisory assistance and potential support

through the institution’s foundation. 3) Through its new Microbank that will

award micro-credits to people at risk of social or financial exclusion and to

groups with limited or unfavourable resources. 4) By becoming an active

member of the rural development foundation and think tank Fundacio del Mon

Rural (FMR). 5) By entering into a collaboration agreement with the MARM in

order to co-ordinate the bank’s activities in rural areas with those of the

ministry.

Banesto, one of the largest and most important financial institutions in

Spain, counts with programmes such as BANESPYME which provides tailor-

made assistance to small and medium sized rural enterprises and enhances

their capacity to innovate (Banespyme Innova) and export (Banespyme

Exporta). They have also introduced Venture capital to the rural environment

providing support to identified innovative rural start-ups with funds such as

Fondo de Capital Riesgo Banesto ENISA Sepi Desarrollo which counts with more

than EUR 30 million. Examples of rural businesses supported with this fund

are Cerezas Marcoserrano and E-CulturaNet in the region of Extremadura.




These include relaxed conditions for establishing financial institutions in thecountryside, regulations allowing foreign financial institutions to operate inrural China, reforms of the rural credit co-operatives (RCC) and efforts todevelop the role of the China Postal Savings Bank (CPSB) and of theAgricultural Bank of China (ABC). It is crucial to continue these reform effortswhich should aim at the creation of a network of viable financial institutionsable to provide loans to dynamic parts of the rural economy, both non-agricultural activities and competitive parts of Chinese agriculture, whichwould be the main source for growth, job creation and sustained increase inincome for the rural population.

Box 3.15. The Monte dei Paschi di Siena (Italy)

The Monte dei Paschi Bank has traditionally had a key financing role in the

province of Siena. The relationship between this oldest operating bank in the

world and the province has benefited both, as the bank’s development is tied

to the province and the province’s economic prosperity is largely due to the

financial support of the bank. Monte dei Paschi therefore plays an important

role in the public, private and voluntary sectors of the province.

This development role has been taken on by a not-for-profit Monte dei

Paschi Foundation which is completely autonomous from the bank and

concentrates its funding activities on science, education, art, health and

cultural heritage. Any organisation or individual citizen in the province may

seek funding from the foundation. Projects are selected for funding based on

criteria established by the foundation. The composition of the governing

board is an important mechanism for integrating the foundation into the

network of stakeholders in the province. The foundation’s statutes call for

the province to select one representative from the voluntary sector to serve

on the foundation’s board. The Siena Chamber of Commerce selects one

member to represent the business community.

The foundation is a powerful instrument of social, territorial and political

cohesion. First, all social, economic and political interests in the province are

represented on the governing board. Furthermore, the foundation’s bylaws

specify that its funds may only go to projects within the geographical

boundaries of the province. These funds may be allocated to public entities,

the service sector and the university.

Other good practices for the role of financial institutions in ruraldevelopment (see Annex 3.A1, 3.A1.2):

● The experience of the Cajas de Ahorro (Spain).

● USDA’s programme to support rural lenders and entrepreneurs (USA).

Source: OECD Territorial Reviews: Siena, Italy.



3.5. Economic diversification

Changes on both the demand and supply side…

It is unlikely that China can sustain such high rates of agriculturalproduction as it did over the last 30 years of economic reforms. Some slowdown has already been observed since the second half of the 1990s. As vastportions of the population become wealthier, growth in demand foragricultural products in quantitative terms decelerates and changes inconsumer preferences will continue to determine an evolution in thestructure of agricultural production in China. The OECD/FAO projections by2017 indicate that grain production for human consumption (wheat and rice)will even fall in China given consumers’ increasing demand for higher valueproducts such as meat and milk (see Figure 3.1).

Overall, China is predicted to meet domestic demand for grains and meatproducts from own production, but will import more oilseeds, dairy productsand sugar (OECD/FAO, 2008). China is also expected to increase its biofuelproduction by above 80% although food-security concerns reinforced by therecent sharp increase in food prices, and international reports, showing strongimpact of biofuel production on global food prices and a mixed net impact onenvironment, have mitigated the focus on ethanol production particularlyfrom grains. China also faces a number of limiting factors on the supply side.Water in the northern half of China is scarce. Arable land availability has beenshrinking every year by 0.5-1.0 million hectares over the last decade and this

Figure 3.1. Projected production changes of key agricultural commodities in China by 2017 compared to 2005-07, %

Source: OECD-FAO Agricultural Outlook 2008-2017, Paris, 2008.

-10

0

10

20

30

40

50

60

70

80

90

Wheat Coarsegrains

Rice Oilseeds Sugar Beef Pigmeat Poultry Sheepmeat

Butter Cheese Biofuel



trend is likely to continue given the growing pressure to turn agricultural landto non-agricultural uses and to reforestation of farmland. China’s landproductivity is already high and further intensification of land use throughchemical enhancement risks further increase in environmental problems. Inthis context, further growth in agricultural production is expected throughland reforms which encourage farmers to invest in their land, wider

Box 3.16. The role of the Highlands and Islands Enterprise (Scotland, UK)

Rural policy in Scotland has largely focused on the Highlands and Islands

which is both the most remote part of the country and the majority of the

rural territory. The region has been subject to special measures of

intervention, notably the creation of the H&I Development Board (now H&I

Enterprise, HIE).

The HIE shares the national strategy of the Scottish Enterprise network and

adds another, strengthening communities, which calls for building capacity

and leadership that enhances the natural and cultural heritage and creates

community assets. In addition to funding, the HIE works with different actors

at different levels to identify initiatives that reflect the HIE priorities or “Five

Ps”: population, place, productivity, pay and prospects:

HIE Policy Priorities – the “Five Ps” to secure economic prosperity in rural areas

Population: More people living, working and studying in the Highlands.

Stimulate the provision of affordable housing, and an open-arms approach to

newcomers, recognising that the scale of population increase needed will not

come from return migrants alone.

Place: Enhance and capitalise on assets, build a role as international

gateway. International standard gateways have quality built environments,

with civic leaders, planners, developers and people who lived there and

worked consistently to make it attractive and distinctive.

Productivity: Create more business of scale, harness ambitious leaders and

generate capital investment. The focus of business development needs to be

on raising productivity in all economic sectors.

Pay: A steady expansion of employment in higher-paying economic activities.

Prospects: Belief in the areas prospect for success translates into wide range

of investment throughout the area. Investing in cultural assets and sports;

improving the overall attractiveness of the area demonstrates the viability of

the community to the residents.

Source: OECD Rural Policy Reviews: Scotland, UK; Highland and Islands Enterprise (2005), A Smart,Successful Highlands and Islands: An Enterprise Strategy for the Highlands and Islands ofScotland, Inverness, Scotland.



application of new biotechnologies, the introduction of labour-augmentingtechnologies and innovation combined with the consolidation of fragmentedfarms and further pursuit on reallocating resources to less land-intensiveproducts such as fruits, vegetables and livestock.

… require to look beyond agriculture for the future of rural China…

All in all, rural labour will be released from the agricultural sector andits role in providing employment in rural areas will decline over time. Thisfall has accelerated considerably in the current decade as indicated by thefall in the share of agriculture in rural employment from 68% in 2000 to 60%in 2005, thus by 1.6 percentage points per year. If this trend continues overthe next 15 years, the share would fall to around 35%, thus close to thecurrent levels in some OECD countries such as Mexico, but still much morethan the OECD average of 6% (OECD, 2007). Among OECD countries, Koreaprovides an interesting example of the possible scenario for the evolutionof agriculture’s role in the Chinese economy. In the mid-1970s, Koreanagriculture’s shares in total employment and in GDP were even above thecurrent Chinese levels. Over three decades, the share of Korean agriculturein total employment declined from 46% in 1975 to 8% in 2005 and itscontribution to GDP from 24% to 3%, correspondingly (OECD, 2008). Assumingthat the share of Chinese agriculture in total employment will fall to 8% byaround 2040 and that China’s total labour force will be at 750-800 million bythat time, the total number of those employed in agriculture would need todecline from the current 326 million to around 60-65 million. More than260 million people currently employed in agriculture would still need tofind non-agricultural employment either in rural or in urban areas or toretire. This shows the challenge for the government to create non-agricultural employment opportunities in rural areas, to absorb ruralmigrants into urban areas, to prepare social security systems to absorb agrowing number of retired farmers and to further diversify the structure ofagricultural production to allow producing higher value products from ashrinking amount of arable land.

… and to invest more decidedly in opportunities lying in rural-urban linkages and emerging in sectors such as tourism, energy production and high-value added typical products

Culture, landscapes and biodiversity are but a few of the assets Chineserural areas can offer to urban citizens in a closer rural-urban relationship.There are many possibilities for rural-urban linkages in terms of businessclusters, cross-border tourism initiatives (see Box 3.17), local food chains (seeBox 3.18) and better integrated transport and other services’ networks. Asmigration dynamics in many other countries have shown, substantial



opportunities will arise as congestion in cities increases and as diseconomiesof agglomeration will provide incentives for people and business to relocate orcommute to rural areas.

Box 3.17. The Eifel region’s rural-urban tourism linkages plan (Germany)

Different districts, municipalities and chambers of industry and commerceof the Eifel region have joined forces within a common strategic concept(Zukunftsinitiative Eifel) promoting the development perspectives of the region.Partnerships have been formed in five fields of action: culture and tourism;forest and wood; agriculture; small trade and craft; technology and innovation.For the projects of each field of action, a responsible person has been selectedin order to concretise measures to be realised within the different networksand to co-ordinate between the different public and private partners involved.

Particularly interesting, the network for culture and tourism aims atprofiling the region as a whole, based on a strategic plan called “TourismusEifel 2015”. Linkages with near-by urban cultural centres such as Cologne,Aachen and Luxembourg are promoted in order to raise the region’s distinctcultural profile and integrated into different master plans for tourism and thehealth care management.

The culture and tourism network specially focuses three thematic fields ofaction targeting the cultural and natural amenities of the region andcontributing to a diversified regional economy:

● Projects within “nature adventure region” integrate existing national andnatural parks, biking and hiking offers, regional handicraft products andpremium rural tourism.

● “Enjoyment region” projects connect the agro-food industry with agriculture,tourism and premium catering trade. More products are integrated withinthe “Eifel regional brand” and a magazine is published to further promote theEifel as a “DOC region” (protected designation of origin).

● The “active and healthy” field of action aims at integrating different healthcare management actors such as clinics, “healthy food” industries, healthand wellness institutions and tourism services, to create an identity as acommon health and wellness region.

Source: Zukunftsinitiative Eifel, www.zukunftsinitiative-eifel.de, accessed 5 November 2008.

Other good practices for exploiting rural-urban linkages (see Annex 3.A1,3.A1.3):

● The Kobra 2010 Rural-Urban Co-operation Project (Slovakia).

● Developing the rural “silver economy”: Seniorpolis (Finland).



Box 3.18. The Proeftuin Amsterdam local food chains project (The Netherlands)

The city of Amsterdam has developed a strategy on healthy, sustainable,

regional food chains called Proeftuin Amsterdam which particularly

emphasises rural-urban linkages and benefitting both urban and rural

dwellers. Critical elements of the strategy are the production of local food,

improved eating habits and a countryside able to meet the food and

recreation demands of urban dwellers. The concept of the Sustainable Food

Chain is at the bottom of this strategy, covering all steps from production,

processing and distribution of food to selling, preparing, consumption and

waste disposal – with the consumer being a key actor. It aims to demonstrate

that local production can be more efficient (e.g. in reducing food miles), to

raise awareness about the identity and origin of products, linking them to the

landscape and local cultural heritage and to contribute to economic

diversification and growth in rural and peri-urban areas. In order to promote

its objectives and to develop concrete targets and projects, the strategy

promotes alliances between public and private actors such as schools and

institutions, farmers associations, traditional and organic food movements

and commercial firms.

Proeftuin Amsterdam facilitates the co-operation of different initiatives

dealing with healthy and sustainable food chains, with the Proeftuin website

being a main communication tool and online portal in the region.

Representatives of national, regional and municipal authorities meet in a

steering committee to co-ordinate and monitor the implementation of

different projects.

One initiative aims at organising local food markets by community groups,

closely co-operating with the city boroughs, organisations such as SlowFood

and regional farmers associations. Supply and demand of regional products

is being mapped in order to overcome problems in the delivery of fresh and

local food. Moreover, municipal guidelines have been issued for the public

procurement of (organic and/or regional) food in municipal canteens, and

support in form of subsidies is offered to local farmers switching from

conventional to organic food production methods.

The strategy has raised citizens’ awareness of the resources, qualities and

products of rural areas surrounding the cities, particularly through

education-related initiatives (schools gardens, school meals, farm-related

projects) and by promoting regional markets to connect producers and

consumers.

Source : ICLEI Europe (2008) , Amsterdam Food Strategy, The Nether lands ,www.proeftuin.amsterdam.nl/, accessed 4 November 2008.



ltssys

For example, rural tourism holds great promise (on different ruraltourism strategies in China, see Box 3.19). According to statistics, ruraltourism served more than 400 million tourists in 2007 and earned overCNY 3 000 billion of which CNY 1 200 billion directly benefited farmers. Theperspectives are positive: Chinese per capita leisure time and habits areevolving and, according to several forecasts, China could become the firsttourist destination and the fourth source of tourists by 2015. Also, thedevelopment potential of renewable energy production still seems to belargely unexploited despite the fact that cleaner energy is promoted by thecentral government. Given that most renewable forms of energy will becreated in rural areas, this approach offers considerable opportunities for ruraldevelopment. Methane from biomass is particularly promoted (11th Five-YearPlan), offering an alternative for villages which are not connected to theelectricity grid. Wind power, hydro power and thermal solar energy are otherpromising renewable energy sources and often located in areas with lowincome. Similarly, Chinese rural areas have great potential in the growingmarket of certified high-value added typical food, agricultural and forestproducts9 for both exports and domestic consumption. As discussed earlier inthis report, natural and cultural resources are often abundant in lagging ruralareas. A lot has been done in recent years to support development in thesesectors and many policy experiments are on-going to better exploit rural-urban linkages. However, current policies would benefit from strongergovernment investment towards rural economic diversification and theextension of existing specified standards such as organic and fair-trade. Interms of policy co-ordination, for example, the many existing tourismdevelopment initiatives could be further integrated with typical foodproduction programmes through territorial marketing policies and as part ofintegrated local development strategies. In this framework, the key todiversification are not individual policies targeting one specific sector butrather the capacity to provide the right mix of framework conditions thatallow new economic activity to flourish.

Box 3.19. Strategies to link rural tourism with regional development and poverty reduction (China)

Tourism development is place-based and can capitalise on the distinctive natural, buiand cultural assets of regions, such as landscape, architecture and history. China with itdistinctive landscapes and heritage to exploit has a real potential to further develop thiapproach to rural tourism. However, the particular strategy chosen by a province greatlinfluences its effect on economic growth, regional development and poverty reduction, ademonstrated by the cases of the provinces of Guizhou and Yunnan.



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Box 3.19. Strategies to link rural tourism with regional development and poverty reduction (China) (cont.)

The connection between tourism and poverty reduction in these relatively poo

southwestern provinces is contingent on whether the tourism industry includes o

excludes the participation of the local poor. Although Yunnan’s economic growt

exceeded Guizhou’s in the early 1990s, the fall of Guizhou’s rural poverty rate in this perio

was much faster than Yunnan’s. It is not the tourism industry’s volume, but its structur

and distribution which contributed to this development.

Guizhou has linked rural tourism with poverty reduction and specifically included ethni

minority villages in its tourism development strategy. The provincial tourism administratio

established two routes linking major tourist sites such as the Huangguashu waterfall wit

nearby smaller-scale ethnic and other poor villages. In doing so, different minority village

succeeded in becoming among Guizhou’s most popular tourist spots and were adopted a

models for other villages. Instead of increasing the scope of tourism infrastructure, local an

provincial governments tried to focus on enhancing local roads and developing existing rusti

houses to offer an alternative way of tourism (nongjiale), including food prepared by the loca

population and ethnic singing, dancing and other cultural performances.

On the other hand, Yunnan, one of China’s most popular rural-tourism destinations

largely concentrated on already well developed areas and invested in large-scale initiative

intended to contribute to economic growth. During the 1990s, most tourism destination

approved by the central government were in non-poor areas. The tourism structure did ofte

not sufficiently encourage local participation, but attracted funding and other supply from

outside to assure scales, standards of infrastructure and skilled workers. For example, th

world famous landscape destinations around Lijiang such as the Leaping Tiger Gorge an

the Yangzi river’s (here known as Jinsha Jiang) so-called “First Bend” brought relatively littl

spin-off benefit to the local rural population as the money spent by visitors has bee

restricted to access fees payable to the business which has secured access rights as well a

spending at the coach park on basic refreshments and souvenirs manufactured elsewhere

However, significant opportunities to develop regional businesses for discerning (highe

spending) tourists exist around Lijiang. Such business opportunities do not themselve

require major investments or large scale financing, as the successful growth of many sel

employed enterprises in China has shown. The strong base of organic agriculture offer

possibilities to establish farmhouse restaurants capitalising on the wide range of high qualit

chemical free food available locally. Nongjiale tourism could include attractive farmhouse

arranged around central courtyards with patterned stone paving and plants, and engag

farmers from the Naaxi minority, their locality and culture. There is also potential for “gree

tourism”, offering guided walking tours and horse riding to explore the local landscap

(Yangzi river, mountains, agricultural terraced lands) and architecture, with buildings mad

of adobe bricks and local tiles. Local authorities ensuring that new buildings are sympatheti

to the local landscape and construction heritage would contribute to regional development

Source: OECD study mission; Donaldson, John A. (2007), “Tourism, Development and Poverty Reduction iGuizhou and Yunnan”, The China Quarterly, 190, June 2007, pp. 333-351.



3.6. Environmental protection

A sound environmental policy is a precondition for sustainable development and rural economic diversification. It should address challenges rural China is facing in terms of…

As discussed in Chapter 1, rural China has exceptional environmentalconditions which offer substantial unexploited opportunities for ruraldevelopment and represent assets for the country as a whole. Newopportunities for rural areas are emerging through an increased environmentalconsciousness, the enlargement of forest areas and of protected naturalreserves and through the establishment of a modern and comprehensive legalframework for managing nature and biodiversity, as well as for water, waste andair management. However, there is a gap between the legal framework andactual implementation, particularly at local levels of government. Also,opportunities are put at risk through serious environmental challenges, rangingfrom water shortages and pollution, land scarcity, soil degradation and non-point pollution from agricultural activities, to the relocation of pollutingindustries from urban to peri-urban and rural areas. Taking into account thesechallenges, a modern policy approach to rural China’s development shouldinclude spatially differentiated measures in the following areas:

… the protection of natural amenities…

An effective use of rural China’s richness in natural amenities andbiodiversity can be a driver for economic and social development. In particular,nature protection concerns should be better integrated into rural developmentplans, especially in poorer western and central regions with abundantbiodiversity. The loss of biodiversity also involves potential risks for breedingnew varieties of plants resistant to disease. There is a need for moreinstitutional co-ordination and enhanced capacities of central and sub-nationalagencies in order to better manage biodiversity protection of existing reserves,to integrate nature conservation and afforestation with other ruraldevelopment projects outside protected areas and to increase research into theeconomic potential of biodiversity. Also, increased financial and humanresources for the protection of nature and biodiversity and a better involvementof local residents in patrolling, monitoring and habitat enhancement couldcontribute to further successes in rural poverty alleviation. Higher priority couldbe assigned to co-ordination of afforestation, nature conservation andsustainable rural development to address desertification and soil erosionproblems. Application of the “polluter pays” and “user pays” principles througheconomic instruments, such as payments for environmental services, willcontribute to addressing different environmental challenges and offer newopportunities for employment in rural areas (see Box 3.20).



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… as well as water use efficiency, the prevention of water pollution…

Efforts should be continued to improve water pollution prevention andwater use efficiency in agriculture (for OECD experience, see Box 3.21). The

Box 3.20. Community support – compensation for environmental services (Korea)

Community support is an innovative Korean approach to compensate loca

communities for their efforts to reduce environmental pressure for the benefits of othe

parts of the society, usually urban residents. The compensations have been applied i

water management, nature conservation and waste management.

Community support in river basin management aims to compensate river upstream

residents (usually in rural areas) for losses due to stricter land-use regulations imposed o

them to protect water quality downstream. Water management and community suppor

were linked in water regulations adopted between 1999 and 2002 for basins of four Korea

rivers: Han, Geum, Nakdong and Yeongsan.

The basin laws created a Watershed Management Fund financed by a system of wate

use charges. The charges (KRW 120-140 per m3) are paid by consumers receiving wate

from a public water supply system; in 2004, they yielded a total of KRW 617 billio

(EUR 470 million) in the four basins. Roughly 60% of this revenue was used o

infrastructure and other water quality improvement projects, 20% on land acquisitio

such as purchasing of riparian buffer zones, and 20% on community support programmes

The four basin laws stipulate for what purposes money from the Watershed Managemen

Fund can be allocated to communities and individual residents. These may include, fo

example, building a community water supply system, a community hall or a swimmin

pool, providing education or home improvements grants to individuals. Actual spendin

decisions are made by the Watershed Management Committees established in each basin.

In biodiversity management, agreements have been introduced to preserve certai

ecologically sensitive areas (e.g. migrant bird observation sites). The agreements requir

that local governments compensate residents for the losses incurred from biodiversit

management, such as not harvesting some crops and rice straws, cultivating barley, o

creating resting spaces for migratory birds. Compensation payments include a 30%

contribution from the national government. Currently, there are nine biodiversit

management agreements in cities and provinces. In addition, 15 private NGOs received

total of KRW 92 million in 2004, in support of their contribution to wildlife preservation.

As in many countries, plans to build new waste management facilities in Korea commonl

face strong local opposition, particularly when the waste originates outside the local area

Under the 1995 Act on the Promotion of Waste Disposal Facilities and Support for Surroundin

Areas, local residents can participate in decision-making and receive compensation (at a rat

of 10% of project cost) from a resident support fund financed from the waste facility’s revenu

Source: OECD Environmental Performance Reviews: Korea (2006).



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Box 3.21. Agro-environmental incentive programmes (United States)

At the US federal level, water pollution by agriculture is mainly addressed throug

voluntary agri-environmental incentive programmes. For instance, the Conservatio

Reserve Program (CRP, in existence since 1988) aims to remove highly erodible land from

production and the Wetlands Reserve Program (initiated in 1993) to convert farmland t

wetlands, for up to 30 years. Both of these programmes, under the US Department o

Agriculture (USDA), involve annual payments to farmers. In addition, cross-complianc

provisions stipulate that farmers must not cultivate highly erodible land or drain wetland

to receive income support under commodity programmes, A CRP project begun in 2004 i

New Jersey involves paying farmers “rent” for 10 to 15 years to plant 120 km2 of trees an

grass along streams. The aim is to restore ecological functions so as to improve wate

quality and provide critical habitat for wildlife.

In the context of the 2002 Farm Bill, the Environmental Quality Incentives Program (EQIP

offers financial support for certain structural and management practices on eligibl

farmland or ranches. It is a voluntary conservation programme promoting agricultura

production and environmental quality as compatible national goals, for exampl

encouraging farmers to use management practices that reduce nutrient run-off o

preserve bird habitats, and special purchase arrangements support electricity generatio

from renewable sources. EQIP offers one- to ten-year contracts that provide incentiv

payments and cost-share for conservation practices. Its plan of operations, developed i

conjunction with producers, identifies the appropriate conservation practice or practice

to address particular resource concerns. EQIP may provide cost-share for up to 75% of th

costs of conservation practices, or as high as 90% for limited resource producers an

beginning farmers and ranchers.

In the 1990s farms received around USD 1.9 billion per year under agri-environmenta

programmes, largely under the CRP. The agri-environmental payments have sinc

increased, reaching USD 3.0 billion in 2004, and are expected to increase further. There i

less emphasis on programmes for retiring land from crop production and more o

programmes supporting conservation on land in production. From 2000 to 2004, budgetar

transfers to the CRP increased by 18%, and transfers to EQIP more than quadrupled. Overa

the share of agri-environmental payments in total budgetary payments to farmer

increased from 5% in 2000 to 10% in 2004.

Other good practices for environmental policy and rural development (see Annex 3.A1

3.A1.4):

● Income generation through environmental programmes (Mexico).

● Water trading under the National Water Initiative (Australia).

Source: OECD Environmental Performance Reviews: United States (2006).



establishment of water user associations responsible for recovering the cost ofproviding irrigation could decrease demand and increase efficiency in wateruse. This should help to reduce overexploitation of groundwater aquifers.Creation of buffer zones along rivers and lakes, treatment of intensivelivestock effluents and efficient application of agro-chemicals should help toprevent agricultural run-off into aquifers, rivers and lakes. Current plans toincrease subsidies on fertilisers in order to promote higher productivity inagriculture stand in contrast to efforts to reduce negative impacts of the use ofchemical fertilisers and pesticides on freshwater sources.

… and rural enterprises pollution.

While rural enterprises provide development and employmentopportunities for smaller towns and rural areas, their operations often lead toextreme pollution problems. Efforts are required to strengthen monitoring,inspection and enforcement capabilities throughout the country. This wouldmaintain the level playing field and prevent the creation of “pollution havens”.Rates of pollution charges should be increased to internalise environmentalexternalities. The implementation of the “circular economy” concept shouldbe further strengthened, promoting waste reduction, reuse and recycling (“3R”concept) and further developing “circular economy” pilot projects in rural (asin urban) industry. Further raising environmental consciousness among ruralresidents and expanding their participation in local environmentalgovernance could enhance the control of and action against pollution.

3.7. Summary

China’s rural areas constitute major resources for the country’sdevelopment and growth, but much of their potential has not yet beenexploited. The strategy “Building a New Socialist Countryside” (NSC) is a far-reaching, sound and innovative approach, although it will need to go furtherin recognising rural-urban complementarities beyond agriculture. Food-security targets and wider rural development objectives have to beharmonised and balanced in order to bridge rural-urban divides. This can beachieved through a more decided focus on investments in rural areas ratherthan on redistributive measures. Priority action is needed to i) optimise landuse and strengthen land related rights; ii) improve rural service delivery in keyfields such as education, health care as well as business and financial services;iii) develop a more decided strategy towards rural economic diversificationtapping on the potential offered by the rich natural and cultural amenities ofrural China; iv) address serious environmental challenges with a specific viewto local-level implementation of national laws in rural areas. Realising thepotential of rural China through a more comprehensive, co-ordinated andbetter funded rural development policy will require important reforms aiming



at a more effective and inclusive multi-level governance system. First,stronger, more formal co-ordination at the central level to overcome sectoralfragmentation as well as rural proofing mechanisms of sectoral policies.Second, an improved inter-governmental fiscal system to matchresponsibilities with resources at all levels. Third, a set of local governancereforms to allow for greater consultation and participation as well asincreased capacity of rural actors. Experience across OECD countries, as wellas many success cases and policy experiments in China, show that if theseconditions are met, the Chinese countryside can be increasingly turned into asource of balanced national development and growth.

While the macroeconomic context in China and globally changed quitesubstantially since this report was drafted, its recommendations arebecoming even more pertinent. For example, stimulating provision of publicservices in rural China would increase the rural population’s purchasingcapacity, thus enhancing domestic demand and at least partly substituting fora weaker demand for Chinese exports on international markets. Moreover, thereturn flow of migrant workers makes it imperative to pursue new ruralemployment opportunities.

Notes

1. Field trips have been conducted during the review process in the provinces ofGuangdong, Yunnan and Shandong as well as in the municipality of Chongqing.

2. In his 2006 working report, Premier Wen Jiabao also stressed that China “need(s) toimprove the policy-making process by integrating public participation and expertevaluation (…)” (National People’s Congress, 2006).

3. Wang Ximing, Analysis of the recent establishment of rural organisations inChina, www.chinaelections.org/NewsInfo.asp?NewsID=96554.

4. Since January 2002, price hearing systems have been effective in many Chineseprovinces. Due to China’s rapid urbanisation, public participation in urbanplanning is more and more developed. On the opposite, but almost none exist inrural areas. Counties governments and local social organisations could be allowedto entrust consulting companies to organize public participation and collectopinions of the general public. This could easily be supported by already existingregulations: Article 22 of the 2007 revised Urban and Rural Planning Law stipulatesthat “the People’s Government of a township or town shall take charge ofestablishing the township or village planning document, and shall file such aplanning document with the People’s Government at the next higher level forexamination and approval. A village planning document shall be approved by thevillagers’ meeting or the villagers’ representative meeting before it is filed forexamination and approval.”

