Resource allocation and Rural Development in China

I. the allocation of rural resources is not coordinated with the role of the rural economy.

Resource allocation is very important for the development of any department and industry, especially for agriculture. It can be said that the original theories on resource allocation are basically extended from the theory of agricultural economy. Everyone may have their own views on the allocation of resources in China's agriculture. One of the most basic views is that although it is not easy for China's agricultural development to achieve such achievements as it is today, there are many prominent and sharp contradictions in terms of resource allocation. The most obvious fact is that in 2002, the proportion of added value created by China's primary industry in the national economy has dropped to 14. 5%. However, the labor force employed in the primary industry accounts for 50% of the employees in the whole society. 50% of the labor force of the whole society only creates 14. 5% of the GDP, which shows that this allocation of resources is very unreasonable, therefore, the efficiency of Chinese agriculture is low. Moreover, 50 per cent of the workforce is only associated with 14. 5 per cent of GDP, so agricultural workers and their families are destined not to be rich. This is a typical feature that China's resource allocation has been very unreasonable for quite a long time from the point of view of the whole country. Because of this, the development of agriculture lags behind, and farmers are quite poor.

But this is only one aspect of the problem. If we analyze agriculture from another aspect, we will find that China's agriculture and rural areas actually have strong potential and great vitality. As mentioned above, the share of agriculture in GDP has fallen to 14. 5 per cent, and of course it will decline in the future. However, it can also be seen from the statistics that at the end of 2002, the agricultural sector accounted for only 5. 5% of the loan balances of all financial institutions in China. 24%. In other words, Chinese agriculture has used only 5. 5% of the whole society. 24% of the loans created 14. 5% of the whole society. 5% of the wealth, it can be seen that this sector is very dynamic and potential. Of course, agriculture is not the only one in rural areas, which is a feature of China's rural areas. In fact, most of the wealth in China's rural areas is mainly created by township enterprises. There are more than 20 million township enterprises in China, with 130 million workers employed in township enterprises. in 2002, the GDP created by it accounted for 31. 5% of the country's GDP. 6%. However, at the end of 2002, the loan balance of the whole society occupied by the whole township enterprises was only 5. 5%. 19%. In other words, township enterprises use 5. 5% of the whole society. 19% of the loans created 31. 5% of the whole society. 6% of the wealth. Therefore, if we add up the whole rural areas, that is, agriculture and township enterprises, we can see a rather amazing phenomenon: in 2002, the added value created by rural areas accounted for 46. 5% of China's total GDP. 1%, but the loans they enjoy account for only 10. 5% of the total social loans. 4%. Therefore, from this point of view, rural areas, agriculture is a very potential sector, the key is how to understand it.

So, one puzzle is that for one who only used 10. 4% credit has created 46. 5% of the whole society. Whether the financial sector values such a sector with 1% wealth, and whether it thinks it has great potential. Of course, the creation of more than 50% of social wealth is also a great thing, but after all, it takes up nearly 90% of the credit demand of the whole society. Does the financial sector feel that only these sectors are worthy of preference? At the end of 2002, the total loan balance in China reached 13. 5%. 2 trillion yuan, the rural sector accounted for only 1. 5%. 300 million yuan. Among them, the balance of loans to agriculture is more than 688 billion yuan, and that to township enterprises is more than 681 billion yuan. In other words, other departments outside the rural areas have used nearly 12 trillion yuan in loans, but the GDP created is only about 6 trillion yuan. The GDP that creates almost 1 yuan needs to occupy 2 yuan in loans in non-rural departments. Why do financial institutions attach so much importance to such an inefficient sector and so little to the agricultural and rural sectors that have so much potential and can create great wealth? It is true that there is such a very strange phenomenon in China's resource allocation: we all see that the proportion of agricultural value added in GDP is declining, but the whole urban system does not want to see the fact that with the decline of agriculture's share of GDP, the labor force and rural population must also be transferred on a large scale, setting obstacles to the mobility and transfer of farmers everywhere. On the other hand, only so few loans to the rural sector have created so much wealth, but the financial sector is reluctant to lend to agriculture and rural areas. This phenomenon is the biggest loss of efficiency in China's economic activities at present. If this problem is not solved, let alone say that the development of China's agriculture and rural areas will lag behind for a long time, and the development of the entire national economy will be seriously affected.

