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AUTHORS Elizabeth Davis Nick Sackos CONTRIBUTORS B.A.S.E. Beijing Robert Mangurian + Mary-Ann Ray Irene Keil David Gregor Tiffany Lin

THE DOLLAR MENU CAOCHANGDI B.A.S.E. Team Elizabeth Davis Nicholas Sackos The cost of food stands as a signifier of the socio-economic environment in China’s urban villages. This availability of cheap produce fuels the culture of street food and locally operated restaurants. While this study alludes to the food culture, it also highlights the larger economic conditions of living in urban China. Each quantity of the following items costs five yuan, less than one U.S. dollar (approximately 77 cents).


“China is able to feed 20% of the world’s population with only 7percent of the worlds farmland”

The United Nations Food and Agriculture Organization via China Daily.

eggplant. source: xinfadi market.


green beans. source: xinfadi market.


“As a percentage of income, people in China spend 50% on food.” -Brown, “Who Will Feed China?”

potato. source: caochangdi farmers market.


coca cola. source: caochangdi grocery.


“In the 1930s, ... plant-based foods comprised 97 percent of Chinese caloric intake, and this diet enabled farmers to maintain subsistence livelihoods on a limited land base… the share of calories consumed from grain and vegetable products in 2002 was 63 percent” -

cilantro. source: xinfadi market.


sweet buns. source: caochangdi bakery.


“Statistics from the United Nations Food and Agriculture Organization show that China’s garlic exports accounted for as high as 90% of the world garlic trade volume in recent years.” The United Nations Food and Agriculture Organization via China Daily. garlic. source: xinfadi market.


yanjing beer. source: caochangdi grocery.


“China dominates world markets in a variety of product areas including garlic, apples, apple juice, mandarin oranges, farm-raised fish and shrimp, and vegetables.� -

brown eggs. source: caochangdi farmers market.


mochi. source: caochangdi grocery.


“China produces 30 percent of the world’s rice, 20 percent of the world’s corn, a fourth of the world’s cotton, an estimated 37 percent of the world’s fruit and vegetables, and half of the world’s pork.” -

rice noodles. source: xinfadi market.


dried chili peppers. source: xinfadi market.


“[Eating out] accounts for 5%-15% of total food expenditure” - Xin Meng and Xiaodong Gong, Impact of Income Growth and Economic Reform on Nutrition Availability in Urban China: 1986–2000

mushrooms. source: caochangdi produce market.


jian bian. source: caochangdi vendor.


“Prices are rising partly due to increasing world commodity prices, but also because of China’s inability to boost domestic production.” - June08/Features/ChinaFeed.htm

red cabbage. source: xinfadi market.


jalepeno. source: xinfadi market.


“China’s rising food prices will become the world’s rising food prices”

–Brown, Who Will Feed China?: wake-up call for a small planet

tofu sheets. source: caochangdi market.


lychee. source: caochangdi produce market.


“In the next 50 years alone mankind can consume as much food as it has in the past 10 thousand” –BBC, Third Eye

boiled pork dumpling. source: family restaurant, caochangdi.


loose floral tea. source: caochangdi street vendor.


“In the next ten years, the price of food is expected to raise 50 percent” –BBC, Third Eye

summer melon. source: caochangdi produce stand.


pork, tofu, + egg wrap. source: caochangdi street vendor.


“A breakthrough in the engineering of hybrid rice ... pioneered by Chinese rice scientists in the 1970s, led to significantly increased yields” -Huang, Rozelle & Rosegrant, China’s Food Economy to the Tewenty-first Century: Supply, Demand, and Trade

rice. source: caochangdi bulk market.


assorted kabobs. source: caochangdi street vendor


“Multiplying 1.2 billion times anything is a lot.”

-– Brown, Who Will Feed China?: wake-up call for a small planet

peaches. source: caochangdi produce market.


raw peanuts. source: caochangdi product market.


“In china, consumption will triple in 9 years” –BBC, Third Eye

bananas. source: caochangdi vendor.


lettuce. source: caochangdi vendor.



“believed to be one of the world’s biggest wholesale food markets and provides a trading center for as many as 80,000 people every day, 24 hours a day, 365 days a year.” Ai, Guozhe. “Agro Market To Go ‘International.’ China Daily. 2010-08-17.














