White Paper – The Grain Issue in China

Information Office of the State Council of the People's Republic of China

October 1996, Beijing


The Chinese government has always attached great importance to the grain issue. With a population of more than 1.2 billion, China is a major grain producer as well as a major grain consumer.

What is the food situation in China? What is the country's grain production potential? Can the Chinese people feed themselves? And how 'II China improve its grain production? Through scientific analysis the Chinese government, in the manner of seeking truth from facts, now addresses these questions of universal concern as follows:

1. New China Has Solved the Problem of Feeding Its People

The semi-colonial and semi-feudal old China before Liberation in 1949 was perennially haunted by the specter of starvation. For long periods of time in the old days 80 percent of the population suffered from starvation or semi-starvation because of the extreme backwardness of agricultural production. Natural disasters nearly always resulted in widespread deaths from starvation. In 1949 when the People's Republic of China was founded, the national grain yield per hectare was only 1,035 kg, and the per capita share of grain was only 2 1 0 kg a year.

After the founding of the People's Republic, the feudal ownership of land was abolished. Under the leadership of their government, the Chinese people devoted themselves to developing grain production through self-reliance and hard work. As a result, China is now able to feed 22 percent of the world's population on about seven percent of the world's cultivated land. Total grain output in 1995 more than quadrupled the 1949 figure, or an average increase of 3.1 percent a year. At present, China ranks first in total grain output in the world, with the per capita share of grain reaching approximately 380 kg (including legume and tuber crops), which is the global average. The per capita production of meat, aquatic products, eggs, fruit and vegetables has reached 41 kg, 21 kg, 14 kg, 35 kg and 198 kg, respectively, which are all higher than the world's average. Statistics from the UN Food and Agriculture Organization show that China contributed 31 percent of the world's increased grain output in the ~1980s. China's significant achievements in developing grain production have not only basically eradicated the problem of people not having enough to eat and wear and gradually raised the living standards of the Chinese people, but also made great contributions to the worldwide efforts to eliminate starvation and poverty.

The development of grain production since the founding of New China can be divided roughly into three phases:

The first phase (1950-1978): China's total grain output increased from 113.2 million tons in 1949 to 304.8 million tons in 1978, an average annual growth of 3.5 percent. During this 29 year period land ownership was first reformed and the peasants were led on to the road of mutual-aid and cooperation to liberate the productive forces, and remarkable success was achieved in improving agricultural infrastructure and the quantity and quality of farming equipment, and in promoting progress in agricultural science and technology. Therefore, a solid foundation was laid for the continued development of grain production.

The second phase (1979-1984): In 1984 China's total grain output rose to 407.3 million tons, increasing by an average of 4.9 percent a year during the six years from 1979 to 1984. This second phase saw the highest increase rate in the country's grain production, which was made possible mainly by a series of reform policies and measures initiated in the rural areas by the Chinese government, including, among others, the household contract responsibility system with remuneration linked to output, the two-layer management system featuring the integration of centralization and decentralization, and raising, by a fairly large margin, of the prices of grain purchased by the state. These important policies and measures greatly stimulated the enthusiasm of the farmers, brought into full play the potential for agricultural production accumulated through years of efforts to improve agricultural infrastructure, the level of science and technology and the amount of investment. In this way an end was put to the situation of China's chronic rain shortages.

The third phase (1985-present): In 1995 the country's grain output totaled 466.6 million tons, increasing by an average of 1.2 percent a year over the previous 11 years. While continuing to develop grain production in this period, the Chinese government has initiated measures to readjust the structure of agricultural production and develop a diversified agricultural economy. At the same time rapid progress was achieved in the production of various other kinds of foodstuffs, with the output of meat (pork, beef and mutton), aquatic products, eggs, milk and fruit reaching 42.54 million tons, 25.17 million tons, 16.76 million tons, 5.62 million tons and 42.11 million tons respectively, or 2.8, 4.1, 3.9, 2.6 and 4.3 times the 1984 figures, respectively. Despite a lowered increase rate of grain production, the quality of people's life was greatly improved because of increased non-grain food supply during this period.