Second, the deep reasons for the unreasonable allocation of resources.

When it comes to the lagging development of agriculture and rural economy, people will think of the dual structure of urban and rural economy. The author has always believed that the dual structure of urban and rural economy is not unique to China, it is an unavoidable phenomenon in any country at a certain stage of development. But the problem is how to treat the dual structure, how the government and society rely on their own efforts to gradually solve and eliminate the dual structure, which is the key. We can now say that it is the planned economic system that has been implemented in the 28 years before the reform that has created the present dual structure. However, until now, 25 years after the reform, it seems a bit far-fetched if we still say that this dual structure is caused by the planned economic system. It took us 25 years to reform the institutional drawbacks brought about by 28 years, but the result of the reform shows us that the gap between urban and rural areas is getting wider and wider. Therefore, we really need to seriously analyze and reflect on a series of our economic policies. In the process of analysis and reflection, we can see that although the planned economic system in the past has left us many insurmountable obstacles, in the process of market-oriented reform, many departments and many people are still using planned economy or even planned economy to control resources. If this problem can not be solved, then the dual structure of urban and rural areas can only be solidified, but it is difficult to be really eliminated. A very clear fact is that the income gap between urban and rural residents has widened over the years. In 2002, the per capita income of urban residents was equivalent to 3. 5% of the income of each farmer. 11 times, this figure is surprising to the whole world. What surprises us even more is that the figure was only 2. 5% at the beginning of the reform in 1978. 57: 1. After 25 years of reform and development, the income gap between urban and rural residents has not narrowed but expanded, which shows that there are still many problems in our system and policy, and that there is a great irrationality in the allocation of resources. On the one hand, we are talking about developing a market economy; on the other hand, people often think about problems in a planned economy way of thinking. This is a barrier that our reform must break through.

Many comrades engaged in agricultural and rural economic research feel that Chinese farmers have made great contributions to China's development. This contribution is manifested in at least three aspects.

The first aspect is the "scissors difference" in the price of industrial and agricultural products. In the era of planned economy, mainly in this way, farmers and rural areas contributed their own output to the process of industrialization and urbanization of the country. Many experts have made a serious analysis on how much funds have been withdrawn from rural areas by means of "scissors difference". Some are estimated to be more than 600 billion yuan, and some are estimated to be more than 800 billion yuan. This way mainly took place in the era of planned economy.

The second aspect is the conversion of agricultural land into non-agricultural land. National law stipulates that any non-agricultural land used for construction must be owned by the state. Therefore, as long as any land is listed as construction land, legally speaking, it must change its ownership and nationalize it. In other words, the state must take away the land collectively owned by the peasants from the peasants by means of expropriation. This process exists in many countries. However, at present, there are two very prominent problems in our country: the first prominent problem is that the compensation given by the government after using administrative power to forcibly expropriate land from farmers is very low. According to the regulations, the compensation fee for requisitioning farmers' land should not be more than 10 times the average annual output of the three years before the land is requisitioned, and the compensation for the resettlement expenses of farmers should not be higher than 6 times of the average annual output value. Later, taking into account the actual situation in rural areas, the Ministry of Land and Resources raised the compensation standard to a maximum of 30 times the annual output of the land. If a piece of land of the best quality can produce 1 ton of grain (there is not much of such land in China), its output will be about 1000 yuan at current grain market prices. The highest multiple of compensation to the land-expropriated farmers, that is, 30 times the compensation, it can only supply the land-expropriated farmers 30,000 yuan. Moreover, from the county government, township government to village organizations, the 30,000 yuan is often less than 10,000 yuan in the hands of the land-expropriated farmers. What is the use of this 10,000 yuan? The central government's various documents on the importance of rural land have made it clear.