As the urban villages throughout the nation’s capital are quickly being demolished, Caochangdi has managed to avoid termination in most part due to its status as an “International Art Village.” Throughout the day, numerous carts and vendors populate the street edges, enlivening the otherwise drab village streets. In the evening, the restaurants open their doors and litter the streets with tables and grills. During the summer, the lack of ventilation at home accompanied by the low cost of food encourage this street culture to thrive.

Coal hives, like the ones featured below, are used by street vendors to heat kabob grills and warm dumplings, edemame and peanuts.


Red chilis drying in the sun.



“I’ve been picking this weed ever since I was a little girl. No one else knows that it is edible so I always have enough.” Denise, CCD330 restaurant and gallery owner on her unique grass salad.


BELOW: Noodles made fresh to order by the owner and chef [right]. The owner, his wife, and son all live together in an approximately 200 square foot space behind the restaurant. FAR RIGHT: The meat market during afternoon siesta.





The making of jian bian. ‘Times Square’, Caochangdi.


date//june 8, 2011. location//’tims square’ caochangdi, beijing. china.



The map of China leaves a deceptive impression of the available agricultural land mass. While China manages to supply 20% of the world’s produce, they do so with only 7% of their overall acreage. This is predominately due to the lack of arable land in the western half of the country. The additon of Xinfadi’s international market in 2010 helped to establish Beijing as a leading agricultural exportor by eliminating the need to pass through Shanghai and Hong Kong.

BELOW: world map highlighting primary sources of agricultural imports as indicated by 2010 Xinfadi press release and national agriculture statistic records RIGHT: a mapping of Beijing’s urban farmland generated by examination of Google aerial















RESEARCH + TEXTS [59] Beijing’s Struggle to Keep Arable Land Away From the Developers [61-65] Who Will China Feed? [67-70] Farmland Preservation in China


“The amount of arable land per capita is 40 percent less than the world average. And while the population is still increasing, so too is the amount of arable land decreasing.�


Beijing’s struggle to keep arable land away from the developers 2009-06-25 by Kim Hunter Gordon Proactive Investors China. 25 June 2009.

Today was “Land Day” in China, which has been a date in the Chinese news calendar since 1991 as a way of promoting the preservation of arable land. This is something which the majority of Chinese still depend on for a living but which is under constant threat from industrialization and real estate developers, who often obtain it illegally in exchange for bribes to from corrupt local government officials.

Mainland China real estate stocks rose an average 1.23 percent today.

This year’s paradoxical slogan “Safeguard scientific sustainible development. Protect the red line of agricultural land” sums up the conflict in China’s two-tiered approach to development as it tries to increase industrial output at the same time as safeguarding the livelihood of rural residents by not building on at least 18 mu (1.2 billion square kilometers) of arable land in the country – the “red line” number that government experts have come up with as a critical point. By the end of 2008, there was only 1.22 billion square kilometres Chinese arable land. Over two-thirds of China’s population is classed as agricultural residents. Every single one, whether young or old, is entitled to a piece of land to till. The current average 11.4 mU (930 square metres) farming land per person. This land is redivided by the village councils every few years, taking into account any deaths and (official) births. On top of this, every rural family is entitled to housing land in the village (they are technically forbidden to build on the farming land). While China has 20 percent of the world’s population, it has just 7 percent of its arable land. The amount of arable land per capita 40 percent less than the world average. And while the population is still increasing, so too is the amount of arable land decreasing. Between 1997 and 2007, the average decrease was 7.5 square kilometres a year. There are concerns that protecting the “red line” will push up property prices, by not giving way to new projects. However, the Ministry of Land and Resources recently surveyed 620 real estate development projects, demonstrating that land prices account for only 23.2 percent of house prices, compared to 60 percent in Japan. RESEARCH + TEXTS | 59

“ has been surprisingly successful at meeting the basic food needs of its population of more than 1.3 billion people, and it has stepped up as a major food exporter. How long can China sustain this momentum?�


