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Arguments - Prediction Error
Agricultural Policy
China's agricultural sector faces many problems, and its future development will greatly depend on the economic decisions made by the country's political leaders. Therefore, much depends on China's overall political situation. While many observers envision a continuation of economic reforms in China, surprises cannot be excluded. The swift and largely unexpected breakdown of the Soviet Union shows that radical changes in economic policy can come over night. China's political system still functions behind closed doors, and many political observers admit that they have no idea which political fraction might gain the upper hand in the long run. Any prediction of China's agricultural development therefore has a high degree of uncertainty. Essentially, we can only make "if-then" projections that link agricultural predictions to specific political and economic scenarios.
Short Description of the Problem
There are many open questions and uncertainties regarding China's agricultural policy. Here is a list of problems that we consider most critical and that can only be solved through the decisions of China's political leaders.
WB00860_.gif (262 bytes) How will China deal with the problem of its excess labor force in agriculture and the threat of large-scale unemployment in rural areas? In particular, will the government succeed in creating nonagricultural jobs in rural areas that could ameliorate rural unemployment?
WB00860_.gif (262 bytes) What will China do to stop or diminish the loss of high-quality cropland due to the expansion of infrastructure, industrial sites, and residential areas? Will the government introduce zoning laws?
WB00860_.gif (262 bytes) Will the administration be able to implement and enforce measures for preventing a further increase in the pollution of critical agricultural resources (water, soil, air)?
WB00860_.gif (262 bytes) How will China deal with the deficit and degradation of agricultural infrastructure, such as dams, reservoirs, and irrigation systems? In particular, what will the government do to build and upgrade systems to control flooding, which is a major factor in disaster-related food insecurity?
WB00860_.gif (262 bytes) Does the Chinese government have the political will to further liberalize internal food trade and market access for the farmers? Will the government allow private ownership of agricultural land? Will the state abandon the compulsory procurement system for grain and move to a more market-oriented grain supply with adequate producer prices for wheat and rice?
WB00860_.gif (262 bytes) What will  China's position on international trade be? Will the political leaders favor China's full integration into the WTO and open its markets to international agricultural trade? Will China abandon its long adherence to the concept of national self-sufficiency in food? 
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The optimistic view Tables & Charts
Many political observers have argued that China's reforms have already reached the point of no return. Especially the introduction of family farming, which gave land to hundreds of millions of farmers and has greatly improved the population's food supply, seems to be undisputed. The economic liberalization in China has also triggered a broad wave of entrepreneurial initiative, which is the engine driving the country's economic progress. It will create a middle class whose members are unlikely to favor any return to an authoritarian command-and-control system. Another development unparalleled in other developing countries is the emergence and growth of village industries, especially in China's coastal regions. They have significantly improved living conditions for a large number of people in rural areas.
Despite the official rhetoric of the development of a "socialist market economy," straightforward market capitalism has already permeated many sectors of Chinese society. Large farmers' markets crowded with customers, busy restaurants, and numerous small private businesses - from computer shops to bakeries - in all of China's major cities indicate that the market economy has taken hold on a broad basis in Chinese society. China's economic reforms are linked with the improvement of living conditions in broad sectors of the population.
The entrepreneurial spirit is observable everywhere.  Even hard-core, high-ranking socialist party officials are quitting their positions and are flocking to the private sector: they "jumping into the sea," as the Chinese say. The most attractive careers for university graduates are no longer in the party hierarchy or state bureaucracy, but in the business sector. Many Chinese researchers and scientists have given up fighting for lifetime academic posts or secure teaching positions, and are trying to get into the commercial sector - even if they have to start at low-level junior positions. There has been a sea wave change in attitudes in Chinese society; a great majority of the population greatly appreciate the economic opportunities brought by the political and economic reforms.
This social change in China lends some support to the argument that any counter-revolution aimed at re-establishing a command-and-control society would necessary fail, because it would not have the support of the masses. Maybe, China is in fact facing a long period of economic growth and growing prosperity, not unlike the "economic miracle" of Germany after World War II.
The pessimistic view
On the other hand, we should not forget that only three decades ago, a faction in China's power elite around Mao's widow attempted to return society to grass-roots communism. The strong anti-intellectual drive in the "Cultural Revolution" was not an ephemeral ideological peculiarity of small group revolutionaries, but a deeply rooted streak in the culture of China's ruling elite. When the Red Guards closed down the Central Statistical Office and ordered researchers to work in the rice fields, and when they punished (or killed) those they considered intellectuals, they were just exhibiting to an extreme the fundamental dislike of individual and intellectual freedom that has characterized China's rulers for centuries.
It is still a dominant cultural characteristic of the Chinese ruling class - communist or not -  that they believe they not only have the right, but the obligation, to intervene in people's everyday lives and "improve" their condition. Stemming from the Confucian philosophy of legitimate governance, this interventionist ideal of political rule can be positive in a moderate form or can be a great threat to scientific freedom and progress in China, if perverted into extreme authoritarian rule. If a government tells the farmers what they should grow, where, and when (as was the case in pre-reform communist China), the result can only be - at best - stagnation in agricultural productivity. However, if a government tells a researcher what to investigate or an engineer what technology to develop in which way, it will certainly damage that individual's creative potential in the long run. Nothing is more devastating to scientific and technological progress, which China urgently needs,  than the censoring of information sources, the suppression of free communication, and above all the discouragement of individual initiative. There are some signs that Chinese rulers might tighten censorship and intensify political control if they believe the reforms have gone too far.
The "China bubble" could also burst, as some observers believe, if a global (or regional) economic recession were to hit China's still-fragile economy. Three factors might become critical: (1) the growing number of people being laid off from state industries and bureaucracies, and the rural unemployed with little or no land might reach a critical mass; (2) the tension between ethnic groups might intensify, especially if the people in the hinterland become aware that the benefits of the reform have been (geographically) distributed rather unequally in favor of the coastal provinces; and (3) there could be growing civil discontent with widespread corruption and the "new rich."
Related Arguments

Agricultural Policy:   Trends     Impact    Data Quality    Prediction Error    Intervention Possibilities    Intervention Costs

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Revision 2.0 (First revision published in 1999)  - Copyright 2011 by Gerhard K. Heilig. All rights reserved. (First revision: Copyright 1999 by IIASA.)