The successful experiences of the People's Republic of China in solving the problem of feeding the whole population can be summarized as follows: It has always stuck to the principle that agriculture is the basis of the national economy, giving top priority to agriculture in national economic development. It has made the increase of grain production the key point in rural economic work, making all possible efforts to ensure a steady increase in total grain output. It has carried out the reform of rural relations of production. including implementation of the policy of the household contract responsibility system with remuneration linked to output and the two-layer management system featuring the integration of centralization and decentralization. In addition, the scope of market readjustment for grain has been expanded and the price of grain adjusted rationally so as to mobilize the enthusiasm of the farmers for grain production. The basic conditions for agricultural production have been continuously improved by expediting scientific and technological advances in agriculture, improving the quality and quantity' of farming equipment, increasing agricultural input and protecting the ecological environment. Given the precondition that grain production is never to be compromised, land resources have been developed and made full use of in a comprehensive way while a diversified economy has been vigorously developed to raise farmers' income.

At present, the great majority of both urban and rural residents in China have adequate food and clothing. The tasks ahead for the Chinese government are, while ensuring a continued increase in grain output, to vigorously promote diversified food production, readjust the food structure, and continue to raise the people's quality of life from the stage of simply having enough food and clothing to leading a relatively well-off and comfortable life. However, the Chinese government is aware that the level of balance between the supply of and demand for grain in the country will have to be further enhanced, and the tense situation between supply and demand will continue to exist for a long time to come. Meanwhile, because of adverse natural conditions and shortage of cultivated land and water resources in some places, there were, by the end of 1995, 65 million people (about five percent of the whole population) who still did not have adequate food and clothing. To tackle this problem the Chinese government has initiated the "poverty-alleviating program" to lift those people above the poverty level by the end of this century.

2. Prospects for China's Consumption Demand for Grain

In the years to come a scientific and moderate food consumption pattern which keeps pace with the national economic growth and conforms to the situation of the nation's agricultural resources should be brought into being among both the urban and rural residents. The Chinese government will strive to avoid a rapid increase in grain demand beyond the supply capacity through guided grain consumption and tapping the grain-producing potential as well as the potential of non-grain food production.

Since 1984, though the per capita share of grain has been relatively stable, the nutritional status of the Chinese people has markedly improved because of the increased supply of food of animal origin. Food supply per person per day in terms of calories reaches 2,727 kilo calories, including those from 70 grams of protein and 52 grams of fat. This figure is higher than the figures for those other countries with per capita GNP comparable to China's. Therefore, it can be said that the food supply in China has basically reached the average world level.

In accordance with the "China Dietary Pattern Reform and Development Program in the 1990s" and the dietary habits of the Chinese people, a food consumption pattern featuring medium calories, high protein and low fat will be gradually brought into being among both urban and rural residents. On the basis of retaining the traditional food structure, food of animal origin will be added to a proper extent to improve the food quality. This gradual change in the food consumption pattern will cause the staple food consumption to decrease while the supply of grain used for feed will gradually increase. Based on this assumption and by making unswerving efforts in grain production, China's per capita share of grain is estimated to reach approximately 400 kg by 2030, despite the fact that the population will reach a new peak. Over half of the 400 kg will be used for staple foodstuffs, while the rest will be used for producing food of animal origin so as to satisfy the need to improve the living standard and the nutritional level of the people.

The Chinese government believes that the above-mentioned food consumption pattern is likely to be realized. First, China has great potential for developing diversified food production, though the per capita grain share will not be increased by a big margin. Non-staple food will play an increasingly greater role in substituting for staple food as the supply of meat, eggs, aquatic products, fruit and vegetables increases. Second, the rapidly increasing demand for commercial grain used for feed can be slowed down through promoting scientific and technological advances in aquatic farming, enhancing the feed efficiency and increasing the proportion of grain-saving products like herbivorous livestock and poultry and aquatic products. Third, China today is at a period of low increase in food consumption. The experiences of many other countries prove that food consumption tends to be constant after having reached a certain level. The present-day urban food consumption level in China as a low-income country has gone beyond the practical limit.