Who Will China Feed? Bryan Lohmar & Fred Gale

In the 1990s, many analysts saw China as a major potential market for agricultural exports from the United States and other countries. Lester Brown’s highly publicized 1995 book, Who Will Feed China? A Wake-Up Call for a Small Planet, predicted that China would turn to international grain markets to meet the expanding food demands of its increasingly affluent population. World Trade Organization (WTO) accession was expected to be a watershed event that would finally open the Chinese market to grain and meat imports. While China has emerged as the world’s leading importer of soybeans, vegetable oil, cotton, wool, rubber, and animal hides, it has been surprisingly successful at meeting the basic food needs of its population of more than 1.3 billion people, and it has stepped up as a major food exporter. How long can China sustain this momentum? China imports only small amounts of premium-grade rice, minor amounts of wheat in most years, and no corn. China has maintained agricultural self-sufficiency in grains as it carries out the world’s largest and fastest urbanization and industrialization. Economic development is increasing competition for scarce resources in China, but growing incomes are allowing most consumers to increase consumption of fruit, vegetables, and livestock products. China has become a significant food exporter by ramping up production in many sectors and gaining world market share. Indeed, China has been a net food exporter for most of the last three decades. China dominates world markets in a variety of products areas, including garlic, apples, apple juice, mandarin oranges, farm-raised fish and shrimp, and vegetables. At times, it seems that China has suspended the law of scarcity by boosting production in many sectors and selling at low prices without having to sacrifice production in other sectors. More recently, however, signs hint at a restoration of the law of scarcity, mostly in the form of rising commodity and input prices, more expensive labor, restrictions on land developments, and a reversal of China’s pro-export policies. Various hidden costs of China’s seemingly miraculous growth also are beginning to emerge, including dangerous chemical residues on food and related food safety problems, falling groundwater tables, polluted water, and overall environmental degradation.

China’s Challenge: Feeding 1.3 Billion People

For centuries, China was an agrarian economy mostly populated by small subsistence farmers. In the 1930s, John L. Buck, a Professor of Agricultural Economics at Nanjing University, estimated that plant-based

foods comprised 97 percent of Chinese caloric intake, and this diet enabled farmers to maintain subsistence livelihoods on a limited land base. In the 1950s, China’s agriculture underwent collectivization, and even though China’s population doubled from 550 million in 1950 to over 1 billion by 1980, the country was still largely able to maintain food self-sufficiency during most of this period. Key to this achievement was the continuation of plant-based diets for much of the population, as the centrally planned and collectively run mobilization of land, water, and labor resources for agriculture was directed toward production of food grains at the expense of livestock and horticultural products. In the late 1970s, China introduced reforms that effectively ended collective agriculture and restored traditional household production. Farm income grew and diets diversified during the 1980s and 1990s. Agricultural production gains stemmed from gains in production efficiency rather than expansion and mobilization of additional resources. The immediate effect of these reforms was a decline in area sown to grain and an increase in land devoted to nongrain crops and livestock production. Still, despite the decrease in area, grain production surged as farmers allocated their limited resources more efficiently. Over the past two decades, the role of the market has expanded and fostered rapid economic growth in China. Ever-wealthier consumers began diversifying their diets to include more variety in fruit and vegetables and more livestock and fish. China Ministry of Health statistics indicate the share of calories consumed from grain and vegetable products in 2002 was 63 percent, far below the 97 percent estimated in the 1930s. Farmers responded to changing domestic demand for food products by further diversifying production. At the same time, Chinese farmers have supplied a growing stream of food exports that include farm-raised fish, shrimp, vegetables, fruit, juices, mushrooms, tea and organic foods. But the rapid growth of livestock and horticultural production did not come at the expense of reduced grain output. After years of regional and local self-sufficiency enforced under collective agriculture, yields continually improved over the post-reform period, the result of stronger incentives, improved production practices, more regional specialization, and the introduction of new varieties. (Who Will China Feed_fig01.gif) Investments in research and development raised the quality of inputs and the efficiency of their use over the past two decades. Research into improved varieties and quality of seeds surged after the late 1970s. By the turn of the century, China had more agricultural researchers than RESEARCH + TEXTS | 61

any other country, and a larger budget for public sector agricultural research than any developing country. Fertilizer quality in China also has improved over the past two decades, as farmers move away from applying pure nitrogen fertilizer to applying more nitrogenphosphorous- potassium blends. China has been importing breeding animals—which are often crossed with domestic breeds—to improve efficiency of weight gain, improve disease resistance, and raise milk output. The government has offered subsidies to farmers for dairy herd improvement for several years. China today is the world’s largest agricultural producer and consumer. With an estimated 10 percent of world land resources and 6 percent of world water resources, China produces 30 percent of the world’s rice, 20 percent of the world’s corn, a fourth of the world’s cotton, an estimated 37 percent of the world’s fruit and vegetables, and half of the world’s pork. For most products, China’s world share of production is close to or exceeds its 20-percent share of world population. China, however, has exploited the means of coaxing food and fiber out of a limited natural resource base to the extent that additional gains will be more difficult than in the past. (Who Will China Feed_fig02.gif)

