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The commodity circulation system in rural areas: a new method for urban development in China

In the process of urbanisation in China, most resources have been invested in cities, creating a scarcity of resources in rural areas. As a result, there is an ever widening gap between urban and rural economic levels.  Rural areas, agriculture, and farmers are three important issues that influence urban development in China.  These three issues are known as San nong wenti [三农问题]. The Chinese government stressed the importance of these matters in the “11th Five-Year Plan”.  From 2005, in order to help farmers sell their produce and to increase liquidities in rural areas, the Ministry of Commerce of the People’s Republic of China successively proposed three plans to promote sales of produce. These policies are the following: Wan cun qian xiang shichang gongcheng [万村千乡市场工程; The Plan Connecting Ten Thousand Rural and City Markets], Shuang bai shichang gongcheng [双百市场工程; The Double 100 Market Plan], and Nong chao duijie [农超对接; The Plan Connecting Farmers and Businesses]

The Plan Connecting Ten Thousand Rural and City Markets” is a plan implemented in 2005. The main objective is to establish a link between agricultural markets in cities and rural areas and to advance the development of remote areas. Using government subsidies, an agricultural commodities network was established. This network extends from cities to rural areas, and is designed to encourage agricultural development and satisfy the needs of the farmers. In contrast, The Double 100 Market Plan” is a plan devised in 2006 to reform 100 large-scale agricultural wholesale markets and foster 100 large-scale businesses involved in the circulation of produce, in order to improve the rate of produce sales, as well as to encourage tighter links between cities and countryside through the circulation of produce. Finally, The Plan Connecting Farmers and Businesses” is a plan implemented in 2006. This plan promotes cooperation between farmers and businesses. With the help of the government, farmers can sign agreements with business operators to supply produce directly to supermarkets. In this way, a platform for the commercial transaction of produce has been set up to upgrade the agricultural industry.

Traditional market in Kunming, Gipouloux François

However, many problems remain in implementing these rural circulation systems. According to Guo Guoqing and Qian Minghui1, one of the main problems in the circulation of rural commodities is the regulatory issue. Because a mechanism regarding the regulation of commodities has not been established, fake and shoddy goods may enter rural areas.  This is detrimental not only to the development of the rural area, but also to the farmers’ quality of life. In addition, despite the government’s effort to set up the rural circulation system, many towns have not cooperated with the urban development plan. Therefore, the circulation paths for produce are often scattered and interrupted. A survey assessing the farmers’ preferences for the distribution of their produce indicated that 42.86% of the farmers preferred to sell their products to specific merchants and 35.71% of the farmers tended to transfer and sell their products independently. However, only 7.4% of the farmers chose to sell their products through the agreement with business operators. The results indicate that the circulation method for farmers’ produce has stalled. The farmers sell their produce independently and simply expect customers. No specialized circulation system or agricultural marketing network has been established or developed.

The establishment of the rural circulation system has, however, improved the circulation of population between the city and rural areas. The system can also assist urban development. The rural circulation system may be a solution that will help to resolve the serious problem of San nong wenti. However, at the present stage, the rural circulation system is immature, as we have seen. Therefore, to solve the problems it encounters, the Chinese government must continue to seek solutions.

  1. Guo Guoqing 郭国庆, Qian Minghui 钱明辉, « Woguo nongcun shangpin liutong de wenti yu duice 我国农村商品流通的问题与对策», Guojia xingzheng xueyuan xuebao 国家行政学院学报, 2007, Vol. 5, pp 18-28. []

Chi-Han Ai

Ph.D. candidate of EHESS ( École des hautes études en sciences sociales, Paris) focusing on regional economic development in China and Taiwan.

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