5. An April 2007, governmental regulation reduced substantially the procedure andlitigation fees in courts. In May 2006, the NPC session also issued a Decision onFurther Improving the Work of People’s Courts and People’s Procuratorates at alllevels.



6. Central Government Document, July 1999, number 11, Report of the PartyCommittee of the People’s Supreme Court concerning solving the issue of courts’“enforcement difficulties”.

7. CCCPC Revised Regulations on Rural People’s Communes [1962], affirmed bySupreme People’s Court in 1986.

8. One of the main causes of the education gap between rural and urban areas is theway in which education was financed until 2004. While in urban areas thecompulsory education (nine years) was financed mainly by the government, inrural areas it was financed primarily by farmers themselves. Recent reforms areintended to close this gap. In 2005, central government took over financialresponsibility for compulsory education in central and western provinces from thecounty level governments. In the revised Education Law of 2006, a principle of freeeducation was introduced. In the spring 2007, free compulsory education (noschool fees, no fees for text books, etc.) was announced as implemented acrossChina. Around 150 million rural students are expected to benefit from this policychange, but sustainable and adequate funding will be needed to make it happen.

9. Such as “Northwest cereals”, Ningxia pepper, Henan’s Qixian garlic or “redagricultural products” in Xinjiang.



ANNEX 3.A1

Additional Good Practice Boxes

In addition to the examples included in Chapter 3 of this Review, thefollowing selection of Boxes presents further OECD good practices for ruraldevelopment.

3.A1.1. Boxes related to Chapter 3.2

The following three Boxes 3.A1.1, 3.A1.2 and 3.A1.3 put forward additionalOECD good practices related to central-level co-ordination for rural policy issues:

Box 3.A1.1. The Law for Sustainable Rural Development (Mexico)

The Law for Sustainable Rural Development, enacted in 2001, foresees a

federal horizontal co-ordination body specific for rural policy, participatory

bodies for civil society at different territorial levels and an official, integrated

“rural” budget.

Three characteristics of its purpose are to be highlighted: First, the multi-sector

approach of creating an Inter-Secretariat (inter-ministerial) Commission for

Sustainable Rural Development (CIDRS). This commission is meant as a cross-

sectoral horizontal co-ordination organ at federal level, which unites the heads of

the different ministries and is presided by the Ministry of Agriculture, Livestock,

Rural Development, Fisheries and Alimentation. Second, its bottom-up territorial

approach aiming to support the design, execution and consolidation of local-based

and engineered projects. Third, its participatory fashion encouraging the creation of

Rural Development Councils which act as the institutional organ within which the

rural population and their organisations can participate in the rural policy decision

and implementation process.



Box 3.A1.1. The Law for Sustainable Rural Development (Mexico) (cont.)

The Federal and sub-national Councils for Sustainable Rural Development are

meant to be the main vertical co-ordination instrument to be used under the Law.

They are a forum for sharing experiences, emitting opinions and co-ordinating

activities linked with rural development. At the state level, the Councils are meant

to develop a rural development strategy, in collaboration with their respective

governments, which is adapted to the specificities of the state’s rural areas.


Box 3.A1.2. The role of DEFRA (UK)

Place-based approaches to policy, services and governance are commonly applied

by the UK government’s Department for Environment, Food and Rural Affairs

(DEFRA). DEFRA was created in 2001 to both broaden the focus of rural policy and to

eliminate policy “silos” by gathering under one roof several rural functions which

were spread across various departments. Therefore, DEFRA works with other

government departments and delivery bodies to ensure, through “rural proofing”

(see box on rural proofing), that national policies apply equitably and effectively in

rural areas.

DEFRA’s Rural Strategy, published in 2004, reinforced the changes to a more

broadly based and locally focussed rural policy with DEFRA being responsible to

developing policies and to arrange for their delivery through other agencies. Policy

and delivery functions are thus managed separately to enhance accountability.

Several initiatives are piloting some of these changes to a new rural policy. Among

them are the Rural Delivery Pathfinders, which is a programme for innovation and

more joined-up approaches in rural service delivery. Also, Local Strategic

Partnerships (LSPs) are a policy body to enhance service delivery for rural

communities.

Source: OECD (2006), “Policy Strategies for Regional Competitiveness: Analytical Report” [GOV/TDPC(2006)24]; DEFRA (2008), Rural Affairs website, www.defra.gov.uk/rural/default.htm, accessed 6November 2008.

Box 3.A1.3. The establishment of a national agenda for rural areas (Canada)

Canada’s initial step towards a strategic vision on rural development was a paper

called “Think Rural”, commissioned in 1997 by the Standing Committee on Natural

Resources. This paper published in 1988 emphasised the need to be innovative with



Boxes 3.A1.4 and 3.A1.5 comprise additional good practices for improvingrural budgets and inter-governmental fiscal systems:

Box 3.A1.3. The establishment of a national agenda for rural areas (Canada) (cont.)

respect to development approaches by involving rural communities themselves in

defining their own needs, identifying solutions and then implementing them. “Think

Rural” contained recommendations about individual rural Canadians’ perspectives,

bringing into sharp focus the necessity for representation at a policy level. In response

to this paper the Canadian Rural Partnership (CRP) was created in 1998.

The CRP is the key policy framework supporting Canadian federal rural policy

efforts to date. The partnership operates within the federal government attempt to

ensure that federal programmes, policies and activities account for differences in

programme and design to allow rural citizens to have equal access to the

programme or services in question. An inter-departmental working group, which

began in 1998 with 17 representatives and currently consists of representatives from

32 federal departments and agencies as well as rural teams working in each of the

13 provinces and territories, is responsible for implementing the partnership.

The Rural Secretariat provides the overall leadership and co-ordination for this

horizontal-portfolio, cross-government approach. The Rural Secretariat’s key

mandate is to advise government in matters related to rural and to evaluate and

recommend and formulate policy for rural areas based on the “rural lens”.

Establishing a “rural lens” approach to policy proofing was the third step in Canada’s

efforts to raise rural consciousness.

Source: Government of Canada (2005), “Checklist of Rural Lens Considerations”, Canadian RuralPartnership, www.rural.gc.ca/checklist_e.phtml.

Box 3.A1.4. Rural budgeting and incentives within the Lively Countryside Plan (The Netherlands)

When publishing the “Agenda for a Lively Countryside” in 2004, the government

chose to devolve as much as possible responsibilities for rural development policy.

This strategy was designed to encourage growth and vitality in the rural economy by

allowing the parties concerned greater flexibility. While the agenda describes the

main national policy targets and budgets for the countryside, it allows regional and

local authorities to translate these policies into action and integrate them into local

and regional measures. Starting from January 2007, national funding of these

measures (by means of a broad investment budget for the countryside) will be based

on seven-year target agreements with the regional authorities, which leaves more

scope for integrated and sustainable plans based on a combination of national and



Box 3.A1.4. Rural budgeting and incentives within the Lively Countryside Plan (The Netherlands) (cont.)

regional priorities. The national priorities focus on nature, agriculture, water,

recreation, socio-economic vitality and landscape with specific additional goals for

different regions.

The roles of the various actors are changing as local and regional authorities will

have more responsibilities and scope for implementation. The national government

will be less involved in implementation and concentrate on facilitating policies by

setting clear targets and providing knowledge and funding to regional and local

authorities. It will also focus on translating global and European regulations into

national policy.

Source: OECD (2006), “Policy Strategies for Regional Competitiveness: Analytical Report” [GOV/TDPC(2006)24].

Box 3.A1.5. The Negotiated Planning and Performance Reserve (Italy)

New instruments in institutional and social partnerships have been established

within an institutional strategy called negotiated planning. This strategy encourages

and harmonises interventions of different public and private actors on the territory.

Co-operation is considered a key in order to select the strategic priorities of each

territory, identify the interventions and the necessary financial resources and

timetables to realise them, co-ordinate the problems of various public and private

actors and monitor project implementation. As an institutional system moves

towards decentralising competencies, the success or feasibility of many initiatives

depends upon the commitments taken by each subject, the collaboration among

public institutions and the involvement of private actors. Therefore, in many

interventions, public administrations act like one party of the contract rather than

the decision-maker.

A performance reserve system grants more resources to administrations which

spend their funds better and not only faster, giving an incentive for authorities to

implement administrative reforms. The 2000-2006 Mezzogiorno Development Plan

foresees the provision of a significant performance reserve allocation (10% of all

resources provided) according to two different competitive criteria: General

provisions for EU Structural Funds provide for the implementation of a 4%

performance reserve to be allocated according to a list of indicators of effectiveness,

management and financial criteria. Another 6% national reserve was then added.

The resulting 10% reserve represents a strong incentive to upgrading the

effectiveness of public administration and the quality of public spending.



Supplementary good practices for rural policy proofing are included inthe two Boxes 3.A1.6 and 3.A1.7:

Box 3.A1.5. The Negotiated Planning and Performance Reserve (Italy) (cont.)

The incentive device governing the reserve is designed both to enhance

competition among administrations in timely upgrading the P.A. and to provide

equal opportunities of participation to all administrations, limiting the handicap of

administrations that history, tradition and dimension make weaker than others.

The latter goal is also pursued by providing diagnostic monitoring and technical

assistance in the achievement of targets. Effective diagnostic monitoring is crucial

in order to provide information (required) to readdress or modify actions

undertaken in order to meet the reserve objectives. For this reason a technical group

is to be appointed to monitor and assess every year the progress made by each

administration against these benchmarks.

Source: OECD Territorial Reviews: Italy.

Box 3.A1.6. The Rural Lens system (Canada)

In Canada, rural proofing was established at the end of the 1990s: Accordingly all

new policy development was subject to a form of rural policy impact assessment. As

Canada developed its institutions to serve a rural policy, several more components

were put in place in 1998. “A Rural Lens” with a checklist of considerations was

initiated to determine if a policy or programme addresses priorities for rural

Canada. The checklist of considerations is as follows:

● How is this initiative relevant to rural and remote Canada?

● Is the impact specific to a selected rural or remote environment or region?

● Have the most likely positive and negative effects on rural Canadians beenidentified and, where relevant, addressed?

● Is the initiative designed to respond to the priorities identified by ruralCanadians?

● Have rural Canadians been consulted during the development or modification ofthe initiative?

● How the benefit to rural Canadians is maximised (e.g. co-operation with otherpartners, development of local solutions for local challenges, flexibility fordecision making)?

Within Canada’s Rural Secretariat, a group of five public servants administer the

Canadian Rural Lens with colleagues in other departments in applying the Rural Lens

to new policy initiatives. Of course, they only get involved with policies that have



Box 3.A1.6. The Rural Lens system (Canada) (cont.)

a rural angle. When the system works well, the Rural Lens unit is involved early, but

involvement may not come until a few weeks prior to Cabinet meetings. The power

of this mechanism is that the Rural Lens staff can advise the Minister to support (or

not support) the new policy proposal. Although the Minister has only one voice at

the Cabinet table, opportunities to involve the several Regional Development

Agencies (and their ministers) are sought. This mechanism provides departments

with an incentive to take the Rural Lens comments into account. If the Rural Lens

staff thinks that the rural perspective has not been properly presented, then they try

to influence the policy proposal accordingly. The objective is not to advocate for

putting rural considerations first, but to ensure that decisions are fully informed

(i.e., of the implications for rural communities).

Source: OECD The New Rural Paradigm: Policies and Governance.

Box 3.A1.7. The role of the Rural Policy Committee (Finland)

In Finland, rural policy has been institutionalised as a policy field. Key measure in

this process have been the recognition by law of the Rural Policy Committee (RPC) in

2000 and the assignment of a specific agenda with the formalisation of the Rural

Policy Programme as one of the four special programmes within the Regional

Development Act.

The RPC is the core of the “rural policy system”. It is currently hosted within the

Ministry of Agriculture and Forestry. The Committee is appointed by the Finnish

government and convenes 6 to 7 times per year. It consists of 9 ministries, of other

public organisations and of private stakeholders on a partnership basis. The RPC’s

three main working methods are the Rural Policy Programme, the national rural

research and development projects and the Theme Groups. In recent years, the RPC

has used about EUR 3 million per year for about 70 research and development

projects which also support the work of Theme Groups. Part of this research is

undertaken through a network of nine rural professorships which was created in

several universities throughout the country, but there are a wide number of other

researchers contributing in the rural research. The RPC has continuously 12-15 Theme

and Work Groups (such as the ones on Local Action Groups, on rural tourism or on

food) which are often important actors in their own field.

The Finnish parliament is linked to the system through the Rural Network of the

Parliament established in 2001. The network convenes 2 to 3 times a year to discuss

topical rural policy issues.



The Boxes 3.A1.8 and 3.A1.9 present good practices related to place-basedpolicies for rural development:

Box 3.A1.7. The role of the Rural Policy Committee (Finland) (cont.)

The Rural Policy Programme is a fixed-term instrument approved by the

government for directional regional development and the creation of new methods

and forms of co-operation for rural areas. The programme is divided into two parts:

One is the Plan of Action of the Rural Policy Committee which contains proposals

also to other parties than the State Government. The other part is the Special Rural

Policy Programme which contains only decisions and proposals within the

competences of the government. Both parts concentrate on broad rural policy issues

and on developing the rural policy system.

Source: OECD Rural Policy Reviews: Finland.

Box 3.A1.8. The Active Regions programme (Germany)

The Active Regions (Regionen Aktiv) programme, just as the LEADER Initiative,represents a breakthrough compared to the traditional approach to rural development.It is a hybrid policy approach implemented by the Federal Ministry of Agriculture, butgrounded in regional policy. The federal ministry moved from its traditional role ofprovider of financial resources to that of service provider to regional actors (technicalassistance, research, communication, etc.). “Community-based” strategic initiatives arethe central element in any locally based development strategy as they embrace the ideathat the local populace has the best sense for what efforts will benefit them and providea means for local people to organise to achieve these goals. The development strategyshould integrate economic, ecological and social concerns across the region with aplace-based focus and attention to rural-urban links in the area.

The Active Regions programme’s main objectives are: i) strengthening rural areas

and creating additional sources of income; ii) nature-friendly and environmentally

compatible land management; iii) consumer-oriented food production; and

iv) strengthening rural-urban connections. The involvement of local actors is the

most important innovation. Partnerships were created in all 18 model regions with

a share of at least 50% of actors from NGOs.

The principle of decentralisation of decision-making and management

responsibilities is associated to the partnership principle. After the project approval,

financial resources are allocated to local actors on the basis of the decisions of the

regional partnership, with the technical support of a specific structure called

“regional management” providing day-to-day management of the programme,

consultancy for applicants and the management of the regional network.



Box 3.A1.8. The Active Regions programme (Germany) (cont.)

Three main aspects of the Active Regions approach should be emphasised:

● The focus given by the federal ministry on the definition of a strategic view by themain actors participating to the programme definition, including the formulationof business plans.

● The role of the federal administrative structure involved both in the selection andimplementation phases, not only performing traditional functions of providingfunds and checking the regularity of all administrative steps, but also supportingthe capacity building of main actors involved.

● The key innovation in vertical governance, especially in the relations between thenational and the local level of government. Active Regions has shown that themobilisation of local actors and resources can be efficiently promoted by thenational rather than the regional level. This conclusion does not only come out fromthe German experience, but also from other decentralised countries’ experience.

The programme has served to facilitate a paradigm shift in approaches to

agricultural and rural policy. It is reported that many regional partnerships formed

during the competition in regions which were not selected have continued to

operate. There is also a greater openness from other sources to finance areas such

as integrated rural development and regional management. Finally, there is a

stronger culture for evaluation and self-assessment among the regions selected as

a result of the programme.

Source: OECD Rural Policy Reviews: Germany; OECD (2006), “Policy Strategies for Regional Competitiveness:Analytical Report” [GOV/TDPC(2006)24].

Box 3.A1.9. The PRODER programme (Spain)

Following the first LEADER experience (1991-1994), Spain decided to expand theinitiative to rural areas beyond those eligible for LEADER. The PRODER programme(the Spanish acronym for Development and Economic Diversification OperationProgramme for Rural Areas) was established in 1996 as a national rural developmentprogramme designed applied according to the LEADER approach and co-financed bythe EU. With the exception of Andalucía and Madrid, LEADER and PRODERterritories could not overlap, with the intention of covering the whole rural territory.

The differences between LEADER and PRODER were: 1) PRODER was not part of aEuropean programme, but rather was a Spanish-based multiregional programmederived from the EU’s Structural Funds framework. 2) PRODER did not haveTransnational Cooperation objectives. 3) Agrarian investments were permitted underthe PRODER, which made it more agrarian in nature than LEADER. 4) LEADER`semphasis on innovative and transferable actions was not necessarily required of thePRODER.



Another example for good practices to increase rural citizens’participation is presented in Box 3.A1.10:

Box 3.A1.9. The PRODER programme (Spain) (cont.)

● The first edition of the PRODER (1996-99) applied only to those Spanish rural countiesfrom the 10 ACs (NUTS 2) in Spain with GDP per capita below 75% of the EU average,identified as Objective 1 regions. The PRODER was then co-ordinatedd from theMAPA. A total of 101 different PRODER local development programmes wereestablished, co-financed with EU, Spanish, regional, local, and private (34.7%) fundstotalling EUR 619.1 million.

● The second edition of the PRODER (2000-06) was potentially opened to all of theSpanish territory, including non-Objective 1 areas, and its management waspassed on to the regional administrations. Three non-objective 1 ACs (Aragon,Catalonia, and Madrid) decided to take up PRODER whilst five opted out of theprogramme. This period, the programme was expanded to a total of 162 counties.The public funds dedicated to the second edition of the PRODER totalledEUR 827.7 million, 63% provided by the EU.

For the 2007-13 European Programming Period, there will no longer be PRODERand LEADER groups but the Local Action Groups (LAGs) that these projects had set-up will remain and will become responsible for managing and implementing themeasures integrated within Axis 4 of the second pillar of the CAP within theirterritory.


Box 3.A1.10. Public consultation for a White Paper on Rural Development (Ireland)

In 1999, a White Paper was prepared with extensive consultation among socialpartners, a broad range of interest groups, government departments and the ruralcommunity. A series of regional seminars were held throughout the country, hostedby the Ministry of State at the Department of Agriculture and Food.

The government received a great variety of written submissions from nationaland local organisations, groups and individuals representing different interests inrural areas. Also government officials, as well as members of an InterdepartmentalCommittee established to prepare the White Paper, met different groups within theconsultation process.

Source: Department of Agriculture, Fisheries and Food (n.d.), Ensuring the Future – A Strategy for RuralDevelopment in Ire land , A White Paper on Rural Development, www.agriculture.gov. ie/index.jsp?file=publicat/wpaper/contents.xml, accessed 4 November 2008.




The following four Boxes 3.A1.11, 3.A1.12, 3.A1.13 as well as 3.A1.14include good practices for innovative rural service delivery:

Box 3.A1.11. The Net on Wheel programme (Portugal)To promote accessibility of electronic and other public services and the use of IT

in rural areas, the Net on Wheel (Net sobre rodas) programme is supported by the

Regional Development Agency for Entre Douro e Vouga, which co-ordinates the

projects common to five municipalities in the region. Since inception, the

programme with its mobile broadband Internet services has reached over 26 000 users

and provided over 250 courses with 860 basic ICT skills diplomas. The services are

beneficial to remote and sparsely populated areas and assure a cost-efficient

management.

With a complete kit (vans equipped with notebook computers, printers, scanners,

webcams, satellite net connection), the programme targets all rural citizens,

particularly marginal groups such as senior citizens, handicapped and unemployed

people and students of all ages. It offers different services, including ICT teaching

courses, digital workshops, examination of basic ICT skills diplomas, support

concerning online government services and general Internet service. With these

services, the programme contributes to social learning, empowerment and job

inclusion.

Different partners support the programme including private business, social and

cultural institutions, schools and universities, as well as regional offices of the

national government. The programme is financed with national and EU funds,

involving EUR 310 000.

Source: Bastos, Isabel and Alexandra Couto (2008), “Net on Wheels. An Innovative Experience toPromote Service Accessibility and Info-inclusion in Rural Areas”, presentation at the OECD RuralDevelopment Conference Innovative Service Delivery for Rural Regions, 3-4 April 2008, Cologne, Germany.

Box 3.A1.12. The “Practical Solutions to Close Broadband Supply Gaps” pilot project (Germany)

Around 10% of German households, mostly in rural areas, have no or insufficient

access to broadband services. This supply gaps impede overall and regional

economic development. The government tries to resolve this issue with an

acceptable price/performance ratio and mostly using measures in line with market

needs. State support is needed for co-ordination, promotion of market processes

and information policy geared towards decision-makers in the municipalities,

citizens’ groups and companies on the ground.



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Box 3.A1.12. The “Practical Solutions to Close Broadband Supply Gaps” pilot project (Germany) (cont.)

A pilot project on “Practical Solutions to Close Broadband Supply Gaps” has been

implemented in six “problem municipalities” in Brandenburg, Saxony, Lower Saxony,

Rhineland-Palatinate and Bavaria. The project exemplifies promising ways for

municipalities and citizens’ groups to work in partnership and tackle the issue on the

ground.

The government established a working group on nation-wide broadband supply

under the direction of the Federal Ministry of Economics. The group examined all

possible concepts and drew up recommendations for action. Participants in this scheme

include representatives from central and local governments as well as private actors.

The government’s objective is to achieve the fullest broadband coverage possible

(i.e., coverage of more than 99% of households). Subsidies should only be granted in

cases where market solutions are not possible. A broadband atlas composed by the

Federal Ministry of Economics helps to identify market opportunities for enterprises

and areas where government action is needed.

According to government findings, market solutions are possible almost

everywhere, even in relatively sparsely populated areas. 20 to 30 local customers are

often enough to realise economically viable (wireless) solutions. However, some

markets evolve slowly and major suppliers often do not focus on rural areas. This

opens up opportunities for SMEs.

Source: Knauth, Peter (2008), “Nation-wide Broadband Services. Policies by the German Government/theMinistry of Economics and Technology”, presentation at the OECD Rural Development ConferenceInnovative Service Delivery for Rural Regions, 3-4 April 2008, Cologne, Germany.

Box 3.A1.13. The Rural Transaction Centres (Australia)Australia instituted the Rural Transaction Centres (RTC) programme to help sma

communities establish locally run and self-funding centres that either introduce new

services or bring back services that were no longer available in rural towns. Recently, th

RTC programme has been integrated into the Australian Government’s new streamline

Regional Partnerships programme. Since its introduction in 1999, over 200 RTCs have bee

approved for assistance under the programme. An RTC programme field consultant assist

in an initial community consultation and feasibility study. The RTC is therefore tailored t

meet community needs but not compete with other planned services, and usuall

includes: Financial services, postal and telecommunications access, federal state and loca

government services, insurance and taxation, printing and secretarial capacity. Thes

centres employ from one part-time employee to four full-time staff. Funding from th

central government covers the capital costs of establishing a RTC and subsidises it

operating costs during its early years of operation, if necessary.

Source: OECD, The New Rural Paradigm: Policies and Governance.



Box 3.A1.14. The Rural Transport Fund (Scotland, UK)

The Rural Transport Fund (RTF) was launched in 1998 to improve transport links

in rural Scotland. It comprises three different elements:

● Rural Public Passenger Transport Grant (RPPT). Enables local authorities to

provide additional rural public transport services, including bus, rail and ferry,

and to allow the subsidising of non-commercial routes in rural areas. All local

authorities, except the four city councils, were eligible for a share of the money

by special grant. The grant was awarded to each council with the balance

distributed according to a formula reflecting factors such as sparsity of

population, settlement patterns and remoteness from service centres, to assure

councils with a higher element of rurality or remoteness to receive a greater

share of the resources.

● The Rural Community Transport Initiative (RCTI). Aims at funding community

transport projects, such as community minibuses, dial-a-bus services, taxi buses

and voluntary car schemes, which would be of particular help in more remote

areas of Scotland, particularly where there are no scheduled bus services or

where the services are very limited. The grant was distributed at a national level

and subject to competitive bids from community transport groups and other

community organisations. Projects are selected by a Steering Group comprised by

the Scottish Government, the Community Transport Association, COSLA, the

Association of Transport Co-coordinating Officers and, until its demise, Rural

Forum. Applications are selected based on criteria of improvement of transport

accessibility of the area and with an emphasis on new and innovative ideas for

provision.

● Rural Petrol Stations Grant Scheme (RPSGS). Assists rural petrol stations in meeting

the cost of tank replacement and groundwater protection requirements. The fund

is intended to focus on ensuring that a network of rural petrol stations is

maintained, because locally available fuel suppliers are considered to be vital to

accessibility in remote rural areas. The grants are awarded by Highlands and

Islands Enterprise and Scottish Enterprise and distributed through the local

enterprise network based on distance and regulatory criteria. In April of 2008 the

residual funding for this initiative is expected to pass to the Enterprise

Networks.

Note: During the publication phase of this document, certain changes are expected that will impact theRural Transport Fund. The RPPT, RCTI and DRT initiative will close on 31 March 2008 and be replacedfrom 1 April 2008 by a new Enhanced DRT initiative, which will be delivered by LAs and funded throughthe SG’s block grant to them. It will then be the responsibility of each LA in Scotland to allocate theresources available to it on the basis of local needs and priorities, having first fulfilled its statutoryobligations and the jointly agreed set of national and local priorities, including the SG’s key strategicobjectives and manifesto commitments. The SG will, however, be ensuring that LAs honour existingRCTI funding commitments for the next two years, to ensure continuity of service provision. DRTprovision will still feature in the Regional Transport Partnerships’ wider consideration of transportneeds at regional level.

Source: OECD Rural Policy Reviews: Scotland, UK.



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Other examples for good practices regarding the role of financialinstitutions in rural development are put forward in Boxes 3.A1.15 and 3.A1.16:

Box 3.A1.15. The experience of the Cajas de Ahorro (Spain)

Spain counts with a wide network of saving banks (Cajas de Ahorro) which have close t

23 000 branches throughout the Spanish territory, 26% of which are in municipalities wit

less than 10 000 inhabitants. This proportion is even larger than the proportion o

population living in these municipalities 22%, which evidences their strong specialisatio

in the rural environment. As a consequence, penetration of financial services in localitie

of low income per capita and population in Spain is much higher than that of comparabl

European countries such as France or Italy.

Their specialisation is in micro-credit which is granted mainly to promote self

employment and creation of micro-enterprises. The profile of the typical user of Cajas d

Ahorro is usually woman (often migrant) aged of 35 years with a clear idea of business i

small scale, asking for a credit of EUR 9 000 to start her businesses, mainly in the servic

sector. However, their role in rural development extends from the typical financial suppor

● Special financing: Social housing, land ownership, SMEs, employment an

entrepreneurship.

● Support to local development: Association for mutual guarantee, Association fo

industrial development, Enterprise co-operation, futures market, programmes of loca

initiatives and venture capital.

● Specific collaborations: Special Agreements, CAP subsidies administration, insuranc

and travel, services to migrants, LEADER (and PRODER) Programmes.

Through the programme CRECE/EOI they have advised 24 770 participants in trainin

and managed 20 000 projects of business creation or consolidation of enterprises. The

have also participated in close to 140 017 “social projects” with an investment o

EUR 1 338.5 million, from 1999 to 2006.

Source: Moraleda, F. (2007), Confederación Española de Cajas de Ahorro, “Las cajas de ahorros en la financiación dla innovacion rural” (Savings Banks Financing Rural Innovation), presentation at the OECD Rural DevelopmenConference Innovative Rural Regions: The Role of Human Capital and Technology, Cáceres, Spain, 21-23 March 2007.

Box 3.A1.16. USDA’s programme to support rural lenders and entrepreneurs (USA)

The United States Department of Agriculture (USDA) is investing to incentivise cos

sharing in local initiatives and to promote self help by educating rural lenders an

entrepreneurs. USDA developed a socio-economic benefits assessment system whic

measures results directly, increases accountability and improves the targeting of resources

In the framework of this approach, USDA encourages rural businesses to lead tangibly b

“bringing more of their own dollars to the table”.



