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6 White Paper on the Business Environment in China
2.1 Agriculture
China’s agricultural industry has a long to farmers and agricultural production,” detailing the adjust-
and varied history. According to the Ministry of Land ments made to honor WTO commitments.5 The Ministry of
and Resources of the People’s Republic of China, 14 percent Finance later reported that in 2011, China’s grain growers were
of the country’s total 9.6 million square kilometers of land area to receive a total of 140.6 billion yuan in subsidies for purchas-
is arable, which it further reports is less than half of the world ing agricultural supplies and machinery as well as for growing a
average in terms of area per capita.1 more diverse selection of crops.6
Despite the relatively small area, it generally supports the The fruits of reformers’ labors are perhaps best summa-
roughly 20 percent of the world’s population who are Chinese rized in the following passage from the same report: “China’s
citizens. This fact, in addition to historical precedents, contin- everyday per capita calorie intake surpassed 2,750 kilocalories,
ues to highlight the need for efficient use of the limited space protein more than 70 grams, fat 52 grams, which by and large
and of the constant interplay between ongoing industrializa- reached the world average level. In general, China’s food secu-
tion and the necessity of a strong fundamental primary indus- rity has been effectively guaranteed, and its urban and rural
try. It is estimated that the Chinese government has, in the past dwellers are living a healthier and more nourishing life.”5
several decades, spent “hundreds of billions of dollars to repair
and revitalize” agriculture.2 A more recent report by the National Bureau of Statistics
indicated that between 2002 and 2011, “average rural in-
Since China joined the WTO in 2001, the Chinese govern- comes surged by 1.8 times compared with 2002 to 6,977 yuan
ment has steadily supported agricultural expenditure and devel- ($1,090) in 2011.” Simultaneously, the report announced on-
opment. In 2006, a study by Xing Wen-Yan from the Liaoning going increases in several areas: “grain production reached 571
Academy of Social Sciences, stated that “in 2006, agricultural million tons, an increase of 114 million tons from 2002, an
tax and tax on agricultural products were abolished through- annual increase rate of 2.5 percent over the last decade”, “rice
out China, ending a 2,600-year history of paying taxes on the yields in 2011 stood at 201 million tons, a 15.2 percent increase
part of farmers. “ From 2007 to 2010, financial expenditure on from 2002”, “wheat production reached 117 billion tons, up 30
agriculture rose with 100 billion yuan every year. In 2009, the percent” and “corn obtained a yield of 192 million tons, a 58.9
central government spent 725.49 billion yuan on agriculture, percent increase from a decade ago.”7
countryside and farmers, reaching a record high, an increase of
nearly 5 times of 123.154 billion yuan in 2000.”42 Counteracting gains in self-sufficiency, in 2013 a combina-
tion of “frost in the growing period and rain during the harvest”
These efforts have paid off handsomely; the China Statistical led to China challenging Egypt’s position as the largest import-
Yearbook 2009 reported that gross output of the agricultural er of wheat in the world. Hard hit was the center of Henan
sector had grown from 139 billion yuan in 1978 (accounting province, “where some growers [had] seen their production
for 38.3 percent of total GDP that year) to 5.8 trillion yuan in slashed by 40 percent from year ago.”8
2008 (19.2 percent of total GDP), calculated “at current pric-
es.”3 “China [had] also been snapping up corn shipments in re-
cent weeks with imports forecast to climb to an all-time high
The PRC government’s expenditures on agriculture have, of 7 million metric tons” over the course of 2013, according to
according to the U.S. Department of Agriculture’s statistics, 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). Pro- Despite the growing robustness of domestic agriculture, how-
ductivity in these terms of output per unit of expenditure has ever, several issues remain major concerns moving forward.
