This week’s issue of The Economist includes a Survey of China that covers key issues such the urban-rural divide, and the (politically) challenging, but economically useful, role of rural land reform. It notes that
- “Giving peasants marketable ownership rights, and developing a legal system to protect them, would bring huge economic benefits”, but that there is a risk to the government that “failure to handle rural issues properly can be destabilizing.”
While rural taxes have been removed, it is noted that new funding sources have not been put in place for public services, so some pressing problems have merely been shuffled rather than solved. In addition, where farmers are compensated for loss of land, it is at the “agricultural value”, which may be only 10 percent of its real market value (and the farmer may only get some it it anyway).
The paper is not always friendly towards China’s government, but it does recognize that the Chinese Communist Party (CPC) “has shown that it will take big risks if economic development demands them”. The experience of state-owned enterprise (SOE) reform is a good example. This may point to a positive outcome for the management of the rural question.
Other issues covered include comment on issues to watch over the next 20 years, such as:
All of these issues are large in scale and will have an impact internationally, as well as in China. Businesses need to understand the risks, as well as the opportunities, that lie ahead – and keep one eye on the medium and long-term while the other is busy being focused on today’s blinding growth.
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See news source:
Survey of China: Coming Out