Hu’s New Deal and the Third Plenary Session of CCP’s 17th Central Committee

Publication: China Brief Volume: 8 Issue: 20

The just-concluded Third Plenary Session of the Chinese Communist Party’s (CCP) 17th Central Committee has pledged a “new deal” with Chinese characteristics for the country’s 730 million-odd farmers through boosting their “material benefits and democratic rights.” The plenum communiqué promised that the party would raise agrarian productivity and rural income through “bold exploration and brave innovations” (Xinhua News Agency, October 12; People’s Daily, October 13). The top-level decision-making body passed a “Resolution on certain important questions concerning the implementation of rural reform and development.” However, little has been said about much-anticipated changes such as allowing peasants to buy and sell their plots of land—or to freely move to the cities. This is despite the fact that the propaganda machinery has compared this high-level conclave to the third plenum of the 11th CCP Central Committee 30 years ago, which kicked off Deng Xiaoping’s historic reforms and open-door policy. Moreover, CCP General Secretary and President Hu Jintao attempted to use this platform to solidify his status as Deng’s worthy successor by vamping up his administration’s commitment to break new ground in economic as well as political reform.

On the eve of the Central Committee conclave, President Hu made a much-publicized visit to Anhui Province, the Mecca of China’s agrarian liberalization. In the early 1980s, Anhui party cadres broke up Chairman Mao’s commune and allowed farmers to exercise discretionary ownership of land “contracted” from the authorities. Hu told local peasants that the leadership would “ceaselessly increase the scale of preferential policies for the agricultural sector.” The party chief indicated that the so-called “contract responsibility system”—under which rural households are given land-use rights for 30 years—would never be adulterated. Most importantly, he vowed that Beijing would, “in accordance with the wishes of peasants, allow them to liuzhuan [transfer] land contracts and management rights through various means” (Xinhua News Agency, October 1; Asia Times, October 10). The official China Daily quoted a well-known scholar at the Chinese Academy of Social Sciences, Dang Guoying, as saying that thanks to further reforms, farmers would be able to trade, rent and even mortgage their land-use rights for profit in a land transaction market. “The move will speed up the country’s urbanization by bringing more farmers to the cities with the big farm contractors promoting modern farming in rural areas,” Dang said (China Daily, October 8).

The Central Committee communiqué, which reflected the as-yet-unpublished keynote address that Hu gave at the meeting, did promise that the per capita income of farmers—4,140 Renminbi in 2007—would be doubled by the year 2020. This could mean that the current urban-rural income gap of 3.33: 1, which is the highest since the start of the reform policy 30 years ago, might be narrowed to some extent. The official media also pointed out that central-government spending on rural infrastructure—which accounted for some 48 percent of total state investments last year—would be augmented in the future (Xinhua News Agency, October 4; Wen Wei Po [Hong Kong], October 13). The full text of the “Resolution” on rural reform and development, which was released on October 19, did contain a paragraph about “strengthening the management of and services related to the liuzhuan of land contracts and management rights” (Xinhua News Agency, October 19). Yet the emphasis was on proper state supervision of this controversial reform. What was lacking were comprehensive and concrete measures through which farmers can monetize their land entitlements.

Under the Chinese constitution, rural land belongs to the “collective,” not to individual households. As such, farmers can neither sell their plots outright, nor use them as collateral to raise cash from banks. For the past few years, however, peasants in different localities, particularly those who have found jobs in the cities in the capacity of “migrant workers,” have been allowed to rent or transfer their contracts to their neighbors. Given that the per capita plot size of Chinese peasants is a miniscule 1.4 mu (one hectare = 15 mu), the amalgamation of individual plots made possible by the liuzhuan process will enable larger-scale mechanization, a key to raising rural productivity (Xinhua News Net, October 4).

A firm decision by the CCP Central Committee, however, is a prerequisite for the liuzhuan system to become a fully legitimate and institutionalized practice. Although the official media has kept mum on the four-day deliberations, it seems clear that there is a lack of consensus among senior cadres on the extent to which farmers can buy and sell land, albeit in an indirect manner. A common worry among officials and economists is that large-scale transactions could lead to a depletion of arable land, which in turn will pose a threat to the country’s “grain security.” Zeng Yesong, a professor at the Central Party School, pointed out that local officials in different regions have applied pressure on peasants to part with their plots so that the land in question can be earmarked for commercial or real-estate development. “The central authorities should insist that the transfer of land contracts and management rights should not result in land being used for other [than agricultural] purposes” (People’s Daily, October 16). Indeed, with rapid industrialization and urbanization, Beijing faces formidable odds in ensuring that total agricultural land nationwide will not shrink beyond 1.8 billion mu, which is deemed the minimum threshold for maintaining food security for the nation of 1.3 billion (People’s Daily, October 15).

