The “Third Plenum”, an important 5-year political meeting traditionally associated with economic reform, concluded on 18 July in Beijing with calls to deepen reforms and build a “high-standard socialist market economy”. Policymakers resolved to foster “new quality productive forces” to facilitate “revolutionary breakthroughs” in technology, industry, and green development, a resolution [1] adopted at the plenum states. Divided into 15 chapters and 60 sections, the resolution lays out a list of reform plans decisionmakers will attempt to put into practice within the next five years. Below we discuss those reform ideas from the resolution most significant for agricultural and rural development.
Under the title of “Promoting integrated urban-rural development”, the resolution dedicates an entire chapter (6) to agricultural and rural issues. The chapter vows to narrow the gap between urban and rural regions that has been challenging President Xi Jinping’s promise of “common prosperity”. According to the document, various measures will be put in place to achieve three interconnected goals: strengthening agricultural production, improving the livelihoods of rural people, and enriching rural areas. Specific measures include:
hukou reform
Reform of China’s household registration (hukou) system has long been under discussion. Currently, rural migrants who move to cities in search of work are excluded from most of the social services enjoyed by their city-dwelling peers. With an estimated 300 million rural people now living and working in cities, the resolution declares that “[w]e will push to see that eligible people who have moved to cities from rural areas enjoy the same rights as registered local residents with regard to social insurance, housing support, and access to compulsory education for their children living with them”.
The document states that the process of granting permanent urban residency to rural migrants will be accelerated, while at the same time protecting their customary access to rural land and their right to partake in rural collective undertakings. Hukou reform was last discussed at the “Two Sessions” gathering in March 2024. Smaller cities have already begun to experiment with urban residency programs for rural workers, but a nation-wide policy shift has yet to take place.
Reform of rural residential property
The resolution also calls for an easing of restrictions on the use of residential property in the countryside. Under existing laws, rural homes are only tradeable within the same village and cannot be used as collateral for loans—a rule that is widely believed to have kept farmers locked out of the property market [2]. These limitations will likely be eased in the near future, with the resolution promising farmers the right to capitalize on their rural residential properties “by leasing them out, contributing them in the form of shares, and engaging in cooperative ventures”.
Support for grain production
Ensuring self-sufficiency in staple crop production has been a long-standing goal for Chinese policymakers. Various sections in the resolution promise ongoing support for grain production. The development of high-standard farmland and new collective farm businesses are seen as important levers to promote the transformation of small-scale and scattered plots into large, mechanized, and efficient modern farms. The resolution also vows to “refine the pricing mechanism for the transfer of contracted land management rights”, which has allowed rural residents who no longer farm their land to rent out their land use rights to larger agricultural operators.
To support grain producers and prop up commodity prices, improvements in agricultural subsidy policies and insurance schemes are promised. At the same time, an “inter-provincial mechanism” will ensure that major grain-purchasing areas compensate grain-producing areas, thereby incentivizing net grain-exporting provinces to expand production.
Loss of cropland
Given China’s unfavorable farmland-to-population ratio, guarding against the loss of arable land due to industrialization and urbanization has been a major policy concern. Policymakers have sought to keep the arable land area stable by demanding local governments to make up for farmland losses by creating equivalent farmland areas elsewhere, but issues related to quality of the newly created farmland areas have hampered the success of the policy. While short on details, the resolution vows to “reform and refine the system for offsetting cultivated land […] and improve the acceptance inspection mechanism to make sure that newly-added arable land is of an equivalent quantity and quality”.
Rural revitalization
To reverse the decline of rural areas, policymakers are looking to “foster new industries and new forms of business in rural areas” that are hoped to provide jobs and incomes for rural residents outside of farming. While the resolution does not mention specifics, it refers to the Green Rural Revival Program in Zhejiang Province (also known as the Thousand – Ten Thousand Project) as a blueprint for promoting all-around rural revitalization. A support system for low-income rural residents and underdeveloped areas is promised to prevent rural residents from lapsing or relapsing into poverty.
Green development and climate change
The resolution dedicates an entire chapter (12) to green and low-carbon development. Policy goals include to take a coordinated approach to ecological conservation and to “actively respond to climate change” by reducing carbon emissions. While agriculture is not specifically mentioned, the text suggests that future policies will seek to address environmental degradation by “realizing the market value of ecosystem goods and services”. The resolution also vows to “further reform the system of paid use for natural resources”, highlighting the central role that eco-compensation standards may play in the future.
The resolution also puts emphasis on strengthening greenhouse gas (GHG) emissions accounting and trading systems. A “carbon footprint management system” is to be established, while improvements in the GHG emissions cap-and-trade system will help China to “actively and prudently move toward reaching peak carbon emissions and carbon neutrality”. Although agriculture is responsible for 6.7% of China’s GHG emissions, the sector has yet to be comprehensively integrated into China’s CO2 emissions accounting and trading system.
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