Social Solidarity Economy in Rural China

International Newsletter on Sustainable Local Development #81

Yvon Poirier, September 2011

In other languages : français - Español - Português

In this issue, we are pleased to present an article on social and solidarity economy in China. It is the summary of the academic work of a Chinese student (who prefers to remain anonymous) at an American university. As you will see, people in China have also realised that cooperation and pooling energy and resources is the best way to achieving collective and individual improvement. This is in spite of the official ideology that has been implemented since 1979. This was when everything was privatised in China. Towns were broken up into individual properties and companies established with capitalist articles of incorporation, including shareholders. Nevertheless in the Chinese rural areas, some people failed to accept this turn of affairs, and maintained a shared collective approach. Others came back to it after some time. These villages became a reference in the poor rural areas of China. The per capita income was often ten times higher than the national average. More recently, many small-scale farmers’ cooperatives have been created to sell local produce, which helps protect individual producers from middlemen. About 13% of Chinese small-scale farmers are members of these cooperatives, and the income of these families is higher than that of individual farmers. This shows remarkable progress, as in many cases these cooperatives were created without the support of local authorities. The Central Government is beginning to admit that this is a positive development, and has established dedicated funds to support such projects. One major consideration is obviously to avoid any further increase to the rural migration to urban areas. It is indeed a recognised fact that it is rural poverty that causes this migration.

We never cease to wonder at the strength of local community-driven initiatives throughout the world, when people realise how much their situation and lives can be improved by pooling their efforts. Even in China, in spite of the reigning individualism, farmers and fisherfolk, coffee and banana growers are deciding to improve their living conditions by working together. As we have often shown in previous articles, when people decide to work together, they often start paying attention to other vital issues like housing, health and education. This also leads to a sustainable approach to their future and that of our planet, one that is similar to that of indigenous peoples who have a proverb that says “Development should be thought out for seven generations”.

We are not trying to pretend that this is the antidote to all capitalist markets. Nevertheless, it is obvious that this represents both a means of resisting and building solidarity and cooperation, that we believe will eventually replace the current dominant predatory and unsustainable model.

Editorial Team

Judith Hitchman

Yvon Poirier

Martine Theveniaut

Social Solidarity Economy in Rural China

Under the new communist leadership, China implemented a full land reform from 1949 to 1953. Land was taken from the landlords and distributed to the peasants. Starting in 1958, the government organised communes so that the peasants could organise large-scale farming with machinery, marketing and some manufacturing. In 1979, the new leadership decided to privatize the land to the farmers and the collectively owned industries were sold to private capitalists.

The reason invoked for this change was that the peasants in the communes had no individual motivation. This new system was called Household Responsibility System. In most communes, peasants agreed, or were forced to agree to the new system. However, a few refused and decided to remain as communes. For many of those who went to the new system, they went backwards. Tractors and other machinery were scrapped since they were not needed. But, many farmers could not even afford to buy a horse or an ox for work. This led to much poverty and this is recognized as one to the reasons that has forced tens of millions of people to move to large industrial urban areas in China.

Today, some of these communes show great success:

• The 30,000 villagers of Huaxi now have reached a total yearly income of 10 billion yuan (approximately 1.5 billion US). Besides farming, they own a steel plant, a horticulture company, a clothing plant, and others. The total sales revenue in 2010 was 50 billion yuan (8 billion US). This allows the village to provide free health services, education (up to PHD), housing, retirement benefits and other needs of the villagers.

• Nanjie village is located in a poor, agricultural province, Henan. The villagers collectively own Nanjie Group, which consists of 29 companies involved in food processing, ink production, pharmaceuticals, handicrafts, plastics, printing, farming and travel services. Similar to Huaxi, all basic public services, such as education, health care, housing and retirement benefits are freely provided by the commune. The village population is 3400, yet there are 7260 employees. Interestingly, jobs in agriculture are better paid than in factories since its considered harder work. The household income is about ten times more that average villages in the region.

• Xixiakou village, a commune in Shandong has a population of 1300. Over a 40-year span since 1970, this fishing village has accumulated more than 6 billion yuans worth of assets. Most households have private cars and the commune also built the largest zoo in Shandong Province.

• Liuzhuang, a commune in Henan with a population of 1700, was still deep in poverty in the 1980s. By 2009, it has raised the disposable income of members to 23,000 yuans per capita, more than ten times the national average.

In recent years, there has been a huge increase in collective enterprises, using the name «cooperative» which is less politically sensitive than «commune» which is identified to the Maoist era.

In Shanxi Province alone, there were more than 24,000 rural cooperatives (Han Yuhai, Peking University, 2010). Since 2003, the central government, understanding that relying only on individual households was not the best option has recognized that organising rural cooperatives was a way for these peasants to grow out of poverty. Otherwise, the peasants are pushed away from their land through forced land sales and renting. The government has devoted special funds to help reorganize rural households into cooperatives. By 2006, rural cooperatives covered 13.8% of the Chinese rural population. Even if much smaller in scale than the communes mentioned above, the income of their members is at least 20-30% higher than peasants who are not involved in any cooperative. The rationale behind the cooperatives is the same as communes – collective savings, higher investment, and shared profit. For example, they can buy vehicles to transport products instead of being totally dependant on middlemen. They can collectively own machinery and purchase goods.

Rural areas in China are facing huge challenges in irrigation. Individual households cannot take care of this system. Allocation of water to each lot of land is a huge problem. In a few rural areas, such as in Jiangxi Province, farmers still collectively run the irrigation system. In most of China, the irrigation system is in bad shape. This is why the central government is planning to spend 620 billion dollars in the next ten years on irrigation, since it has to pay for everything. This is why collective management and maintenance of irrigation is the only long-term approach to sustainable growth of agricultural production (Li Changping). Since the People’s daily has articles on these subjects, it shows growing awareness in China about these alternatives approaches.

The Chinese student says in her closing remarks. The prospect of the rural cooperatives is yet to be confirmed by future developments. Nevertheless, it is increasingly clear that a system where everyone cares about nothing other than one’s self interest does not truly maximize the welfare of individuals.

Yvon Poirier

News about Nanjie (in English)


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International Newsletter on Sustainable Local Development #81