Chinese government pushes to finance family farms and other rural ventures

The restricted nature of ownership rights of China’s rural land has created a number of problems for the country. Two big ones:

• China’s rural residents have not been able to monetize their land by sale or rent the way urbanites have been able to do with property, which has created a long-term underclass.
• The modernization of the country’s agricultural sector is more difficult because it’s hard to enjoy economies of scale when managing large numbers of individually owned properties.

Now comes a new initiative aimed at mitigating both of these problems: The People’s Bank of China, the Ministry of Agriculture and Rural Affairs, the Ministry of Finance, and the country’s banking and stock securities regulators jointly issued a document (in Chinese) on “financial support for the development of new agricultural business entities.”

“Family farms, farmer cooperatives, and agricultural socialized service organizations” are specifically mentioned as “important forces to ensure stable income growth for farmers, effective supply of agricultural products, and agricultural transformation and upgrading.”

• The document encourages agricultural ventures to raise funds, including by listing on the Nasdaq-like STAR market and by issuing bonds.
• The aim is to financialize the countryside, and encourage financial institutions to work with rural residents and both private and communal owners of land.
• The document reflects two of Xí Jìnpíng 习近平 and his government’s priorities: poverty alleviation and rural revitalization.