Signs of Stress to Land and Water

Land and water are key inputs to agriculture and are the main constraints to China’s continued production growth. Chinese farmers farm not only the most productive land in plains and valleys in the eastern third of the country but also steep hillsides, arid grasslands, drained lakes, and dry riverbeds that are generally not cultivated in more land-abundant regions like North America or Australia. While southern China has relatively abundant water that facilitates waterintensive flooding of rice paddies, the per capita water endowment in the North China Plain is roughly one-tenth the world average and is well below conventional measures of water scarcity. Yet, this region produces a large share of China’s wheat, corn, cotton, and other crops that rely heavily on irrigation. China’s current exploitation of land and water resources is either at or beyond sustainable levels. The cultivation of steep hillsides is causing massive sedimentation loss estimated at over 2 billion tons per year, decreasing productivity in areas losing topsoil, reducing water storage capacity in reservoirs, and increasing the likelihood of floods. Agricultural practices, both crop cultivation and animal husbandry, on sensitive arid grasslands are partly to blame for the desertification of these areas. In the North China Plain, the groundwater table is falling rapidly in some areas, and several surface-water sources periodically dry up before reaching the sea. The Yellow River, for example, ran dry for long periods of the year in the 1990s. Policy measures instituted in 2000, however, have ensured the river’s continued flow to the ocean. 62 | RESEARCH + TEXTS

Industrial and urban growth is increasing the competition for China’s limited land and water. China’s nonfarm economic boom means that housing complexes, industrial parks, power stations, and other projects, are being built on land converted from agriculture. Competition for land within agriculture is also intense. Increasing production of meat, dairy products, vegetables, fruit, and farmraised fish competes with grain cultivation for area. Given the gradual shrinkage of the agricultural land base, expansion of one agricultural activity generally means that land must be diverted from another. Efforts to develop saline or other marginal lands for limited agricultural activities have yet to result in significant expansion of agricultural production onto such land. As with land, water resources face increasing demand from nonfarm users. In 1980, industrial and domestic consumers used only 13 percent of the water consumed in China, with agriculture accounting for the remainder. By 2000, agriculture use was roughly two-thirds of water consumed in China, and industry and domestic users have raised their share to one-third. On the productive North China Plain, water diversions for human use are well over 60 percent of renewable water resources, and nearly 90 percent in the Hai River Basin in Hebei Province. While China intensively uses its land and water resources in agriculture, there is potential to manage both resources more efficiently. Land in China is allocated to farm households but remains collectively owned and subject to redistribution to other households or sale to nonagricultural interests by local leaders. This system reduces incentives for households to invest in land improvement and raises the cost of land transfers. It also results in small, fragmented household land holdings that confound farmers’ capacity to specialize or take advantage of economies of scale and size. Additionally, farmers rarely allow land to be fallow and recover from intensive production, a practice that could have negative long-term implications for land productivity. Until the 1990s, water management in China was geared to exploiting water as a cheap resource to boost agricultural and industrial production without considering the opportunity costs. Efforts to encourage water saving are just beginning to take hold. Reforming land and water management policies and practices in China may help improve the efficiency of resource allocation and could bring about more sustainable practices and contribute to future production growth. However, such reforms are likely to confront ideological and other resistance. Moreover, the gains may not have a large net effect on agricultural production since more efficient allocation may lead to a reduction in the levels of land and water allocated to agriculture. This is particularly true for grains, since the value of these resources in grain production is lower than in horticultural production and nonagricultural uses.