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Different projects try to tackle the challenge of exploiting rural-urbanlinkages. The following Boxes 3.A1.17 and 3.A1.18 give additional examples:

Box 3.A1.16. USDA’s programme to support rural lenders and entrepreneurs (USA) (cont.)

A rural economic development loan and grant (REDLG) programme provides funding t

rural projects through local utility organisations. During the financial year 2008, more tha

USD 33 million is available for loans.

One part of the scheme is a loan programme which offers zero interest loans to loca

utilities which they, in turn, pass through to local businesses. Supported projects have t

create and retain employment in rural areas. There is also a grant programme, providin

grant funds to local utility organisations which use the funding to establish revolving loa

funds. Loans are made from the revolving loan fund to projects which will create or retai

rural jobs.

Examples of eligible projects include capitalisation of revolving loan funds, technica

assistance, business incubators, community development assistance to non-profits an

public bodies, facilities and equipment for education and training for rural residents t

facilitate economic development, facilities and equipment for medical care to rura

residents or telecommunications/computer networks for distance learning or lon

distance medical care.

Source: Dorr, Thomas C. (2008), “Rural Service Delivery: Trends and Challenges”, presentation at the OECD RurDevelopment Conference Innovative Service Delivery for Rural Regions, 3-4 April 2008, Cologne, Germany; USDRural Development (n.d.), Rural Economic Development Loan and Grant, www.rurdev.usda.gov/rbs/buspredlg.htm, accessed 5 November 2008.

Box 3.A1.17. The Kobra 2010 Rural-Urban Co-operation Project (Slovakia

To promote the integration of the Slovak and Austrian municipalities surroundin

Bratislava, the framework concept “Kobra 2010” serves as a guideline for future

development. It aims at fostering a regional identity for the citizens belonging to differen

countries. Concrete proposals to enhance rural-urban co-operation are included within

master plan, focussing on bicycle routes and the construction of a bicycle and pedestria

bridge across the Danube, as well as on the identification of a “landscape axis” along th

Danube upgrading residential areas on both sides of the border and controlling th

territorial development of the municipalities affected.

A common platform of the city of Bratislava and neighbouring Slovak and Austria

municipalities aims at co-ordinating regional development.

Source: PGO (n.d.) , Kobra. Stadt-Umland-Kooperation Bratislava, www.pgo.wien.at/downloadKOBRA_Druckvorlage_02_08_klein.pdf, accessed 5 November 2008.



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Box 3.A1.18. Developing the rural “silver economy”: Seniorpolis (Finland)

Seniorpolis combines four main areas to develop a uniform and extensive servic

selection to satisfy the needs and requirements of senior citizens, such as: Housin

solutions for senior citizens; life-long learning through interactive and distant learnin

systems for senior citizens; development of care service best practices tailored to meet th

needs of senior citizens (for example, neighbourhood traffic routes and weekday service

such as transportation and meals); and relaxation services. Instead of seeing senio

citizens as a challenge, they are shifting towards making ageing population a

opportunity.

Aside from the services provided for senior citizens, they aim at developing new model

to promote business targeting senior citizens. For example, a quality certificate and trad

marks for different senior citizen products and services, solutions and concepts based o

Seniorpolis’ operations. They expect that, as a result, integrated product and servic

packages will be established. Seniorpolis will prioritise export know-how and solutions.

In sum, Seniorpolis defines itself as:

● A network that collects, promotes co-operation, combines and integrates activities anoperations involving senior citizens.

● A project that co-ordinates and develops project implementation and procedure.

● A senior citizens’ village: Ristijärvi has been selected as a pilot area where specialiseprivate housing and lifestyle services for senior citizens will be developed on a businesbasis.

● A prototype workshop that guides product development, innovations, applications anan application testing environment.

● A brand for marketing and launching the concept.

● A franchising concept to develop and maintain business activities and product/servicpackages.

● A centre of expertise: One amongst several research, development, education an

business centres in the region of Kainuu (others include Measurepolis;Woodpolis, an

Snowpolis).

● A corporate and holding company: Seniorpolis Oy (Ltd.) manages the Seniorpolconcept, develops Seniorpolis business logic, participates in risk financing, marketinand business development and owns Seniorpolis licensing and proprietary rights.

Source: OECD Rural Policy Reviews: Finland.




Finally, the Boxes 3.A1.19 and 3.A1.20 provide further examples for goodpractices in the interaction of environmental policy and rural development:

Box 3.A1.19. Income generation through environmental programmes (Mexico)

Mexico has implemented several programmes that seek to exploit synergies

between environmental/natural resources management and employment/income

generation, especially in marginalised and rural areas. The Temporary Employment

Programme (PET), the largest employment/ income generation programme, is

implemented jointly by four ministries (Social Development, Agriculture,

Transportation, and Environment). With a budget of MXN 4 billion in 2000, PET

generated about 1 million short-term jobs. The programme targets extreme poverty

by making intensive use of low-skilled labour in infrastructure and environmental

projects. There is a focus on areas designated as high-priority conservation zones,

as susceptible to natural disasters or as experiencing serious environmental

degradation. At least 78% of PET funds must be allocated to priority “micro regions”

with high marginalisation levels. In practice, PET benefits participants who do not

have access to year-round jobs and who are poorer than non-participants in their

own communities.

The National Reforestation Programme (PRONARE, launched in 1992) generates

about 100 000 temporary jobs annually, reducing migration to urban areas. Mexico’s

forestry sector represents 1% of GDP and 100 000 permanent jobs. Marginal farmers

clear forested land (often by burning) for subsistence agriculture and animal

husbandry.

The Forestry Development Programme (PRODEFOR, launched in 1998) creates more

lasting employment impacts through structural improvements in the forestry sector. It

encourages investments aimed at improving competitiveness in the production chain,

for example by creating efficient production units and facilitating market access. It

also encourages more diversified use of forest resources (non-timber production, eco-

tourism), forest protection (fire prevention measures) and regeneration (preparation

for reforestation). PRODEFOR’s employment impacts have varied over the years, at

between 5 000 and 32 000 direct jobs (and 9 000 to 15 000 indirect jobs) annually. By

2000 it had assisted over 14 000 ejidos (communally owned land) and owners of other

types of land, so that about 500 000 hectares of forest was subject to sustainable

forestry practices. Mexico’s forests should be further seen as an economic asset for

rural development; sustainable forestry should continue to be promoted, particularly

in mountainous areas, to reduce rural poverty and contribute to environmental

protection.

Source: OECD Environmental Performance Reviews: Mexico (2003).



Box 3.A1.20. Water trading under the National Water Initiative (Australia)

Despite the 1994 Water Reform Framework and other water management and

institutional arrangements, the sustainability of water resource management

practices became a growing concern across the Australian continent. This led to the

adoption in 2004 of an Intergovernmental Agreement on the National Water

Initiative (NWI) which is a joint effort by all Australian governments to create a

nationally compatible water management framework.

The NWI aims to increase the productivity and efficiency of water use, including

through i) expansion of water trading, which is expected to allow more cost-

effective and flexible recovery of water to achieve environmental outcomes; ii) more

secure water access entitlements, better registry arrangements, monitoring,

reporting and accounting of water use, and iii) improved public access to

information. The NWI identifies some 70 actions, of which about half require

extensive co-operation among governments to establish common methods and

rules for measuring, planning, pricing and trading water.

Efforts to facilitate water trading build on a history of temporary and permanent

trading dating back to 1983, when South Australia became the first State to

introduce temporary water entitlements. Since then, State/Territory laws have

made trading possible in all jurisdictions, but various restrictions on trading (other

than those intended to protect the environment) remain mainly aimed at shielding

existing uses and third-party interests.

Most trading occurs in regulated water systems, i.e. systems with engineered

infrastructure such as dams, which allow water to be diverted and stored when

stream flow is plentiful and then released later according to the needs of water

users and ecological requirements. Australia has more than 500 large dams, mostly

built since the 1970s, with a total storage capacity of about 85 000 GL (to be

compared to a total annual water use of about 25 000 GL). In addition, there are

many smaller dams (i.e. with a retaining height of less than 15 metres). Trading

varies from one year to the next, depending on weather conditions.

Trading has also occurred in the agriculture sector. In the case of temporary

trades (i.e. on a yearly basis), this often involves trade between farmers in the same

irrigation system; in the case of permanent trades, a typical case may entail a shift

from sheep and cattle farming to a dairy or horticultural venture in a different

location. In the Murray basin, for example, 120 GL “moved” from pasture irrigation

to horticultural uses further downstream. So far, most trading has taken place in

New South Wales, Victoria, Queensland and South Australia.



Box 3.A1.20. Water trading under the National Water Initiative (Australia) (cont.)

Trading is a significant element of water use practice. Across Australia, a volume

in the order of 1 300 GL was traded in 2004-05 (i.e. about 7% of total water

consumption), of which 1 053 GL was temporary trade and the remainder

permanent trade. According to one estimate concerning Victoria, about 6% of water

entitlements was traded permanently to a new location during the 1990s; between

3 and 8% of annual water use was traded temporarily in the second half of the same

decade. As can be expected, in any one year temporary trading typically exceeds

permanent trading by a large margin. In Victoria in the 2004-05 season, total trade

amounted to about 500 GL, of which 11% was permanent trade. In the 2000-01

season, the volume traded in the ten irrigation areas of New South Wales amounted

to about 624 GL, of which about 7% was permanent transfers. In South Australia in

the same year, permanent trade actually exceeded temporary transfers,

representing 51% of a total volume of 105 GL.

The price of water obtained through temporary trading fluctuates from year to

year, depending on weather patterns. For instance, in the Greater Goulburn Zone

(Northern Victoria) average temporary trading prices ranged between AUD 40-80 per

ML (thousand cubic metres) during the period 1998-2001. In South Australia, prices

for permanent trade amounted to approximately AUD 1 000 per ML during the same

period.

Finally, some water quality trading is also occurring. One particular example of

“water trading” is the Hunter River Salinity Trading Scheme in New South Wales,

which is a “cap and trade” scheme to regulate salt discharges from 20 mines and

two electricity generators along the river. “Opportunities to discharge” or credits can

be traded. One credit gives the holder the ability to discharge as saline water 0.1% of

the daily total allowable discharge of salt to a “block” of water in the Hunter River

during days of high flow. There are 1 000 credits, and a “block” is the body of water

that passes a particular point on the river (Singleton) each day. Examples of

experimentation in nutrient trading exist in Western Australia (Busselton), New

South Wales (South Creek) and Queensland.

Source: OECD Environmental Performance Reviews: Australia (2008).


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ÉVALUATION ET RECOMMANDATIONS

La Chine rurale compte plus de 700 millions d’habitants, soit près du double de la population rurale de l’ensemble des pays de l’OCDE.

Selon la définition fondée sur le recensement, la population rurale de laRépublique populaire de Chine (ci-après : la Chine) s’élevait à 737 millions depersonnes en 2006, soit 56 % du total national. La Chine demeure donc un paysà dominante rurale et sa population rurale est la seconde plus importante aumonde, après celle de l’Inde. La population rurale est répartie de façon inégaleen Chine, se concentrant pour moitié dans huit provinces. À l’opposé, les troisplus grandes provinces en termes de superficie, à savoir le Xinjiang, le Tibet etla Mongolie intérieure, représentent plus de 40 % du territoire national maisleur population rurale constitue moins de 4 % de la population totale. Ladensité de la population rurale est la plus forte sur la côte dans le Shandong,à Tianjin et dans le Jiangsu et au centre dans l’Anhui et le Henan, où elleexcède ou avoisine les 300 habitants au km2, et elle est la plus faible dans lesprovinces du Tibet, du Qinghai et du Xinjiang, toutes trois situées à l’Ouest, oùelle est inférieure à 10 habitants au km2. La faible densité dans les trois plusgrandes provinces se traduit par une densité moyenne relativement faible dela population rurale en Chine : environ 75 habitants au km2.

L’exode rural n’a cessé d’augmenter…

Jusqu’au milieu de l’année 2008, l’expansion économique chinoise, la créationmassive d’emplois dans les villes et les faibles taux de chômage dans les zonesurbaines ont été d’importants facteurs d’attraction, incitant la population ruraleà migrer vers les villes et vers les provinces côtières. Les facteurs incitant au

départ ont notamment été la très faible disponibilité en terres cultivées parhabitant, la rareté des possibilités d’emploi non agricole (en particulier dansles provinces du Centre et de l’Ouest), la dégradation de l’environnement et lescatastrophes naturelles qui touchent chaque année près d’un quart de lasurface ensemencée du pays. Le nombre des travailleurs ruraux migrants aainsi fortement augmenté, contribuant ainsi à abaisser la population ruraled’un pic de 859 millions de personnes au milieu des années 90 à 737 millionsde personnes actuellement. Selon la définition la plus couramment utilisée,on peut dire que le nombre des migrants ruraux est passé d’environ 2 millions



en 1983 à 78.5 millions en 2000 puis à 132.1 millions en 2006. Environ 70 % desmigrants ruraux ont migré vers ou à l’intérieur des régions de l’Est et les 30 %restants vers ou à l’intérieur des régions du Centre et de l’Ouest. De même,71 % des migrants ruraux sont allés s'établir dans des zones urbaines et unepart encore importante (29 %) s’est établie dans les zones rurales. La premièreprovince d’origine (Sichuan) est située à l’Ouest, mais les autres principalesprovinces d’origine sont situées au Centre et à l’Est. Les migrants originairesdu Sichuan et des provinces centrales sont allés s'établir à l’Est alors que lamajorité des migrants de l’Est (Guangdong, Jiangsu, Zhejiang) se sont déplacésdans leur province d’origine ou vers d’autres provinces de l’Est. Les principalesprovinces de destination sont toutes situées le long de la côte.

… entraînant une distorsion de la composition démographique dans les zones rurales, mais y produisant aussi des effets positifs sur les revenus, la consommation et les investissements.

La population des migrants ruraux est composée en majorité de jeunes en âgede travailler et ayant un niveau d’instruction relativement bon. La migration aune grande incidence sur la pyramide des âges des populations rurale eturbaine. Le départ de jeunes travailleurs rend la pyramide des âges de lapopulation rurale beaucoup plus étroite pour la tranche d’âge des 20-34 ans.Inversement, leur arrivée dans les zones urbaines compense dans une largemesure l’impact du durcissement de la politique de l’enfant unique sur lastructure démographique de la population urbaine. Le vieillissementdémographique touche à la fois les zones rurales et les zones urbaines mais ila tendance à progresser plus rapidement dans les zones rurales : selon lesobservations, 70 % des personnes âgées vivent à la campagne. Ce phénomèneconstitue une véritable gageure pour les principales provinces d’originecomme l’Anhui, le Hunan et le Sichuan. Les migrants étant dissuadés de fairevenir leur famille en ville (malgré les mesures progressives pour réformer lesystème du hukou [enregistrement des ménages]), une proportionexcessivement élevée d’enfants – selon les estimations, ils seraient unevingtaine de millions – reste dans les zones rurales. Ces évolutions ont faitmonter le taux de dépendance de 40.4 % en 1982 à 43.2 % en 2006 pour leszones rurales. Par contre, le taux de dépendance est tombé de 45.4 % à 32.3 %pour les zones urbaines au cours de cette même période en raison de l’affluximportant des migrants et de la baisse de la fertilité. L’exode rural – qui estessentiellement le fait des travailleurs masculins – a en outre contribué à laféminisation de la population rurale, en particulier pour la tranche d’âge des20-34 ans. La migration a également des effets positifs sur les zones rurales.



Les envois de fonds effectués par les migrants concourent à diminuer lapauvreté rurale, accroître la capacité d’autofinancement des ménages rurauxet augmenter la consommation. Selon des enquêtes sur les ménages, lerevenu supplémentaire généré par la migration entraîne pour les ménagesune hausse du revenu par habitant comprise entre 8.5 % et 13.1 %. Danscertaines provinces enregistrant un fort taux d’exode, les envois de fondsreprésentaient de 30 % à 40 % du revenu des ménages en 2001. Lesinvestissements productifs des ménages migrants sont généralementsupérieurs à ceux des ménages ruraux dont aucun membre n’a migré. Lesménages migrants ont plus de biens durables, des maisons plus spacieuses etdes machines plus productives que les ménages uniquement agricoles.Comme l’exode réduit l’excédent de main-d’œuvre agricole, il pourraitcontribuer à accroître à long terme la productivité du travail agricole, malgréla difficulté à satisfaire la demande de main-d’œuvre saisonnière en raison del’imperfection des marchés du travail ruraux. Compte tenu de la superficielimitée des terres agricoles, les possibilités d’augmenter substantiellement laproductivité du travail agricole et de relever le revenu par habitant tiré del’agriculture résident dans la réorientation de la main-d’œuvre du secteuragricole vers les autres secteurs économiques, y compris par le canal del’émigration.

Le revenu rural moyen n’a cessé d’augmenter, et les taux de pauvreté rurale ont baissé de façon spectaculaire ces trente dernières années…

Au cours des trente dernières années, la Chine a réalisé de remarquablesprogrès dans l’augmentation des revenus ruraux moyens et dans la luttecontre la pauvreté rurale. Le pays a réussi à augmenter les revenus ruraux engrande partie grâce à la série de réformes agricoles menées à la fin desannées 70 et au début des années 80, comprenant le démantèlementprogressif du système d’exploitation collectiviste et son remplacement parl’octroi, à des fins d’exploitation privée, de droits d’utilisation des terrescollectives à des ménages d’agriculteurs. Depuis, d’autres réformes, telles quele développement des entreprises rurales, l’assouplissement du système duhukou, la réforme de la fiscalité rurale et l’ouverture progressive à laconcurrence mondiale, ainsi que la poursuite des réformes foncièresdestinées à renforcer la garantie de maintien des droits de propriété desexploitants, ont contribué à une plus grande diversification des activitéséconomiques dans les zones rurales et à la hausse ininterrompue des revenusruraux. C’est ainsi que le revenu réel par habitant des ménages ruraux apresque quintuplé entre 1980 et 2007, ce qui représente un taux annuelimpressionnant d’environ 6 %. Cette hausse générale des revenus ruraux a



réduit la pauvreté rurale de façon spectaculaire, à la fois en termes absolus eten termes relatifs. Quelle que soit la définition retenue, celle de la Chine oucelle de la Banque mondiale, cette évolution est manifeste. Selon la définitionde la Banque mondiale (revenu de 1 USD par personne et par jour en PPA), lenombre des personnes vivant dans la pauvreté en Chine est tombé d’environ530 millions (zones rurales et urbaines) en 1981 à 129 millions en 2004, et letaux de pauvreté a été abaissé de 53 % à 9.9 % respectivement. La vastemajorité des personnes vivant en dessous du seuil de pauvreté habite en zonerurale : en 2001, le taux de pauvreté était de 12.5 % pour la Chine rurale contreseulement 0.5 % pour la Chine urbaine. De surcroît, malgré les progrèsaccomplis jusqu’à présent, une grande partie de la population chinoise vitencore juste au-dessus du seuil de pauvreté absolue ; en 2004, 34.9 % de lapopulation vivait avec moins de 2 USD par personne et par jour.

… mais les écarts se creusent par rapport aux zones urbaines ainsi qu’entre les différentes zones rurales.

L’écart de revenu entre citadins et ruraux est important et en augmentation.Le ratio revenu urbain nominal sur revenu rural nominal par habitant étaittombé de 2.6 en 1978 à 1.8 en 1985, essentiellement sous l’effet de la hausserapide de la production agricole. Mais, depuis, la tendance baissière s’estinversée, le ratio remontant au niveau record de 3.3 en 2007. Ce creusementrécent de l’écart s’est produit malgré l’envolée des prix des matières premièresagricoles et malgré les différentes mesures prises par le gouvernement pouraugmenter les revenus ruraux, comme la suppression des taxes agricoles, lerelèvement des subventions aux moyens de production pour l’agriculture,l’accroissement des paiements directs aux agriculteurs et l’accélération desdépenses budgétaires consacrées au développement rural. Le différentiel derevenu nominal est légèrement plus faible lorsque l’on tient compte du faitque la vie est moins chère dans les zones rurales, mais il demeure importantet a tendance à s’accroître avec le temps. Il est plus élevé lorsque l’on prend encompte les prestations sociales implicites et explicites et les subventions dontbénéficient les citadins. Le niveau du revenu rural par habitant est très inégalcar les possibilités d’emploi non agricole dans les zones rurales et laproductivité du travail agricole varient considérablement selon les provinces.Les mesures d’éradication de la pauvreté absolue en Chine rurale ont été plusou moins efficaces comme le montre le fait que les taux de pauvreté diffèrentbeaucoup d’une province à l’autre, allant de moins de 0.5 % dans presquetoutes les provinces côtières à plus de 5 % dans les provinces occidentalesen 2005 (plus de 11 % dans le Qinghai, province de l’Ouest). Les zones ruralesdépendantes de l’agriculture sont plus vulnérables et ont tendance à



enregistrer les taux de pauvreté les plus élevés. Ces constatations donnent àpenser que si l’agriculture traditionnelle a été un moyen efficace de combattrela pauvreté absolue pendant les premières phases de la réforme, aujourd’huic’est la diversification des revenus qui est un facteur essentiel d’éradicationdes dernières niches de pauvreté absolue en Chine.

Malgré les améliorations récentes, d’importants écarts subsistent entre les territoires en termes d’accès et de qualité des services dans les domaines de l’éducation et des soins de santé…

La Chine fait partie des pays où près de 100 % des enfants vont jusqu’au boutde leurs études primaires, mais d’importantes disparités d’accès à l’éducationsubsistent entre la ville et la campagne et entre les différentes provinces. Lapopulation rurale âgée de plus de 15 ans a en moyenne 7 ans de scolarité,contre 10 ans pour la population urbaine. Le taux d’analphabétisme dans leszones rurales est plus du triple de celui dans les zones urbaines, s’établissantrespectivement à 11.5 % et 3.6 % de la population âgée de 6 ans ou plus. Demême, le pourcentage de la population rurale ayant fait seulement des étudesprimaires est plus du double de celui de la population urbaine. La populationurbaine a 18 fois plus souvent que la population rurale une instruction duniveau du collège et d’un niveau supérieur. En outre, le niveau d’instruction dela population rurale varie considérablement selon les provinces. Il estsensiblement plus élevé dans les provinces côtières relativement riches quedans les provinces du Centre et que surtout dans celles de l’Ouest. Dans desprovinces comme le Tibet, le Qinghai, le Gansu, le Ningxia, le Guizhou et leYunnan, le taux d’analphabétisme avoisine encore ou dépasse les 20 %. Dansces provinces, mais aussi dans celles du Sichuan et de Chongqing, laproportion d’analphabètes et de personnes n’ayant fait que des étudesprimaires excède 60 % et au Tibet elle frôle les 90 %. Il est à noter que danscertaines provinces de l’Ouest, comme le Xinjiang ou le Shaanxi, et danscertaines provinces du Centre, comme le Shanxi, le Henan et le Hubei, leniveau d’instruction avoisine ou dépasse la moyenne. L’offre de services desanté dans la Chine rurale est également problématique. Selon lesestimations, les dépenses de santé (publiques et privées) par habitant dans leszones urbaines étaient en 2004 le quadruple de celles dans les zones rurales.Si la population urbaine permanente (migrants exclus) est couverte par uneassurance-maladie, la grande majorité de la population rurale ne l’est pas enraison de l’effondrement du système rural coopératif de soins de santé quiexistait en Chine jusqu’à la fin des années 70 et était financé par les revenusliés à l’exploitation collective. Si un traitement médical s’avère nécessaire, lessolutions qui s’offrent aux familles rurales sont donc souvent de débourser



une somme élevée, de s’endetter fortement ou de se passer du traitement.C’est pourquoi les indicateurs de santé révèlent d’importantes disparitésentre la ville et la campagne. Par exemple, les taux de mortalité infantile et demortalité maternelle dans les zones rurales sont le double de ceux dans leszones urbaines. L’espérance de vie en Chine a été relevée dans les zonesrurales, à 69.6 ans, mais moins que dans les zones urbaines, d’où uncreusement de l’écart de 3.5 ans en 1990 à 5.7 ans en 2000.

… des infrastructures de transport et des services de base…

Malgré les difficultés liées à la structure et à la géographie de son peuplement,la Chine a aussi considérablement progressé dans la mise en place del’infrastructure de base dans les zones rurales. D’après les donnéesdisponibles, 96 % des villages dits administratifs et 83 % des villages naturelsavaient accès au réseau routier public à la fin de 2006. De même, presque tousles villages, administratifs et naturels, ont accès à l’électricité et à un réseautéléphonique. En 2006, plus de 80 % des bourgs avaient achevé lamodernisation de leur réseau électrique. Cependant, en termes absolus, pasmoins de 20 millions de personnes n’ont pas encore l’électricité dans leszones rurales. En moyenne, plus de 80 % des bourgs ont un bureau de poste,mais dans les provinces occidentales le chiffre n’est que de 67 %. Le nombretotal de kilomètres de routes ou la densité du réseau routier est un bonindicateur de l’état de l’infrastructure routière d’un pays, mais il est tout aussiimportant de prendre en compte la qualité du réseau routier. À cet égard, degrands progrès restent à accomplir. Si dans les provinces orientales les routesreliant les villages administratifs et les bourgs sont en majorité en ciment ouen bitume, dans les provinces occidentales elles sont encore pour la plupartfaites de pierres broyées et de sable ou dépourvues d’un revêtement durci. Lesroutes desservant les villages naturels sont généralement de qualité encoremoins bonne dans toutes les provinces, mais dans les provinces orientales60 % des routes de ce type sont en ciment ou en bitume, contre seulement15 % dans les provinces occidentales. En ce qui concerne les services de base,un des grands déf is pour le gouvernement consiste à assurerl’approvisionnement en eau potable de la population rurale. Il est signalé qu’àla fin de 2005 quelque 312 millions de ruraux ne disposaient pas d’accès à uneeau saine et que de nombreuses personnes n’avaient pas l’eau courante, enparticulier les ménages à faible revenu. Même lorsque l’eau courante estfournie, les normes sur la qualité de l’eau potable sont souvent violées fautede traitement approprié. En ce qui concerne l’eau non transportée parconduite, les données de suivi font apparaître d’importantes violations desdirectives relatives à l’eau potable non transportée par conduite,



principalement en raison de la contamination des sols. Pas moins de 70 % dela population rurale, dont une grande partie dans les provinces occidentales,n’a pas accès à un système d’assainissement. L’épandage d’engrais humainnon traité sur les cultures et son recyclage pour le bétail sont d’importantsvecteurs de maladies. Des services municipaux modernes de traitement desdéchets, comprenant la collecte séparée, la récupération du gaz de décharge etl’incinération des déchets en vue de leur valorisation énergétique manquentsouvent en Chine rurale.

... et de l’accès au crédit et à d’autres services financiers.

La diversification économique des zones rurales est freinée par ailleurs par lesous-développement de l’infrastructure financière rurale. En dépit deplusieurs initiatives de réforme et de l’abondance des liquidités dansl’ensemble de l’économie, le secteur financier rural en Chine accuse encore unretard et reste structurellement faible, ce qui ralentit le développement et ladiversification des campagnes. Les données consolidées sur l’épargne et lesemprunts dans les zones rurales font apparaître un transfert net desressources financières de ces zones vers les zones urbaines. Bien qu’il soitdifficile de déterminer dans quelle mesure cela reflète la réponse desinvestisseurs rationnels qui se désengagent des secteurs peu rentables auprofit de secteurs plus lucratifs ou si cela résulte des déficiencesinstitutionnelles des systèmes financier et budgétaire, il est manifeste quel’agriculture et les entreprises rurales se heurtent à d’importantes difficultésde crédit. Le fait que la part de l’agriculture et des entreprises rurales dans letotal des prêts est sensiblement inférieure à leur contribution au PIB de laChine atteste de ces difficultés. L’accès au crédit est particulièrement difficilepour les petits producteurs agricoles. Cela tient en partie à ce que lesproducteurs agricoles ne peuvent offrir leur terres en hypothèque et aux coûtsde transaction élevés associés à l’obtention d’un crédit officiel, mais aussi à lafermeture de nombreuses succursales d’établissements financiers sans quede nouvelles ne soient ouvertes.