improved greatly, roughly doubling between 1978 and 2006.4
Despite these improvements, the PRC’s Ministry of Agricul- For one, a study conducted this year by the Chinese Acad-
ture observed in 2004 that the relatively gradual growth of the emy of Sciences found that “the agricultural sector is a drag on
sector is indicative of “the low comparative returns on agricul- the development of China’s modernization, with its technolog-
ture,” therefore validating the various subsidies (such as transfer ical level by the end of 2008 more than a century behind that
payment) that are “important [measures] of most countries to of the United States.” In terms of productivity, the Academy
preserve food security.”5 found that Chinese agricultural efforts were only one percent as
productive as those in Western nations; furthermore, the report
The report also noted that “agricultural subsidies have been concluded that bringing productivity up to international norms
gradually transferred from the distribution process to the pro- will necessitate the creation of “jobs for 280 million farmers,
duction process and direct subsidies have started to be offered cutting the rural workforce population from 310 million to 31
million over the next 40 years” as part of modernization efforts.9
110
2.1 Agriculture
China’s agricultural industry has a long to farmers and agricultural production,” detailing the adjust-
and varied history. According to the Ministry of Land ments made to honor WTO commitments.5 The Ministry of
and Resources of the People’s Republic of China, 14 percent Finance later reported that in 2011, China’s grain growers were
of the country’s total 9.6 million square kilometers of land area to receive a total of 140.6 billion yuan in subsidies for purchas-
is arable, which it further reports is less than half of the world ing agricultural supplies and machinery as well as for growing a
average in terms of area per capita.1 more diverse selection of crops.6
Despite the relatively small area, it generally supports the The fruits of reformers’ labors are perhaps best summa-
roughly 20 percent of the world’s population who are Chinese rized in the following passage from the same report: “China’s
citizens. This fact, in addition to historical precedents, contin- everyday per capita calorie intake surpassed 2,750 kilocalories,
ues to highlight the need for efficient use of the limited space protein more than 70 grams, fat 52 grams, which by and large
and of the constant interplay between ongoing industrializa- reached the world average level. In general, China’s food secu-
tion and the necessity of a strong fundamental primary indus- rity has been effectively guaranteed, and its urban and rural
try. It is estimated that the Chinese government has, in the past dwellers are living a healthier and more nourishing life.”5
several decades, spent “hundreds of billions of dollars to repair
and revitalize” agriculture.2 A more recent report by the National Bureau of Statistics
indicated that between 2002 and 2011, “average rural in-
Since China joined the WTO in 2001, the Chinese govern- comes surged by 1.8 times compared with 2002 to 6,977 yuan
ment has steadily supported agricultural expenditure and devel- ($1,090) in 2011.” Simultaneously, the report announced on-
opment. In 2006, a study by Xing Wen-Yan from the Liaoning going increases in several areas: “grain production reached 571
Academy of Social Sciences, stated that “in 2006, agricultural million tons, an increase of 114 million tons from 2002, an
tax and tax on agricultural products were abolished through- annual increase rate of 2.5 percent over the last decade”, “rice
out China, ending a 2,600-year history of paying taxes on the yields in 2011 stood at 201 million tons, a 15.2 percent increase
part of farmers. “ From 2007 to 2010, financial expenditure on from 2002”, “wheat production reached 117 billion tons, up 30
agriculture rose with 100 billion yuan every year. In 2009, the percent” and “corn obtained a yield of 192 million tons, a 58.9
central government spent 725.49 billion yuan on agriculture, percent increase from a decade ago.”7
countryside and farmers, reaching a record high, an increase of
nearly 5 times of 123.154 billion yuan in 2000.”42 Counteracting gains in self-sufficiency, in 2013 a combina-
tion of “frost in the growing period and rain during the harvest”
These efforts have paid off handsomely; the China Statistical led to China challenging Egypt’s position as the largest import-
Yearbook 2009 reported that gross output of the agricultural er of wheat in the world. Hard hit was the center of Henan
sector had grown from 139 billion yuan in 1978 (accounting province, “where some growers [had] seen their production
for 38.3 percent of total GDP that year) to 5.8 trillion yuan in slashed by 40 percent from year ago.”8
2008 (19.2 percent of total GDP), calculated “at current pric-
es.”3 “China [had] also been snapping up corn shipments in re-
cent weeks with imports forecast to climb to an all-time high
The PRC government’s expenditures on agriculture have, of 7 million metric tons” over the course of 2013, according to
according to the U.S. Department of Agriculture’s statistics, 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). Pro- Despite the growing robustness of domestic agriculture, how-
ductivity in these terms of output per unit of expenditure has ever, several issues remain major concerns moving forward.
improved greatly, roughly doubling between 1978 and 2006.4
Despite these improvements, the PRC’s Ministry of Agricul- For one, a study conducted this year by the Chinese Acad-
ture observed in 2004 that the relatively gradual growth of the emy of Sciences found that “the agricultural sector is a drag on
sector is indicative of “the low comparative returns on agricul- the development of China’s modernization, with its technolog-
ture,” therefore validating the various subsidies (such as transfer ical level by the end of 2008 more than a century behind that
payment) that are “important [measures] of most countries to of the United States.” In terms of productivity, the Academy
preserve food security.”5 found that Chinese agricultural efforts were only one percent as
productive as those in Western nations; furthermore, the report
The report also noted that “agricultural subsidies have been concluded that bringing productivity up to international norms
gradually transferred from the distribution process to the pro- will necessitate the creation of “jobs for 280 million farmers,
duction process and direct subsidies have started to be offered cutting the rural workforce population from 310 million to 31
million over the next 40 years” as part of modernization efforts.9
110
