Last week’s PNTR vote, along with China’s pending membership in the WTO, could have an effect on Xiao’s livelihood–and that of most other farmers in the country. Both developments are expected to lead to a surge in U.S. agricultural exports to China. Phillip Laney of the American Soybean Association calls China’s WTO accession a “win, win, win, win” for U.S. farmers. But China’s farmers could be losers. Lots of protected Chinese industries (among them automobiles, banking and insurance) could be hit hard by trade liberalization. But no group is more vulnerable to foreign competition than China’s 800 million peasants. In the future, commodity prices in China are almost certain to fall, exacerbating an already bad unemployment problem in the farming sector. There are upwards of 200 million surplus laborers in the countryside–and, by some estimates, a post-WTO flood of cheap food imports could put an additional 9 million farmers out of work. Cities will be hard-pressed to take up the slack. “When farmers cannot find jobs in the city, yet have no land to go to back home, there will be a danger of social unrest,” says An Deqiang, a Beijing-based economist.
China’s farmers don’t need any more hardships. Like Xiao, most toil with their hands on tiny plots of land. Many homes lack plumbing, telephone lines and sometimes even electricity. After 20 years of economic reforms, farm income is just 40 percent of the average urban salary. Production is primitive and inefficient, making it nearly impossible for Chinese farmers to compete with those in industrialized countries. The average Chinese plot is a half-hectare in size; European farms are 40 times larger. Although China potentially holds an advantage in labor-intensive crops like fruits and flowers, 70 percent of China’s farmers grow grains, and government-supported prices will drop when China opens its market. “China has no choice but to reform,” says a Western diplomat in Beijing. “The WTO means short-term pain, long-term gain. The alternative is short-term pain, long-term catastrophe.”
Chinese farmers often lack the knowledge, time or capital to modernize or switch crops, so Beijing is taking steps to reform the industry. For one thing, the government has stopped buying low-quality domestic grains like spring wheat and early-season rice from certain regions, prompting some farmers to move out of the grain business. The state wants to establish an agricultural-inspection system, which it hopes will raise the quality of Chinese food products and make them more appealing to global consumers.
China is also going high tech to teach farmers sophisticated sales techniques. In Lu Xia village in northern Fujian province, the town government has not only encouraged farmers to switch from grain to fruit, it has set up an Internet information center to help them uncover new markets for their crops. Foreign direct investment and expertise will also help. Laney, the U.S. soybean-industry official, says his organization has shown Chinese fish farmers how to switch from pig dung to extruded soy meal for feed. The result is less waste, less pollution and a better-tasting fish–which nets a higher price.
A few rural areas have successfully tinkered with their economies. For years the village of Dongxiaokou, north of Beijing, was largely dependent on wheat fields. Today many of those fields grow cabbages and other vegetables. Village leaders have rented one plot to Beijing Green Field Flowers–a private company that grows roses, trees and shrubs for landscaping. Company manager Mu Chunyan says the village leaders make more money renting the land than cultivating it themselves–and that her flower business provides higher wages for her 16 employees than the wheat fields across the road. “The village leaders hope that we can expand our business and rent more land next year,” she says. If more of China’s farms go the way of Dongxiaokou, China could reap a more bountiful harvest.
