China’s Xi urges revival of old rural distribution system to boost economy and enhance ‘ties with rural masses’

From the days of Mao Zedong until the late 1970s, rural cooperatives were the only place where peasants could access daily goods and farming supplies

Renewed call is in line with president’s recent push for China to embrace an inward-facing ‘dual-circulation’ strategy of domestic development

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Rural cooperatives have long been a driving force in the country’s agricultural and rural development, and President Xi Jinping wants them to be a “bridge for the Communist Party to maintain close ties with the rural masses”. Photo: Xinhua

Published: 8:30pm, 25 Sep 2020Updated: 9:27pm, 25 Sep 2020

President Xi Jinping has renewed his call for a revival of an old state-run distribution system to boost the rural economy, unite farmers and strengthen the ruling Communist Party’s power base in the countryside.

In a note to a conference hosted by the All China Federation of Supply and Marketing Cooperatives – also known as China Co-op, which supported the party’s rule in the countryside during the command-economy era from 1949-78 – Xi urged government officials to revamp the system to help modernise rural villages and to consolidate the party’s governance in rural areas, according to the official Xinhua news agency.

Xi said the cooperatives, which throughout their long history have been a driving force in the country’s agricultural and rural development, need to “become a comprehensive platform for farmers’ production and lives, as well as a bridge for the Communist Party to maintain close ties with the rural masses”.

The renewed attempt to inject new life into the decades-old co-op system came after Xi introduced a new dual-circulation strategy in May to rely more on the domestic economy as the country’s diplomatic relationship with the United States deteriorates. The model focuses on internal circulation – the domestic production and consumption cycle supported by innovation – while trade with other countries and regions, or external circulation, is regarded as secondary for economic growth.

Revitalising the China Co-op – a cabinet-level agency – was also in line with Xi’s campaign to reform and expand the co-op system since he became president in 2013. Under the China Co-op system, there were 2,762 cooperatives at the county level or above by the end of last year, with close to 90 per cent fully funded by the central government, according to government data.

At more local levels, there were more than 32,000 cooperatives at the end of 2019, and almost all rural towns have at least one cooperative at the moment, compared with slightly more than 50 per cent in 2012. In addition, there are nearly 180,000 farmers’ cooperatives that specialise in a variety of agricultural products, from cotton and tea to seafood and vegetables.

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