2016年CRI Supply-side Reform Highlighted in China's Rural and Agricultural Development

Chen Xiwen, deputy head of China's Central Rural Work Leading Group, explained that the supply side reform is aimed at making products meet market demand.

"We continue to import grain from foreign countries, which implies there must be some problems with our supply system. To make our products meet market demand and set reasonable prices for them, we should make the agricultural sector 1 adjust to the new normal of economic development, accelerate rural reform and optimize 2 the overall industrial structure of agriculture."

He also suggested that the country should take a wider view of the productive capacity of the agricultural sector.

"Imbalance now exists between the supply and demand of major agricultural products of China and the problems mainly exist on the supply side. We can't say whether agricultural development is successful simply by judging from the quantity of production. We should also take into account whether the products can fit the market in terms of quantity, variety as well as quality. This is very important."

According to the policy paper released on Wednesday, total grain output in 2015 increased 2.4 percent year on year to around 621 million tons, the 12th straight year of growth.

However, some produce like corn saw supply gluts 3, while others like soybeans are in short supply.

Li Guoxiang, a researcher with the rural development institute at the Chinese Academy of Social Sciences, believes that the agricultural sector should be regulated in accordance with market mechanisms 5.

"While playing down the risk of food shortages, the policy paper also stresses the importance of supplying agricultural products of good quality. All in all, to reform the sector is the core of this policy document; that is to say, farmers should plant what consumers demand."

Wednesday's document has pledged to create at least 53 million hectares of high-quality farmland by 2020, and encouraged enterprises to "go overseas" to balance exports and imports.

It also sets targets of increasing woodland coverage 6 to above 23 percent by 2020, and wetland acreage above 500 thousand square kilometers.

New national standards on food safety will be prioritized and standards on pesticides 7 residues 8 and veterinary drugs will reach international standards by 2020.

Li Guoxiang notes that both governmental supervision 9 and the market play important roles in achieving that goal.

"Under the market mechanism 4, products planted with a strict use of pesticides and chemical fertilizer would be priced higher, and by strengthening supervision, any violations 10 in the use of pesticides and chemical fertilizer should be severely 11 punished and those involved held responsible."

This is the 13th consecutive 12 year that the document has focused on the issues concerning agriculture, rural areas, and farmers, highlighting the strategic importance of these sectors 13.

For CRI, I'm Xie Cheng.