400 Meat 300


Oilseeds Grain

100 0












SOURCE: USDA, Economic Research Service calculations using China National Bureau of Statistics data

ABOVE_ Fig 01 RIGHT_ Fig. 02

Signs of Labor Scarcity

China has been able to maintain low-cost production in international agricultural markets largely because of low labor costs. Historically, Chinese farms have raised large amounts of output from small plots by using labor-intensive production strategies, such as growing multiple crops per year, intercropping, and growing vegetables in courtyards. But hundreds of millions of rural workers have found nonfarm employment over the last two decades. The flow of labor from rural areas enabled China’s industry and cities to boom, while wage growth was relatively stagnant for much of the last two decades. China’s rapid economic expansion appears to have finally exhausted the pool of under-employed workers. Since 2003, wages have been rising at a double-digit pace. The dwindling pool of available rural workers is resulting in increased mechanization of harvesting and planting. Anecdotal evidence also suggests that intensive agricultural practices, like double-cropping, transplanting seedlings by hand, and small-scale hog production, have decreased due to labor shortages and high wages. (Who Will China Feed_fig03.gif)

Food Prices Are Rising

The recent trends in resource use, labor availability, and changing agricultural production, along with rising international food prices, are causing increases in China’s domestic food prices. Food prices in China began rising in 2006, and China’s government made controlling the inflationary impact of food prices a top policy concern in 2007. Pork prices in China soared to record levels in 2007 as the hog sector contracted, in part due to disease outbreaks and inclement weather in southern China. In previous cycles (as recently








PERCENT IN 2005 *Based on United Nations Food and Agriculture Organization data Source: USDA, Economic Research Service calculations using USDA data except where noted.

as 2004-05), sharp increases in prices drew more producers into hog production. But in 2007, response to the record-high prices was slowed by disease losses and the high cost of feed and feeder pigs. Ultimately, officials resorted to introducing subsidies and insurance as incentives to encourage hog production and hasten the easing of prices. Recent policies aimed at boosting grain planting have diverted land from soybean and rapeseed production, and oilseed and vegetable oil prices rose sharply in the last 2 years. Prices are rising partly due to increasing world commodity prices, but also because of China’s inability to boost domestic production. In response, China has made several significant policy changes in the last year. The Chinese government withdrew rebates of value-added taxes that encouraged exports, and it introduced temporary export taxes on grain and flour to cut off grain exports and cool domestic grain prices. Also in the past year, China scaled back ambitious policies to retire environmentally sensitive land from cultivation, and it revised plans to develop grain-based bio-fuel production.

Hidden Costs Now and in the Future

In addition to having an impact on the production costs borne by farm households, applications of agricultural chemicals and exploitation of natural resources can have external costs borne by others or by future generations. These costs are becoming more evident in China. As education and access to news improves, Chinese consumers are growing more concerned about the quality of the environment and the food they eat, and are seeking changes. In a 2007 survey of household food consumption choices in Beijing, far more households reported choosing food products according to quality and safety attributes than according to price. Chinese farmers have applied heavy doses of chemical fertilizer RESEARCH + TEXTS | 63

Indeed, the United States and many other countries have faced similar resource and environmental constraints and still maintained robust growth in agricultural production while transitioning into more environmentally friendly production practices. China, however, is developing at a much more rapid pace than other countries, has a very large and diverse agricultural sector, and has yet to fully establish supporting institutions to facilitate this transition while increasing the efficiency of production.



250 Fertilizer

200 150

Agricultural Labor



50 0












Source: USDA, Economic Research Service calculations using China National Bureau of Statistics data.

Fig. 03

and pesticides to overcome natural resource constraints and significant pest pressures. Farmers use a variety of veterinary drugs to control diseases that spread quickly among livestock and fish raised in crowded facilities, and they use feed additives to enhance animal growth. Residues of toxic pesticides, drugs, and industrial pollutants detected in food are a potential health hazard. A sizeable share of China’s industrial production also takes place in rural areas and in close proximity to agriculture. The external costs of industrial production, such as water pollution, often are borne by agricultural producers. China’s food industries have been stung by quality and safety problems both overseas and in domestic markets. There is a strong campaign to reduce and regulate farm chemical use. Chinese officials now ban food production in heavily polluted areas and limit use of toxic chemicals. Exporters must go through stringent certifications and product testing, raising the costs of production and limiting the development of potential export markets for food products. Chemical fertilizer and animal waste also contribute significantly to water pollution and may be constrained by environmental regulations. The Future of Agricultural Production and Trade in China China’s sheer size and relatively open trade policies ensure that it will continue to be a major importer and exporter of agricultural products. However, rising prices and increasing attention to environmental and food safety problems in 2006-07 seemed to signal the end of “easy” growth. In coming decades, China’s agricultural export juggernaut might be slowed as it faces resource and labor scarcities and confronts environmental and food safety costs that were not always taken into account during the decades of robust growth. Slower export growth, coupled with growth in domestic consumption, may shift the food industry’s attention toward supplying the domestic market. While future gains in China’s agricultural production will not come as easily as in the past, there is still scope to achieve further growth. 64 | RESEARCH + TEXTS

