China's Farmers Need Equal Treatment
By Chi Fulin

During the long years of the centrally planned economy China’s farmers have been much worse off than workers in urban areas. This dual structure has survived despite more than two decades of wide-ranging economic and social reforms. To create equal opportunities for both the rural and urban populations during this new stage of China’s development, the following measures are unavoidable:

• Introducing broad agricultural tax reform. Such reform should include a uniform urban and rural tax system and the elimination of the agricultural tax and other "collective fees." Farmers should be paying value added tax and personal income tax just like any other private businesses. Price gaps between industrial and agricultural products are still wide open, putting farmers at a disadvantage; prices of agricultural outputs have been kept low compared with the prices of such inputs as fertilizers and agricultural machines; and farmers carry a heavier tax burden than city dwellers. Between 1979 and 1994 farmers paid about 1,200 billion yuan in taxes and fees, while the government spent about 377 billion yuan on agriculture. According to State Council statistics, in 1998 farmers paid a total of Y122.4 billion in agricultural taxes, specialty taxes, slaughter taxes, education fees, and other collective fees, as well as local administrative fees. This tax system has become completely obsolete and discriminates against farmers.

• Eliminating the household registration system, thereby giving farmers "equal citizenship." Before 1958 movement between urban and rural areas was unrestricted. In 1958 the current household registration system was introduced, whereby migrants from rural areas to cities were considered to be illegal migrants and could be fined and deported back to the place where they were registered. The household registration was strictly enforced between 1958 and 1978, but controls were somewhat relaxed after 1978. Since the 1980s, and especially in recent years, the household registration system has been reformed in some parts of China; however, the reforms have not basically changed the discriminatory systems in place against farmers in terms of employment, education, financial support, and social security. Residents in cities and townships receive housing, medical, education, and employment benefits, while farmers are denied these benefits even if they live and work in urban areas. In addition, rural people cannot afford the cost of living in cities. To achieve modernization in rural areas, the government should support the migration of rural workers into nonagricultural areas.

• Granting rural workers equal labor rights and job opportunities. Official statistics indicate that China had 88 million migrant rural workers in 2001, but other figures cite 120 million. Phasing out discriminatory policies against migrant workers in cities, eliminating residence registration requirements, and providing free schooling for migrant workers’ children and health insurance for their families could gradually lead to a unified, open labor market. China’s urban development will get a boost from absorbing the surplus rural labor force and small townships and cities will flourish. At the same time the movement of surplus labor will help the rural economy and farmers’ will be able to earn higher incomes.

• Granting quasi property rights to farmers. The government should use all legal means at its disposal to thwart local authorities’ efforts to confiscate land. As long as some authorities are using their power to grab land farmers will be unable to make long-term investments and develop their plots, which in turn endangers the future of this crucial sector. A favored tactic of local authorities is to harass farmers to such an extent that in the end they have no other alternative than to give up their land rights. Local cadres often gain land by ordering land "re-allocation," and the government should ban their ability to do so. Farmers’ land rights should be clearly defined so that rural households can possess, use, benefit from, and deal with their own contracting and operation rights. The right to buy and sell the land should be guaranteed, with the condition that it should not be sold at less than its value. Farmers should be entrusted with land use rights.

• Improving transfer payments to allow rural areas to provide free education, health, and pension benefits and minimum subsistence support. Education is compulsory between the ages of 6 and 15, but if the local authorities lack the means, it is not free, which is the case for many rural families, which are forced to pay for their children’s education—if they can afford it. At the same time many rural households are deprived of social security, especially those rural workers who are employed in nonagricultural sectors. While urban retirees can be sure that their pensions will reach a nationally defined minimum level, because if it were less the central government would make up the difference, farmers are excluded from this entitlement. China cannot afford to treat them differently. It is high time to extend old-age pensions and medical insurance systems to the rural population using a combination of state funds and individual contributions. Meanwhile the provision of minimum subsistence allowances for farmers should be combined with poverty alleviation policy in rural areas.

• Establishing farmers’ organizations. Farmers should set up professional organizations on a volunteer basis. These organizations should coordinate farmers’ marketing and purchasing activities, thereby decreasing the risk of price fluctuations and lowering their transaction costs. Furthermore, based on villages’ self-governance systems, farmers’ associations at various levels could protect farmers’ interests. Farmers’ associations should enjoy a similar political and social status as the Women’s Federation and the Workers’ Union.