The politics of the shareholding collective economy in China's rural villages

Abstract

Since the early 2000s, the collective economy, assets or property rights have gone through shareholding reform in an increasing number of China's rural villages. There are two main types of the shareholding economy. One type is the Cooperative of Shareholding Economy (CSE) that quantifies the total value of the village's collective assets and turns them into stocks to be distributed among all the villagers. Another type is the Shareholding Land Cooperative (SLC), which peasants spontaneously organized in some regions and voluntarily joined with their land-use contracts. Both types aim to turn ordinary villagers into the shareholders and thereby the genuine owners of the collective economy or assets. The SLC serves another purpose, which is to achieve economies of scale for agricultural production through reconcentration of village land. While the effects of the shareholding reform in empowering peasants are varied and limited, it does have the potential to make village governance more democratic.

Keywords:

• collective economy
• recollectivization
• peasant cooperative
• shareholding reform
• village democracy

Funding

This study was supported by a research grant from the National University of Singapore (R-108-000-035-112).

Notes

¹This program was designed to reduce income inequality in rural areas, expand the new rural medical system and improve the supply of rural public goods, among other things (Ahlers and Schubert 2012; Yeh, O'Brien, and Ye 2013).

²As Alexander F. Day (2013) well argues, the situation in rural China characterized by state involution in the 1990s was similar to that of the first half of the twentieth century, leading to the resurgence of the political advocacy of that period as well. With the AAT, China's liberals have been advocating the withdrawal of the state from the countryside and the peasantry's democratic self-governance. CSEs and SLCs seem to represent important steps in that direction.

³Southern Jiangsu has a developed economy with a high level of industrialization, whereas northern Jiangsu is an average agricultural region.

⁴Jiangxiang and Huaxi (southern Jiangsu), which I visited in December 2012 and January 2013, are the villages of this type.

⁵Xixi (southern Jiangsu) and Lijiazhuang (northern Jiangsu), which I visited in July 2005 and January 2012 respectively, belonged to this category.

⁶As the 2013 party decision stipulated, SLCs must be founded on ‘the premise of upholding and improving the system for providing the strictest possible protection for farmland', and aimed to ‘develop large-scale agricultural operations in diverse forms’ (ZZGT 2013).

⁷According to the information offered by Weitang township government.

⁸This sub-model can be found in Tianjin as well. For new villagers, such as women who married into the villages, they could purchase shares (H. Zheng et al. 2012). A mixed pattern of CSE management prevailed in the Hanchuan and Laohekou regions of Hubei. Many village governments scrapped villagers’ land-use contracts with their consent, and then provided the investors with the recollectivized land. The village government, however, did not ‘rent’ the land to the investors but used the land to join the enterprises as a shareholder on behalf of fellow villagers. Thus, these private enterprises operated more like joint-stock ones, whose profits were divided between the village and enterprise owners according to the prior negotiated formulae (Guo, Chen, and Wang 2012).

⁹Most of the peasants I met and interviewed in Suzhou were scattered in the rural areas surrounding the city and sold their crops in the city's many food markets. From my interviews with those whose villages did have SLCs or who knew the SLC practice in their regions, I did not find any two SLCs which were of exactly the same type. The reason, as I learned from rural officials, could be that the SLC was still a ‘new-born’ thing (xinsheng shiwu) on which no legislation was available yet. I also interviewed a number of peasants and officials in Funing who told me similar stories, except that SLCs were obviously less common there. This phenomenon contradicted my expectation, as northern Jiangsu is an agricultural region and SLCs aim to first and foremost increase grain output. According to my observation, two reasons might explain why SLCs were less prevalent. First, northern Jiangsu, at least the Funing region, did not have as much ‘under-utilized’ farmland as did most of southern Jiangsu. Second, peasants there did not display much enthusiasm for achieving ‘economies of scale’ through land recollectivization.

¹⁰In terms of its role as a broker, the first type of SLC was similar to the ‘company + cooperative + households’ model in Yan and Chen (2013). But the addition of ‘cooperative’ in Yan and Chen's model mainly aims to allow farmers ‘more collective power’ in dealing with the company. It, too, resembles Zhang and Donaldson's (2008, 38) third form of relationships between agribusiness companies and farmers in China, specifically in that the contracting company ‘establish[es] production bases by renting the land (use rights) from the collective owner, the village, and hiring village residents … as company employees'.