China is establishing policies to maintain production growth and reduce the environmental impact of agricultural practices. Research institutes are developing new crop varieties and production systems that could increase yields and use water more efficiently. The livestock industry is importing breeding stock and developing larger scale commercialized operations to improve the efficiency of livestock production. Agricultural officials in China are promoting demonstration projects in more sustainable modes of agricultural production. China is strengthening farmers’ rights to land—although stopping short of allowing full ownership of land—so farmers can rent land, consolidate their holdings, and achieve efficiencies in size and scale. Moreover, agricultural officials seek to band small farms together into “production bases” to supply uniform products to selected agribusinesses which, in turn, supply farmers with standardized inputs, technical information, and production credit. Changing consumption patterns will play an important role in China’s future agricultural trade. As Chinese consumers diversify their diets, aggregate consumption of traditional food grains, such as rice and wheat, is flat or declining. Some land historically used to grow food grains is being shifted to feed grains to support the growing livestock sector. Finally, China’s fruit and vegetable production will continue to grow and, over time, food safety issues will likely be res olved. However, a large share of the increases in the production of these products will be consumed by China’s own large and increasingly wealthy population.


“It is a staggering accomplishment that China is able to feed 20 percent of the world’s population with only 7 percent of the world’s farmland.”


Farmland Preservation in China Ding, Chengri Land Lines: July 2004, Volume 16, Number 3

The fast pace of farmland conversion in the People’s Republic of China is causing alarm among top leaders concerned with food security and China’s ability to remain self-reliant in crop production. This loss of farmland is a direct result of China’s remarkable success in economic development over the past two decades, which has resulted in rapid urbanization and the conversion of enormous amounts of farmland into residential, industrial, commercial, infrastructure and institutional uses. Nearly a decade ago, Lester Brown asked, “Who Will Feed China?” in a book that drew attention to the importance of farmland preservation. At first glance, visitors to China may not realize there is any problem with food supply or farmland protection because food seems to be abundant. Moreover, concern over China’s acute housing shortage has prompted many economists to prefer a policy that makes more farmland available for housing. Their arguments may be sound in theory. When one looks deeply at China’s land resources and projected growth, however, it becomes easier to understand the rationale for the country’s rigorous efforts to preserve its declining supply of farmland and recognize the farm-related issues and policy challenges that can be expected in the foreseeable future.

Tensions between Land and People

A map of China gives the false impression that land is abundant. Even though the total land mass of China is similar to that of the United States (9.6 and 9.4 million square kilometers, respectively), land suitable for human habitation in China is limited. About one-fifth of China’s territory is covered by deserts, glaciers and snow. Areas that average more than 2,000 meters above sea level and mountainous regions each account for one-third of China’s land, indicating a high level of land fragmentation. Thus, less than one-third of China’s land area is composed of the plains and basins where more than 60 percent of the population of 1.3 billion lives. There are fewer farms in China per capita than in almost any other country. China’s rate of per capita farmland occupation is 0.26–0.30 acre (depending on which official data are used), less than 43 percent of the world average. It is a staggering accomplishment that China is able to feed 20 percent of the world’s population with only 7 percent of the world’s farmland. The relationship between the Chinese people and their land is further complicated by the uneven distribution of the population. The eastern part of China represents 48 percent of the nation’s territory, but includes 86 percent of China’s total farmland and nearly 94 percent of its population. By contrast, the western provinces feature vast and

mostly unusable land. Henan Province, located near the center of China, has the nation’s highest population density. Henan is only onesixtieth the size of the U.S., but its population is more than one-third of the U.S. population. This east-west division also reflects striking differences in farmland productivity. In the east, farms generally reach their maximum potential yield, whereas farm productivity in the west is low, and it is difficult and expensive to improve productivity there. More than 60 percent of China’s farms have no irrigation systems, and most of those farms are located in the west. Regions with more than 80 percent of the nation’s water resources have less than 38 percent of the farmland. Around 30 percent of all farmland suffers from soil erosion, and more than 40 percent of farmland in arid and semi-arid regions is in danger of turning into desert. It seems inevitable that the tensions between the Chinese people and the use of their land will only escalate in the next decade or two, driven in large part by the ambitious socioeconomic development goals set up by the Sixteenth Communist Party Congress in 2003. Those goals call for China’s GDP to be quadrupled and the rate of urbanization to reach 55 percent by 2020. Given the projected population growth from 1.3 billion to 1.6 billion, Chinese cities will become home to 200 to 350 million new urban residents. This remarkable increase in development will require land for all kinds of human needs: economic development, housing, urban services and so forth.

