China Reapplies Farm Controls

But state interference will damage future harvests, analysts say

CHINA'S peasants have reaped a record harvest this year and given Beijing a short-term victory in its campaign to forestall unrest. Bending behind carts piled with sacks of wheat, peasants are filling state grain centers and providing the leadership with a political buffer against the collapse of communism in Eastern Europe as well as discontent at home.

Like China's imperial rulers, conservative communist leaders can find solace in the old maxim, ``plentiful grain, little panic.''

But efforts to boost grain production above this year's estimated harvest of 465 million tons threaten to stir unrest in the countryside, foreign analysts say.

In a new policy aimed at raising grain output, Beijing is defying the free-market principles underpinning China's bountiful harvests and stepping up interference in farming.

The shift is unlikely to sustain high grain yields in coming years. Instead, it will probably hamper China's effort to feed itself, while speeding the erosion of rural incomes, Western agricultural analysts say.

Local officials are tightening controls over seeds, pesticides, fertilizer, the transport and marketing of crops, and other essentials of agriculture in an effort to further the state plan for grain through ``two-tier farming.'' The new system sets a layer of collective officialdom atop family farms.

Village officials in some areas are promoting a ``collective economy'' by reclaiming property given to peasants when China broke up moribund communes and leased land to rural families a decade ago. Under the family-oriented arrangement, peasant incomes have tripled and grain production surged by one-third.

The two-tier policy was recently endorsed by ``key party and government departments'' at a national conference, according to the official newspaper China Daily. It has already been adopted in Anhui, Hebei, Hubei, and Hunan provinces, the official press reports. International aid agency officials say it is slated to be introduced nationwide.

Public descriptions of the program are ambiguous, reflecting the uncertainty arising from intense debate among the leadership over how much state control to reimpose on the economy, according to Western diplomats.

The ambiguity gives local officials leeway in enacting the program, but also a wide margin for abuse, diplomats and Chinese agricultural analysts say.

Officials must gain the consent of peasants before consolidating land into large collective fields and must provide compensation for any seized property, writes State Councilor Chen Junsheng in the Communist Party newspaper People's Daily.

They will, however, withhold facets of the ``coordinated collective service'' to push farmers to follow state policy, indicates another People's Daily report.

``The state could use funding, technology, and materials to either encourage or restrict farmers' production in accordance with its plan,'' the newspaper says. The new policy has provoked widespread anxiety among farmers who recall the former poverty in the communes and who worry the state will undermine the system of family tilling, reports the official newspaper Peasant Daily.

While such treatment of China's peasants is not new, the touting of ``two-tier farming'' mirrors the revival of traditional forms of strict economic planning throughout the economy.

China's leaders have in the past year upheld the imperatives of self-sufficiency and ample grain production in speeches carrying the signature of Communist Party patriarch Chen Yun.

Phrases representing the concept of ``equal wealth for all'' and other repudiated Maoist ideals appear in some descriptions of the system. The two-tier rural economy will ``let all farmers, rather than just some of them, prosper,'' China Daily says.

The program could be easily misinterpreted by conservative officials eager to reimpose communal farming, says Wei Daonan at the Chinese Academy of Social Sciences. China's per capita grain production steadily declined during the years of communal farming before the party launched reforms in the countryside in 1979. The Agriculture Ministry declined to clarify the policy.

The two-tier system is only the latest effort to ensure that gains in per capita grain production catch up with China's rapid population growth, Chinese officials say. After four years of stagnant output, Beijing shook up local governments in 1988 by imposing stricter quotas on grain farmers. It also raised the price it pays farmers for grain in 1989 and so logged a bumper harvest.

The recent rise in grain output, however, is unlikely to continue, says Cai Fang at the academy's Rural Development Institute. Rather than grow grain at a fixed state price, peasants will increasingly cultivate crops that fetch more on the free market, he says.

China would best encourage peasants to grow grain by lifting state price controls, economists say. China subsidizes grain by selling it in cities for about one-seventh the price it pays farmers.

But Beijing is reluctant to aggravate a $9 billion budget deficit by raising the price it pays peasants. And it shies from raising the cost of grain for urban workers lest the action spark turmoil.

Unwilling to use the ``carrot'' of free-market prices to coax peasants into growing more grain, China is reverting to the ``stick'' of strict quotas and other administrative steps like the ``two-tier'' system, diplomats and international aid officials say.

The coercive measures are likely to worsen rural discontent, Western diplomats say. Peasant incomes have fallen 4 percent this year, largely because a state austerity scheme has forced thousands of rural industries to close.

Peasants are less willing to tolerate harsh administrative policies than a decade ago, Wei says.

``Chinese in rural areas are more aware of how a market economy benefits them and have gradually learned to resist unreasonable policies.''

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