Le profil économique de la Chine rurale évolue : le secteur primaire reste un secteur majeur mais a tendance à perdre de son importance en termes d’emploi et de part du revenu rural…

Au cours des réformes, l’économie rurale s’est profondément transformée, lapart de l’agriculture dans l’emploi rural et dans le PIB rural diminuant, avecpour corollaire un poids accru des secteurs non agricoles comme l’industrie, la



construction, le transport, la communication et le commerce. La part del’agriculture (ainsi que de la foresterie et de la pêche) dans l’emploi rural esttombée de 82 % en 1985 à 60 % en 2005. Malgré cette évolution, l’agriculturereste la principale activité de la majeure partie de la population ruralechinoise. Dans plusieurs provinces de l’Ouest et du Nord, comme le Xinjiang,le Yunnan, le Tibet, la Mongolie intérieure, le Heilongjiang et le Jilin, maisaussi dans la province de Hainan, la part de l’emploi agricole excède 70 %.Reflet de la structure actuelle et de la transformation en cours de l’économierurale chinoise, l’agriculture demeure la principale source de revenu desfamilles rurales, mais sa part dans le revenu total est descendue de 66 % aumilieu des années 80 à 42 % en 2006. À l’inverse, la part des salaires del’industrie et des envois de fonds des migrants a plus que doublé, passant de18 % en 1985 à 38 % en 2006. Le poids de l’agriculture dans le revenu desménages ruraux et son rythme de baisse dans le temps varient selon lesprovinces. Si dans les provinces centrales et occidentales, la part del’agriculture dans les revenus ruraux nets est encore de 40-70 %, dans lesprovinces côtières elle n’est plus que de 25-45 %. Dans la province côtière duGuangdong, elle a été plus que divisée par deux, tombant de 54% en 1990 à25 % en 2006, alors que dans la province centrale du Henan, elle demeureélevée même si elle est passée de 72 % à 54 % au cours de la même période. Lesrevenus non agricoles jouent un rôle plus important dans le niveau desrevenus ruraux nets. De fait, plus la part des revenus salariaux augmente, plusle niveau des revenus nets par habitant des ménages ruraux s’accroît.

… et, malgré des taux de croissance élevés et d’importantes restructurations, la productivité du travail agricole reste faible.

L’agriculture elle-même a connu d’importantes restructurations et des taux decroissance phénoménaux depuis la période des réformes. Entre 1990 et 2006,la Production agricole brute (PAB) de la Chine a augmenté en termes réels de162 %. Pendant cette période, la production de céréales a bondi de 98 % et cellede bétail de 278 %, reflet des changements dans la demande deconsommation. Le processus de restructuration s’est ralenti ces dernièresannées, en particulier après 2003, probablement sous l’effet de l’interventionnettement plus marquée des pouvoirs publics depuis 2004 en vue de stimulerla production céréalière. Atteindre un niveau d’autosuffisance élevé enmatière de production céréalière est un des objectifs majeurs de la politiqueagricole chinoise. À cet effet, les pouvoirs publics ont mis en œuvre un certainnombre de mesures, comme les paiements directs aux producteurs céréaliers,des prix minimums d’achat pour les céréales, des subventions aux moyens deproduction destinées aux producteurs céréaliers, et le commerce d’État des



céréales, qui faussent les signaux du marché et freinent la réorientationimpulsée par le marché vers des produits à plus forte valeur ajoutée et à forteintensité de main-d’œuvre, comme les fruits, les légumes et le bétail, pourlesquels la Chine dispose d’un avantage comparatif. Le renchérissementrécent des produits de base agricoles sur les marchés mondiaux a renforcél’action des pouvoirs publics, et la diversification de la production agricolechinoise pourrait s’en trouver encore plus contrariée. Le fait que la part del’agriculture dans le total des emplois et dans le PIB national étaitrespectivement de 43 % et de juste 13 % en 2006 montre que la productivité dutravail est faible dans le secteur agricole chinois, s’établissant aux alentours de30 % de la moyenne nationale. Bien que la productivité du travail agricole soitfréquemment inférieure à la moyenne dans les pays de l’OCDE, sauf enNouvelle Zélande, l’écart est particulièrement marqué en Chine et est aggravépar le fait que ce secteur à faible productivité emploie encore plus de 40 % dela population active nationale. Dans beaucoup de provinces de l’Ouest, duNord et du Centre, l’agriculture absorbe même plus de 50 % de la main-d’œuvre, et la productivité du travail agricole est de 25 % à 50 % de la moyenneprovinciale, soit nettement inférieure à la moyenne nationale.

La diversification de l’économie rurale de la Chine a pour moteur le développement rapide des entreprises rurales, en particulier dans les provinces côtières.

La croissance soutenue des entreprises rurales (y compris des entreprises debourgs et de villages (EBV) restructurées et les entreprises privées récemmentcréées dans les zones rurales) a contribué à la transformation structurelle del’économie rurale de la Chine. Selon les chiffres officiels, leur nombre a étémultiplié par 15, passant de 1.5 million en 1978 à 23 millions in 2006, créant119 millions d’emplois nouveaux au cours de cette période. Les entreprisesrurales ont enregistré des résultats exceptionnellement bons au début desannées 90, un ralentissement significatif au cours de la seconde moitié desannées 90 et une progression régulière au cours de la première moitié desannées 2000 avec des taux annuels de croissance de la valeur ajoutée, desexportations et des bénéfices approchant les 20 %. L’industrie est le principalsecteur d’activité des entreprises rurales, représentant 58 % de l’emploi totalet 76 % de la valeur totale de la production en 2006. Mais les entreprisesrurales exercent également des activités tertiaires, notamment (par ordred’importance en termes d’emploi) le commerce, la construction, le transport,le logement et la restauration et les services sociaux. En 2006, les entreprisesrurales non industrielles représentaient 42 % des emplois et 22 % de la valeurde la production. Les entreprises rurales ont d’importantes activités



d’exportation. Entre 1990 et 2006, leurs exportations ont augmenté de 20 %par an (en termes réels), et en 2006 elles contribuaient à 40 % du total desexportations chinoises. L’industrie légère, le textile et l’habillementreprésentaient près de la moitié des exportations des industries rurales, suivisdes machines, des travaux d’artisanat et des produits alimentaires. Cettestructure confirme que les industries rurales exportent pour l’essentiel desproduits à forte intensité de main-d’œuvre pour lesquels la Chine continue dedisposer d’un avantage de coût relatif important. La modification du régimede propriété des industries rurales est presque achevée : au cours de laseconde moitié des années 90 et au début des années 2000, les entreprisesrurales ont subi de profondes restructurations. Les entreprises ruralescollectives de petite et moyenne taille ont été transformées pour la plupart ensociétés par actions ou à responsabilité limitée dont la majorité des parts sontdétenues par les dirigeants et les employés. Les entreprises rurales implantéesdans les provinces côtières ont toujours été privilégiées, bénéficiant d’unaccès relativement aisé aux marchés d’exportation et aux grands marchésintérieurs des provinces orientales densément peuplées et relativementriches. Huit des dix premières provinces en termes de valeur de la productiondes entreprises rurales sont des provinces côtières.

Les possibilités inexploitées de diversification de l’économie rurale sont vastes, notammenten termes de ressources naturelles, culturelles et énergétiques…

La Chine est l’un des pays dont l’environnement naturel est le plus diversifié aumonde, occupant la première place dans l’hémisphère Nord en termes debiodiversité. La Chine rurale accueille environ 10 % des plantes, mammifères,oiseaux, reptiles et amphibiens de la planète. Alors que la superficie mondialede la forêt ne cesse de diminuer, la superficie de la forêt chinoise augmente etarrive actuellement au cinquième rang mondial. La forêt chinoise couvre175 millions d’hectares, soit environ 18 % du territoire chinois, contre 14 % à lafin des années 80. Avec 12 millions d’hectares de forêt primaire, elle abrite unevaste biodiversité (2 500 espèces d’arbres indigènes). En outre, ses campagnesont un patrimoine culturel particulièrement riche à découvrir. Citons lesmonuments tangibles et intangibles, les mémoriaux et les réalisations commeles produits de l’artisanat, les festivals ethniques, la musique régionale, lesformes d’art dramatique et l’art du conte. Les sources d’énergie renouvelableabondent mais restent largement sous-utilisées. En 2006, la consommationd’énergie de la Chine était la seconde plus forte au monde, après avoir presquedoublé au cours de la dernière décennie. Si le charbon et le pétrole sont ses deuxprincipales sources d’énergie, la Chine est néanmoins grande consommatrice



d’énergies renouvelables combustibles et de déchets, dont la part représentait13 % du total en 2005, sensiblement plus que pour les pays membres del’Agence internationale de l’énergie. Le gouvernement a fixé pour objectifs degénérer 10 % de la production totale d’énergie à partir de sources renouvelables(y compris de l’énergie hydraulique) d’ici 2010 et 15 % d’ici 2020. Abstractionfaite des installations de grande taille reliées au réseau, la Chine a le marché del’énergie éolienne qui enregistre la plus forte croissance au monde et ellecompte plus de 200 000 éoliennes de petite taille qui fournissent en électricitéles ménages des zones rurales. La capacité du parc éolien devrait être portée de6 GW en 2007 à 50 GW en 2015. Le solaire, l’hydraulique et la biomasse sontd’autres sources d’énergie renouvelable prometteuses qui peuvent contribuer àprotéger l’environnement et à stimuler le développement social et économique.

… mais les graves menaces qui planent sur l’environnement compromettent ces possibilités.

La croissance économique rapide de la Chine ces trente dernières années a exercéune pression considérable sur l’environnement, avec pour corollaire unedégradation de la santé humaine et des ressources naturelles. Malgré les progrèsaccomplis ces dernières années, la rareté de l’eau et sa pollution dans les zonesrurales demeurent de graves problèmes. Les ressources en eau par habitant nesont que de un tiers à un quart de la moyenne mondiale. La pénurie d’eau estestimée à 36 milliards de m3 par an, dont 30 milliards de m3 pour l’agriculture.Elle est particulièrement grave dans la région du Nord (bassins des fleuvesSonghua, Liao, Hai, Jaune et Huai) : avec 44 % de la population de la Chine et 65 %de ses terres cultivées, cette région ne dispose que de 13 % des ressources en eau.L’intensité d’utilisation des eaux souterraines dépasse fréquemment le seuil audelà duquel les écosystèmes des eaux douces ne sont plus viables. Les pénuriesd’eau sont aggravées par la hausse de la demande des ménages, services etindustries urbains et par la faible efficacité des systèmes d’irrigation employés enagriculture. La crise de l’eau est devenue un obstacle majeur au développementéconomique et coûte selon les estimations entre 14 et 17 milliards USD par an entermes de perte d’activité économique. Environ un tiers de la longueur des coursd’eau chinois et près des trois quarts des grands lacs chinois sont très pollués parla pollution agricole diffuse et par les eaux ménagères et industrielles usées nontraitées. Les conséquences de l’irrigation avec de l’eau polluée étaient estimées à7 milliards CNY en 2003 en termes d’impact sur le rendement et la qualité desproduits, hors incidences sur la santé humaine. De par la pollution de l’eau etl’insuffisance des systèmes d’assainissement, les maladies transmissibles parl’eau et d’autres maladies, comme la schistosomiase, sont endémiques danscertaines zones. La rareté des terres disponibles est un grave problèmequ’accentue l’érosion des sols. Seulement un cinquième des terres cultivées en



Chine sont classées comme étant de grande qualité et 58 % du territoire chinoisest classé comme aride ou semi-aride. Par habitant, la superficie des terrescultivées en Chine n’est que d’un tiers de la moyenne mondiale. Plus de 12 % deces terres ont disparu au cours de la dernière décennie sous l’effet del’industrialisation et de l’urbanisation. La culture intensive a réduit la fertilité et lecontenu organique des sols et a pollué les sols et l’eau. L’érosion des sols est unproblème fréquent, qui touchait 356 millions d’hectares en 2003, notammentdans les zones montagneuses et les collines. Elle est attribuable principalementau surpâturage, à des techniques inadaptées de mise en valeur des sols et à ladéforestation. Comme l’eau, les sols sont eux aussi contaminés par les déchargesà ciel ouvert recevant les déchets ménagers et industriels, en particulier dans leszones rurales non équipées de systèmes de collecte et de traitement de l’eau. Ladésertification constitue également un problème, notamment dans le Nord et leNord-Ouest : les zones désertiques couvrent 9 % du total des terres et se sontétendues rapidement ces dernières années. Au fil des ans, la pollutionindustrielle, en particulier celle générée par les entreprises rurales, a exercé unepression sur l’environnement, en partie du fait de la relocalisation des activités deproduction de la ville vers la campagne. Les mesures récentes de réduction desrejets industriels dans l’eau ont entraîné la fermeture de nombreuses industriesinefficaces et polluantes, surtout des papeteries, dans les bourgs et villages.

Synthèse

L’analyse de la Chine rurale révèle une forte hétérogénéité spatiale. D’où lanécessité de mesures souples, adaptées aux possibilités et besoins desdifférents lieux. L’hétérogénéité des zones rurales des différentes provinceschinoises est accentuée par la diversité qui existe au sein des différencesprovinces. La Chine rurale peut présenter un visage très différent dans deszones situées à faible distance les unes des autres. Dans ce contexte, la sectionsuivante étudie les principales particularités de l’approche chinoise actuelledu développement rural et sa capacité à faire face à la complexité, à ladiversité et à un milieu rural en développement rapide.

L’approche chinoise de la politique rurale évolue rapidement et a pris récemment la forme d’une ambitieuse stratégie appelant à la « Construction de Nouvelles Campagnes Socialistes » (NCS).

La nouvelle approche chinoise des zones rurales a commencé avec la périodedes réformes, à partir de 1978. Cette période, qui s’est ouverte sous la nouvelleimpulsion politique donnée après la Révolution culturelle et sous la direction de



Deng Xiaoping, a vu d’importantes transformations politiques. Dans le cadredes « quatre modernisations » (de l’agriculture, de l’industrie, de la défensenationale et de la science et de la technologie) visant à stimuler l’essoréconomique de la Chine à long terme, l’approche du développement des zonesrurales a été substantiellement modifiée. Les communes populaires ont étésupprimées et le passage progressif à une approche reposant davantage sur lesmécanismes du marché s’est traduit par un relâchement des contrôles agricoleset par l’instauration d’un système de production moins centralisé : le systèmede responsabilité des ménages. Ce système de responsabilité a accordé parcontrat aux ménages agricoles à titre individuel des droits d’utilisation desterres, conférant ainsi aux agriculteurs une plus grande autonomie pour ce quiest des décisions en matière de production et de gestion de leurs activités. Desréformes connexes ont habilité les autorités locales à favoriser la diversificationéconomique à travers les entreprises rurales et ont introduit un système degouvernance rurale plus autonome fondé sur les districts, les bourgs et lesvillages. Les lignes directrices du 11e plan quinquennal (2006-2010) font unobjectif majeur de la nouvelle stratégie du développement rural qui appelle à la« Construction de Nouvelles Campagnes Socialistes » (jianshe shehui zhuyi xinnongcun, dite stratégie NCS). Cette approche des zones rurales reconnaît latransformation économique et sociale de la Chine et répond à l’inquiétudecroissante suscitée par les déséquilibres entre les zones urbaines et rurales etentre les différentes zones rurales. Conçue pour résoudre les « trois problèmesruraux » (ou sannong) concernant l’agriculture, les communautés rurales et lesagriculteurs, la stratégie NCS étend la portée de la politique rurale et couvre nonseulement la productivité agricole mais aussi l’utilisation des terres, le revenudes habitants des campagnes, les réformes de la gouvernance locale et l’offre deservices publics ruraux.

L’attention accrue portée aux déséquilibres territoriaux s’est traduite par le renforcement des dépenses publiques dans les zones rurales…

Conformément à la stratégie NCS du gouvernement central, les dépensespubliques dans les zones rurales ont augmenté ces dernières années. D’aprèsles données disponibles, les dépenses consacrées aux zones rurales ontpresque doublé en termes nominaux, soit une hausse de 75 % en termes réels(en utilisant l’IPC comme déflateur) entre 2004 et 2007. En outre, la part desdépenses consacrées aux zones rurales dans le total des dépenses budgétairesest passée de 8.2 % en 2004 à 9.1 % en 2007. L’aide est principalement apportéeà travers les mesures de politique agricole, qui représentaient 55 % du totalen 2007, suivies des mesures concernant l’infrastructure rurale (23 %) et desmesures de développement social (20 %). Les dépenses consacrées au



développement social regroupent en l’occurrence l’aide à l’éducation en zonerurale, aux soins de santé, à la réduction de la pauvreté rurale et à la sécuritésociale en zone rurale.

… mais la mise en œuvre de la stratégie NCS est encore freinée par des difficultés politiques. Tout d’abord, la cohérence et l’efficacité de la politique rurale pâtissent de la complexité du système de gouvernance et du cloisonnement sectoriel...

Dans le cadre institutionnel de la politique rurale, le Comité central du Particommuniste de la Chine et les deux Groupes directeurs (CLGFE et CLGRW) quiy sont liés jouent un rôle décisif. Conseillés par des groupes de réflexioninfluents (comme le Centre de recherche sur le développement du Conseil desaffaires d’État, DRC), ils définissent les grands principes du développementrural et travaillent en collaboration avec les principales institutions du Conseildes affaires d’État. Beaucoup d’organismes participent aux mesures d’aideaux zones rurales, les plus importants étant le ministère des Finances et laCommission d’État pour le développement et la réforme (CEDR), quicontribuent à peu près aux deux tiers des budgets totaux, suivis du ministèrede la Communication (aujourd’hui intégré dans le ministère des Transports),du ministère de la Santé et du ministère de l’Éducation. Si le ministère desFinances est de loin le principal bailleur de fonds à l’agriculture, d’importantsprogrammes relèvent aussi de la responsabilité de la CEDR et du ministère desTransports. Le ministère de l’Agriculture est chargé d’un nombre relativementélevé de programmes axés sur l’amélioration technologique et sur les servicesde vulgarisation, mais les transferts budgétaires associés à ces programmessont faibles (moins de 1 % du total). Actuellement, il n’existe pas d’institutionni de dispositif officiel spécifiquement chargé d’intégrer les plus importantesmesures de la stratégie NCS. La CEDR et le ministère des Finances jouent unrôle prépondérant dans l’élaboration et la mise en œuvre de la politique rurale,mais ils ne s’occupent que de la partie de la stratégie concernant les zonesrurales. La coordination entre les différents acteurs du Parti et del’administration au plus haut niveau est facilitée par la tenue de réunionsformelles et informelles rassemblant les plus hauts dirigeants. En outre, lesdeux Groupes directeurs du Parti jouent un rôle essentiel en assurant la liaisonentre les plus hautes autorités du système politique, en facilitant lacommunication des décisions du Parti à l’administration centrale et enaccélérant la prise de décision. Cependant, les ressources des Groupesdirecteurs étant relativement limitées et un grand nombre d’acteurs étantconcerné, la coordination horizontale en matière d’élaboration de la politique



reste modeste et est rendue difficile par le cloisonnement sectoriel despolitiques. Cette difficulté à coordonner l’action publique conformément auxorientations de la stratégie NCS se retrouve aux niveaux d’administrationinférieurs où les objectifs de l’administration centrale sont relayés et où lesplans locaux de développement rural sont élaborés. Une partie desorientations définies par l’administration centrale se perd dans le dédale descinq niveaux de l’administration (du niveau central au niveau des bourgs), cequi nuit à l’efficacité de la mise en œuvre.

Deuxièmement, les dysfonctionnements du système de transferts entre administrations et les conséquences inattendues des réformes récentes, comme la réforme des impôts et taxes ruraux, ne permettent pas une répartition appropriée des ressources...

Malgré les progrès considérables réalisés ces dernières années, le systèmebudgétaire très décentralisé de la Chine se caractérise encore par le peud’autonomie de l’échelon local, une dépendance accrue vis-à-vis destransferts et d’importantes disparités entre les localités. Ces dernières années,une réforme générale des impôts et taxes ruraux a permis de réduire le poidstrop élevé de la fiscalité déploré par une grande majorité des agriculteurs.Cependant, cette réforme a aussi réduit les prérogatives des collectivitéslocales en matière de fiscalité directe, d’où une diminution des recettesfiscales. Les transferts fiscaux étant insuffisants, notamment pour leslocalités les plus pauvres, alors que les responsabilités augmentent, l’écartentre les dépenses et les ressources financières des collectivités locales s’estcreusé. Le montant global des transferts a été relevé essentiellement aumoyen de subventions pré-affectées, ce qui accroît la dépendance vis-à-visdes ressources de l’administration centrale et alourdit la charge de travailadministratif des collectivités locales. Alors que les récentes réformes ontrenforcé les compétences au niveau des districts, le niveau des bourgs et lesvillages se heurtent à des contraintes financières et continuent souvent àcollecter des fonds extrabudgétaires. Bien que le gouvernement se soitemployé à introduire une péréquation fiscale, les différences entre lescollectivités rurales en termes de dépenses fiscales par habitant sontprononcées et ont d’importantes répercussions sur les prestations de services.Au niveau intermédiaire du système administratif, les provinces disposent demoyens particulièrement puissants pour décider du montant des fonds àallouer aux préfectures (qui allouent ensuite des fonds au niveau du district,et ainsi de suite). Ces moyens sont donnés par délégation et souvent de façonimplicite car ni la Constitution ni la Loi budgétaire (1994) n’attribuent



officiellement des compétences spécifiques aux provinces ou aux préfectures.Les importantes disparités entre les provinces en termes de part des recetteset des dépenses à la disposition des collectivités locales peuvent s’expliquerdans une large mesure par cette approche peu formalisée et décentralisée. Lesdysfonctionnements du système de transferts entre administrations peuventégalement être liés à la faible représentation des intérêts des campagnes.Conformément à la Loi électorale actuelle relative à l’Assemblée populairenationale (APN) et aux assemblées populaires locales, le nombre despersonnes qu’un député de la campagne représente à l’APN est le quadruplede celui qu’un député de la ville y représente. Ce ratio institutionnalisé ville-campagne de quatre pour un est de plus en plus considéré comme étantinéquitable et empêchant une résolution efficace des problèmes dedéveloppement rural.

… ce qui limite beaucoup la capacité des autorités infranationales à assumer leurs nouvelles responsabilités.

Du fait des déficiences du système de transferts fiscaux entre administrationsexposées ci-dessus et des forts écarts de croissance enregistrés dans tout lepays, les ressources sont souvent très insuffisantes par rapport auxresponsabilités au niveau des districts et des bourgs et dans les villages (auniveau des collectivités locales). À la suite des réformes récentes et à lalumière de la stratégie NCS, les unités administratives au niveau des districtssont devenues le plus important niveau de l’administration locale. Elles sontmaintenant chargées des dépenses relatives à la scolarité obligatoire etgratuite pendant neuf ans, au nouveau système de coopératives médicalesrurales ou aux programmes de sécurité sociale comme les « cinq garantiespour les ménages » (wu baohu) ou le programme d’allocation de subsistance(dibao). Les réformes de la fiscalité et du système de transferts ont entraînéune augmentation des ressources financières au niveau des districts, même siles ressources propres des districts ont diminué en termes relatifs. D’un côté,la mise en œuvre de la réforme visant à « fiscaliser les prélèvements nonfiscaux » laisse peu de possibilités aux autorités des districts de collecter desfonds extrabudgétaires. D’un autre côté, de nombreux districts richesperçoivent de confortables recettes extrabudgétaires, provenantessentiellement des transactions foncières. En outre, pour remédier à leurmauvaise situation financière et faire face à la nécessité imprévisible derépondre à l’augmentation des transferts, les districts et les bourgs ontrecours à l’emprunt, la plupart du temps sous une forme illicite, les arriérés desalaire étant probablement la forme d’endettement local la plus visible et laplus critiquée. Le manque de ressources financières est également très



préoccupant au niveau des bourgs et dans les villages et est aggravé parl’opacité du « système de répartition budgétaire entre les districts et lesbourgs » (xianxiang caizheng tizhi), selon lequel un district et ses différentsbourgs négocient le détail du partage des recettes et de l’affectation desdépenses, qui peut différer d’un bourg à l’autre au sein d’un même district. Àl’instar des bourgs, les villages dépendent de plus en plus pour leursressources financières des transferts fiscaux provenant des niveauxsupérieurs de l’administration. Les transferts ne suffisent pas à compenser lessources de revenu officielles supprimées et ne constituent pas la majeurepartie des recettes. Les revenus tirés des transactions foncières (ventesfoncières et règlements au titre de contrats d’achats fonciers) ont augmentéde près de 50 % entre 2000 et 2004, illustrant le fait que les villages s’efforcentde combler les déficits financiers par les revenus tirés des ventes foncières etde la vente d’actifs.

Troisièmement, les faiblesses de la gouvernance locale rendent difficile la mise en œuvre effective des directives de l’administration centrale.

L'analyse met en évidence plusieurs points faibles de la gouvernance locale enChine rurale, dont les plus importants sont énumérés ci-dessous :

● Faible capacité administrative des fonctionnaires locaux. Abstraction faite desfonctionnaires ayant un haut niveau d’instruction dans les ministèrescentraux et les riches administrations provinciales, la qualité et la capacité dela fonction publique varient beaucoup en Chine. C’est un obstacle majeur à lamise en œuvre de la stratégie NCS qui exige une meilleure coordination etune plus grande capacité stratégique que les politiques sectoriellestraditionnelles. Les postes sont pourvus selon des procédures nonconcurrentielles et souvent opaques, en particulier au niveau desadministrations locales. En outre, les dirigeants sont transférés desentreprises rurales vers la fonction publique sans que les procéduresconcurrentielles définies par l’administration centrale ne soient respectées.Les études sur le terrain montrent que maints dirigeants ruraux ne sont passuffisamment préparés à s’occuper des questions de politique publique.Dans les provinces de Shaanxi, Gansu et Henan, par exemple, les dirigeantsdes bourgs sont souvent diplômés d’un collège technique ou d’unétablissement d’enseignement secondaire professionnel du premier cycle etsont parfois des agriculteurs. De surcroît, la rotation des emplois et lestransferts vers d’autres administrations restent très élevés, ce qui empêcheles fonctionnaires de connaître pleinement les particularités du milieu localdans lequel ils travaillent. A quelques exceptions près, les études empiriquesmontrent qu’il n’y a pas de définition claire des rôles et fonctions au titre



desquels ils peuvent être tenus responsables ou soumis à des mesuresd’incitation. En principe, les dirigeants locaux ruraux sont rémunérés en tantque fonctionnaires selon une échelle hiérarchique stricte. Cependant, lesécarts de rémunération sont significatifs entre les provinces ainsi que d’uneville ou d’un district à un autre à l’intérieur d’une même province. Lesstatistiques disponibles montrent que les salaires des fonctionnaires locauxne sont pas suffisamment compétitifs, ce qui peut inciter à la corruption.

● Faible obligation de rendre compte et faiblesse de l’État de droit dans les régionsrurales. Dans la Chine rurale, le niveau local rend très peu de comptes auxniveaux supérieurs de l’administration et aux citoyens. La centralisation auniveau des districts et aux niveaux supérieurs des pouvoirs politiques,administratifs et fiscaux dont s’est accompagnée la réforme des impôts ettaxes ruraux risque de réduire la responsabilité des autorités locales enversleurs administrés et de nuire à l’efficacité des mesures visant à inciter lesfonctionnaires à dépenser avec efficience. Les niveaux supérieurs del’administration s’emploient à suivre avec précision l’affectation, lemontant et les modalités des dépenses publiques, les types de servicespublics qui sont assurés ou le nombre d'employés de l’État. Les autoritéslocales procèdent au suivi et à l’audit des fonctionnaires des niveauxinférieurs en utilisant un système de responsabilité ciblée selon lequel lesfonctionnaires signent un contrat de performance politique avec leurssupérieurs hiérarchiques immédiats. Dans le cadre de ce système,l’obligation de rendre des comptes a été étendue et la performance estévaluée essentiellement selon une approche descendante en utilisant desindicateurs « clés » dont le suivi est relativement facile à assurer mais quirisquent d’être simplistes. Pour améliorer le suivi, le ministère des Financesa déployé ses capacités statistiques. Néanmoins, les mécanismes de suividescendants ont tendance à mesurer l’écart entre ce qui a été décidé ausommet et la façon dont cela est appliqué sur le terrain. Les collectivitéslocales en concurrence pour l’obtention de transferts d’un montant plusélevé sont très incitées à se mettre en valeur en termes de dépensesbudgétaires et d’investissement, ce qui souvent ne procure pas d’avantages,même à court terme, à leurs administrés. L’approche ascendante du suiviconsistant à renforcer la transparence des budgets locaux n’estvirtuellement pas utilisée. La faible reddition des comptes est liée à lafaiblesse de l’État de droit en Chine. Les tribunaux sont une institution cléen matière d’application des lois, mais ils demeurent faibles et n’occupentpas une place importante dans le système politique. En Chine, les tribunauxlocaux relèvent de la compétence des collectivités locales dans lesquellesils sont situés. Depuis 1978, les réformes de l’appareil judiciaire ont portéprincipalement sur les juridictions nationales et provinciales. Or, en Chine,les litiges sont les plus nombreux aux niveaux des villages et des districts et



se rencontrent surtout à la campagne, où les avocats professionnels et lesjuges sont les moins nombreux.