This was caused by lack of domestic investment channels and the fact that people spend a greater proportion of their incomes on food. In the future the proportion of their increased incomes spent on housing and transportation will increase along with the implementation of medical, housing and other social security reforms. At the same time, the proportion of food expenses in the total consumption expenses of the people will decrease gradually and the increase of food consumption will be behind the income increase.

In the light of the above trend of change in consumption pattern and the estimated population growth, China's demand for grain in the next few decades is projected as follows: By 2000 the population will reach 1.3 billion and the total demand for grain will be 500 million tons, based on 385 kg per person; by 2010 the population will approach 1.4 billion and the total demand for grain will be 550 million tons, based on 390 kg per person; and by 2030 the population will peak at 1.6 billion and the total demand for grain will be approximately 640 million tons, based on 400 kg per person.

3. China Can Basically Achieve Self-Sufficiency in Grain Through Self-Reliance

The basic principle for solving the problem of grain supply and demand in China is to rely on the domestic resources and basically achieve self-sufficiency in grain. China endeavors to increase its grain production so that its self-sufficiency rate of grain under normal conditions will be above 95 percent and the net import rate five percent, or even less, of the total consumption quantity.

China has basically achieved self-sufficiency in grain at the present stage, and there are many favorable objective factors for her to maintain such achievement by her own efforts in the course of future development: Natural agricultural resources, production conditions, technical level and some other conditions ensure great potential in this respect.

The Chinese government has determined to even up the grain supply to meet the demand through increasing grain production, and is confident of its ability to lead the people throughout the country to achieve this goal. But at the same time it also knows clearly that this is not an easy task. First, the average amount of agricultural resources per capita in China is low compared with many other countries. China lacks cultivated land and water resources, and this is the dominant factor restricting its agricultural development. In these conditions China must make great efforts to advance its agricultural productivity and make it far higher than the average world level. Second, China's agricultural infrastructure is weak, means of production lag behind and it does not have sufficient ability to fight natural calamities. So a sustained effort should be made in these respects. Third, grain production will fluctuate in the course of the transformation of the economy into a socialist market one because of the small-scale production and decentralized management of peasant households. So adjustment and control of grain production should be strengthened. Fourth, because China is in a period of rapid industrial development there is a distribution tendency in resources that is unfavorable to grain production. So effective measures have to be adopted in support of agriculture, especially grain production. In a word, facing difficulties squarely, the Chinese government will continue to strictly carry out the basic policy of protecting cultivated land and ecological environment in its economic distribution and its work guidance and implement the two major strategies: developing agriculture by relying on science, technology and education in the countryside, and realizing sustainable development. Thus it expects to promote a fundamental change in the agricultural economic system and the method of increasing agricultural production, so as to facilitate the steady increase of the overall grain production capability.

While standing for the resolution of balance between the supply of and demand for grain at home, China will not refuse to use international resources as a necessary complement. This will, however, only play the role of regulation in varieties, in case of crop failures and to support poor regions. There are the following three reasons for China to even up its grain supply to meet the demand: First, grain production plays an important role in maintaining social stability. China is a country with a population of more than 1.2 billion, which makes it imperative for the government to ensure a high rate of grain self-sufficiency as a necessary condition for stability. Otherwise, it will not be able to maintain its national economy's sustained, rapid and healthy development. Second, stability of the grain market. The quantity of grain consumed in China every year is one fifth of the world's total. If China were to import a great deal of grain from other countries, the international grain market would be under severe pressure, and poorer countries would be unable to obtain enough supplies of cheap grain from it. Third, the employment of the rural work force. At present, China has more than 400 million laborers in the countryside, and the development of grain production is one of the main ways of stimulating the employment of the rural work force and increasing the income of the farmers. To import too much grain would have an unfavorable impact on grain production at home as well as on the employment of the rural work force. China's striving for relying mainly on her own efforts to solve the grain problem will serve only to improve the stability of the world grain market and strengthen the stabilizing factor of the international grain trade.