¹¹In some rural areas in northern Jiangsu, if the size of the SLC's land was not large enough to achieve economies of scale, it also allowed other villages’ households to join (interviews with peasants, 12–14 April 2014, Funing).

¹²There are also a few SLCs whose businesses go beyond agriculture in its traditional sense and cover food-related industries and services (interviews in Suzhou).

¹³According to my interviewees, thanks to the strict regulation of the use of farmland, these non-agricultural businesses mostly involved grain processing.

¹⁴As Yan and Chen (2013) indicate, informal mutual aid practices and cooperative associations have existed since the HRS.

¹⁵It was allegedly government efforts that accounted for the percentage of the villages that had FPCs increasing from 0.64 in 1997 to 20.75 in 2008 (Deng et al. 2010).

¹⁶It should not be hard to persuade peasants to join SLCs. As a 2004 survey showed, most Chinese peasants preferred ‘land cooperatives’ to ‘full private ownership rights’ (Kong and Unger 2013; Brandt et al. 2002).

¹⁷Of course, in the ‘Law of the People's Republic of China on Specialized Farmers Cooperatives’ which was adopted in October 2006 and went into effect in July 2007, the cooperatives are defined as ‘mutual-help economic organizations joined voluntarily and managed in a democratic manner'. And the cooperatives’ directors and supervisors ‘shall be elected at the membership assembly’ (Article 26). Contrasting with SLCs or other shareholding corporations, institutionalized democratic mechanisms are not present at all in the farmer cooperatives.

¹⁸As I learned from my interviewees in Suzhou, the specified value of each share does not correlate with its dividend, which hinged on the SLC's income, but is the ‘transfer’ price among the SLC members. The Shanglin SLC Charter stipulated that its shares must not be sold to outsiders, nor could the SLC member quit or take back his/her land. But the shares could be inherited or sold among its members.

¹⁹The most likely reason was that unlike Shanglin, Caodun village government had no ‘mobile land’ left and all the village land was leased to villagers under the HRS.

²⁰According to a survey in 72 villages of five provinces, more than 70 percent of the respondents supported the AAT. And 57.9 percent expressed ‘trust’ in the regime (Chen and Qi 2008).

²¹It should be noted that in none of these studies was evidence of land grabs or coercion found in land recollectivization. This suggests the possible weak status, if not marginalization, of village cadres in this process.

²²There is no compelling evidence to prove that Chinese peasants support either land privatization or new agricultural collectivism. Peter Ho's (2013) study suggests that China's insecure land tenure is deemed credible by most of the peasants.

²³Instead, the key to the growth was not family farming (baogan dao hu) or the HRS but baochan dao zu (a ‘small group responsibility system’ that contracted output to each of the [small work] groups within the team) and baochan dao hu (contracting output to the individual household). Bramall observed that the growth of grain output in Sichuan actually declined under the HRS, rather than accelerated. His data showed that the average annual real growth rate in 1977–1982 was 9.1 percent, and that it dropped to 4.9 percent in 1982–1988 (Bramall 1995).

²⁴After the production team, the lowest tier of the commune, was designated as the production and accounting unit in 1962, grain output grew modestly but stably – except in the period in which income differentials were forced to reduce for political reasons. This modified commune system, often referred to as the ‘team system', was allegedly effective at solving the motivation problem through work-point accounting which tied incomes to work done. It, too, captured ‘many available economies of scale’ and served ‘as a basis for continued technical improvements in irrigation, mechanization, and so forth’ (Putterman 1985). The team system referred to here was virtually smaller scale collective production.

²⁵‘Over the longer terms', Harry Harding (1987, 107) predicted, ‘the Chinese are encouraging the creation of various forms of rural cooperatives to provide many of the rural services that were previously the responsibility of the communes … . [M]any of the subsidiary activities surrounding agricultural production would be organized on a cooperative basis'. An excellent summary of similar views and analyses may be found in Yan and Chen (2013).

Additional information

Notes on contributors

An Chen

An Chen is an associate professor of political science at the National University of Singapore, and a former senior research fellow at the Chinese Academy of Social Sciences. He received his PhD in political science from Yale University. He is the author of Restructuring political power in China: alliances and opposition, 1978–1998 and The transformation of governance in rural China: market, finance, and political authority.