At the present stage, China's land has two basic functions for farmers: first, land is the most basic means of production for farmers; second, land is the most basic living guarantee for farmers. So, can this 10,000 yuan play a role in replacing these two basic functions? If it can not play this role, then what will farmers do for their livelihood in the future? Agricultural land is largely converted into non-agricultural construction land under such a low level of valuation. It is understood that the state-owned land transfer fees collected by local governments at all levels reached 120 billion yuan in 2001, 240 billion yuan in 2002, and 249 billion yuan by the end of September 2003. How much compensation did farmers get from it?

The second prominent problem in land expropriation is that the power of land expropriation is overused. The law stipulates that land can be expropriated for the sake of public welfare. However, all non-agricultural construction land is obtained through expropriation. In other words, for the sake of commercial development and the interests of real estate developers, the government is also expropriating land. In fact, a considerable part of the land requisitioned and not fully compensated by farmers is not used for public welfare or shared by the people of the whole society, but has brought huge benefits to some land speculators and some real estate developers. Of course, a considerable part of it has been converted into the financial revenue of governments at all levels.

Over the years, especially after China's urbanization has accelerated significantly since the late 1980s, it may not be clear how much farmers have contributed to the country through land expropriation. However, the author estimates that the contribution made by farmers in this regard is at least 2 trillion yuan.

The third contribution is migrant workers. At present, the total number of migrant farmers working in cities is about 100 million. Regardless of whether their wages are reasonable, there is at least one: because they are migrant workers, they have encountered a series of problems. First of all, mayors of some big cities often say that cities are developing rapidly, with per capita GDP reaching US $3000 or even US $4000. But if you ask him whether the 2-3 million or even 3-4 million workers working in his city are counted as equal in the denominator, he will be speechless. He does not include migrant workers who come to the city to create wealth in the per capita GDP. Then, by the same token, so many migrant workers go to the city, pay taxes and create wealth locally, but there is almost no share of the public services provided by the local finance to migrant workers. Like social security. A large number of migrant workers have no social security. In some places, enterprises are required to pay social security for migrant workers. Now, for the social security established by each employee, there is a personal account and an overall planning part. In the best places, employees can take half of their personal accounts when they leave, but not the other half. Therefore, the social security paid by a large number of migrant workers in various places is actually mainly used for urban workers. In this area alone, farmers lose at least 200 billion to 300 billion yuan a year. Therefore, it can be said that in current China, the prosperity of cities depends to a certain extent on the free occupation of a large amount of wealth of farmers. This situation makes foreigners who come to China feel very strange. When they go from Beijing to Shanghai and from Guangzhou to Shenzhen, they do not believe that this is a developing country, nor do they believe that there are still tens of millions of rural people here who do not have enough food and clothing.

If the problems in the above three aspects are allowed to develop, it is obviously extremely disadvantageous to the development of agriculture and rural areas. The root cause of these problems is very clear, that is, there is a big problem with the rules guiding the allocation of resources. In other words, in the process of promoting the reform of the market economic system, the mode of thinking and behavior of the planned economy is still playing a tenacious role, so the gap between urban and rural areas is widening. So, how can we change such a way of thinking and behavior, and finally form a reasonable rule of economic operation, so that the allocation of resources between urban and rural areas can become reasonable? so that rural areas and farmers can have the right to obtain sufficient or necessary resources to promote their own growth, which is a very prominent problem we are facing at present.

