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5 White Paper on the Business Environment in China
2.1 Agriculture
CHINA’S AGRICULTURAL INDUSTRY has a long duction process and direct subsidies have started to be o ered
and varied history. According to the Ministry of Land to farmers and agricultural production,” detailing the adjust-
and Resources of the People’s Republic of China, 14 percent ments made to honor WTO commitments.5 e Ministry
of the country’s total 9.6 million square kilometers of land of Finance later reported that in 2011, China’s grain growers
area is arable, which it further reports is less than half of the were to receive a total of 140.6 billion yuan in subsidies for
world average in terms of area per capita.1 purchasing agricultural supplies and machinery as well as for
growing a more diverse selection of crops.6
Despite the relatively small area, it generally supports the
roughly 20 percent of the world’s population who are Chinese e fruits of reformers’ labors are perhaps best summa-
citizens. is fact, in addition to historical precedents, rized in the following passage from the same report: “China’s
continues to highlight the need for e cient use of the everyday per capita calorie intake surpassed 2,750 kilocalo-
limited space and of the constant interplay between ongoing ries, protein more than 70 grams, fat 52 grams, which by and
industrialization and the necessity of a strong fundamental large reached the world average level. In general, China’s food
primary industry. It is estimated that the Chinese government security has been e ectively guaranteed, and its urban and ru-
has, in the past several decades, spent “hundreds of billions of ral dwellers are living a healthier and more nourishing life.”5
dollars to repair and revitalize” agriculture.2
A more recent report by the National Bureau of Statis-
Since China joined the WTO in 2001, the Chinese gov- tics indicated that between 2002 and 2011, “average rural in-
ernment has steadily supported agricultural expenditure and comes surged by 1.8 times compared with 2002 to 6,977 yuan
development. In 2006, a study by Xing Wen-Yan from the ($1,090) in 2011.” Simultaneously, the report announced
Liaoning Academy of Social Sciences, stated that “in 2006, ongoing increases in several areas: “grain production reached
agricultural tax and tax on agricultural products were abol- 571 million tons, an increase of 114 million tons from 2002,
ished throughout China, ending a 2,600-year history of pay- an annual increase rate of 2.5 percent over the last decade”,
ing taxes on the part of farmers. “ From 2007 to 2010, - “rice yields in 2011 stood at 201 million tons, a 15.2 percent
nancial expenditure on agriculture rose with 100 billion yuan increase from 2002”, “wheat production reached 117 billion
every year. In 2009, the central government spent 725.49 bil- tons, up 30 percent” and “corn obtained a yield of 192 mil-
lion yuan on agriculture, countryside and farmers, reaching a lion tons, a 58.9 percent increase from a decade ago.”7
record high, an increase of nearly 5 times of 123.154 billion
yuan in 2000.”42 Counteracting gains in self-su ciency, in 2013 a combi-
nation of “frost in the growing period and rain during the
ese e orts have paid o handsomely; the China Sta- harvest” led to China challenging Egypt’s position as the larg-
tistical Yearbook 2009 reported that gross output of the ag- est importer of wheat in the world. Hard hit was the center of
ricultural sector had grown from 139 billion yuan in 1978 Henan province, “where some growers [had] seen their pro-
(accounting for 38.3 percent of total GDP that year) to 5.8 duction slashed by 40 percent from year ago.”8
trillion yuan in 2008 (19.2 percent of total GDP), calculated
“at current prices.”3 “China [had] also been snapping up corn shipments in re-
cent weeks with imports forecast to climb to an all-time high
e PRC government’s expenditures on agriculture have, of 7 million metric tons” over the course of 2013, according
according to the U.S. Department of Agriculture’s statistics, to the USDA.8
risen from 15 billion yuan in 1978 to 317 billion yuan as of
2006 (the last year for which these statistics are published). Despite the growing robustness of domestic agriculture,
Productivity in these terms of output per unit of expenditure however, several issues remain major concerns moving forward.
