Grain subsidies last big hurdle
The worsening plight of millions of grain farmers has made agriculture the last major obstacle to China's entry to the World Trade Organisation.
The United States and the European Union are demanding that China reduce the level of subsidies to its farmers, while Beijing insists it be treated as a developing country and retain the right to give subsidies at current levels.
A spokesman for China's Ministry of Foreign Trade and Economic Co-operation (Moftec) said yesterday no new talks were planned with the US on the farm issue, after the previous round in Washington in March that ended in disagreement.
He declined further comment. The US embassy also declined comment.
But Zhang Hanlin, professor at the WTO research centre at Moftec University, said the talks had not reached a deadlock.
'China and the US have already reached mutual understanding on all issues,' he said. 'The talks have not broken down. What is needed now is a political decision. It is hard to predict the timing.'
Long Yongtu, the Moftec vice-minister in charge of the WTO negotiations, in late March said China could give up the right to raise subsidies after entry into the WTO.
'The result of negotiations should be a victory for both sides,' he said. 'To achieve this, each side can make some small or large concessions. But we absolutely cannot give up this principle [of the right to farm subsidies] as the price of entry into WTO.'
Agriculture is the sector that would be hardest hit by China's entry. Official estimates are that 9.7 million farmers will lose their livelihoods in the seven years after accession, because cheaper imports of grain and other foodstuffs will make their production uneconomic. Worst hit will be the poorest farmers, those who live on tiny plots and in areas of the interior far from the rich consumers in the east.
'China can never compete with the US, Canada and Australia in the farm arena,' China International Capital Corp said. 'China can never modernise its economy without drastic changes in population structure.'
It said it would be a tremendous task to create jobs for and re-train nearly 10 million people who would be displaced, especially as the welfare system did not cover farmers.
'One of our major concerns regarding China's WTO membership is how to preserve social stability under high unemployment in the transition period.'
The plight of poor farmers has worsened since 1996, with prices of farm goods declining and the growth in their incomes falling each year. The average farm income last year was 1,640 yuan (about HK$1,536), an increase of 2 per cent over 1999, while the average urban income rose 7 per cent to 6,280 yuan.
Grain stocks are at record levels and more than 100 million rural residents have no work. The official media reports regularly on illegal taxes and levies aimed at farmers and the unrest they lead to.
Chen Xiwen, deputy director of the State Council Development Research Centre and one of China's top rural specialists, said the only solution was to allow large-scale migration of rural people into urban areas.
'The numbers of farmers must be reduced to effectively enrich farmers,' he said. 'It will be extraordinarily difficult to develop the agricultural industry and rural areas without accelerating urbanisation. Taking the initiative to promote urbanisation and moving surplus rural labour to towns and cities is crucial to . . . increasing farmers' incomes.'