A closely related issue is the possible abolition of the segregationist hukou or “residence permit” system, whereby rural residents cannot move to the cities without government approval. While this draconian, 1950s-vintage regulation is widely considered a violation of the human rights of the majority of Chinese, Beijing has only taken gradualist measures to speed up urban-rural integration. Thus, the Central Committee communiqué pledged to “abolish the urban-rural, two-tier structure and to integrate the economic and social development of cities and villages.” Yet, no solid steps, let alone a time-table, have been announced for abrogating the discriminatory hukou practice. This has led to speculation that at the plenum, Central Committee members representing the interests of the rich and urbanized eastern coast have opposed an expedited resolution of the hukou system, due to fears that a sudden influx of rural residents would strain already over-stretched facilities in crowded coastal cities (Apple Daily [Hong Kong], October 14; Ming Pao [Hong Kong], October 14).

Indeed, while more than 200 million peasants have found jobs in urban areas, these migrant laborers remain veritable second-class citizens. They can only secure short-term residence permits, and are barred from standard welfare benefits such as medical insurance or subsidized education for their children. The furthest that experiments in urban-rural integration have gone is that farmers in a limited number of specially designated provinces and cities are free to move and work anywhere within these regions’ parameters. For example, the centrally administered municipality of Chongqing has set 2020 as the goal for full urban-rural integration within the megacity of 32 million. Currently, 55 percent of Chongqing residents live in agricultural counties in Chongqing’s outskirts; this will be reduced to 30 percent 12 years down the road. Similar experiments are being tried out in rich cities such as Shenzhen, which is just across the border from Hong Kong (Wen Wei Po, October 10).

It remains true, however, that the Hu-Wen team is unable to devise definite plans to do away with the hukou stricture. This is despite the fact that the large-scale migration of farmers to urban areas would translate into a big boost for domestic consumption. And given the expected shortfall in exports to a recession-ridden United States and Europe, the leadership is counting on consumer spending as a major driver of economic growth in the rest of the decade. According to a senior deputy to the Chinese People’s Political Consultative Conference (CPPCC), Sun Mingshan, there is no reason why the party-state authorities should continue procrastinating on this crucial issue. A veteran public security official, Sun blames the lack of resolve on “the absence of consensus [among the leadership] and serious lapses in legislation.” “The reform of the [urban and rural] residence system is itself not complicated,” Sun said, adding that progress had been held up because of “the complicated distribution of interests” among various social sectors (People’s Daily, September 8). In other words, cadres running large cities and urban centers, who have dominated policy-making in the past few decades, have kept on putting up obstacles to the dismantling of the hukou order.

Another disappointment about the Central Committee meeting is that there is little about political reform. This is despite the fact that the plenum communiqué made the pro forma commitment to safeguarding peasants’ “democratic rights” as well as “boosting social equality and justice.” It also noted that by the year 2020, “the system of rural self-rule will be perfected, and the democratic rights of farmers will be earnestly guaranteed.” What is sorely lacking, however, are substantial, quantifiable measures to promote agrarian self-government. Since late patriarch Deng introduced village-level elections—which allow peasants to pick members of the village administrative committees through one person one vote polls—in 1979, unsuccessful calls have repeatedly been made to elevate this democratic exercise to higher levels such as towns and counties.

This is despite claims made by senior Central Party School scholar Zhou Tianyong that “by 2020, China will basically finish its political and institutional reforms.” What Zhou meant, however, was merely that “there will be public democratic involvement at all government levels,” not Western democratic institutions such as multi-party politics or general elections (Daily Telegraph [London], October 15). Moreover, no headway has been attained in the legitimization of non-party affiliated rural organizations such as nonghui, or farmers’ unions. Such organizations could for example, help farmers lobby for higher procurement prices. Despite 30 years of reform, the majority of Chinese farmers still sell their produce to the state—and at prices largely fixed by the agricultural and internal-commerce departments.

Equally disturbing is the Hu-Wen leadership’s apparent failure to take solid steps to improve the quality of grassroots administration. Despite the blanket security imposed by China’s formidable control apparatus in the half year or so before the Beijing Olympics, large-scale confrontation between peasants and police broke out in the spring and summer in a number of counties in impoverished provinces such as Yunnan and Guizhou (China Brief, Volume 8, Issue 16, August 1). Both Beijing and regional authorities have admitted that a key problem is endemic corruption among grassroots cadres and law-enforcement officers, some of whom are said to be in collusion with triads, or Chinese-style mafia (Xinhua News Agency, July 25; Guizhou Daily, July 26). Yet the Central Committee merely reiterated the need to beef up “CCP grassroots organizations.” Thus, the plenum document said “we must strengthen the creativity, cohesiveness and combat ability of various levels of party organizations, and ceaselessly raise the level of the party leadership’s rural work [ability].” It also put emphasis on promoting rural cadres who are “fair and above-board, [capable of] plain living and hard struggle, and able to uphold the interests of farmers.” Yet without supervision by the people or non-party-affiliated groups—which is only possible through real political reform—it is doubtful whether the party’s long-standing reliance on “finding good cadres” or “building reliable party cells” will really raise the woeful standards of administration, particularly in poor and remote counties.