has improved greatly, roughly doubling between 1978 and
2006.4 Despite these improvements, the PRC’s Ministry of For one, a study conducted this year by the Chinese Acad-
Agriculture observed in 2004 that the relatively gradual growth emy of Sciences found that “the agricultural sector is a drag
of the sector is indicative of “the low comparative returns on on the development of China’s modernization, with its tech-
agriculture,” therefore validating the various subsidies (such nological level by the end of 2008 more than a century be-
as transfer payment) that are “important [measures] of most hind that of the United States.” In terms of productivity, the
countries to preserve food security.”5 Academy found that Chinese agricultural e orts were only
one percent as productive as those in Western nations; fur-
e report also noted that “agricultural subsidies have been thermore, the report concluded that bringing productivity up
gradually transferred from the distribution process to the pro- to international norms will necessitate the creation of “jobs
for 280 million farmers, cutting the rural workforce popula-
94
2.1 Agriculture
CHINA’S AGRICULTURAL INDUSTRY has a long duction process and direct subsidies have started to be o ered
and varied history. According to the Ministry of Land to farmers and agricultural production,” detailing the adjust-
and Resources of the People’s Republic of China, 14 percent ments made to honor WTO commitments.5 e Ministry
of the country’s total 9.6 million square kilometers of land of Finance later reported that in 2011, China’s grain growers
area is arable, which it further reports is less than half of the were to receive a total of 140.6 billion yuan in subsidies for
world average in terms of area per capita.1 purchasing agricultural supplies and machinery as well as for
growing a more diverse selection of crops.6
Despite the relatively small area, it generally supports the
roughly 20 percent of the world’s population who are Chinese e fruits of reformers’ labors are perhaps best summa-
citizens. is fact, in addition to historical precedents, rized in the following passage from the same report: “China’s
continues to highlight the need for e cient use of the everyday per capita calorie intake surpassed 2,750 kilocalo-
limited space and of the constant interplay between ongoing ries, protein more than 70 grams, fat 52 grams, which by and
industrialization and the necessity of a strong fundamental large reached the world average level. In general, China’s food
primary industry. It is estimated that the Chinese government security has been e ectively guaranteed, and its urban and ru-
has, in the past several decades, spent “hundreds of billions of ral dwellers are living a healthier and more nourishing life.”5
dollars to repair and revitalize” agriculture.2
A more recent report by the National Bureau of Statis-
Since China joined the WTO in 2001, the Chinese gov- tics indicated that between 2002 and 2011, “average rural in-
ernment has steadily supported agricultural expenditure and comes surged by 1.8 times compared with 2002 to 6,977 yuan
development. In 2006, a study by Xing Wen-Yan from the ($1,090) in 2011.” Simultaneously, the report announced
Liaoning Academy of Social Sciences, stated that “in 2006, ongoing increases in several areas: “grain production reached
agricultural tax and tax on agricultural products were abol- 571 million tons, an increase of 114 million tons from 2002,
ished throughout China, ending a 2,600-year history of pay- an annual increase rate of 2.5 percent over the last decade”,
ing taxes on the part of farmers. “ From 2007 to 2010, - “rice yields in 2011 stood at 201 million tons, a 15.2 percent
nancial expenditure on agriculture rose with 100 billion yuan increase from 2002”, “wheat production reached 117 billion
every year. In 2009, the central government spent 725.49 bil- tons, up 30 percent” and “corn obtained a yield of 192 mil-
lion yuan on agriculture, countryside and farmers, reaching a lion tons, a 58.9 percent increase from a decade ago.”7
record high, an increase of nearly 5 times of 123.154 billion
yuan in 2000.”42 Counteracting gains in self-su ciency, in 2013 a combi-
nation of “frost in the growing period and rain during the
ese e orts have paid o handsomely; the China Sta- harvest” led to China challenging Egypt’s position as the larg-
tistical Yearbook 2009 reported that gross output of the ag- est importer of wheat in the world. Hard hit was the center of
ricultural sector had grown from 139 billion yuan in 1978 Henan province, “where some growers [had] seen their pro-
(accounting for 38.3 percent of total GDP that year) to 5.8 duction slashed by 40 percent from year ago.”8
trillion yuan in 2008 (19.2 percent of total GDP), calculated
“at current prices.”3 “China [had] also been snapping up corn shipments in re-
cent weeks with imports forecast to climb to an all-time high
e PRC government’s expenditures on agriculture have, of 7 million metric tons” over the course of 2013, according
according to the U.S. Department of Agriculture’s statistics, to the USDA.8
risen from 15 billion yuan in 1978 to 317 billion yuan as of
2006 (the last year for which these statistics are published). Despite the growing robustness of domestic agriculture,
Productivity in these terms of output per unit of expenditure however, several issues remain major concerns moving forward.
has improved greatly, roughly doubling between 1978 and
2006.4 Despite these improvements, the PRC’s Ministry of For one, a study conducted this year by the Chinese Acad-
Agriculture observed in 2004 that the relatively gradual growth emy of Sciences found that “the agricultural sector is a drag
of the sector is indicative of “the low comparative returns on on the development of China’s modernization, with its tech-
agriculture,” therefore validating the various subsidies (such nological level by the end of 2008 more than a century be-
as transfer payment) that are “important [measures] of most hind that of the United States.” In terms of productivity, the
countries to preserve food security.”5 Academy found that Chinese agricultural e orts were only
one percent as productive as those in Western nations; fur-
e report also noted that “agricultural subsidies have been thermore, the report concluded that bringing productivity up
gradually transferred from the distribution process to the pro- to international norms will necessitate the creation of “jobs
for 280 million farmers, cutting the rural workforce popula-
94