● Représentation et participation des citoyens limitées. L’autogestiondémocratique des villages est l’un des principes clés de la stratégie NCS. Lesétudes montrent que l’élection directe des chefs de village et des comités desvillages aboutit à la réalisation de projets et investissements d’intérêt généralplus nombreux et de plus grande qualité que lorsque les chefs de village sontnommés. Cependant, les instances élues des villages sont subordonnées auxinstances des bourgs, et à la direction « principale » du bureau villageois duPCC et de son Secrétaire du Parti, qui est un fonctionnaire nommé. Dansmaints lieux, les relations entre, d’une part, les comités des villages et,d’autre part, les autorités des bourgs et les bureaux villageois du PCC ont ététendues. La stratégie poursuivie dans plusieurs localités, consistant à confierles deux plus hauts postes d’un village à un fonctionnaire élu, serait unmoyen de rendre la gouvernance locale plus démocratique mais risqueparallèlement d’affaiblir l’autorité du chef du village. Parmi les autresproblèmes électoraux, on peut citer l’ingérence de l’État dans le processus denomination des candidats, l’insuffisance des mécanismes de suivi etd’évaluation en période post-électorale, et l’achat de voix, notamment dansles zones rurales plus développées. Au niveau des bourgs et des districts, lesélections ou d’autres mécanismes formels obligeant les fonctionnaires àrendre compte de leur performance aux citoyens font défaut, à quelquesexpériences intéressantes près. La participation des villageois à laplanification, à l’élaboration, à la mise en œuvre et au suivi des décisionsprises au niveau local varie sensiblement, mais son importance est de plus enplus reconnue dans les comptes-rendus des dirigeants. Elle s’exprimeprincipalement sous la forme de séances législatives et d’actions desensibilisation à des questions comme la protection de l’environnement etl’offre de services publics. Le dispositif de budgétisation participative appeléyishi yiyi, qui associe les habitants des zones rurales à la sélection des projetsd’investissement, illustre les efforts déployés par le gouvernement pouraccroître la participation des citoyens, mais il n’est pas encore suffisammentappliqué. Comme les organisations indépendantes qui sont une émanationde la société civile sont essentiellement illégales selon la législation chinoiseactuelle, les organisations non gouvernementales (ONG) ont besoin d’une« organisation de tutelle » issue du Parti ou de l’État et agréée par l’État pourpouvoir être enregistrées. Sur les 387 000 organisations sociales à but nonlucratif (shehui zuzhi) inscrites en 2007 au registre du ministère des Affairesciviles, seule une petite minorité est active dans les zones rurales, signe de lafaible institutionnalisation de la participation des citoyens dans lescampagnes. Pour résoudre les difficultés d’accès des producteurs ruraux auxmarchés et pour les aider à se regrouper au sein d’associations de



commercialisation, le gouvernement a commencé à soutenir les associationsou coopératives professionnelles d’agriculteurs. En 2003, toutefois,seulement 7 % des villages comptaient des associations professionnelles enactivité. Un cadre règlementaire a été voté en 2007 : la Loi sur les coopérativesrurales, dont la finalité est d’accroître l’efficience du marché agro-alimentaire. Il faudrait que cette loi fasse l’objet d’une évaluation publiquepar les membres des coopératives professionnelles.

La stratégie NCS est une bonne initiative mais sa mise en œuvre exigera un système de gouvernance à plusieurs niveaux plus efficace et plus intégrateur.

Malgré une stratégie novatrice et d’une grande portée, la politique ruralechinoise est limitée dans sa capacité à résoudre les problèmes urgents et àexploiter le vaste potentiel des zones rurales du pays. Une approchedescendante et fragmentée et les faibles compétences fiscales et administrativesdes autorités locales rendent difficile une mise en œuvre cohérente desdirectives de l’administration centrale. Pour surmonter ces difficultés, il fautrevoir la répartition des responsabilités et des ressources des différents niveauxde l’administration en matière de politique de développement rural ainsi que lesrôles respectifs des acteurs publics et non gouvernementaux. Lesadministrations infranationales (en particulier aux niveaux des districts et desbourgs) sont des acteurs clés dans les zones rurales. Elles sont chargées de lamise en œuvre des plus importantes politiques publiques et sont les gardiennesd’un savoir indispensable en ce qui concerne les enjeux et opportunités dudéveloppement. Il est crucial d’exploiter au mieux leur savoir, surtout dans unpays aussi vaste et en aussi rapide expansion que la Chine. Dans ce contexte, desmesures s’imposent pour remédier aux insuffisances du système chinois degouvernance à plusieurs niveaux de la politique rurale, en particulier sur lesplans institutionnel, budgétaire et administratif. La réalisation de réformes dansces domaines est, dans une large mesure, un préalable à une mise en œuvreefficace de la politique rurale chinoise.

Premièrement, des efforts s’imposent pour améliorer au niveau central la coordination des politiques rurales et leur mise à l’épreuve en zone rurale (rural proofing).

La mise en œuvre de la stratégie NCS novatrice nécessite d’abandonner ladémarche descendante et sectorielle au profit d’une approche stratégiqueplus intégrée du développement rural. Déterminer comment faire passer



progressivement l’administration centrale d’un rôle de commandement et decontrôle à un rôle de facilitateur du partage des connaissances et de la prisede décision en commun est un défi que tous les pays de l’OCDE ont à relever.Au niveau central, la principale difficulté consisterait à renforcer et àformaliser la coordination trans-sectorielle, la surveillance et les affectationsfinancières en transcendant le système actuel des réunions des dirigeants del’État et du Parti dans des instances qui se chevauchent et en transcendant lesinsuffisances des Groupes directeurs en termes de ressources en personnel. Lenombre même des ministères et agences participant à l’élaboration, à la miseen œuvre et au suivi de la politique rurale doit être révisé et des contacts plusformels doivent être établis entre eux. Les expériences menées récemmentdans divers pays fournissent des exemples intéressants qui vont desmécanismes de coordination de la politique rurale au niveau national définispar la loi à la création d’un ministère intégré en passant par des outils decoordination plus flexibles mais formalisés. Il existe également de largespossibilités de renforcer les capacités des ministères centraux par desmécanismes de « mise à l’épreuve en zone rurale » (rural proofing) quipermettent de contrôler les impacts respectifs des politiques sectorielles surles zones rurales et les objectifs de politique rurale fixés par la stratégie NCSou d’autres stratégies. Les mécanismes de mise à l’épreuve se sont révélésefficaces dans les pays de l’OCDE pour intégrer les ministères sectoriels dansles stratégies générales de politique rurale et pour leur permettre d’adapter lespolitiques sectorielles aux caractéristiques des différentes régions rurales.

Deuxièmement, les réformes du système de relations budgétaires entre les administrations devront inclure la révision de l’affectation des dépenses, l’augmentation des recettes locales, et une plus grande efficacité du système de transferts.

La redéfinition de l’affectation des dépenses devrait viser à ajuster lescapacités administratives et financières aux responsabilités, dans un systèmeplus transparent et rationalisé. L’administration centrale devrait avoir pour rôlede fixer les « règles du jeu » et de veiller à ce que les autorités infranationalesdisposent des ressources nécessaires pour remplir leurs obligations, et nond’intervenir directement dans les dépenses. Une exception serait laréalisation par l’administration centrale d’investissements directs dans des« projets pilotes » ou dans des activités d’intérêt national, comme lesprogrammes de recherche ou de mise en réseaux. La préparation d’un« budget rural » au niveau central doit également être étudiée. Les dépensesconsacrées aux questions sannong sont définies par l’administration centrale,mais cela n’inclut pas toutes les dépenses aux niveaux central et infranational



destinées aux zones rurales. La répartition des responsabilités entre lesdifférents niveaux de l’administration publique doit être guidée par le souci deconcilier équité et objectifs efficaces. Une évaluation réaliste des capacitésexistant aux différents niveaux de l’administration doit également entrer enligne de compte. Il convient de renforcer les prérogatives fiscales descollectivités locales pour encourager une gestion plus efficace des ressources.Les taxes locales, les recettes provenant des transactions foncières et lesdroits d’utilisation devraient tous faire partie intégrante d’un systèmed’imposition locale transparent qui doit être raccordé aux investissementslocaux effectivement réalisés et qui doit être soumis au contrôle des citoyens.Il convient aussi d’autoriser les emprunts légaux, au moins dans les zonesdotées des plus fortes capacités, et des mesures devraient être prises pouraméliorer la gestion des emprunts au niveau local. Enfin, le montant etl’emploi des transferts budgétaires doivent être revus pour une plus grandeéquité et efficacité. L’attention ne doit pas se porter seulement sur« l’ampleur » mais aussi sur « la finalité », qui est la condition dont sontassortis les transferts. À cet égard, les transferts globaux raccordés auxobjectifs généraux de la stratégie NCS doivent être augmentés et les dotationspré-affectées réduites, et ce rééquilibrage doit s’accompagner desinvestissements nécessaires dans l’assistance technique et dans la mise enplace de systèmes de suivi et d’évaluation qui permettront de privilégier lesrésultats stratégiques (économiques, sociaux et environnementaux, etc.) parrapport aux évaluations traditionnelles « simplistes » fondées sur les extrants.La rationalisation des transferts devrait également réduire le chevauchementet l’incohérence des dépenses et permettre d’alléger la bureaucratie et lescharges administratives pesant sur les administrations locales.

Troisièmement, le recours accru aux politiques fondées sur le contexte local pourrait être encouragé pour mieux adapter les directives de l’administration centrale aux particularités locales…

Il existe de vastes possibilités aux niveaux inférieurs de l’administration de :i) mieux adapter les orientations définies par l’administration centrale auxparticularités locales au moyen de politiques fondées sur le contexte local ;ii) accroître les capacités administratives et les responsabilités desfonctionnaires locaux, qui influent beaucoup sur la compréhension et donc lamise en œuvre des politiques définies au niveau central ; et, iii) favoriser laconsultation et la participation du public. Les politiques fondées sur lecontexte local ont été testées à travers des programmes pilotes. En s’appuyantsur les enseignements tirés de ces pratiques et des abondantes expériences



dont on dispose au niveau international, ces programmes peuvent êtremaintenant améliorés, rationalisés et étendus à toute la Chine. Cesinnovations politiques peuvent comprendre une nouvelle manière de définirles zones cibles comme zones fonctionnelles et des stratégies dedéveloppement local plus créatives appuyées par des partenariats entre lesacteurs publics, privés et non gouvernementaux. Les chefs d’entreprise, parexemple, peuvent devenir d’importants partenaires pour les acteurs publicsqui souhaitent s’engager dans une gouvernance plus ouverte et innovante.Dans cette perspective, il faut que les pouvoirs publics ne s’intéressent pasuniquement aux « recettes fiscales » mais aussi au rôle plus large que lesentreprises peuvent jouer dans leur communauté rurale.

… et doit s’accompagner d’efforts explicites pour renforcer les capacités administratives et les responsabilités locales…

Le renforcement des capacités des fonctionnaires locaux passe par la réalisationde nouveaux progrès dans les réformes engagées en matière de personnel, quiont produit plus de résultats positifs dans les zones urbaines et côtières que dansla plupart des régions rurales de la Chine. Une des priorités est l’amélioration dela gestion des ressources humaines (GRH) aux différents niveaux del’administration et la création d’un cadre permettant à l’administration centralede s’assurer que les administrations infranationales gèrent leur personnel defaçon satisfaisante. Une autre priorité est la nécessité de mieux planifier lepersonnel et les compétences et de raccorder clairement l’action publique et lesprestations de service d’une part et les besoins en personnel en termesquantitatifs et qualitatifs d’autre part. Des procédures d’entrée plus rigoureuseset des salaires plus concurrentiels devraient être envisagés afin de mieux adapterles compétences des fonctionnaires ruraux à l’étendue de la mission dont lastratégie NCS les charge. Les capacités locales en matière d’élaboration de lapolitique rurale peuvent être renforcées par des programmes de formation ciblés,le transfert vers les zones rurales pauvres de fonctionnaires plus expérimentés etla facilitation des mises en réseaux et des échanges de bonnes pratiques avecd’autres localités en Chine ou à l’étranger. Parallèlement aux changementssusmentionnés, on pourrait envisager d’assouplir le recrutement et larémunération aux niveaux des districts et des bourgs afin de surmonter lesrigidités du système actuel de gestion du personnel pour une meilleureadaptation à la situation locale. En outre, les systèmes actuels de mesure de laperformance, comme le système de responsabilité ciblée, devraient être révisésde manière à diffuser davantage la « culture de l’évaluation » et à évaluer laperformance des fonctionnaires locaux en regard d’objectifs plus complexes,comme des objectifs sociaux, environnementaux et de bonne gouvernance,



plutôt qu’en regard d’objectifs simplistes tels que le taux de croissanceéconomique ou le taux de natalité. Enfin, un renforcement et une plus granderégularité des audits contribueraient à réduire la corruption et à mieux contrôlerl’emploi des fonds publics destinés aux projets de développement rural.

… et pour accroître la représentation et la participation des citoyens.

L’objectif d’une meilleure représentation des intérêts des habitants des zonesrurales revêt au moins deux dimensions. Premièrement, comme proposé dansune résolution approuvée par la 10e APN en 2007, la révision des règles électoralesdevrait viser à équilibrer la représentation des ruraux et celle des citadinsactuellement différentes au sein des assemblées populaires, pour une meilleureexpression des préoccupations des ruraux. Deuxièmement, et en accord avec lesrécents communiqués de l’administration centrale, la participation du publicpourrait même être davantage soutenue pour promouvoir une formulationouverte et intégratrice des politiques aux différents niveaux de l’administration.Les villageois devraient avoir la possibilité de nommer directement les candidatsaux élections sans ingérence de l’État et le suivi postélectoral et les mécanismesd’évaluation doivent être davantage institutionnalisés. Il s’agit notamment derenforcer le droit des citoyens d’accéder à l’information et de participer àl’autogestion des villages, par exemple en publiant le budget annuel et lesdépenses effectives des comités des villages. Il faut aussi mieux informer lesvillageois sur les règles et procédures électorales et trouver les candidatsappropriés car de nombreuses personnes compétentes migrent vers les zonesurbaines. Les organismes sociaux devraient être soutenus dans les zones ruralespour une représentation plus ordonnée et plus transparente des citoyens et desgroupes d’intérêt. Les réformes pourraient introduire des mesures d’aide auxfemmes agricultrices et d’allègement du poids de la réglementation pesant surles ONG (obligation de bénéficier d’un appui, montant du capital social exigé,etc.). Cela impliquerait d’institutionnaliser les organisations agricoles qui existentdéjà, d’étudier la possibilité de formaliser certains mouvements sociaux ruraux,et de conférer un statut légal aux associations de la société civile dans les zonesrurales. L’objectif serait de faciliter l’émergence progressive de structures conçuesaux niveaux de la base et intermédiaire, comme les fédérations rurales, lesassociations et les ONG locales, pour permettre une interaction avec les décideurspolitiques. Dans l’optique d’une représentation et d’une participation plus largeset meilleures au niveau des collectivités locales, les réformes devraientégalement envisager d’accroître les possibilités d’évaluation publique desservices et des prix, par exemple au moyen d’auditions sur les questions detarification, qui sont déjà une pratique courante dans de nombreuses provinceschinoises mais presque exclusivement dans les zones urbaines.



Quatrièmement, renforcer l’obligation de rendre compte et l’État de droit exige un système judiciaire rural plus professionnel et plus cohérent.

Nombre des problèmes rencontrés par les institutions judiciaires dans les zonesrurales sont déjà bien identifiés et ciblés par les récentes règlementations etdécisions des autorités publiques. Les slogans récurrents insistant sur lanécessité de « rapprocher les juges des citoyens » (faguan weimin) montrent lerôle primordial que les juges locaux et ordinaires sont censés jouer dans la miseen œuvre de la réforme. Cependant, il reste encore à renforcer l’indépendancede l’appareil judiciaire et l’autorité des tribunaux, vis-à-vis à la fois desinstances du Parti et des autorités locales. Le rôle et le pouvoir du Parti enmatière de politique rurale doit être défini plus clairement, de manière àmaintenir un degré raisonnable de séparation entre l’appareil judiciaire etl’appareil politique. Pour lutter contre l’ingérence et le protectionnisme desautorités locales et pour renforcer les tribunaux, une modification desprocédures de financement de l’appareil judiciaire et de nomination des jugespourrait également être étudiée. En outre, comme il est urgent de mettre unterme aux troubles sociaux liés au nombre croissant de litiges, qui portentnotamment sur l’utilisation des terres, la mise en œuvre de deux grandesréformes pourrait être accélérée pour renforcer l’État de droit dans le pays :i) relever la qualité des juridictions du niveau le plus élémentaire ; et, ii) assurerune application cohérente des lois sur tout le territoire.

La réforme du système de gouvernance rurale créera les conditions requises pour résoudre plus efficacement les problèmes les plus pressants de la Chine rurale et pour atteindre les objectifs de la stratégie NCS. Les principales priorités de la politique rurale de la Chine incluent : i) l’utilisation des terres, ii) l’offre de services, iii) la diversification économique et iv) la protection de l’environnement.

Utilisation des terres : Des progrès sont nécessaires pour appliquerpleinement la législation sur les droits relatifs aux terres agricoles,permettre la négociabilité et la mise en hypothèque des terrains résidentielset inscrire dans la loi les dispositions récemment améliorées relatives àl’expropriation foncière.

Améliorer l’utilisation des terres et renforcer les droits fonciers sont deuxpriorités urgentes pour la Chine rurale. La disponibilité des terres représenteun avantage comparatif significatif pour les régions rurales et leurs habitants.Il y a 121.7 millions d’hectares de terres agricoles en propriété collective,



attribués aux agriculteurs pour une exploitation privée, pour une durée de30 ans, et 12.3 millions d’hectares de terrains résidentiels attribués auxrésident ruraux pour « une longue durée sans changement ». Cependant, lavaleur des droits fonciers et le potentiel de développement qui leur est associésont soumis à d’importantes contraintes légales. La stratégie des pouvoirspublics en matière de réforme foncière devrait comprendre des mesures dansles domaines suivants :

● Les droits d’utilisation des terres agricoles sont bien établis dans les loischinoises comme la Loi sur la propriété (2007) et la Loi sur les contratsconcernant les terres agricoles (2002), mais des problèmes de mise en œuvresurgissent. Définis comme étant des droits de propriété usufruitière, lesdroits sur les terres agricoles conférés aux ménages agricoles sontrenouvelables à expiration. De récentes décisions des autorités centralesprévoient de garantir les droits actuels des agriculteurs pour « une longuedurée sans changement ». Les importants potentiels économiques deszones rurales pourraient être réalisés s’il n’y avait pas d’ingérence del’administration en termes de durée, d’étendue et d’assurance. Malgré ledurcissement des restrictions légales, toutefois, les réajustements de terresdemeurent un important problème dans de nombreuses zones rurales,minant la confiance et les espérances des agriculteurs. En réponse àl’évolution de la taille des ménages ou à la réduction générale des terresd’un village résultant des expropriations foncières, les autorités localesréajustent fréquemment la superficie des possessions foncières desménages agricoles. Pour encourager les agriculteurs à investir dans leursterres et pour faciliter le développement des marchés des droits sur lesterres agricoles, une meilleure application des lois nécessite de sensibiliserdavantage les agriculteurs aux droits qui leur sont conférés au titre de la loi.Il importe pour cela de bien faire connaître les droits d’utilisation des terres,d’assurer un suivi régulier et extensif de l’application et des violations de lalégislation et de mettre en place des mécanismes efficaces de résolutiondes litiges comme les « groupes de règlement des litiges fonciers » et lesservices d’aide juridique aux agriculteurs. Par ailleurs, les droitsd'utilisation des terres agricoles devraient être hypothécables pour faciliterl'accès des agriculteurs au crédit. Enfin, il faut remédier au problème de la« recherche de rente » de la part des fonctionnaires locaux, qui souvent fontréaliser des transactions sur les droits sur les terres agricoles pour obtenirun gain financier.

● Les terrains résidentiels sont classifiés comme étant des terrainsconstructibles à vocation non agricole et peuvent donc avoir une grandevaleur marchande. Les droits sur les terrains résidentiels sont définiscomme étant des droits de propriété pour « une longue durée sanschangement ». Mais les politiques et la législation existantes relatives aux



terrains résidentiels ne considèrent pas ces droits comme étant des droitsde propriété significatifs. Contrairement à ce qui se passe pour les terresagricoles, la loi ne précise pas si les résidents ruraux ont le droit de« profiter » des terrains résidentiels. S’appuyant sur cette ambiguïté de laloi, des décisions administratives vont jusqu’à interdire la transaction desdroits sur les terrains résidentiels ruraux. Le résultat est que les droits surles terrains résidentiels ne peuvent être dans leur grande majorité ninégociés ni mis en hypothèque. Faute d’une réglementation protégeantefficacement les droits sur les terrains résidentiels, ces droits risquentd’être la proie de l’étalement urbain. Il arrive souvent que les autoritéslocales et les promoteurs commerciaux s’emparent de terres sans verseraux résidents ruraux une compensation suffisante. Ces problèmespourraient trouver leur solution dans des réformes du nouveau cadrejuridique actuel destinées à protéger les droits sur les terrains résidentiels.Ces réformes devraient avoir trois priorités : i) définir les droits de « longuedurée » sur les terrains résidentiels comme étant des droits de propriétéusufruitière perpétuels ; ii) rendre les droits sur les terrains résidentielspleinement négociables, en permettant explicitement le transfert des droitssur les terrains résidentiels ruraux ; et, iii) permettre la mise en hypothèquedes droits sur les terrains résidentiels, pour faciliter l’accès des agriculteursau crédit aux fins du développement rural ou d’activités non agricoles.

● Expropriation foncière. Les changements introduits ces dernières annéesdans les orientations politiques ont apporté d’importantes améliorations,en particulier en termes de compensation et procédures en matièred’expropriation des terres agricoles et des terrains résidentiels. Cependant,ces améliorations doivent être inscrites dans la loi pour avoir force légale. Lalégislation actuelle sur l ’expropriation fait écho à l ’obligationconstitutionnelle selon laquelle toute expropriation d’une terre enpropriété collective doit être dans « l’intérêt général ». Mais ces lois nedonnent pas de définition précise de ce qu’est l’intérêt général au nomduquel l’expropriation peut s’effectuer. Dans le système actuel, l’État jouitd’un monopole sur les marchés fonciers à des fins non agricoles et lespromoteurs commerciaux doivent recourir à l’État pour procéder à desexpropriations foncières pour leur développement commercial. Cependant,les récentes décisions au titre de la réforme foncière annoncées par lesautorités centrales, commencent à faire évoluer ce système monolithiqueen permettant des transactions marchandes de terrains constructibles enpropriété collective à des fins commerciales, sans intervention de l’État. Lesagriculteurs devraient être habilités à négocier directement avecl’utilisateur commercial sur des points comme la compensation et lerelogement. Conformément au document d’orientation récent, denouvelles mesures législatives ou règlementaires devraient être adoptées



pour réduire les possibilités d’expropriation des terres agricoles et desterrains résidentiels et définir clairement en quoi consiste l’utilisation deterrains dans « l’intérêt général » au nom duquel l'État peut effectuer uneexpropriation, par exemple en adoptant une liste intégrée de finalitéspubliques particulières autorisées. L’État ne serait autorisé à procéder à desexpropriations foncières qu’aux fins énoncées dans cette liste. Saisir desterres agricoles ou des terrains résidentiels à des fins commerciales seraitjugé illégal, comme établi dans la Constitution et la Loi sur l'administrationdes terres (1998). D’autres mesures réalisables à court terme seraient utiles :i) la compensation doit être substantiellement augmentée en introduisantune approche fondée sur la valeur de remplacement et sur des normesminimales de compensation ; ii) la majeure partie de la compensationdevrait revenir au titulaire des droits sur les terres agricoles visées parl’expropriation ; iii) les prestations de sécurité sociale destinées aux rurauxtouchés devraient être versées en supplément et non en remplacement dela compensation, conformément à l’objectif de l’administration centrale demettre en place progressivement un système de sécurité sociale rurale ; et,iv) les procédures de saisie des terres exigent de meilleures garanties ayantforce exécutoire des droits des agriculteurs à notification, à participation età appel.

Offre de services : il est nécessaire de mettre en œuvre une stratégie deservices ruraux plus cohérente et mieux financée pour combler les écartsentre les villes et les campagnes et entre les différentes zones rurales…

Il est indispensable d’améliorer l’offre de services publics pour assurer lacohésion sociale et répondre aux besoins et difficultés d’un pays qui est entrain de passer d’une société traditionnelle fondée sur l’exploitation agricole àune société plus diversifiée. En dépit des remarquables progrès accomplis enmatière d’expansion de l’enseignement obligatoire, de fourniture de servicesde santé, de transport et de base, et malgré l’annonce par le gouvernementd’investissements dans l’approvisionnement en eau, l’assainissement et lasécurité sociale, les services ruraux accusent un retard par rapport auxservices urbains. Par exemple, l ’accès à l’éducation varie encoreconsidérablement selon les provinces, de nombreuses régions du Centre et del’Ouest obtenant des résultats sensiblement inférieurs. Reste à savoir si lesfonds pour la scolarité obligatoire de neuf ans alloués aux différents niveauxde gouvernement seront suffisants et pérennes. Il faut accroître les ressourcesfinancières de l’enseignement professionnel pour former les agriculteurs etfaciliter leur transfert vers d’autres secteurs. Suite à la mise en place dunouveau système de coopératives médicales rurales, les services de santé sontrelativement accessibles aux ruraux, mais leur faible qualité et leurs coûtsrelativement élevés, ajoutés à un appui budgétaire insuffisant empêchentencore d’obtenir les résultats escomptés. L’infrastructure et les services de



base font souvent défaut : il faut investir davantage dans les services detransport afin d’accroître la qualité des routes de campagne. Le ratio coût-avantage pourrait être particulièrement élevé en termes de réduction de lapauvreté, en particulier si ces investissements font partie d’une stratégie dedéveloppement local plus intégrée. Dans de grandes parties de la Chine rurale,l’accès à l’eau potable est problématique car l’eau est souvent contaminée parle rejet de polluants, d’eaux non traitées et d’eaux usées. En outre, lesconditions sanitaires restent insatisfaisantes, notamment dans les régionspauvres. En ce qui concerne la nouvelle sécurité sociale rurale et lesprogrammes d’allocation de subsistance, il est difficile de savoir si lescollectivités locales pauvres disposent de ressources suffisantes pour s’alignersur les fonds centraux. Comme indiqué précédemment, les écarts entre lesvilles et les campagnes et entre les différentes zones rurales en matière deservices résultent fréquemment de ce que le dysfonctionnement desdispositifs budgétaires aboutit à un sous-investissement et à l’insuffisancedes ressources financières des autorités locales par rapport à leur mandat.

... via des investissements plus soigneusement étudiés et mieux adaptés au contexte local et des modes innovants de prestations de services...