Whether the allocation of resources is reasonable or not depends on a few questions first. In 2001, China Economic 50-person Forum! There is a seminar entitled. It seems strange that in the 21st century, people are still talking about Wenzhou model and Sunan model, but I find it very interesting. Of course, the Sunan model and Wenzhou model have changed a lot compared with the 1980s, but there are at least three points worth pondering from the past comparison of the two models. Comparing the two models from the growth mode and growth structure, the first difference is who allocates resources. In southern Jiangsu in the 1980s, resources were basically in the hands of the government and the quasi-government, so it goes without saying that the quasi-government is the rural collective ownership economic organization. Individual farmers can not control the resources. Judging from the situation in Wenzhou at that time, a very important reason for the emergence of such an active economy is that farmers may master resources, start a business and develop through their own imagination and efforts. Because of this difference, in the 1980s, people felt that almost everyone wanted to be a boss when they went to Wenzhou; when they went to southern Jiangsu, they could feel that almost everyone expected the secretary of the village to be as smart and capable as Wu Renbao. Therefore, who dominates resources determines whether the economy of this region and this country is dynamic or not. The second difference is who accumulates wealth. By the same token, southern Jiangsu is accumulating wealth collectively and the government is accumulating wealth; Wenzhou is not the case, it is a vibrant and dynamic enterprise that is accumulating wealth. So, although wealth is being accumulated at the same speed and on the same scale, the efficiency of reusing the wealth is obviously different because the mechanisms for mastering and controlling the wealth are different. The third difference is what the government does. In Wenzhou, it is generally accepted that the government is a small government! The government also knows very well that it is to create the environment, create conditions and provide services. In many other places, the government memorizes the functions of entrepreneurs! He came over, but forgot the functions of the government. As proposed in the decision of the third Plenary session of the 16th CPC Central Committee, the functions of the government are mainly to carry out economic regulation, market supervision, social management and the provision of public services. Then, the dislocation of these aspects is a very important reason for the uncoordinated allocation of resources in our country. Specifically, the government and officials are at the disposal of resources, the government and departments are accumulating wealth, and the government is looking for projects and investments everywhere. Such a dislocation leads to the unreasonable allocation of resources.

III. The reality of China's economy urgently calls for the transformation of the growth mode.

China's economic development in recent years is indeed very impressive. From 1978 to 2002, China's GDP maintained an average annual growth rate of 9. 4% in 24 years, which should be said to be a very proud achievement. However, it must be noted that this high growth really covers up a series of contradictions and problems. For example, the growing gap between urban and rural areas mentioned above is a major contradiction that cannot be avoided one day. At the same time, we also need to see what such a high level of growth depends on. Economic growth mainly depends on two factors: one is to have sufficient market capacity to absorb the wealth created, and the other is to have sufficient resources to support such a high growth rate. It is necessary to seriously consider whether China has these two factors for a long time. In the summer of 2003, it is possible that all the economically developed regions of China are faced with a great difficulty of lack of electricity. This reminds us that after such a rapid growth, there has been a big energy problem in China. China now imports 70 to 80 million tons of oil every year; coal production in 2003 is likely to exceed 1.6 billion tons. If China's economy is to grow at a faster rate, and if we continue to consume this kind of energy, it may be a very realistic question whether the energy in the domestic and international markets can provide sufficient support for us. China's steel consumption is also growing very fast, although it has to import, but the growth of its own steel production is very astonishing. However, the domestic iron ore resources are constantly decreasing. Now, several major steel mills in China use imported iron ore. Therefore, without changing the mode of growth, it is difficult to maintain rapid economic growth.

From a market point of view, after the Asian financial crisis in 1997, it should be said that China's economic growth is still remarkable. However, there is actually a big problem with this structure of growth. Because after 1998, China's economic growth is mainly driven by investment, mainly by foreign trade, while the pulling effect of real domestic demand on economic growth is very limited. In other words, China is now consuming a lot of very valuable energy and resources, and its products will mainly promote the international market. Due to the huge force of export growth, there are more and more contradictions and frictions between China and many countries in foreign trade. Of course, the author does not deny that efforts should be made to expand exports. But everyone is optimistic about investment in China, mainly because China has a large market of 1.3 billion people. However, after careful analysis, we can see that among these 1.3 billion people, that is, 300 to 400 million urban residents, they have relatively strong purchasing power, and nearly a billion farmers do not have much purchasing power. Why does domestic demand always fail to rise? One of the very important reasons is that the income of farmers does not go up and the rural market cannot flourish. Most people have no purchasing power, and no matter how large the population is, the market will not prosper.