China has never relied on the international grain market too much. From the founding of New China to the eve of the 1960s China was a net exporter of grain. After that it began to import more than it exported. Since the reform and opening polices were introduced at the end of the 1970s the net import percentage in domestic grain production has been on the decrease. It was 3.2 percent from 1978 to 1984, 1.2 percent from 1985 to 1990 and 0.4 percent from 1991 to 1995. Therefore, the small quantity of grain imported by China will not imperil the stability of the international grain market. There is no basis to the international clamor about a "China threat in food supply." It is true that China imports some grain, but at the same time it also exports some foodstuffs with fairly high added value. From 1985 to 1995 the export value of foodstuffs and edible animals and poultry was US$ 75.6 billion, while the import value was US$ 34 billion, so China was a net food-exporting country. China is willing to establish comparatively stable trade relations in grain with the grain exporting countries on the basis of equality and mutual benefit.

4. Striving to Improve Production Conditions to Increase the Comprehensive Grain Production Ability

A series of measures will be adopted in protecting cultivated land resources, increasing agricultural input, and improving water conservancy facilities and the standard of agricultural equipment so as to increase China's comprehensive grain production ability. Only in this way can it fulfill the task of increasing grain output.

Protecting cultivated land is always the foundation for increased grain production. Over the years, certain laws and regulations have been worked out and perfected, including the Agriculture Law, Land Management Law and Water and Soil Conservation Law. The result has been an alleviation in the trend of rapid reduction of cultivated land, the net area of cultivated land reduction having dropped to less than 200,000 ha from the annual average of 300,000 ha before the 1990s. Following the speeding up of industrialization in the future there will be a growing demand for land for economic construction. In view of this the government will, in light of the principle of "economization on land use and little or no occupation of cultivated land," adopt still more effective measures to ensure the dynamic equilibrium of the total cultivated land, restrict occupation of cultivated land for non-agricultural purposes, improve the land preservation system and strengthen the protection of basic farmland. The examination and approval system for the use of land for construction must be implemented strictly and the development scale of cities controlled so as to efficiently use the available land and increase the land utilization rate. Administration of the plans for village and township construction and township enterprise development will be strengthened. Scattered township enterprises will be joined together to form industrial districts and residential areas concentrated to save as much land as possible for farming. A policy of linking the appropriation of land for non-agricultural construction purposes to land development and reclamation will be implemented.

Since the founding of New China, led by the Chinese government the Chinese people have built 84,000 reservoirs as well as many other flood control and water storage projects to improve production conditions. They have also improved 20 million ha of areas liable to waterlogging. The irrigated area has increased to the present 49-33 million ha from 16 million ha in the early Liberation period, and the water supply capability has reached 500 billion cubic meters, greatly strengthening the ability of agriculture to withstand natural calamities. The Chinese government will continue to work hard to build a group of large and medium-sized water control projects to solve the problem of unbalanced distribution of water resources in different regions and seasons. Agricultural capital construction will be undertaken on an extensive scale, so that the effective area of irrigated land will reach 53.30 million ha by 2000, 56.70 million ha by 2010 and 66.70 million ha by 2030, respectively accounting for 56 percent, 60 percent and 70 percent of the cultivated land. The rebuilding and repair of key irrigation and drainage projects should be quickened to increase the area with stable yields despite drought or excessive rain to more than 40 million ha in 2030 from the present 33 million ha. The per unit area yield of more than 20 million ha of the 2030 figure will reach 15 tons per ha. The use of water-saving irrigation methods and dry land farming are encouraged. Also by 2030, the area irrigated by water-saving irrigation methods will be increased to more than 40 million ha from the present 13 million ha and the effective utilization rate of irrigation water will be increased to more than 60 percent from 40 percent. In addition, the effective utilization rate of natural precipitation will be raised to upwards of 30 percent. At the same time, the improvement of medium and low-yield fields should be speeded up. China plans to upgrade 14 million ha of medium- and low-yield fields by 2000, with a target upgrading of 60 million ha of medium- and low-yield fields by 2030.