Bien qu’il soit nécessaire d’investir davantage dans les zones rurales, cela nesera pas suffisant pour combler les écarts existants. Comme indiqué plushaut, améliorer les dispositifs budgétaires à tous les niveaux del’administration pourrait procurer des effets positifs incontestables sur lesprestations de services. Cependant, étant donné la superficie et la diversité duterritoire chinois, il est indispensable d’adopter une approche plus flexible etdavantage fondée sur le contexte local, nourrie constamment par de nouvellesinnovations en matière de modes de prestations. Une stratégie moderne deprestations de services ruraux exige de disposer des outils analytiquesnécessaires pour déterminer le bon éventail de services et en doter les régionsqui en ont besoin, d’une manière qui tient compte des arbitrages efficience/équité et qui est en accord avec la stratégie régionale générale. Lesinvestissements dans l’infrastructure des transports, par exemple, devraientcomprendre une analyse coût-avantage plus attentive, ex ante et ex post,intégrant des objectifs économiques, sociaux et environnementaux etconciliant les besoins locaux avec les priorités nationales. Une stratégieholistique de l’investissement dans les régions rurales devrait donc prendreen considération des facteurs comme le moment opportun pour investir et lamanière dont l’investissement s’inscrit dans le cadre général des stratégies etdont il est raccordé aux autres investissements. En matière de prestations deservices, l’approche de la « taille unique » n’est pas efficace. Pour répondre à ladiversité et à l’évolution rapide des milieux ruraux, l’offre de services dans lesrégions rurales doit inviter à un retour d’informations fiable de la part de



l’échelon local et à une innovation constante. Maints éléments montrent quele nombre des obstacles structurels à la fourniture de services dans les zonesrurales peut être réduit considérablement en développant différentesméthodologies. Il est important de s’assurer que les programmes novateurs deprestations de services ne sont pas de simples investissements ponctuelsmais offrent des possibilités d’apprentissage et d’amélioration. Il importeaussi de passer outre la tendance actuelle à privilégier les zones urbaines aumotif que le service rural engendre des coûts élevés pour de faibles bénéfices,en reconnaissant au contraire la complémentarité des services urbains etruraux dans le cadre d’une stratégie régionale bien conçue. Les technologiesde l’information et de la communication (TIC) offrent de grandes possibilités,notamment aux régions les plus reculées de la Chine. Un des objectifspremiers de la politique rurale doit être de donner à la population concernéela possibilité d’utiliser les TIC, en résolvant les difficultés liées au coût trèsélevé de la mise en place des infrastructures dans les zones à faible densité depopulation. À cet effet, divers moyens peuvent être employés selon lescirconstances, comme l’octroi de subventions, la fourniture publique directeou le renforcement de la concurrence privée. Disposer d’une infrastructuredes TIC bon marché et fiable est essentiel mais non suffisant. La recherchemontre que plusieurs conditions doivent être réunies pour que les zonesrurales puissent tirer parti des TIC – par exemple : une utilisation intelligentede la technologie par l’administration (administration en ligne, etc.), un cadreinstitutionnel qui encourage la coopération entre les entreprises et entre lessecteurs public et privé, et un minimum de capacités en matière de R-D. Il fautdonc que les autorités nationales et locales mènent une politiqued’investissements stratégiques adaptés au contexte local tant dansl’infrastructure technologique « matérielle » que dans l’infrastructuretechnologique « immatérielle ».

... et via l’ouverture au marché et un rôle plus stratégique des prestataires nongouvernementaux, y compris des coopératives rurales et des établissementsfinanciers.

Des prestations de services ruraux efficaces requièrent un rôle actif de la partd’un large éventail d’acteurs ruraux. Le système actuel de prestations centrésur les unités de service public (USP) doit être révisé. D’une part, il existe devastes possibilités d’accroître l’efficacité, l’efficience et la responsabilisationdes USP, en particulier au moyen d’incitations proches de celles du marché.D’un autre côté, des progrès peuvent encore être accomplis en termes departicipation des acteurs non gouvernementaux, comme les coopérativesrurales, les ONG et les entreprises privées, à la fourniture des services. Lesétablissements financiers peuvent jouer un rôle majeur : la mise à dispositionde ressources financières peut être le facteur déterminant de l’éventuelletransformation des actifs ruraux en opportunités commerciales. Cependant,



comme dans maints autres pays, plusieurs éléments empêchent le bonfonctionnement des marchés financiers privés dans les zones rurales. On peutciter entre autres la présence limitée de succursales des établissementsfinanciers, notamment dans les localités reculées ; le déficit de droits depropriété sûrs et les dysfonctionnements du système juridique ; le faiblemontant et volume des transactions ; le taux élevé des défaillances et lesdifficultés à recouvrer les sommes prêtées ; le faible montant des prêts et le« coût » élevé de l’information. Les banques et agences de développementpeuvent donc jouer un rôle crucial en réduisant les risques et en mettant enplace des mesures incitant les établissements financiers à servir ce segmentdu marché. Les expériences des pays de l’OCDE montrent qu’il existe maintesfaçons d’encourager la mise à disposition de fonds pour le développementrural. Les réseaux d’entreprises peuvent contribuer à une réduction des coûtspar des gains d’échelle, à une meilleure circulation des informations et à lamise en place de mécanismes de confiance. En outre, les programmes dedéveloppement des entreprises peuvent concourir à renforcer lescompétences des entrepreneurs et à augmenter le nombre des start-upsrurales viables. Plusieurs mesures gouvernementales récentes et en vigueurvisent à remédier à ces problèmes et à consolider les réseaux financiersruraux. Elles consistent notamment en l’assouplissement des conditionsrequises pour la création d’établissements financiers à la campagne, uneréglementation autorisant les établissements financiers étrangers à opérer enChine rurale, la réforme des coopératives rurales de crédit (CRC) et ledéploiement d’efforts pour développer le rôle des caisses d’épargne de la Postechinoise et celui de la Banque agricole de Chine. Il est crucial de poursuivre cesefforts de réforme qui devraient permettre la création d’un réseaud’établissements financiers viables capables d’accorder des prêts aux partiesdynamiques de l’économie rurale, comprenant les activités non agricoles etles parties compétitives de l’agriculture chinoise, qui deviendront la principalesource de croissance, de création d’emplois et de hausse soutenue des revenuspour la population rurale.

Diversification économique : L’évolution de l’offre et de la demande…

Il est improbable que la Chine puisse soutenir le rythme de productionagricole élevé qu’elle a enregistré au cours des 30 dernières années deréformes économiques. Un ralentissement s’observe déjà depuis la secondemoitié des années 90. L’enrichissement de larges parties de la population faitdécélérer la croissance de la demande de produits agricoles en termesquantitatifs, et les modifications des préférences des consommateurscontinueront à dicter l’évolution de la structure de la production agricole enChine. Selon les projections OCDE/FAO pour 2017, la production céréalièredestinée à la consommation humaine (blé et riz) diminuera même en Chine



car les consommateurs se tournent vers des produits à plus forte valeurajoutée comme les produits carnés et le lait. Globalement, selon lesprévisions, la Chine produira suffisamment pour satisfaire sa demandeintérieure de céréales et de produits carnés, mais elle devra importerdavantage d’oléagineux, de produits laitiers et de sucre. Toujours selon lesprévisions, la Chine augmentera sa production de biocarburant de plus de80 % bien que les préoccupations pour ce qui est de la sécurité alimentaire,renforcées par la récente envolée des prix alimentaires et les rapportsinternationaux, montrant le fort impact de la production de biocarburant surles prix alimentaires mondiaux et un impact contrasté sur l’environnement,ont diminué l’intérêt porté à la production d’éthanol, en particulier à partir decéréales. La Chine est en outre limitée par un certain nombre de facteurs ducôté de l’offre. L’eau est rare dans la moitié nord du pays. La superficie desterres arables disponibles s’est réduite chaque année de 0.5-1.0 milliond’hectares au cours de la dernière décennie et cette tendance devrait sepoursuivre en raison de la pression croissante exercée pour convertir les terresagricoles à des fins non agricoles et pour les reboiser. En Chine, la productivitédes terres est déjà élevée et une utilisation encore plus intensive des sols àl ’a ide de produi ts ch imiques r isque d ’aggraver les problèmesd’environnement. Dans ces conditions, l’augmentation de la productionagricole devrait s’effectuer en encourageant, dans le cadre de réformesfoncières, les agriculteurs à investir dans leurs terres, en ayant davantagerecours aux nouvelles biotechnologies, en introduisant des innovation ettechnologies augmentant l’efficacité du travail tout en regroupant lesexploitations agricoles dispersées, et en continuant à réorienter les ressourcesvers les produits à moins forte intensité de terres comme les fruits, leslégumes et le bétail.

… exige de ne pas faire reposer l’avenir de la Chine rurale seulement surl’agriculture…

Au total, le secteur agricole libèrera de la main-d’œuvre rurale et son rôlecomme source d’emplois dans les zones rurales diminuera avec le temps.Cette diminution s’est accélérée considérablement au cours de la décennieactuelle comme l’indique la baisse de la part de l’agriculture dans l’emploirural de 68 % en 2000 à 60 % en 2005, soit un recul de 1.6 % par an. Si cettetendance se poursuivait au cours des 15 années suivantes, la part del’agriculture tomberait aux alentours de 35 %, se rapprochant des niveauxactuellement observés dans des pays de l’OCDE comme le Mexique, maisresterait bien supérieure à la moyenne de l’OCDE, qui est de 6 %. Parmi lespays de l’OCDE, la Corée fournit un exemple intéressant de la façon dont lerôle de l’agriculture dans l’économie chinoise pourrait évoluer. Au milieu desannées 70, la part de l’agriculture coréenne respectivement dans le total de



l’emploi et dans le PIB était même supérieure aux niveaux observésactuellement en Chine. En trente ans, la part de l’agriculture coréenne dans letotal de l’emploi est passée de 46 % en 1975 à 8 % en 2005, avec pour corollaireune baisse de sa contribution au PIB de 24 % à 3 %. En supposant que la part del’agriculture chinoise dans le total de l’emploi soit tombée à 8 % d’ici 2040 etque la population active chinoise totale s’élève à 750-800 millions depersonnes à cette date, il faudra que le total des emplois agricoles ait étéramené de 326 millions actuellement à environ 60-65 millions. Plus de260 millions de personnes actuellement employées dans le secteur agricoledevront trouver un emploi non agricole dans les zones rurales ou urbaines ouprendre leur retraite. Le défi pour les pouvoirs publics est de créer despossibilités d’emploi non agricole dans les zones rurales, d’absorber lesmigrants ruraux dans les zones urbaines, d’élaborer des systèmes de sécuritésociale permettant d’absorber le nombre grandissant d’agriculteurs à laretraite et de continuer à diversifier la structure de la production agricole demanière à produire des produits à plus forte valeur ajoutée sur des terresarables dont la superficie se réduit.

… et de saisir plus résolument les possibilités de synergies entre la ville etla campagne et les possibilités qui s’ouvrent dans des secteurs comme letourisme, la production d’énergie et les produits traditionnels à forte valeurajoutée.

Les cultures, les paysages naturels et la biodiversité ne sont qu’une partie dupatrimoine dont les campagnes chinoises peuvent faire bénéficier les citadinsdans le cadre d’une relation plus étroite entre la ville et la campagne. Il existede nombreuses possibilités d’établir des liens entre la ville et la campagne entermes de pôles d’activités économiques, d’initiatives touristiquestransfrontalières, de chaînes d’alimentation locales et de réseaux de servicesde transport et autres plus intégrés. Comme l’a montré la dynamiquemigratoire dans maints autres pays, d’importantes possibilités s’ouvriront àmesure que la congestion des villes augmentera et que les déséconomiesd’agglomération inciteront les individus et les entreprises à s’installer dans leszones rurales ou à faire la navette entre les zones urbaine et rurale. Parexemple, le tourisme rural est riche de promesses. D’après les statistiques, letourisme rural a compté plus de 400 millions de touristes en 2007 et a rapportéplus de 3 000 milliards CNY, dont 1 200 milliards CNY ont bénéficiédirectement aux agriculteurs. Les perspectives sont bonnes : le temps de loisirpar habitant et les habitudes en Chine évoluent et, selon différentesprévisions, la Chine pourrait devenir la première destination touristique et laquatrième source de touristes en 2015. En outre, le potentiel dedéveloppement de la production d’énergie renouvelable semble encoreconsidérablement sous-exploité, bien que les énergies moins polluantessoient promues par le gouvernement central. Cette approche offre de vastes



opportunités de développement des zones rurales. L’utilisation de méthanetiré de la biomasse est particulièrement encouragée, ce qui offre une solutionaux villages non raccordés au réseau électrique. L’éolien, l’hydraulique et lesolaire thermique sont d’autres sources prometteuses d’énergie renouvelableet sont souvent utilisés dans les zones à faible revenu. De même, d’importantsdébouchés s’ouvrent aux zones rurales chinoises sur les marchés internes etexternes en expansion des produits alimentaires, agricoles et forestierstraditionnels à forte valeur ajoutée et certifiés. Les zones rurales en retard sontsouvent riches en ressources naturelles et culturelles. Beaucoup a été fait cesdernières années pour soutenir le développement dans ces secteurs et denombreuses initiatives des pouvoirs publics visant à mieux exploiter les liensentre la ville et la campagne sont en cours d’expérimentation. Cependant, lespolitiques actuelles gagneraient à un renforcement des investissementspublics destinés à diversifier l’économie rurale et à une extension des normesactuellement définies comme celles concernant le commerce des produitsbiologiques et le commerce équitable. En termes de coordination despolitiques, par exemple, les nombreuses initiatives de développement dutourisme existantes pourraient être davantage intégrées dans les programmesde production de denrées alimentaires traditionnelles grâce à des politiquesde marketing territorial et dans le cadre de stratégies de développement localintégrées. Dans ce contexte, la clé de la diversification ne réside pas dans despolitiques individuelles ciblant un secteur particulier mais dans la capacité àmettre en place les conditions-cadres nécessaires pour que de nouvellesactivités économiques puissent se développer.

Protection de l’environnement : Le développement durable et la diversificationde l'économie rurale passent par une politique environnementale judicieuse. Ilfaut relever les défis auxquels la Chine rurale est confrontée, depuis lesaménités naturelles, la pollution et l’utilisation efficace de l’eau jusqu'à lapollution due aux entreprises rurales.

La Chine rurale bénéficie d’un environnement naturel exceptionnel qui offred’importantes possibilités de développement rural encore inexploitées et quiconstitue un atout pour tout le pays. La plus grande sensibilisation auxproblèmes d’environnement, l’agrandissement des zones forestières et desréserves naturelles protégées et la mise en place d’un cadre juridiquemoderne et global pour la gestion de la nature et de la biodiversité ainsi quepour la gestion de l’eau, des déchets et de l’air créent de nouvellesopportunités pour les zones rurales. Cependant, il existe un hiatus entre lecadre juridique et sa mise en œuvre effective, en particulier au niveau del’administration locale. En outre, des possibilités sont compromises par degraves problèmes d’environnement comme les pénuries d’eau et la pollutionde l’eau, la rareté des terres, la dégradation des sols et la pollution diffusegénérée par les activités agricoles, ainsi que la relocalisation d’industries



polluantes des zones urbaines vers les zones périurbaines et les zones rurales.Compte tenu de ces problèmes, une approche moderne du développement dela Chine rurale devrait inclure des mesures géographiquement différenciéesdans les domaines suivants :

● Aménités naturelles. La grande biodiversité des campagnes chinoises peutêtre un moteur du développement économique et social si elle est exploitéeefficacement. En particulier, le souci de protéger la nature devrait êtredavantage intégré dans les plans de développement rural, notamment dansles régions pauvres du Centre et de l’Ouest où la biodiversité est forte. Unediminution de la biodiversité fait d’ailleurs courir le risque de devoirintroduire de nouvelles variétés de plantes résistantes aux maladies. Il estnécessaire d’accroître la coordination institutionnelle et de renforcer lescapacités des agences centrales et infranationales afin de mieux gérer laprotection de la biodiversité dans les réserves existantes et d’intégrer lapréservation de la nature et le reboisement dans les autres projets dedéveloppement rural concernant des zones non protégées. En outre,l’augmentation des ressources financières et humaines destinées à protégerla nature et la biodiversité et une participation accrue des résidents locauxaux patrouilles, au suivi et à l’amélioration de l’habitat pourraient contribuerà faire reculer encore plus la pauvreté rurale. Une plus grande prioritépourrait être accordée à la coordination du reboisement, à la préservation dela nature et au développement rural durable afin de remédier aux problèmesde désertification et d’érosion des sols. L’application des principes du« pollueur-payeur » et du « consommateur-payeur » au moyen d’instrumentséconomiques comme la facturation des services environnementauxcontribueront à remédier aux problèmes d’environnement et créeront denouveaux gisements d’emploi dans les zones rurales.

● Prévention de la pollution de l’eau et utilisation efficace de l’eau. Ilfaudrait poursuivre les efforts déployés pour une meilleure prévention de lapollution de l’eau et une utilisation plus efficace de l’eau en agriculture. Lacréation d’associations d’usagers de l’eau chargées de recouvrer le coût defourniture de l’irrigation pourrait conduire à une baisse de la demande etune utilisation plus efficace de l’eau. Cela devrait permettre de réduire lasurexploitation des nappes phréatiques souterraines. La création de zonestampons le long des cours d’eau et des lacs, le traitement des effluentsd’élevage intensif et l’application efficace des produits agrochimiquesdevraient permettre d’éviter les rejets agricoles dans les nappesphréatiques, les cours d’eau et les lacs. Les projets actuels d’augmentationdes subventions aux engrais pour encourager l’augmentation de laproductivité en agriculture vont à l’encontre des efforts de réduction deseffets négatifs de l’utilisation d’engrais chimiques et des pesticides sur lessources d’eau douce.



● Entreprises rurales. Les entreprises rurales offrent des possibilités dedéveloppement et d’emploi aux petites villes et aux zones rurales, maisleurs activités génèrent souvent de graves problèmes de pollution. Desefforts s’imposent pour renforcer les capacités de suivi, d’inspection etd’application dans tout le pays. Ainsi, les règles du jeu resteraient lesmêmes pour tous et la création de « havres pour pollueurs » serait évitée. Letaux des redevances de pollution devrait être relevé pour internaliser lesexternalités environnementales. La mise en application du conceptd’« économie circulaire » devrait être renforcée en encourageant laréduction, la réutilisation et le recyclage des déchets (le concept « des 3R »)et en lançant davantage de projets pilotes d’« économie circulaire » dansl’industrie rurale (et urbaine). Susciter une plus grande prise de conscienceécologique chez les résidents ruraux et les faire davantage participer à lagouvernance environnementale locale pourrait augmenter l’efficacité ducontrôle de la pollution et des mesures de lutte contre la pollution.

Synthèse

La Chine rurale représente une ressource importante pour le développementet la croissance du pays, mais son potentiel demeure largement inexploité. Lastratégie NCS est une démarche judicieuse et novatrice, mais il faudraitqu’elle aille plus loin dans la prise en compte de la complémentarité villes-campagnes sans se limiter à l'agriculture. Les objectifs de sécurité alimentairedoivent être conciliés avec les objectifs de développement rural généraux pourcombler les écarts entre les villes et les campagnes. On peut y parvenir enaccordant la priorité à l’investissement dans les zones rurales par rapport auxmesures de redistribution. Il faut s’employer en priorité à : i) optimiserl’utilisation des terres et renforcer les droits fonciers ; ii) améliorer l’offre deservices ruraux dans des domaines comme l’éducation, les soins de santé etles services financiers et aux entreprises ; iii) mettre en place une stratégieplus volontaire de diversification de l’économie rurale en exploitant lespossibilités offertes par les riches aménités naturelles et culturelles de laChine rurale ; et, iv) s’attaquer aux graves problèmes d’environnement ens’assurant notamment de la mise en application au niveau local de lalégislation nationale dans les zones rurales. Concrétiser le potentiel descampagnes chinoises en appliquant une politique de développement ruralplus globale, mieux coordonnée et mieux financée exige d’importantesréformes de la gouvernance. Premièrement, il faut renforcer et étendre lacoordination formelle au niveau central pour surmonter le cloisonnementsectoriel et il faut disposer de mécanismes de « mise à l’épreuve en zonerurale » des politiques sectorielles. Deuxièmement, le système de relationsbudgétaires entre les administrations doit être amélioré afin qu’à tous les



niveaux les responsabilités s’accompagnent des ressources nécessaires.Troisièmement, une série de réformes de la gouvernance locale doivent êtremenées pour élargir la consultation et la participation et pour renforcer lescapacités des acteurs ruraux. Les expériences des pays de l’OCDE, et lesnombreuses expérimentations dans l’action publique et les réussites en Chinemontrent que, lorsque ces conditions sont réunies, les campagnes chinoisespeuvent de plus en plus devenir un moteur du développement et de lacroissance équilibrés du pays.

Si le contexte macroéconomique a considérablement évolué en Chine et àl 'échel le mondiale depuis la rédact ion du présent rapport , lesrecommandations qu'il contient sont d'autant plus pertinentes. Par exemple,en dynamisant l'offre de services publics en Chine rurale, on augmenterait lepouvoir d'achat de la population des campagnes, ce qui accroîtrait la demandeintérieure et compenserait au moins partiellement le ralentissement de lademande d'exportations chinoises sur les marchés internationaux. De plus, leretour des travailleurs ruraux migrants rend indispensable la poursuite denouvelles opportunités d’emplois dans les zones rurales.