It is from these perspectives that China should seriously consider the specific ways to continue its growth and consider how to really expand domestic demand, otherwise, there will be more and more frictions in foreign trade and tighter resource constraints. It is from this perspective that the author believes that it is urgent to seriously study the problems of agriculture, rural areas and farmers in China.

IV. Eliminate the factors hindering the allocation of rural resources

From the perspective of rural areas, at present, the proportion of agricultural added value in GDP has dropped to 14. 5%, while the annual growth rate of agricultural added value is probably less than 3%, and agricultural tax plus agricultural specialty tax is 60 billion yuan a year. These three indicators are totally out of line with the current assessment indicators of local governments. To a large extent, local governments and local officials pursue the growth of GDP and fiscal revenue, while the growth of agricultural GDP itself is so low and the proportion is so small that many local government officials think that with so much energy and financial resources invested in agriculture, how much can agriculture contribute to local GDP growth? How much can it contribute to the growth of local revenue? Just from the perspective of GDP and fiscal revenue, agriculture is indeed negligible, so many places are ignoring it and are unwilling to strengthen it, so it is increasingly difficult for agriculture to get the resources it needs, and it is not surprising that there are problems in agriculture and rural areas. Therefore, from a conceptual point of view, if we do not get rid of the strange phenomenon of "GDP fetishism", China's agriculture cannot be strengthened.

When it comes to investment and financing, whether many current specific policies and specific operating rules are reasonable or not is worthy of careful analysis. For example, since the mid-1990s, the central government has called on "companies + farmers" to require leading enterprises with driving ability to expand their bases and drive farmers to develop agricultural production. Practice has proved that this is a very good form. However, many large leading enterprises are faced with many problems. For example, if an animal husbandry enterprise in Heilongjiang or Inner Mongolia wants to build its base in the northwest, where can the project be reported? Is it reported in the planning department of this province or in the provincial newspaper of investment? If the enterprise is registered in this part of the province, and the base and processing plant are built in another part of the province, where can I apply for the loan? Where can I open a bank account? Originally, under the condition of market economy, this kind of problem should not be a problem. Where there are business activities, the government should provide such services. However, up to now, we still draw a circle everywhere as a prison. Enterprises can get better protection from the local government only if they operate in the administrative area where they are registered. once they leave the place where they are registered, they are likely to encounter all kinds of squeezes and difficulties. So, how can such a business model advocated by the central government continue to develop?

For example, it is particularly difficult for rural areas, especially farmers, to obtain credit funds. According to the results of the actual survey, of the 240 million peasant households in China, only about 15% have obtained loans from formal financial institutions, and about 85% of farmers basically get loans through private credit. This shows that the services provided by China's financial system to rural areas are actually very inadequate. There are a variety of reasons. As mentioned above, many people do not see it, nor do people especially engaged in finance. Under the premise of market and technological progress, agriculture is in fact an industry with a very high rate of return. This is one aspect. On the other hand, it has something to do with China's system, system, policy and law. For example, financial institutions believe that lending to farmers is very risky, and farmers do not have collateral. It seems bizarre to say that farmers have no collateral. As a farmer, the most basic thing is to have land. Land should be said to be a very important resource and a very important factor of production, and it is the most natural thing for it to be used as collateral. Don't the real estate developers in the city borrow money from the bank by virtue of a land certificate? However, this method will not work with the farmers, because it is stipulated that cultivated land cannot be used as a mortgage. Farmers have the right to use the land, but the right to use the land cannot be used as a mortgage. In that case, the peasants have almost no other means of production to mortgage. Of course, farmers still have houses, and real estate as collateral is also a common practice in the global financial community, but not for Chinese farmers. Because although the farmers' houses are built with their own money, they cannot be used as mortgages without property certificates. Therefore, for a farmer, the only two things of value cannot be used as mortgage by law. So, who is to blame for the lack of collateral for loans to farmers? Therefore, under such circumstances, the ability of farmers to obtain credit can be imagined.

