The widening Gap between Farm and Non-farm Income
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As reviewed by the Organization for Economic Co-operation and Development (OECD) on China's agriculture policies, one of the most striking features of China's development in the reform period since 1978 was a large and growing income disparity between the rural and urban populations. Compared with OECD nations, the level of government support to Chinese agriculture fluctuated at low levels through the 1990s, rising to 8 percent in 2003, well below the OECD average of 30 percent. In considering the agricultural free trade movement and China's WTO membership since 2001, there has been a much lower impact on promoting agriculture trade than on other Sino-economic sectors. Meanwhile, Chinese farmers have benefited much less than their counterparts in developed nations even though China is considered a developing country by many standards. For instance, most developed members of the WTO, such as the United States and the EU, have provided huge subsidies to their agricultural sectors for decades. In contrast, China's agricultural sector has been subsidizing the domestic industrial sectors for decades.
The fact is that surplus farm labor and low educational levels with low technological support have contributed significantly to the under development in rural areas. To accelerate rural development, China will have to enhance its agriculture related institutions and increase policy transparency, including improvement to education, health care, agricultural technology support. As learned from leading WTO members, farm subsidies may also have a key role to play in promoting China's agriculture and in narrowing the rural-urban income gap.
China is still a large agricultural nation. With 1.3 billion people relying on domestic farm products, to what extent China can develop its agriculture, will be decisive for China's sustainable development in the coming years. There is no doubt that rural-urban inequality has increased significantly, and there is also a common understanding that more needs to be done to solve this inequality. Although such inequality in China will most likely worsen, at least in the short run, government actions – e.g. in education, in farm support, and in agriculture stimulating initiatives – all deserve immediate attention.
The author is a columnist with China.org.cn. For more information please visit:
http://www.china.org.cn/opinion/node_7075405.htm
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