Since the founding of New China, agroindustry has developed by leaps and bounds, playing an important role in ensuring increased grain production. The total output of chemical fertilizer has increased to the present 24.5 million tons from 39,000 tons in the early Liberation period (expressed in 100 percent available ingredients-similarly hereinafter), and the amount used has increased to 35.70 million tons from 79,000 tons, averaging 375 kg per hectare of cultivated land. Agricultural machinery power has increased to 360.7 billion watts from 1.21 billion watts in the same period, the number of large and medium-sized tractors has increased to 670,000 from 1,300 and that of agricultural trucks to 800,000 from 4,000. Nowadays in the rural areas 162.8 billion kwh of electricity is used per year, while in the early Liberation period the figure was only 50 million kwh. As a whole, however, the agroindustry today is still unable to meet the needs of sustained agricultural development. For this reason, China will continue to make great efforts to expand its chemical fertilizer production and raise the self-sufficiency rate of chemical fertilizer. By 2000 China will be basically self-sufficient in nitrogenous fertilizer. At the same time, the production of farm chemicals, plastic film, agricultural machinery and electrical power and diesel oil will be developed rapidly.

The structure of national income and capital distribution of society will be gradually adjusted. Priority should be given to agriculture, especially grain production, in terms of planning and capital input, and a higher percentage of the fixed assets investment, state budgeted funds and bank loans will go to agriculture so as to increase the total agricultural input. By 2000 agricultural investment in the budget for the capital construction plan of the central government will increase to more than 20 percent from the present 17 percent. In light of the practice of the central government, local governments will also increase their investment in agriculture. The annual agricultural input of financial departments at all levels should increase by a wider margin than regular financial revenues. The increase rate of agricultural loans should be higher than that of other loans. The proportion of agricultural loans should exceed 10 percent of the total bank loans and credit cooperatives should increase the proportion of their agricultural loans. The rural financial system should be further improved, including the establishment of a rural policy bank, commercial bank and cooperative financial organization. The rural policy funds should be guaranteed to be mainly used for grain production. The Chinese government will continue to adopt a series of policies and measures for increasing the efficiency of agricultural input so as to promote enthusiasm for increasing input in grain production on the part of rural collective economy organizations and households. With the promise of due benefits to investors, the government should extend loans to large industrial and commercial enterprises which engage in agricultural development. The scale of using foreign investment for agriculture should be expanded, and preferential treatment provided for such investment, especially in grain production.

5. Developing Agriculture by Relying on Science, Technology and Education and Changing the Grain Increase Method

To change the grain increase method we must first carry out reform, optimize the industrial structure and farming system, stress scientific management, enhance the level of intensive farming in grain production and raise the utilization rate of agricultural resources. The most important thing is to rely on progress in science and technology, step up efforts to develop grain production by relying on science, technology and education and concentrate on high yields, high quality, high efficiency and low consumption. Since the birth of the People's Republic, China has made over 30,000 major agricultural scientific and technological achievements, of which over 6,000 have won awards from the state or ministries, and some of them have reached the international advanced level. The variety of the most important grain crops has been renewed three to five times, each time resulting in increased yields of 10 percent or more. In the past decade the total area sown to hybrid rice has reached 160 million ha, with an increased output of 240 million tons; the large-scale popularization of various comprehensive cultivation technologies has played an important role in grain production increase; and in the hi-tech sphere, including bioengineering, a number of important technologies, such as the new combination of two-line hybrid rice, have shown favorable development prospects. But, as compared with countries with advanced agriculture, China's agricultural science and technology lags fairly far behind. Hence, the Chinese government has chosen and put into practice the strategy of developing agriculture by relying on science, technology and education. It will adopt a series of measures to enable science and technology to play a greater role in increased grain production.

6. Comprehensively Developing, Utilizing and Protecting Land Resources for the Sustainable Development of Agriculture

China has always attached great importance to comprehensive development and utilization of mountain areas, water surfaces, grasslands and other resources to increase the output of various foodstuffs. From now on, China will continue to adhere to the principle of "never slackening grain production and actively developing a diversified economy," make full use of various resources and increase the supply of meat, eggs, milk products, aquatic products, vegetables and fruit. Meanwhile China should pay attention to the protection of agricultural resources and the improvement of the ecological environment to realize the sustainable development of agriculture.