评估与建议

有超过 7亿人口居住在中国农村，这几乎是所有经合组织国家农村人口的两倍。

基于官方人口普查的定义，中华人民共和国（以下简称中国）2006 年的农村人口为 7.37

亿，占全国总人口的 56%。因而，中国仍是以农村为主的国家，农村人口据世界第二位，

仅次于印度。中国各地区农村人口分布不均：半数农村人口集中于 8 个省份。与之相

比，虽然面积最大的三个省份（即新疆、西藏和内蒙古）占该国领土面积的 40% 以上，

但其农村人口占总农村人口的比例不足 4%。农村人口密度最高的地区是沿海的山东、天

津和江苏，以及位于中部的安徽和河南，密度超过或接近每平方公里 300 人；密度最低

的地区是位于西部的西藏、青海和新疆，密度低于每平方公里 10 人。由于最大的省份密

度较低，中国农村人口的平均密度相对较低，约为每平方公里 75 人。

外迁人口不断增加

直到 2008 年，中国的经济增长、城市工作岗位的大量出现，以及城市地区较低的失业率

提供了强劲的推动因素，吸引农村外来人口进入城市及沿海省份。这些推动因素包括极

低的人均耕地拥有量、非农业工作机会稀缺（尤其是在中西部省份）、环境退化，以及

每年影响中国约四分之一播种面积的自然灾害。因此，农村外出务工数量一直在稳步上

升，导致农村人口从 1990 年代中期最多时的 8.59 亿减少到目前的 7.37 亿。根据最常用

的定义，可以设定农村外出人口的数量从 1983 年的约 200 万，增至 2000 年的 7850 万，

随后到 2006 年更增至 1亿 3210 万。约有 70% 的农村外出人口流向东部地区或在东部地

区流动，而剩余的 30% 外出人口则流向中西部省份或在其中流动。同样，有 71% 的农村

外出人口流向城市地区，但仍有较大比例（29%）的人口在农村地区流动。人口流出最

多的省份（四川）位于西部，这不足为奇，但其它主要人口流出省份却位于中部及东部

地区。来自四川和中部省份的外出人口流向东部，而来自东部（广东、江苏、浙江）的

外出人口主要在原省份内流动，或流向其它东部省份。所有主要的流入省份均位于沿

海。

…扭曲了农村地区的人口结构，但同时对农村收入、消费及投资带来了积极的影响。

农村外出人口主要由年轻、教育程度相对较高的适龄劳动力构成。人员外流对农村及城

市人口的年龄结构产生了重大影响。年轻务工人员外流，使得农村地区 20 至 34 岁年龄

段的人群大大减少。反过来，这些人员流入城市地区，很大程度上弥补了较为严格的独

生子女政策对城市人口结构的影响。人口老化对农村和城市地区均有影响，但农村地区


评估与建议

的老龄化速度通常更快：研究发现，70% 的老年人居住在农村。对主要流出省份（譬如

安徽、湖南和四川）来说，这个问题尤其严重。由于不鼓励外来人口在城市安家落户

（尽管正在逐步改革户口 [家庭登记 ]制度），留在农村地区的儿童比例异常庞大。所谓

留守儿童的数量可能大约有 2000 万人。由于上述趋势的结果，农村地区的抚养比率已经

从 1982 年的 40.4% 上升至 2006 年的 43.2%。与之相反，由于大量外来人员流入，加上

生育率下降，城市地区同期的抚养比率从 45.4% 降至 32.3%。主要由男性务工人员构成

的人口外流，也造成农村人口的女性化，20 至 34 岁的人口尤甚。人口外流也对农村地

区产生积极影响。外出人员的汇款有助于减轻农村的贫困状况，增强农村家庭的自我融

资能力，并促进消费。家庭调查发现，通过外出人员赚取的额外收入将家庭人均收入提

高了 8.5% 至 13.1%。在外出人员比例较高的某些省份，2001 年的汇款收入占到家庭收入

的 3040%。外出人员家庭的生产性投资通常要高于无外出人员的家庭。与纯粹务农的家

庭相比，外出人员家庭拥有更多的耐用品、较宽敞的住房及更多生产性设备。尽管农村

劳动力市场不完善，满足季节性劳动力需求存在诸多困难，但由于人员外出减少了农业

过剩劳动力的数量，从长期来看可能有助于提高农业劳动生产率。考虑到农田数量有

限，如果要大幅提高农业劳动生产率，增加农业人均收入，须寄希望于劳动力从农业流

入其它经济部门，其中包括人口的流出。

在过去 30年中，农村平均收入不断上升，农村贫困率大幅下降

过去 30 年中，中国在提高农村平均收入，消除农村贫困方面的成绩卓著。中国在提高农

村收入方面的成就，很大程度上归功于 1970 年代后期和 1980 年代初期的一系列改革，

包括逐步取消集体农业制度，代之以将集体所有的土地分配给农户开展个体农业生产，

并让农户拥有土地使用权。此后的其它改革措施，譬如发展农村企业、放宽户口制度、

农村税收改革、逐步向全球竞争者开放农业以及旨在加强农民土地权利期限保障的后续

土地改革，有利于促进农村地区经济活动的差异化，不断提高农村收入。因此，1980 年

至 2007 年间，农村家庭的人均实际收入几乎提高了 5 倍，年增长率高达约 6%，令人瞩

目。农村收入的总体增加使得农村的绝对及相对贫困程度大幅下降。无论是采取中国的

定义还是世界银行的定义，趋势都显而易见。根据世界银行的定义（按购买力平价计

算，每人每天 1美元），中国的贫困人口从 1981 年的约 5.3 亿（包括农村及城市地区）

下降到 2004 年的 1.29 亿，贫困发生率相应从 53%降至 9.9% 。贫困线以下的人口绝大

多数生活在农村地区，因为研究显示，2001 年中国农村的贫困发生率为 12.5%，而中国

城市的发生率为 0.5%。然而，尽管已经取得上述进步，仍有相当多中国人口的生活水平

勉强高于绝对贫困线。研究显示，其中 34.9% 的人 2004 年的生活水平低于每人每天 2美

元。

…但是，城乡差别以及不同农村之间的差距加大。

城乡收入差距巨大，并有加大的趋势。城乡人均名义收入之比从1978年的2.6降至1985年

的 1.8，主要原因是农业产值的迅速增长，但随后却再现扩大趋势，2007 年达到 3.3 的

历史最高水平。尽管农产品价格高涨以及政府采取多项政策措施增加农村收入（譬如取


评估与建议

消农业税，增加农业生产投入补贴，提高对农民的直补，加快农村发展的预算支出），

但近年来的差距仍在加大。经过农村地区较低生活成本的调整后，名义收入差距有所缩

小，但总体依然巨大，并有逐渐增大的趋势。如果考虑到城市居民享受到的隐含与明确

的福利及补贴，城乡差距便会更大。由于各省农村地区非农业工作机会及农业劳动生产

力差异巨大，人均农业收入水平亦非常不平均。中国农村消除绝对贫困的成就亦存在差

异。譬如，各省的贫困率相差明显。2005 年，几乎所有沿海省份的贫困率均低于 0.5%，

而西部省份则高于 5%（西部省份青海则超过 11%）。依赖农业的农村地区最为脆弱，并

很可能显现出最高的贫困率。这表明，虽然传统农业在改革初期有效地缓解了贫困，但

收入多元化现在已经成为消灭中国剩余绝对贫困死角的关键要素。

尽管近年来有所改善，但在教育与医疗领域，服务

的普及与质量仍存在巨大的地区差别

虽然中国属于几乎所有儿童都完成小学教育的国家，城乡人口及各省之间接受教育的机

会仍存在鲜明的差异。15 岁以上农村人口平均受教育时间为 7年，而城市人口为 10 年。

农村地区的文盲率比城市高 3 倍以上，6 岁及 6 岁以上城乡人口的文盲率分别为 11.5%

和 3.6%。同样，仅完成小学教育的农村人口比例比城市高一倍以上。相反，城市人口接

受大学以上教育的比例，比农村地区高 18 倍。各省农村人口的教育程度也存在明显差

异。相对富裕的沿海省份的教育程度，明显高于中部特别是西部省份。在西藏、青海、

甘肃、宁夏、贵州、云南等省份，文盲率依然接近甚至超过 20%。在上述省份以及四川

和重庆，文盲人口及仅接受小学教育的人口比例超过 60%，而西藏则接近 90%。有意思的

是，某些西部省份（譬如新疆或陕西）及中部省份（譬如山西、河南和湖北），教育程

度接近甚至超过平均水平。中国农村的医疗服务亦是难题。据估计，2004 年城市地区的

人均医疗开支（公共及私人）比农村地区高 4倍。虽然医疗保险覆盖城市常住人口（不

算外来人口），但由于农村合作医疗体系于 1970 年代末之前处于崩溃状态，绝大部分农

村人口不受保障，该医疗体系先前由集体农业收入提供资金。因而对农村家庭来说，医

疗救治往往带来高额成本，令其债台高筑，乃至放弃治疗。因此，与医疗相关的所有指

标均显示出重大城乡差异。例如，农村地区的儿童与产妇死亡率比城市地区高一倍。中

国农村的预期寿命上升至 69.6 岁，但不如城市地区，使得两者的差异从 1990 年的 3.5

年扩大到 2000 年的 5.7 年。

交通基础设施与基本服务

尽管存在住房分布结构与地理方面的困难，中国在为农村地区提供起码的基础设施方面

也取得了显著的进步。根据可获得的数据，截至 2006 年底，96% 的行政村和 83% 的自然

村已经连接公路系统。同样，几乎所有行政村和自然村都已连接供电及电话网络。截至

2006 年底，80% 以上的乡镇已经完成电网升级。但从绝对数量看，农村地区仍有 2000 万

人没有电力供应。平均而言，80% 以上的乡镇拥有邮政机构，但西部省份的比例较低，

仅为 67%。虽然道路的总长度或密度可有效反映一个国家的道路基础设施提供状况，但

考察道路系统的质量同样重要。在这方面，仍有许多工作要做。虽然东部省份连接乡镇

与行政村的道路大多为水泥或柏油路，但西部省份的道路大多依然用碎石和沙砾铺筑，


评估与建议

或者路面没有硬化。各省连接自然村的道路通常质量更差，但在东部省份，此类道路的

60%依然由水泥或柏油铺筑，而西部省份的比例仅为 15%。就基本服务而言，政府面临的

重大挑战是向农村人口提供饮用水。据报道，截至 2005 年底，约有 3.12 亿的农村人口

未享受到安全供水，许多人（尤其是低收入家庭）无法得到自来水。即使有自来水供

应，由于处理不充分，饮用水标准也经常得不到遵守。就非自来水而言，监测数据表明，

违反非管道饮用水标准的现象普遍存在，主要原因是地面污染。高达 70% 的农村人口缺

少安全的卫生设施，其中许多人居住于西部省份。对作物施用未经处理的人粪尿，及其

作为动物饲料的再循环会产生严重的传病媒介。中国农村往往缺乏现代城市的垃圾处理

服务，其中包括分离收集，运用垃圾气体，通过焚烧回收能源。

...获取信贷与其它金融服务。

农村金融基础设施落后，进一步制约了农村地区的经济多元化发展。尽管采取多项改革

尝试，并且整个经济资金流动范围广泛，但中国的农村金融业依然落后，处于结构性脆

弱，阻碍农村的发展与多元化发展。农村储蓄及贷款的综合数据表明，金融资源呈现从

农村到城市地区的净转移。虽然难以确定这在多大程度上反映出理性投资者将资金从低

利润行业转向高利润行业的对策，亦难确定这在多大程度上源自于金融和财政体系的制

度性缺陷，但显然农业和农村企业均面临严重的信贷约束。这些约束表现为：农业和农

村企业在借贷总额中的比例，远远低于它们对中国 GDP所作出的贡献。小规模农户获取

信贷尤其困难。部分原因在于，农户无法对其土地进行抵押贷款，而获取正规信贷的交

易成本较高。另一个原因是金融机构关闭了许多当地分行，而新的分支机构却尚未出

现。

中国农村的经济状态正在演变：第一产业依然是核

心，但在就业及农村收入的比例方面，它的重要性

似乎在降低

在改革进程中，农村经济经历了重大转变，农业在农村发展及农村 GDP中的份额不断下

降，而非农业活动（譬如工业、建筑、交通与通讯、商业）的重要性随之上升。农业

（以及林业和渔业）占农村就业的比例，从 1985 年的 82%降至 2005 年的 60%。尽管有此

趋势，对于中国绝大多数农业人口来说，务农仍是主要活动。在若干西部与北部省份

（譬如新疆、云南、西藏、内蒙古、黑龙江、吉林）以及海南，农业的就业比例超过 70% 。

农业依然是农村家庭的主要收入来源，这反映出中国农村经济的当前结构与现行变化，

但农业占总收入的份额从 1980 年代中期的 66%降至 2006 年的 42%。相反，工业及外出

人口汇款所占的份额翻了一番以上，从 1985 年的 18% 升至 2006 年的 38%。农业在农村

家庭收入中的重要性及其随时间下降的速度各省不一。虽然在中西部省份，农业仍然提

供 40-70% 的农村净收入，但在沿海省份，该比例在 25-45% 不等。沿海省份广东的份额

下降一半有余，从 1990 年的 54%降至 2006 年的 25%，而中部省份河南依然偏高，但同

期已经从 72% 降至 54%。非农业收入对农村净收入的重要性正在上升。确实，来自工资

与薪金的收入份额越高，农村家庭人均净收入就越高。


评估与建议

…而且，尽管增长率较高，并实施重大的结构调整，农业劳动生产率依然低下。

农业本身经历了重要的结构调整过程，而自实施改革以来，亦经历了令人瞩目的增长。

从 1990 年至 2006 年，中国的实际农业总产出（GAO）增长了 162%。在该期间，作物产

量增加 98%，而牲畜产量增加 278%，反映出消费者需求的变化。近年来（尤其是 2003

年后），结构调整进程放慢，原因可能是政府自 2004 年起大力加强干预，以促进粮食生

产。粮食生产高度自给是中国农业政策的关键目标之一。这导致政府运用若干政策措

施，譬如：对粮食生产者进行直接补贴，制定粮食最低收购价格，实施针对粮食生产者

的生产投入补贴，以及国家开展粮食交易，这些措施扭曲了市场信号，并且减缓了市场

条件下向高价值及劳动密集型产品的转变。这些产品包括水果、蔬菜及牲畜。中国在这

方面具有比较优势。全球市场农产品价格近期上涨，更是加强了这种政策推力，这可能

进一步阻碍中国农业的多元化。2006 年，农业占就业人口总数的比例为 43%，而 GDP仅

为全国的 13%。这表明，中国的农业生产率水平低下，仅约为全国平均水平的 30%。虽然

经合组织国家农业劳动生产率低于平均水平相当普遍（新西兰例外），但中国的这种差

距尤其巨大，这个生产率低下的行业仍吸收了全国 40% 以上的就业人口，更令情况雪上

加霜。在许多西部、北部及中部省份，农业吸收的劳动力甚至超过 50%，而农业劳动生

产率为本省平均水平的 25% 至 50%，远远低于全国平均水平。

农村企业的迅猛发展，促进了中国农村经济的多元

化发展，沿海省份尤为如此

农村企业（包括改制后乡镇企业及农村地区新起的私营企业）的迅猛增长，支持了中国

农村经济的结构转变。官方数据显示，它们的数量增长了 15倍，从 1978 年的 150 万家

增至 2006 年的 2300 万家，在此期间创造了 1.19 亿个新的工作岗位。1990 年代初农村

企业的表现异常强劲；1990年代后半期显著放缓；2000年代前半期稳步改善，附加值、

出口值及利润的年增长率接近 20%。工业是农村企业最重要的活动，2006 年占到就业总

人数的 58% 及总产值的 76%。但农村企业还包含第三产业活动，包括（按就业人数排序）

商业、建筑、运输、住房餐饮及社会服务。2006 年，非工业性的农村企业占就业人数的

42% 和产值的 22%。农村企业深入参与出口行业。从 1990 年至 2006 年，它们的（实际）

出口额每年增长 20%，到 2006 年，中国 40% 的出口产品总量由它们生产。轻工、纺织和

服装占农村工业出口的将近一半，随后是机械、手工艺和食品。这个结构证明，农村工

业的出口产品集中于劳动密集型行业。中国在该行业仍然拥有牢固的相对成本优势。农

村工业的所有制结构转型差不多已经完成：在 1990 年代后半期及 2000 年代初，农村企

业经历了深刻的重组过程。绝大部分大中型农村集体企业转制为控股或有限责任公司，

多数股份由经理人和雇员所拥有。沿海省份的农村企业总是占有优势，可以相对容易地

进入出口市场，以及人口密集、相对富裕的东部省份中的大型国内市场。在农村企业产

值最高的 10 个省份中，有 8个位于沿海地区。


评估与建议

农村经济进一步多元化的未发挥潜力巨大，

尤其是在自然、文化及能源资源方面

中国是世界上环境最为多样化的国家之一，其生物多样性位居北半球榜首。中国农村拥

有全球约 10% 的植物、哺乳动物、鸟类、爬行动物和两栖类动物。虽然全球的森林面积

不断萎缩，但中国的森林面积却在增加，现已居世界第五位。森林覆盖面积达到 1.75 亿

公顷，约占中国土地面积的 18%，而 1980 年代末仅为 14%。中国的森林（包括 1200 万

公顷的原生林）拥有丰富的生物多样性（2500 个本地树种）。而且，中国农村地区待发

现的文化遗产也异常丰富，包括有形及无形的遗迹、纪念物、各种成果，以及工艺品、

民俗节日、区域性的音乐、戏剧与曲艺等形式。可再生能源丰富，但开发仍严重不足。

2006 年，中国的能源消耗已位居世界第二，在过去 10 年中增长将近一倍。虽然能源结

构基本上是煤炭和石油，但中国是重要的可再生与垃圾燃料使用国。2005 年，上述燃料

占到该国总消费量的 13%，远远超过国际能源机构成员国家。中国政府已经设定目标，

2010 年前来自可再生资源（包括水电）的能源供应要占总量的 10%，而 2020 年前要达

到 15%。除了大规模的电网接入安装工程，中国还是世界上增长最快的风能市场，已拥

有超过 20 万套小型风能机组为农村地区的家庭提供电力。风力发电量预计将从 2007 年

的 6 亿瓦，增加到 2015 年的 50 亿瓦。其它前景广阔的可再生能源包括：太阳能、水电

和生物质能，这些能源可有利于保护环境，促进社会与经济发展。

…但严重的环境威胁令这种发展潜力面临风险 .

中国过去 30 年来经济迅猛增长，已经给环境造成相当大的压力，继而损害到健康与自然

资源。尽管过去几年有所改善，但农村地区的水资源匮乏和水污染状况依然严重。人均

水资源仅为世界平均值的 1/4 至 1/3。每年的用水短缺量估计为 360 亿 m3，其中农业短

缺占 300 亿 m3 。缺水状况在北方地区尤为严重（松花江、辽河、海河、黄河及淮河流

域）；北方地区的人口及耕地分别占中国的 44% 和 65%，但水资源仅占全国的 13%。对

地下水使用强度，往往超过淡水生态系统保持健康所必需的限度。城市家庭、服务业、

工业的用水需求增加，而农业灌溉效率低下，进一步加剧缺水状况。水资源危机已经成

为经济发展的重要制约因素，每年对经济活动造成的损失估计在 140 亿至 270 亿美元。

中国约 1/3 的河流长度及约 3/4 的主要湖泊受到农业污染物扩散及未经处理的生活与工

业废水的严重污染。考虑到对产量及农产品质量的影响（不考虑对人体健康的影响），

使用污水灌溉所造成的影响在 2003 年估计达到 70 亿元。水污染和糟糕的卫生条件使得

水源性疾病及其它疾病（譬如血吸虫病）在某些地区广泛流行。土地稀缺状况严重，土

壤流失更令其恶化。中国 58% 的土地面积列为干旱或半干旱土地，仅有 1/5 的耕地列为

高质量耕地。从人均而言，中国的耕地面积仅有世界平均值的 1/3。在过去 10 年中，由

于工业化和城市化，上述耕地的12%已经流失。精耕细作降低了土地肥力及有机质含量，

并对土壤和水造成污染。土壤流失问题普遍，山区丘陵地带尤其严重。2003 年，受土壤

流失问题影响的土地多达 3.56 亿公顷。土壤流失主要是由于过度放牧、土地开垦不当及

砍伐森林。像水一样，土壤也经常受生活与工业废水公开排放的污染，缺少废水收集与

处理服务的农村地区尤其如此。另一个问题是沙漠化，尤其是中国北部和西北部地区。

沙地面积占总面积的 9%，并在近年来以更快的速度扩大。多年以来，工业污染（尤其


评估与建议

是农村企业造成的污染）已经对农村环境造成负担，部分原因是城市的生产活动迁移至

农村地区。近年来江河的工业污水排放量有所减少，这是由于小城镇与乡村的许多低效

和污染型工业遭到关闭，尤其是造纸厂。

总结

对中国农村的分析显现出高度的空间异质性，因此需要制定灵活政策，照顾到不同地区

的机会和需要。省份内部的多样性，更加剧了中国农村的省际差异。彼此距离相对较近

的地区，也可能体现出非常不同的中国农村。在此背景下，下一章节将探讨当前中国所

采取的农村发展措施最为鲜明的特征，并探讨其应对复杂状况、多样化及快速发展的农

村环境的能力。

中国制定农村政策的方式正在迅速转变，

近来已经采取建设社会主义新农村雍晡罢铰缘

形式（NSC）。

中国针对农村地区的新政策措施始于1978年开始的改革时期。该时期由文化大革命之后

新的政治领导人启动，由邓小平主导，其中涉及重要的政治转型。为了实现农业、工业、

国防及科学技术领域的四个现代化，推动中国经济的长期发展，中国对开发农村地区的

方式实施了重大变革。国家废除了人民公社，逐步转向更加市场化的做法，其中包括放

宽农业管制，并实施集中化程度较低的生产体制，称为家庭联产承包责任制（HPRS）。

HPRS通过合同方式授予个体农户土地使用权，农民可以更自主地作出生产和经营管理决

策。相关改革措施允许地方政府通过农村企业促进经济多元化，并且推行基于县、乡、

村三级，更为自主的农村治理体系。第十一个五年计划（2006-2010）方针中包含的一

个关键目标便是农村发展新战略，该战略要求建设社会主义新农村（下文简称新农村）。

对农村地区采取这种措施，表明认识到了中国的经济社会转型，并着手应对城乡之间及

农村之间日益严重的发展不均衡性等问题。为了解决涉及农业、农村和农民的三农问

题，新农村战略扩大了农村政策及目标的范围，并涉及到农业生产率、土地使用、农村

居民收入、地方治理与地方民主改革，以及提供农村公共服务等问题。

对地区不平衡的更多关注，加大了农村地区的公共

支出

配合中央政府的新农村策略，近年来农村地区的公共支出持续增加。现有数据表明，

2004 至 2007 年间，用于农村地区的名义支出几乎翻番，而实际支出增加了 75%（用 CPI

作缩减指数）。并且，农村地区的支出占预算总支出的份额从2004年的8.2%上升至2007

年的 9.1%。最大部分的支持来自于农业政策措施，占到 2007 年总额的 55%，随后是农村

基础设施（23%）和社会发展（20%）。本文所指的社会发展支出涵盖农村教育、医疗、

农村扶贫、农村社会保障方面的支持。


评估与建议

…但是，若干政策难题依然阻碍新农村战略的实施。首先，复杂的治理体系和条块分割影响农村政

策的一致性与有效性 ...

在农村政策的制度框架中，中国共产党中央委员会（中共中央）和两个相关领导小组

（中央财经领导小组和中央农村工作领导小组）发挥决定性的作用。上述机构接受有影

响力的智库（譬如国务院发展研究中心 [DRC]）的建议，与国务院重要机构共同确定农

村发展与工作的总体原则。大量机构参与向农村地区提供支持，其中最重要的机构有财

政部和国家发展与改革委员会（发改委），占到预算总额的约 2/3，随后是交通部（现

已并入交通运输部）、卫生部和教育部。虽然财政部在很大程度上是最重要的农业资金

提供者，但发改委和交通部负责重要项目。农业部负责的项目数量相对较多，着重于技

术改进及延伸服务，但与上述项目相关的财政转移支付较少（不到总额的 1%）。目前没

有统一机构或正式机制负责整合最重要的新农村政策。发改委和财政部是制定与实施政

策的关键部门，但它们仅负责影响农村地区的部分政策。高层领导人的正式与非正式会

议，有助于不同的最高级别党政机关之间的协调。另外，党的两个领导小组亦发挥关键

作用，它们在政治体制最高领导人之间建立桥梁，将党的体制所作出的决定顺畅地传递

到中央政府，并加快决策速度。然而，由于领导小组资源相对有限，而政策参与者众多，

实际政策设计当中的横向协调依然不多，并受到行业政策分割的困扰。随后，按新农村

战略指引的路线协调政府政策中出现的困难，也会在下级政府中出现，它们需要传达重

要政府的目标，并制定本地的农村发展计划。在经过复杂的五级行政结构（从中央到乡

镇层级）后，中央政府的部分指令受到削弱，从而妨碍有效的实施。

其次，运行不良的政府间转移支付制度和近期改革

措施（譬如农村税费改革）产生的意外影响，使得

资源无法适当配置 ...

尽管近年来取得重要进步，但中国高度分散的财政体制，其特点依然是：地方自主权较

少；对转移支付依赖加大；各地差异巨大。近年来，全面的农村税费改革（RTFR）成功

地化解了农民对税收负担过重的普遍抱怨。但是，这项改革也减少了地方政府自行筹措

资金的手段，导致财政资源减少。由于财政转移支付不足（尤其是较贫穷地区），而责

任日益增大，地方政府出现支出与财务资源之间的缺口。总体转移支付的增加部分，大

多采取划款的形式，这增加了对中央资源的依赖度，给地方政府造成沉重的行政负担。

虽然近期的改革措施增强了县级政府的能力，但乡镇及村级仍面临财务状况紧张，经常

不断筹措预算外收入。尽管政府试图施行财政平等化，但农村政府之间的人均财政支出

差异巨大，这对政府提供的服务产生重大影响。省处于行政体制的中层，各省拥有特别

有力的手段，可以决定分配给地级政府的数额（而后者再分配给县级政府，如此层层往

下）。上述资源往往以默认方式授予，因为《宪法》和《预算法》（1994）对向其或向

地级政府转移特定权力均未作任何正式的规定。各省在收入份额及地方政府可支配开支

数额方面差异巨大，其主要原因可能就是这种非正规化的分散式做法。政府间转移体制

种的运行失灵，还可能与代表农村利益的力量薄弱有关。根据目前的全国人民代表大会

（全国人大）与地方人民代表大会的《选举法》，农村全国人大代表所代表的人口数量


评估与建议

是城市代表所代表人数的四倍。目前制度化的城乡比率（4:1）正越来越被认为不公平，

并且无助于解决农村发展问题。

…严重制约中央政府以外的机关面对职责增多的能力。

上述政府间财政体制的缺陷，以及全国各地增长表现的巨大差异，经常造成县、乡、村

（各级地方政府）在行使职责方面资源严重匮乏。经过近期的改革，并由于新农村政策，

县级行政机关已经成为最重要的地方政府层级。目前，县级政府的支出职责包括免费的

九年制义务教育、新型农村合作医疗制度（NRCMS）或者社会保障政策，譬如五保户或

低保制度。财政与转移体制改革已使得县级财务资源增加，即使各县自身的资源相对减

少。一方面，由于实施费改税改革，县级政府很少有办法再筹集预算外资金。另一方面，

许多较富裕的县正在获取巨额预算外收入，主要来自土地相关交易。并且，为了解决糟

糕的财务状况，应对满足更高水平转移支付的不测需要，县和乡镇再度诉诸借债手段，

其中大多数为非法债务，拖欠工资可能是最常见、议论最多的地方债务形式。财政资源

匮乏，也是乡镇与村级政府的主要问题，而含糊不清的县乡财政体制令问题更加严重。

根据该体制，县及下属的不同乡镇协商收入分享与支出项目的细节，甚至在同一个县的

乡镇之间，上述安排都可能出现不同。与乡镇相似，村的财务资源也日益依赖来自上级

政府的财政转移。转移支付不足以弥补被取消的正式收入来源，亦不占财政资源的主要

部分。2000 年至 2004 年间，土地相关交易的收入（土地的销售额与合同款项）增加了

将近 50%，这表明村试图通过出售土地和资产的收入解决资金缺口。

再者，地方治理方面的弱点对中央指令的落实构成

挑战。

以下分析揭示了中国地方政府管理的几个主要弱点：

● 地方官员行政能力偏低。除中央部委及富裕省份政府官员的教育程度普遍较高外，中

国各地公务员的素质与能力参差不齐。这对实施新农村政策造成重大障碍。因为与传

统的行业政策相比，这些政策需要更好的协调与策略能力。职位任命（尤其是地方政

府）普遍存在非竞争，并且往往非透明的程序。而且，干部从农村企业调任公务员职

位，而不遵守中央规定的竞争程序。实地调查显示，许多农村干部并不具备处理公共

政策事务的条件。例如在陕西、甘肃及河南等省，乡镇干部往往是以前技术学院和职

业中专的毕业生，有时甚至是农民。另外，离任和来自其它行政机关的调任依然非常

频繁，限制了官员对自身任职的当地具体环境的了解。除了某些例外，实证研究均显

示，存在着干部据以承担责任或得到奖励的职位与职能界定不清的现象。原则上，地

方农村干部如同公共官员，按严格的层级标准付酬。然而，各省之间，乃至同一省份

县市之间的薪酬差异显著。现有统计数据显示，地方官员的工资竞争力不够，可能令

腐败问题恶化。

● 农村地区的行政问责程度低、法规薄弱。无论是面对上级行政机关还是普通公民，中

国农村地方政府的负责程度均十分低下。伴随农村税费改革，政治、行政与财政权力

集中于县级和更高层级，这有可能降低地方政府对公民的负责程度，削弱官员增强支


评估与建议

出效率与成效的动力。上级政府极力试图有效跟踪公共资金支出的去向、数额和方

式，了解提供了哪些公共服务，国家机关的人员数量等。地方政府采用目标责任制对

下级官员进行监控与考察。根据这项制度，官员与直接上级领导签订政绩合同。在

该制度，汇报要求得以扩大；上级按某些核心指标评估下级的业绩，这些指标易于监

控，但却可能流于简单化。为改善监控，财政部加强了自身的统计能力。并且，自上

而下的监控机制通常能够衡量上级决定的目标与下级实施状况之间的差距。争取较高

水平转移支付的地方政府，有强烈的动机在财政支出和投资中表现自己，这往往让当

地群众连短期利益都无法享受到。通过增强地方预算的透明度，自下而上实施监控的

做法基本上不存在。行政问责程度低与农村的法规薄弱有关。法院是落实法律的关键

机构，但法院依然权力薄弱，并在政治体制中地位较低。中国的地方法院隶属于地方

政府的管辖权之内。1978 年起，司法制度改革主要着眼于国家及省级司法管辖权。然

而，中国数量最多的诉讼发生在村级和县级，多数发生在专业律师和法官数量最少的

农村 .

