5. Transformations to Agriculture and Agricultural Policies in China

The definition of poverty in China is as follows. Nutritionists formulate food lists per the most basic nutrition requirements, and then then the food costs necessary to meet these requirements are calculated. That number is divided by Engel's coefficient (0.65) to arrive at the minimum amount of income necessary to maintain warmth and adequate nutrition. Anybody whose income falls below this level is considered to be in poverty.

As urban reforms lagged behind rural reforms, in addition to the need to solve the problems of the tens of millions of educated youths returning to urban areas after the Cultural Revolution, urban centers in the mid-1980s had nearly zero capacity to employ rural citizens. So at the time, the state issued a policy allowing rural citizens to engage in non-agricultural enterprises, but not to leave the countryside. This was a marked step forward from the policies enacted during the era of the people’s commune that forced all rural citizens to remain in the countryside and engage in agriculture. The policies enacted in the 1990s allowing rural citizens to both leave the countryside and engage in non-agricultural enterprises was thus an even greater step forward. This demonstrates the gradual nature of reforms in China.

The basic criteria for household farms are as follows: The operators of the farm must hold rural household registration. The primary source of labor on the farm must be household members. Primary income of the household must come from agriculture. Scale stability of operations must meet standards set by agricultural departments at the county level or higher.

The Chinese government began comprehensive reforms to rural and agricultural taxes in 2003. The primary tasks of said reforms were mostly completed by the end of 2004.

In order to understand the opinion of rural citizens on direct grain subsidies, in 2005, the Ministry of Finance conducted a questionnaire survey on 1809 rural citizens growing grain in the 13 primary grain producing provinces (or autonomous regions). The survey's results indicate that 98.34% of respondents “understand the direct subsidy policy” and only 1.66% “know a little.” No respondent answered “don't know.” Among the respondents, 1677, or 93%, responded “satisfied” with the direct subsidy policy. Only 85, or 5%, responded “somewhat satisfied.” Ninety-nine percent of respondents, 1782 in total, responded that they thought the direct subsidy policy “increased” their incentives to plant grain. Ninety-five percent, or 1722 respondents, answered that they “preferred the direct grain subsidy policy” to the previous policy of price-protected purchasing. That price-protected purchasing policy was considered a “yellow box policy,” but the direct subsidization of farmers planting grain was considered a “green box policy,” more advantageous to allowing China's grain products to be competitive on international markets. At the same time, this policy created favorable conditions for marketization reforms of grain purchasing and sales (cited from the research report into direct grain subsidies in the 13 primary grain producing provinces of Zhu Zhigang et al. accessed from http://​www.​mof.​gov.​cn/​pub/​jinjijianshesi/​zhengwuxinxi/​diaochayanjiu/​200806/​t20080619_​47083.​html).