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Expert's View
An Agrarian Agenda> Expert's View
UPDATED: March 1, 2010 NO. 9 MARCH 4, 2010
Success Outside the City
How can China promote the sustained development of its agriculture sector and social improvements to the countryside

Fostering rural entrepreneurs

GREEN COUNTRY: Farmers in Heze County, Shandong Province, sow seeds in the warm and rainy spring this year (XINHUA)

Zheng Fengtian (Deputy Director of the School of Agricultural Economics and Rural Development at Renmin University of China):

An overwhelmingly positive aspect of the No.1 Document is the encouragement and help the country gives farmers to start up their own businesses and improve the frigid employment landscape in the countryside. This is expected to stimulate the depressed job markets in the countryside and inject momentum into the rural economy.

As their wage growth stagnated in recent years, many migrant workers started their own businesses in rural areas as opposed to big cities where the costs of labor and land are increasing.

But after years of research, we are surprised to find that the business environment in rural China is getting worse than it was in the 1980s, despite seemingly rapid economic growth. More disturbing, though, is the fact that the trend has shown few signs of easing.

Local governments tend to offer a variety of policy incentives to attract foreign investors, but when it comes to local rural entrepreneurs, they are much less enthusiastic. Stringent requirements in land use, tax rates and environmental protection have been the biggest bottlenecks, not to mention a lack of financing.

On top of the difficulties came the financial crisis that led to the closure of numerous factories in China's eastern coastal provinces, sending millions of migrant workers back home. This only increased the difficulties farmers faced in starting up their own businesses.

In response, the authorities are supposed to guarantee the smooth implementation of the document and step up stronger policy incentives, such as business trainings and tax waivers for farmers. Efforts should also be enhanced to help with technological advancement of smaller rural enterprises and sharpen their competitive edge.

Farmers' income is key

SUPPORTING EMPLOYMENT: Laid-off migrant workers from Shangyou County of Jiangxi Province get re-employed at a local business. The province has made stiff efforts to help with employing laid-off migrant workers, including providing vocational training and tax breaks for those starting their own businesses (ZHOU KE)

Han Jun (Director of the Research Department of Rural Economy of the Development Research Center under the State Council and one of the compilers of the No.1 Document for 2010):

By pledging to prop up rural development, the No. 1 Document has indicated a bright prospect for the rural economy. Among the many measures included in the document, one stands out: improving the income and other social benefits for farmers.

Per-capita net income of farmers has increased more than 6 percent for five straight years, but is still well below that of gross domestic product. This has evidently weighed down the purchasing power of farmers and cast an ominous shadow over the rural consumer market.

However, boosting farmers' wealth is easier said than done. The country's annual grain output has exceeded 500 million tons for years, which has kept grain prices at dismal levels. Besides this, the earnings growth of migrant workers has lagged far behind that of urban residents.

But the good news is that faster wage growth for migrant workers may be on the way, as the labor surplus of the country seems to be running low. Late last year, many exporters in coastal areas even experienced acute labor shortages as they geared up to fill rebounding orders in the run-up to Christmas. It is an inevitable trend that employers will have to pay more for skilled migrant workers.

For the government, it is necessary to distribute heavier subsidies for farming and at the same time streamline the compensation systems for migrant workers and protect their deserved rights and benefits. It would also be helpful to reinforce their vocational training and increase the value of rural labor.

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