|Chinese Farmers Escape
Harvest Tax Paid for Centuries
Morning Edition, August 26, 2005 · From the
central Chinese countryside, Rob Gifford reports that
for the first time Chinese farmers are not paying a
harvest tax. Beijing is lifting the tax to fight growing
unrest in the countryside that in the past has brought
Growth depends on making farmers well off
By Wu Qi (China Daily)
Updated: 2005-08-17 05:52
Zheng Chanzi, a farmer who lives in North China's Hebei
Province, has many reasons to be pleased this summer.
While his family was busy harvesting wheat, which had
grown better than in previous years, he heard the government
had slashed the agriculture tax again and raised the
selling price of grain by 60 per cent to 1.5 yuan (18
US cents) per kilogram.
"That means we earned several hundred yuan more
from the summer harvest alone," said Zheng, who
farms a plot of almost half a hectare.
For farmers, whose annual net income averages 2,900
yuan (US$358), this increase in income is by no means
The Zhengs live in the village of Xijing on the North
China Plain. Most households there survive by growing
two crops a year - usually wheat in the summer and corn
in the autumn.
They should all benefit from the tax break offered
by the government, which is meant to make life better
for rural families.
The move is significant to the large rural population
in the country, which accounts for 70 per cent of China's
Agricultural reform started in 1970s featured a contracted
responsibility system, which links income to household
output, sparks farmers' enthusiasm and galvanizes the
The second generation of the collective leadership
of China, with Deng Xiaoping at the centre, promised
not to change the system for 15 years. The third generation
of leaders also committed to keeping the policy for
another 30 years from 1997.
Thanks to a seriers of preferential policies, the summer
grain harvest was 106.3 million tons this year, an increase
of 5.1 million tons or 5.1 per cent from a year earlier,
according to the National Bureau of Statistics. This
year's early rice production also increased. This follows
a bumper harvest in 2004, when grain production hit
469.5 million tons - 38.8 million tons or 9 per cent
more than the previous year - the quickest-ever annual
To further lighten the financial burden on farmers,
the government has efficiently reformed the rural taxation
China began levying an agricultural tax in 1958, and
has remained one of the few nations to do so. Before
the introduction of reforms the tariff brought in 50
billion yuan (US$6.2 billion) or 3 per cent of the nation's
total annual tax revenue.
In 2000, China launched experimental reforms of the
rural tax and fee systems in East China's Anhui Province,
in an effort to reduce the tax burden on farmers and
eliminate growing administrative fees.
This year, as nearly 90 per cent of China's provinces
and autonomous regions have abolished agriculture tax,
revenue is expected to be just 1.5 billion yuan (US$185
million), down 93 per cent on last year. In 2006, rural
residents who numbered 757 million last year will be
exempted from agriculture tax, three years ahead of
Experts say the lifting of agricultural taxes will
not affect fiscal stability, and will greatly help rural
To encourage grain production, the government has increased
direct subsidies to growers in 800 major grain-producing
counties across the country by 10 per cent this year.
According to Zhu Zhigang, vice-minister of finance,
the funds will be granted in proportion to the counties'
grain acreage and output. Money may be spent on agricultural
development programmes, technological innovation, education,
culture, public health and any other field as long as
it boosts the economy and raises the quality of living.
In 2004, China granted 11.6 billion yuan (US$1.4 billion)
in direct subsidies to 600 million farmers in 29 provinces,
autonomous regions and municipalities - a move that
"made at least 98 per cent of farmers content and
happy," said Zhu, citing a survey conducted by
Extensive expressways and expanding enterprises have
driven some farmers from their land, as the process
of industrialization and urbanization accelerates.
Statistics show more than 20 million farmers have been
relocated from their land in the past 13 years due to
From 1996 to 2004, China's arable land shrank from
130 million hectares to 122 million hectares, reducing
the per capita acreage to just 0.09 hectare. During
that period the population has been growing by an average
of 10 million annually.
China has to feed 22 per cent of the world's population
with less than 7 per cent of the arable land.
This serious situation has forced the government to
act tough. In April 2004 the State Council halted the
granting of farmland for other uses for six months and
started to rectify national land market imbalances.
Special teams organized by seven departments under
the State Council were sent to various localities to
find out if policies were having the desired effect
and to warn of severe punishment for breaking the rules.
The State Council has issued three circulars urging
better protection of crop land.
Despite an overall improvement in farmers' lives over
the past few decades, the widening income gap between
farmers and city dwellers constitutes a massive challenge
to economic and social development - and is one of the
root causes of social disharmony.
Statistics from last year show the average annual disposable
income of urban residents is more than three times that
of farmers. Annual income in the cities averages more
than US$1,000, versus US$360 in the fields.
There are still 90 million people living on an annual
per capita net income at or below US$105, the national
Farmers' weak purchasing power has become a drag on
the economy, which is yet to fully recover from lingering
deflation. The government has responded by elevating
the average rural education and training level. This
has long been regarded as one of the main factors contributing
to poverty in rural and mountainous areas.
Several years ago the poverty-reduction drive simply
provided money and supplies for farmers.
"Practice has shown that just providing funds
is not effective in helping farmers completely shake
off poverty," says Professor Gong Weibin, an agricultural
expert at China's National School of Administration.
"Needy farmers can really find a way to self-development
after they possess the ability to make a living on their
own," Gong said.
The government is determined to make farmers' reliance
on a formal social security system, rather than their
So far 52 million farmers have joined the rural old-age
insurance system, and 2.2 million have received pensions.
More than 80 million farmers had participated in the
rural co-operative medical service system by the end
of 2004, and 12.6 million had drawn allowances guaranteeing
the minimum living standard.
Experts believe the government, in its effort to build
a harmonious society, must bring farmers into the social
security system, which is a prerequisite of stability
and will help China advance from an agriculture country
to an industrialized nation.
(China Daily 08/17/2005 page5)