● 公民的代表与参政议政程度有限。村的民主自治是新农村战略的重要原则之一。研究

显示，与任命村长的情形相比，直接选举村长和村委会的结果是实施更多、更好的公

共物品项目与投资。然而，选举产生的村机构从属于乡政府，并服从村党支部及其支

部书记的核心领导，后者是任命的官员。在许多地方，村委会与乡政府及村党支部彼

此关系紧张。有些地方采取将村中的两个最高职位集中于一位经选举产生的官员，这

项策略可能是进一步推动地方治理民主化的途径之一，但这样做也可能会模糊村长的

职责。其它选举问题包括：政府干预候选人提名流程、选举后的监控与评估机制薄

弱，以及贿选（尤其是在较为发达的农村地区）。除了某些富有意义的尝试之外，县

乡一级依然缺乏选举或者令官员就自身业绩对公民负责的其它正式机制。村民参与规

划、设计、实施、监控地方决策的程度差异巨大，但领导层在其报告中越来越认识到

这样做的重要性。所采取的主要形式是召开立法听证会，以及对环境保护、提供公共

服务等问题进行呼吁。让农村居民参与投资项目选择的所谓一事一议的参与预算制

度，便体现了政府为提高公民参与度所作出的努力，但其这项制度应用得还不够。根

据目前的中国法律，产生于民间的独立组织属于非法，因此非政府组织（NGO）需要

有政府批准的党政主管机构才能登记成立。2007 年，在民政部登记的 387 000 家非赢

利性社会组织中，仅有少数组织活跃于农村。这表明，农村公民制度化参与社会事务

依然薄弱。为了解决农户进入市场的问题，并帮助他们组成营销协会，政府已着手扶

持农民专业协会或合作社。但是在 2003 年，仅有约 7% 的村拥有开展运行的专业协

会。2007 年通过了法规框架：这部《农村合作社法》旨在提高粮农市场的效率。必

须由专业合作社的利益相关方对该法律进行公开评估。

新农村建设是一项稳妥的战略，但其全面实施需要

更加有效并具有包容性的多层次治理体制。

尽管有了一项创新而富有远见的策略，但在解决紧迫的挑战及发挥农村地区巨大潜力方

面，中国的农村政策仍然显现出局限性。自上而下，条块分割的做法，以及有限的地方

财政与行政能力，使得中央的指令难以贯彻实施。要解决上述难题，必须重新设计各级

政府关于农村发展政策的职责与资源分配，并重新界定政府与非政府部门的相关角色。

中央政府以外的政府（尤其是县乡级政府）在农村地区发挥关键性作用。它们负责实施


评估与建议

最重要的政府政策，并且掌握发展机遇和挑战方面的重要情况。充分利用它们所掌握的

情况至关重要，尤其是中国这样一个发展迅速的大国。在这个前提下，必须采取行动，

解决中国农村政策多层次治理的弱点，包括制度、财政和行政方面。上述领域的改革很

大程度上是成功实施中国农村政策的前提。

首先，必须努力加强中央一级的农村政策协调与检验。

实施创新的新农村战略，必须逐渐摒弃自上而下的部门主导方式，而采取更为统一、策

略性的方式实施农村发展工作。经合组织国家遇到的一个常见挑战是如何让中央政府的

角色从命令控制逐渐转变为促进知识汇集，决策共享。在中央一级，主要挑战在于加强、

规范跨部门协调、监管，以及目前各个重叠机构党政领导会议体制以外的财务安排，并

且要克服领导小组个人资源方面的弱点。参与农村政策设计、实施和监控的部委和机关

数量过多，应当重新加以研究，还应当在它们之间确立更为正式的联系。各国近期取得

经验可以提供有用的例子，其中包括：依法设立国家级农村政策协调机制；建立临时部

委；以及采取更为灵活但却规范的协调手段。同时，中央部委可以通过农村检验机制，

检验相关部门政策对既定新农村或其它农村政策目标的影响，这方面仍存在巨大的改进

余地。在促使直线部委充分介入农村政策策略，调整部门政策适应不同农村地区特点方

面，经合组织国家中的检验机制都显现出重大成就。

其次，政府间财政体制的改革必须包含：修改支出分配；增加地方收入；提高财政转移支付制度的成

效。

重新确定支出分配，目的在于建立更加透明、精简的体系，将责任与行政和财务能力相

匹配。中央政府的角色应当是制定游戏规则，确保地方政府拥有适当的资源履行自身义

务，而不是直接参与支出。其中一个例外是中央直接投资于试点项目或具有全国意义的

活动，譬如研究或网络建设项目。还应当考虑在中央层面编制农村预算。即使中央政府

提出三农问题的投资，这也并不包括针对农村地区的所有中央及地方支出。各级政府的

职责分配，应当遵循谨慎兼顾公平与效率目标的原则。另外，还应考虑切实评估各级政

府的当前能力。应当提高地方政府的创收能力，以便培养政府更有效地利用资源。地税、

土地交易收入及使用费都应当归属于透明的地方税收体制，该体制应当与本地实际投资

相挂钩，并接受公民的审查。另外，应当允许合法借贷（至少在财力较强的地区），应

当采取措施，改善地方政府的债务管理。最后，必须重新考虑财政转移的规模和用途，

以提高公平与效率。不仅应当关注数额，还应当关注方式，后者是与财政转移相关的制

约条件。就此而言，应当增加与新农村总体目标相关的整体转移，减少拨款；与此同时，

应当进行技术援助及设立监控与评估体系方面的适当投资，使得新的评估方式着重于战

略性成果（经济、社会、环境等方面），而不是采取基于产出的简单化传统评估。精简

财政转移，还应当减少重复、不一致的支出，并减少形式主义以及地方政府的行政负担。


评估与建议

再者，应当鼓励更广泛地运用地方性政策，以便调

整中央指令适合当地条件

中央政府以外的各级政府在很大程度上可以 i) 通过地方性政策，更好地调整中央指令

适应本地情形； ii) 提高地方官员的行政能力与负责程度，这在很大程度上影响对中央

所制定政策的理解与实施； iii) 支持公众咨询与参与。通过试点项目，对地方性政策

加以检验。从这些做法中获得的教益以及当前国际上的丰富经验，目前可以强化、精简

上述规划，并将其扩大应用到更广泛的中国农村。这些政策创新可能涉及按目标领域划

分职能部门的一种新方法，以及在公共、私人及非政府部门联手支持下，制定更加富有

创意的地方发展策略。例如，对于希望通过更加开放、创新方式进行治理的公共部门，

企业领导人可以成为其重要的合作伙伴。在这方面，政府不应当仅着重于财政贡献，还

应当考虑企业在其农村社会中可以发挥的更广泛作用。

…应当辅之以明确的行动，努力提高地方的行政能力和负责程度

在地方官员能力增强的基础上，还必须推进当前的人事制度改革，这些改革的积极成果

更多地体现在城市和沿海地区，而非中国大部分农村地区。重点之一在于改善各级政府

的人力资源管理，找到适当的框架，帮助中央政府确保中央政府以外的政府妥善管理自

身的人员队伍。另一项重点在于必须改进人员与资质规划，在公共政策及服务提供与人

员规模及技能的需求之间建立起清晰的联系。应当考虑采取更严格的录用程序和更富有

竞争力的薪资，以进一步调整农村官员的技能，适应新农村建设所赋予他们的职权范

围。通过有针对性的培训计划，将经验丰富的官员调往贫穷农村地区，以及有指导地开

展联络活动，并与国内外其它地区交流良好经验，可以加强地方政府在制定农村政策方

面的能力。除了上述变革措施外，可以考虑赋予县乡一级在招聘与薪酬方面更多的灵活

性，克服目前人事制度的诸多僵化规定，以便更好地适应当地情况。此外，应当修订目

前的绩效考评制度（譬如目标责任制），进一步普及考评文化，对照更加细致的目标评

定地方官员的业绩。应当参考社会、环境及良好治理方面的目标，而不是经济增长率或

出生率等简单目标。最后，经过优化、更为经常性的审核有助于减少腐败，更好地控制

农村发展项目专项公共资金的使用。

…并且支持公民的代表与参政议政。

使农村公民的利益取得更好的代表性，至少须具备两个方面。一方面，正如 2007年 10届

全国人大批准的决议所提议的那样，修改选举规则应当着眼于平衡目前人民代表大会中

城乡代表比例的差异，以便更好地表达农村公民关心的问题。另一方面，依照中央政府

的近期声明，公共参与可能会得到更大的支持力度，以便促进政策制定的开放性和包容

性。并且，应当设立程序规则，以确定何时向公民征求意见。这为各级政府改善政策表

现及自身的民主表现提供了途经。村民应当能够在不受政府干预的情况下，直接提名候

选人，而选举后的监控与评估机制必须进一步制度化。这包括增加获取信息，参与村级

自治的权利。例如，可以采取公布村委会年度预算和实际支出的方式。还必须更好地让


评估与建议

村民了解选举规则和程序，并找到合适的候选人，因为许多能人正在流向城市地区。应

当在农村地区推动社会组织的发展，以利于更加有序、透明地代表公民及利益群体。改

革措施可以推行适当的政策，以扶持女性农民，减少非政府组织的监管负担（发起部门

规定、注册资本规定等）。这就必须对已经存在的农民组织进行体制化，考虑规范某些

农村社会活动，赋予农村地区的民间协会合法地位。这样做的目标在于促进自下而上的

中间结构的逐步形成，譬如农村联合会、协会或地方非政府组织，以便与政策制定者开

展互动。在地方政府层面更多更好地参政议政的方向指引下，改革措施还应当考虑增加

公众对服务和价格进行评估的机会，例如可通过价格听证制度。这项制度在中国许多省

份已经成为常见的做法，但几乎仅局限于城市地区。

另外，提高负责程度，改善法治需要更加专业、统

一的农村司法体系。

农村地区司法机构面临的许多问题已经得到明确，并且，近期的政府法规及决定已经对

其加以关注。近期的口号坚持要求法官为民，这表明国家非常希望地方及普通法官在实

施改革方面发挥关键作用。然而在面对党的机关与地方政府时，依然需要提升司法的独

立性和法院的权威。法律应当清楚地界定党在农村政策方面的角色和权力，让法律和政

治保持适当程度的分离。为了制止地方政府的干预和保护主义，并从制度上增强法院的

力量，可以进一步探讨改变法院资金拨付和法官任命的程序。并且，由于必须迫切应对

纠纷数量（特别是土地使用决策相关的纠纷）增多带来的社会动荡，应当加速实施两大

改革，在农村加强法治：a)提高最基层司法机构的素质； b)在全国实现法律执行统一。

改革农村治理体制，将创建必要的前提条件，更有

效地应对中国农村最紧迫的挑战，实现新农村建设

的目标。中国农村政策的关键重点包括：i) 土地使用； ii) 服务提供； iii) 经济多元化； iv) 环境保护。

土地使用：必须在下列方面取得进展：充分实施耕地权利法律，允许宅基地上市流通及

可抵押，将最近改良的土地征用政策纳入法律。

优化土地使用和加强土地相关权利，是中国农村的紧迫问题。对农村地区和农村居民来

说，拥有土地体现出重大的竞争优势。中国有 1亿 2170 万公顷分配给农民耕作 30 年的

集体所有耕地，以及 1230 万公顷分配给农村居民长期不变的宅基地。然而，土地相关权

利及其连带开发潜力的价值受到法律障碍的严重制约。战略性的土地改革政策手段应当

包含下列领域的措施 :

● 耕地使用权早已在中国法律中得以确立，譬如《物权法》（2007）和《农村土地承包

法》（2002），但在实施方面会出现问题。耕地权利确定为用益物权，以 30 年为期分

配给农户，到期后可以续期。最近中央政府的决定要求确保农民现有的土地权利长期

不变。倘若上述使用权出于农业目的而自由转让，并且在长度、广度和担保不受行政

干预，那么农村地区就有可能实现重要的经济潜力。尽管法律限制更加严格，但在许

多农村地区，土地重新调整依然是重大挑战，会损害农民的信心与期望。因应家庭规

模的变化，或者为了应对由于征地造成的村庄土地总体减少，地方政府机关经常重新


评估与建议

调整农户拥有的土地面积。为了鼓励农民投资于土地，并促进耕地权利市场的发展，

更好的执法要求加强宣传土地使用权，经常而广泛地监控法律的实施和违法现象，并

且建立有效的纠纷解决机制，譬如土地纠纷委员会，为农民提供法律援助服务，从而

提高农民对自身土地权利的意识。再者，应该让耕地使用权能够抵押从而增加农民获

得信贷的机会。最后，必须解决地方官员的寻租问题，他们往往强制执行耕地权利交

易，从中获取经济利益。

● 宅基地归类为建筑用地，适于非农业开发，因此可能具备重大市场价值。宅基地权利

确定为长期不变的物权。但现行的宅基地法律和政策未能将此类权利当作有意义的物

权。跟耕地不同的是，法律并未明确农村居民是否有权通过宅基地获利。由于存在这

样的法律含糊，政府法令进而禁止了农村宅基地权利交易。因此，宅基地权利基本上

不可上市交易，亦不可设定抵押。由于缺乏有效法规保障宅基地权利，此类权利有可

能成为城市扩张的猎物。经常出现这样的情况：地方政府和商业开发者征用土地，却

不给予农村居民充分的补偿。目前新法律框架的改革措施旨在保障宅基地权利，或可

以解决上述难题。这些改革措施应当着眼于三个方面：i)将长期宅基地权利确定为永

久用益物权； ii)使得宅基地权利完全可上市交易，明确允许转让农村宅基地权利；

iii) 允许抵押农村宅基地权利，以便改善农民获取信贷用于农业及非农业开发的渠

道。

● 土地征用。近年来实施的政策指令变动取得了重大进步，尤其是在对耕地和宅基地的

补偿和征用程序方面。然而，这些进步必须纳入法律才能具备司法效力。现行的征用

权法律反映了宪法的规定，即：征用任何集体所有的土地必须符合公共利益。但这些

法律并没有精确定义可以依据哪些公共利益而实施征用权。根据目前的体制，国家对

非农业用途土地市场拥有垄断权，商业开发者必须依靠国家征用土地以用于商业开

发。然而，中央政府近期公布的土地改革决定开始打破这种垄断体制，允许集体所有

的建筑用地出于商业目的而上市交易，政府对此不加干预。应当允许农民就补偿款及

安置款等问题，直接与商业开发者谈判。根据最近的政策文件，应该采纳新的立法和

监管措施去缩小耕地和宅基地征用的范围，严格并明确地界定在符合公共利益的前提

下，政府可以行使其征用权使用土地，譬如列表陈述具体可允许的公共目的。可以允

许国家仅出于列述的目的征用土地。将耕地和宅基地用于商业目的使用应视为非法，

如宪法和 1998 年的土地管理法中指出的。其它短期实现的措施也会有所裨益：i) 必

须大幅提高补偿额度，施行重置价值法以及最低补偿标准； ii) 被征用耕地的权利所

有人应当享有大部分补偿； iii) 受影响农村公民的社会保障性福利资金应当作为补

偿款的补充，而不是代替补偿，以符合中央政府逐步建立农村社会保障体系的目标；

iv) 土地征用程序必须通过更好的、法律上可执行的手段，保证农民的知情权、参与

权和上诉权。

提供服务：必须采取更加条理分明、资金充足的农村服务策略，缩小城乡差别及农村之

间的差别…

为确保社会凝聚力，应对农村从传统的农耕社会向更加多元化社会转变的需要和挑战，

改善公共服务的提供至关重要。尽管在扩大义务教育，提供医疗、交通及基本服务方面

已经取得显著进步，并且政府宣布将对供水、卫生及社会保障进行投资，但相对于城市

地区，农村的服务水平依然十分低下。例如，各省享受教育的程度依然差异巨大，许多

中西部地区的表现要糟糕得多。分配给各级政府的九年制免费义务教育资金是否充足、


评估与建议

持续，仍然是一个疑问。必须加强对职业教育的资金投入，以便训练农民，帮助他们转

向其它行业。实施新型农村合作医疗制度后，农村公民可以相对容易地获得医疗服务，

但糟糕的质量、相对高昂价格及预算支持不足，实际上却阻碍最终实现预想的结果。基

础设施与基本服务经常缺乏：必须增加对交通服务的投资，提升农村道路的质量。即使

这些投资属于更加整体化的地方发展战略，它们在减少贫困方面的成效比也非常之高。

中国农村许多地区仍然得不到安全的供水，因为污染物、未经处理垃圾和废水的排放，

经常对水造成污染。另外，卫生条件依然差强人意，特别是较贫穷地区。至于新的农村

社会保障及最低生活保障计划，财力薄弱的地方政府是否有足够的资源满足中央所要求

的资金，尚是未知之数。正如先前讨论的那样，服务方面的城乡差距及农村之间的差距，

往往源自于财政安排失灵，造成投资不足，以及地方政府的授权得不到资金支持。

... 通过更加细致、因地制宜的投资及创新服务提供模式加以实施 ...

虽然增加农村服务的投资必不可少，但其不足以弥合目前的差距。正如上文所讨论的那

样，改善各级政府的财政安排无疑会给服务的提供带来好处。但由于中国幅员辽阔，各地

差异巨大，采取更为灵活、因地制宜的做法，同时不断创新服务提供的模式，似乎十分重

要。现代农村服务提供策略必须包括：适当的分析工具，以确定正确的服务组合，并将其

与适当的地区向匹配，服务方式须考虑到效率 / 公平的权衡，并符合地区总体战略。例

如，交通基础设施投资应当结合更加细致的前后成本效益分析，综合考虑经济、社会与环

境目标，兼顾地方需要与国家重点。因而，全面的农村地区投资策略应当考虑若干因素，

包括适当的投资时机，以及投资如何适应总体策略框架，并与其它投资相辅相成。并不存

在处处适合的有效服务提供模式。为了应对多样化局面及快速变化的农村环境，农村地区

的服务提供必须鼓励当地人士提供可靠的反馈意见，并不断加以创新。大量证据显示，通

过开发不同的解决方法，可以减少农村地区提供服务方面存在的许多结构性障碍。重要的

是，必须确保创新的服务提供规划不仅是一次性投资，而且提供学习、提高的机会。另

外，还必须超越目前城市中存在的偏见，即强调农村服务成本高，收益低，而要认识到，

在精心设计的区域发展策略中，城乡服务存在许多互补因素。信息通讯技术能够提供巨大

的机会，尤其是向中国最偏远的地区。农村建设的一项关键目标，便是向农村人口提供信

息通讯技术，从而克服人口稀少地区开发基础设施成本高昂所造成的困难。可以根据不同

情况，通过不同途径实现这个目标，包括：供应补贴，直接向公众提供服务或增强私有企

业的竞争。低廉、可靠的信息通讯技术必不可少，但这还不够。研究显示，农村地区要享

受信息通讯技术的好处，还必须具备若干条件。其中包括：政府有意识地运用技术（电

子政务等）；鼓励企业之间及政企合作的制度框架；起码的研发能力。因而，中央及地方

政府必须制定适当政策，对硬性和软性技术基础设施进行因地制宜的战略投资。

... 迎接市场机会，让非政府服务提供者发挥更具战略性的作用，包括农村合作组织及

金融机构。

要有效地提供农村服务，需要广泛的农村利益相关者发挥积极作用。必须反思目前以公

共服务单位为核心的服务提供体系。一方面，公共服务单位的成效、效率和负责程度仍

有许多改善的余地，尤其可通过市场化的激励措施。另一方面，可以加大让非政府机构

参与提供服务的力度，譬如农村合作组织、非政府组织和私营企业。金融机构可以发挥

关键作用。能否获得金融资源，可能是决定农村资产能否转化为市场可利用机会的关键

因素。然而，就跟其它许多国家那样，私营金融市场在农村开展运营存在若干阻碍因素。

其中包括：金融机构的分行数量有限（尤其在偏远地区）；缺乏安全的物权及适当运行


评估与建议

的法律制度；交易的规模和数量较小；违约率高，信贷追讨困难；贷款规模小，信息成

本高。因而，开发银行及政府机构可能须发挥关键作用，以降低风险，制定激励措施，

便于金融机构为这个细分市场提供服务。经合组织各国的经验表明，可以通过许多途径

为农村发展筹集必要的资金。业务网络有助于扩大规模，降低成本，建立信息流及信任

机制。另外，业务开发计划有利于增强各种创业技能，增加切实可行的农村初创企业的

数量。近期及当前的若干政府举措试图解决上述问题，加强农村金融网络。这些举措包

括：放宽在农村设立金融机构的条件；公布法规，允许外国金融机构在中国农村开展业

务；改革农村信用合作社（农村信用社）；努力扩大中国邮政储蓄银行（邮储）与中国

农业银行（农行）的作用。必须继续上述改革措施。措施的目标应当是创建切实可行的

金融机构网络，以便为农村经济的活跃部分（非农业活动以及中国农业具有竞争力的部

分）提供贷款。这些经济部门将成为农村人口主要的增长来源，并为其创造工作岗位，

带来可持续的收入增长。

经济多元化发展：供求双方的变化

中国不太可能维持过去 30 年经济改革期间所实现的农业生产高增长率。1990 年代后半

期，已经出现某些放缓的迹象。随着很大部分人口变得更加富裕，对农产品数量上的需

求增长会出现减速，而消费者偏好的变化将继续决定中国农业生产结构的演变。经合组

织 / 粮农组织截至 2017 年的预测表明，随着消费者转向价值更高的产品（譬如肉类和

奶制品），中国人消费的粮食产量（小麦和大米）甚至会出现下降。总的来讲，中国预

计可以通过自身生产满足对粮食和肉类产品的国内需求，但将进口更多的油料种子、奶

制品和糖。中国预期还会将生物燃料的产量提高 80% 以上，但对粮食安全的担忧，使得

中国减弱了（尤其是）利用谷物生产乙醇的力度。近期食品价格高涨，而国际上有报告

显示，生物燃料生产对全球食品价格产生严重影响，并且对环境影响弊大于利，更是加

剧了这种担忧。中国还面临供应方面的若干制约因素。中国北部面临缺水。过去 10 年

来，可耕地面积以每年50-100万公顷的速度萎缩；由于日益面临将农用土地改为非农用

途及退耕还林的压力，这个趋势可能还将继续。中国的土地生产率已经相当之高，通过

化学增强手段进一步加深土地利用，有可能会令环境问题增多。因此，中国必须通过土

地改革，鼓励农民对土地进行投资，普及应用新型生物技术，引进提高劳动生产力的技

术与创新，同时合并小块农场，进一步努力将资源重新配置给土地密集化程度较低的产

品（譬如水果、蔬菜、牲畜），从而进一步提高农业产量。

…必须在农业之外，寻找中国农村的未来出路

总而言之，农村劳动力将从农业部门释放出来，农业在提供农村地区就业方面的作用将

逐步降低。最近 10 年中，这种下降明显加速，体现为农业占农村就业人口的份额，从

2000 年的 68%降至 2005 年的 60%，每年的降幅为 1.6 个百分点。如果这个趋势在今后

15 年中得以继续，该份额将会减少到约 35%，从而接近某些经合组织国家（如墨西哥）

目前的水平，但仍远远高于经合组织 6% 的平均值。在经合组织国家中，韩国的例子颇有

意思，或许可以此为借鉴，研究中国经济中农业角色的演变。1970 年代中期，韩国的农

业占总就业人数及 GDP的份额甚至超过中国目前的水平。经过 30 年后，韩国农业占总就

业人数的份额从 1975 年的 46% 下降到 2005 年的 8%，农业对 GDP的贡献相应从 24%降至

3%。假设中国农业占总就业人数的份额在 2040 年左右降至 8%，而中国当时的劳动力总

数为 7.5 亿至 8亿，那么从事农业的人口总数就必须从目前的 3.26 亿降至约 6000-6500


评估与建议

万左右。目前从事农业的 2.6 亿多人口仍须在农村或城市地区找到非农就业岗位，或者

退休。这显示了政府所面临的诸多挑战：在农村地区创造非农就业机会；在城市地区吸

纳农村外来人口；建立社会保障体系，接纳日益增加的退休农民；进一步丰富农村产业

结构，以便利用日益萎缩的可耕地生产价值更高的产品。

…更加坚定地投资于城乡联系中蕴含的，以及旅游、能源生产和高附加值特产等行业中

出现的机会。

在较为密切的城乡关系中，中国农村地区可以为城市居民提供诸多有益的事物，譬如文

化、景观和生物多样性。在业务集群、跨境旅游活动、本地产业食物链，以及更好地整

合交通及其它服务网络方面，城乡联系存在许多可能的机会。正如许多其它国家的人口

迁移动态所显示的那样，由于城市拥挤程度增加，集聚产生的非经济性让人员和企业产

生搬迁或来往农村地区的动机，重大的机会将会显现。例如，农村旅游前景广阔。据统

计，2007 年农村旅游接待游客数量超过 4亿人，收入超过 3万亿元，其中 1.2 万亿直接

让农民受益。各方面均呈现积极前景：中国的人均闲暇时间和休闲方式都在发展进步。

若干预测显示，到 2015 年，中国可能成为第一大旅游目的地及第四大游客来源地。另

外，虽然中央政府倡导清洁能源，但可再生能源生产的发展潜力似乎还远未得到充分开

发。这种做法为农村地区的发展带来了重大机遇。通过生物质生产乙醇尤其得到推广，

这为没有接入电网的村庄提供了另一项选择。其它有前途的可再生能源还包括风力、水

力及太阳热能，它们往往分布在低收入地区。同样，在不断增长的认证高附加值特色食

品、农业及林业产品市场，中国农村地区亦拥有巨大潜力，可满足出口及国内消费需求。

落后的农村地区往往拥有丰富的自然与文化资源。近年来，人们采取了许多措施，扶持

上述领域的发展，并正在开展许多政策试验，以更好地利用城乡联系。然而，当前的政

策要产生收益，政府必须加大对农村经济多元化的投资力度，扩大现行特定标准（譬如

有机产品标准和公平交易标准）的适用范围。例如在政策协调方面，可以通过区域营销

政策，并作为综合型地方发展战略的组成部分，将现有的许多旅游开发项目与特色食品

生产计划进一步融合。在这个框架中，多元化的关键不在于针对某个具体行业的个别政

策，而是能否提供适当的框架条件组合，使得新经济活动得以繁荣。

环境保护：一个良好的环境政策是可持续发展及实现农村经济多元化的前提条件。它应

解决中国农村在保护自然环境以及水污染、用水效率及农村企业污染方面的难题。

中国农村拥有出色的环境条件，可为农村发展提供尚未利用的巨大机会，并且也是整个

国家的有利资源。环境意识增强，森林及资源保护区面积扩大，并且建立了管理自然与

生物多样性以及水资源、废物与空气管理的现代综合法律体系，这一切都促使农村地区

出现新的机会。然而，法律体系与实际执行之间存在差距，尤其是在地方政府层面。另

外，严重的环境挑战，譬如：水资源与污染、土地匮乏、土壤退化、农业活动造成的非

点源污染、污染性产业从城市搬迁至城市周边及农村地区，使得机会亦面临风险。考虑

到上述挑战，针对中国农村发展的现代政策手段应当包含下列领域的措施，这些措施必

须在空间上有所差异：

● 自然环境资源。有效利用中国农村丰富的生物多样性，可以成为经济与社会发展的动

力。具体而言，应当将自然保护问题更好地纳入农村发展计划，尤其是较为贫穷，但

生物多样性丰富的中西部地区。丧失生物多样性还包含另一个潜在风险，就是无法培

育能抵御疾病的新型植物品种。必须中央政府与中央政府以下的政府机关必须开展更


评估与建议

加制度化的协调，并提升自身的能力，以便更好地管理保障现有保护区的生物多样

性，并将自然保护与造林与保护区外的其它农村发展项目结合起来。另外，增加保护

自然与生物多样性的财力与人力投入，更好地让当地居民参与巡查、监控、改善生物

栖息地，也有利于农村在减少贫困方面取得进一步的成功。应当重点协调植树造林、

自然保护及可持续农村发展三方面的工作，以解决沙漠化和土壤流失问题。通过经济

手段（譬如为环保服务付费），实施谁污染，谁付费或谁使用，谁付费的原则，将有

利于解决各种的环境难题，并为农村地区带来新的就业机会。

● 水污染防范与节约用水。应当继续努力改善农业中水污染的防范，提高用水效率。成

立水资源用户协会，负责收取提供灌溉的成本，可以减少需求，提高水资源利用效

率。这应当会有助于减少对地下蓄水层的过度开采。在江河与湖泊沿岸建立缓冲区，

处理密集的牲畜污水，高效施用农药，应当会有助于防止农业污水流入蓄水层、江河

和湖泊。当前提高提高化肥补贴以促进农业生产效率的计划，却与减少化肥与杀虫剂

的使用对淡水水源负面影响的努力背道而驰。

● 农村企业。虽然农村企业为较小的乡镇和农村地区提供发展与就业机会，但它们的运

行往往造成极其严重的污染问题。必须采取措施，在全国范围加强监控、检查与执行

能力。这有助于维护公平竞争，防止产生污染天堂。应当提高排污费，内化环境外部

效应。应当进一步加强实施循环经济的概念，倡导废物的减少、再利用和再循环（3R

概念），进一步在农村（及城市）工业中发展循环经济试点项目。进一步提高农村居

民的环境意识，扩大他们在本地环境治理中的参与度，可以增强对污染的控制，改善

打击污染的行动。

总结

中国农村是国家发展与增长的重要资源，但仍有巨大的潜力尚待开发。新农村建设战略

是一项稳妥、创新的举措，但必须进一步认识到农业之外的城乡互补因素。粮食安全目

标必须与更广泛的农村发展目标相平衡，以便弥合城乡差距。要实现整个目标，必须更

加坚决地着眼于农村地区的投资，而不是再分配措施。必须优先采取以下行动， i) 优

化土地使用，加强土地相关权利； ii) 改善教育、医疗及商业与金融服务等关键领域的

农村服务； iii) 制定更加坚决的农村经济多元化战略，充分发挥中国农村丰富的自然

与文化资源所提供的潜力； iv) 应对严重的环境挑战，具体关注全国性法律在农村基层

地区的实施。通过更加全面、协调、资金更加充足的农村发展政策实现中国农村的潜力，

将需要重大的治理改革。首先需要通过中央一级更强有力、更加规范的协调，克服部门

分割，并且还要建立对部门政策的农村适用性进行检验的机制。其次，要改善政府间财

政体制，使各级政府的责任与资源相匹配。再者，要实施一整套地方治理改革措施，使

得农村人士能够更大程度地参政议政，并提高他们的能力。经合组织各国的经验以及中

国的许多成功案例和政策试验表明，如果实现上述条件，中国农村可以日益转变成国家

平衡发展与增长的动力源泉。

在本报告起草后中国及整个全球的宏观经济环境发生了巨大变化，报告中的一些建议甚

至变为重要。例如，激励对中国农村公共服务将会提高农村人口的购买潜力，从而起到

提高内需，部分的弥补因中国在国际市场出口需求减弱的作用。而且，农民工的返乡潮

使得创造新的农村就业机会变得十分必要。


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CHINAWith more than 700 million residents living in rural areas, China is still a predominantly rural country. Despite substantial improvements in standards of living, the Chinese countryside is largely lagging behind. Rural-urban disparities in income and services and subsequent migration trends pose great challenges to sound development. The Chinese government’s recent strategy, “Building a New Socialist Countryside”, and related governance and fiscal reforms, represent an innovative approach to tackle these challenges and have brought substantial investments in rural areas.

This report analyses the key socio-economic forces at work in China’s rural areas and discusses the current government strategy for rural development. It argues that in order to bridge rural-urban divides the current policy approach needs to go further in recognising rural-urban complementarities beyond agriculture and that food-security targets need to be balanced with wider rural development objectives. This will entail a greater focus on investment rather than redistributive measures. Action is needed to: optimise land use and strengthen land-related rights; improve rural service delivery in education, health care and business and financial services; develop a stronger strategy of rural economic diversification, drawing on the potential of rural China’s rich natural and cultural amenities; and address serious environmental challenges with a view to the local-level implementation of national laws. Realising the potential of rural China through a more comprehensive, co-ordinated and better funded rural development policy will require important governance reforms at all levels. Experience across OECD countries, as well as many success cases and policy experiments in China, show that if these conditions are met, the Chinese countryside can increasingly become a source of balanced national development and growth.

The report will be of interest to policy makers, researchers, NGOs and others interested in the dynamics of China’s economic and policy development.

French and Chinese translations of the Assessment and Recommendations have been included in this volume.

ALSO AVAILABLE:The New Rural Paradigm: Policies and Governance (2006)OECD Rural Policy Reviews: Germany (2007)OECD Rural Policy Reviews: Mexico (2007)OECD Rural Policy Reviews: Finland (2008)OECD Rural Policy Reviews: Scotland, UK (2008)OECD Rural Policy Reviews: Italy (2009)OECD Rural Policy Reviews: Spain (2009)

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