On the other hand, 240 million farmers each grow only a few mu of land, so that some customers want to enter the financial system, it does make many big banks feel that the cost is very high, even if the loan can be recovered. As a result, many experts suggest that because the use of funds is very efficient for farmers, they can accept higher loan interest rates, so the financial authorities also agree that credit cooperatives provide loans to farmers. the lending rate can be doubled from the original benchmark interest rate. In fact, for farmers, the interest rate is not the most important, whether they can borrow money is the key. The annual interest rate doubles to more than 10%. It is understood that many farmers say that as long as their projects are right and lack of funds, they are willing to accept an interest rate of 25%. Therefore, can interest rates rise further when the supply of funds falls short of demand? The competent department said no, because it might lead to unfair competition. Therefore, we have set up a cage to bind ourselves: farmers are not allowed to mortgage their property, and the financial sector also says that there is no mortgage; farmers can accept higher interest rates, and the financial sector says they are not allowed to float any more. however, they would rather use very low interest rates to lend to inefficient enterprises, resulting in non-performing loans and setting up these very unreasonable systems on the farmers' side. Of course, this is very simple to say, but there are complicated factors behind it. It is not to change the law, saying that land and real estate can be mortgaged, and farmers will certainly be able to obtain loans. Some people are bound to ask, if the farmers' investment fails and the land and real estate are gone, then the farmers will be even poorer. So, from this point of view, there are many things that need to be considered as a whole. However, on the whole, we must see such a most basic phenomenon, that is, for rural areas, the most prominent problem in the allocation of resources is "people can not get out, money can not go down". Therefore, for agriculture and rural economy, if we want to improve their efficiency, we must find ways to transfer more and faster farmers, so that more agricultural credit funds and agricultural investment funds that can efficiently create social wealth can enter rural areas. This is an urgent problem to be solved at present.

There are many unreasonable phenomena in the financial services in rural areas. For example, if we analyze the agricultural credit structure, we can see that there are almost no long-term loans in the credit funds for agriculture. Farmers have almost no loans for infrastructure construction and large-scale modern facilities, but only working capital. In cities, a large number of enterprises, including many state-owned enterprises, are difficult to be called enterprises because they have no capital and rely entirely on bank loans for investment and construction. As a result, the bank's funds are occupied by a large number of non-capital enterprises, even if the enterprise is successful, its benefit is also very low. Because all the funds come from banks, enterprises are actually "working" for banks. What's more, once there is a risk in this kind of enterprise, the risk of non-performing loans is very great. So, how on earth can rural areas get the funds that can be used for long-term construction? It is obviously not possible to rely solely on the government. Although there is no stipulation that financial credit funds cannot be used to support long-term construction investment in rural areas, in fact, neither the state nor banks do so. This creates a big problem. For rural areas, it is often said that the agricultural sector can not come up with good loan projects, but in fact, if we do not issue long-term loans to agriculture and rural areas, where can good projects come from? At the same time, agricultural insurance is shrinking, and now there is no agricultural insurance in all places except for some agricultural insurance in the suburbs of Shanghai and the Xinjiang Construction Corps. The absence of insurance increases the risk of the bank. Therefore, the whole financial system is not matched, and the financial services provided to rural areas are not sound, which is a very fatal reason for the fact that it is difficult for agriculture to obtain funds.

Of course, China's agricultural and rural problems are very big, and there are many problems floating on the surface, such as the slow growth of farmers' income, the widening income gap between urban and rural areas, the lag of rural social undertakings, and so on. The real fundamental solution should be how to transfer too much rural labor force. It is the main problem to be solved at present that how to guide more investment and financing that have no benefit or even become non-performing assets in the city to the rural areas. For China, if the agricultural and rural problems are solved, at least half of China's problems will be solved.