To realize the sustained and stable growth of grain production and produce diversified foodstuffs China must handle well the relationship among population, resources and environment, strengthen the management of agricultural resources and protect the ecological environment. Since the 1980s China has made great efforts to conduct the construction of ecological agriculture and has tried every means to find a sustainable agricultural development mode that can not only increase the output of grain and other farm produce, but also help improve the ecological environment. In this period there has been a comprehensive improvement of soil erosion on over 67 million ha of land in small river valleys, and more than 2,000 experimental ecological agriculture stations of various sizes have been set up at the county, township and village levels. Moreover, China has unfolded large-scale projects for water and soil conservation throughout the country, and constructed a shelter-forest network for fields in the plains to control soil erosion. Important shelter-forest and other ecological projects in northeast, north and northwest China, on the middle and upper reaches of the Yangtze River and in coastal areas have taken shape. Pastoral areas have given up farming and restored animal husbandry when artificial grasslands have been constructed to prevent them from becoming deserts. All these measures have played active roles in improving China's ecological environment. China will continue to promote agricultural construction in an ecologically friendly way, start large-scale water and soil conservation, control soil erosion in small river valleys in a comprehensive way, prevent desertification and grassland deterioration, and strive to increase the coverage rate of forests. In the course of industrialization and urbanization China will continue to protect and improve the natural environment for agriculture. In this respect, it will focus on controlling environmental pollution brought about by industrial development, and popularize suitable technologies to help prevent and control industrial pollution. It will actively develop new sources of rural energy, try to slow down the destruction of vegetation and the deterioration of soil quality caused by the shortage of energy in rural areas. It will speed up the construction of hydropower facilities, reduce the proportion of coal in the energy structure, and combat the negative influences of acid rain and global warming.

7. Deepening Structural Reform and Creating a Favorable Policy Environment for Grain Production and Circulation

In the past decade or so profound changes have taken place in China's grain production and circulation system, as well as in the government's regulation and control methods of grain supply and demand and price fluctuation. The Chinese government will work hard to consolidate and perfect the existing achievements, and will deepen the restructuring of the agricultural economy in accordance with the requirements for the building of a socialist market economy system:

Make the rural basic management systems stable for long periods of time and improve them continuously. The household contract responsibility system with remuneration linked to output and the two-layer management system featuring the integration of centralization and decentralization are the basic management systems Chinese rural areas have adopted since the initiation of the policy of reform and opening to the outside world. As these systems have effectively promoted the production of grain and other agricultural products, and safeguarded the producers' own decision-making power in management and their economic benefits, they have won the heartfelt support of the broad masses of farmers. In 1983 the Chinese government declared clearly that the existing rural basic management systems would remain unchanged for quite a long time, and the public land contracted out by the collectives to peasant households could be used by the latter for as long as 15 years. In 1993 the government made a decision that upon the expiration of a land contract the term could be extended for another 30 years and that during the contract term farmers could freely transfer the land use right with compensation, on condition that the way of its use remain unchanged. The Chinese government will continue to encourage rural areas and small towns to develop secondary and tertiary industries to speed up the absorption of the surplus rural labor force, propel the localities, where possible, to gradually implement operation of cultivated land on an appropriate scale, further improve the economic benefits of grain production and strengthen the motive force for grain production development.

Making timely and appropriate use of the international grain market and regulating the relationship between the domestic grain supply and demand through import and export trade are also necessary for stabilizing grain markets. In recent years the grain prices on the domestic market have been approaching step by step those on the international market. To protect the farmers' basic interests the Chinese government will adopt the policy of imposing tariffs on imported grain according to the usual international practice.

On the eve of the founding of New China some Westerners predicted that the Chinese government would not be able to solve the problem of feeding the country's population. History has already shown the futility of such a prediction. In the coming decades, though China will be confronted with the reality of less cultivated land, a large population and great demand for grain, there exists huge potential for development. The Chinese government has experience and has developed methods for solving the grain problem, and the peasants have a vast reservoir of enthusiasm for production. It can be believed with full reasons that the Chinese government and people have the ability to solve the problem of grain supply by relying on their own efforts. Practice will prove to the world: The Chinese people can not only feed themselves, but also make their quality of life better and better year by year. Instead of forming a threat to the world's grain supply, China will make ever greater contributions to it.