Farmland Preservation Laws

Two principal laws govern farmland preservation efforts in China. The Basic Farmland Protection Regulation, passed in 1994, requires the designation of basic farmland protection districts at the township level and prohibits any conversion of land in those districts to other uses. It also requires that a quota of farmland preservation should be determined first and then allocated into lower-level governments in the five-level administrative chains (the state, province, city, county and township). This important act represents the first time China has imposed a so-called zero net loss of farmland policy. This policy affects only basic farmland, so the total amount of basic farmland will not decline due to urbanization.

Components of Basic Farmland

Agricultural production areas (such as crops, cotton, edible oils and other high-quality agricultural products) approved by governments RESEARCH + TEXTS | 67

Farmland with high productivity and good irrigation that have been exploited. Vegetation production areas for large and mid-sized cities Experimental fields for science and educational purposes There are two kinds of basic farmland protection districts. The first level consists of high-quality farmland with high productivity that cannot be converted to nonagricultural uses. The second level is goodquality farmland with moderate productivity that can be converted to nonagricultural uses, usually after a planned period of five to 10 years. The regulation further stipulates (1) if the conversion of land within farmland districts is unavoidable in order to build national projects, such as highways, energy production or transportation, the state must approve the conversion of land parcels of more than 82.4 acres and the provincial governments must approve those of less than 82.4 acres; and (2) the same amount of farmland lost to conversion must be replaced by new farmland somewhere else. The second law, the 1999 New Land Administration Law, is intended to protect environmentally sensitive and agricultural lands, promote market development, encourage citizen involvement in the legislative process, and coordinate the planning and development of urban land. The law has two important clauses. Article 33 extends the application of the zero net loss farmland policy in the Basic Farmland Protection Regulation to all farmland. It stipulates that “People’s governments . . . should strictly implement the overall plans and annual plans for land utilization and take measures to ensure that the total amount of cultivated land within their administrative areas remains unreduced.” Article 34 requires that basic farmland shall not be less than 80 percent of the total cultivated land in provinces, autonomous regions and municipalities directly under the central government. The law reinforces farmland preservation efforts by requiring approval from the State Council for any conversion of basic farmland; conversion of other farmland larger than 86.5 acres; and conversion of other land larger than 173 acres. It further encourages land development in areas that are considered wasteland or that feature low soil productivity. Although the law requires the zero net loss of farmland policy to be implemented at provincial levels, it is actually carried out at the city, county and sometimes township levels.

Assessment of the Farmland Policy

The goals of the farmland preservation laws are to limit development on farmland and to preserve as much existing farmland as possible. Land development patterns and urban encroachment into farmland continue unabated, however. Approximately 470,000, 428,000 and 510,000 acres were converted to urban uses in 1997, 1998 and 1999 respectively, and in 2001–2002 some 1.32 percent of remaining farmland was lost. The actual rate of farmland loss was probably far greater than those officially released numbers. For example, seven administrative units at the provincial level (Beijing, Shanghai, 68 | RESEARCH + TEXTS

Guangdong, Hunan, Congqing, Jiangxi and Yunnan) reported net farmland losses in 1999. On closer inspection, the negative impacts of China’s farmland preservation laws may outweigh the gains. These laws have been questioned because they affect other actions that create urban sprawl and the merging of villages and cities; destroy contiguity of urban areas; raise transportation costs; and impose high social costs resulting from clustering of incompatible land uses. More important, they push economic activities into locations that may not provide any locational advantage and adversely affect urban agglomeration, which ultimately affects the competitiveness of the local economy. The designation of basic farmland is based primarily on the quality of soil productivity; location is not a factor. Because existing development has occurred near historically high-productivity areas, that land is likely to be designated as basic farmland whereas land farther away is not. New development thus results in leapfrogging development and urban sprawl and raises transportation costs, but also creates mixed land use patterns in which villages are absorbed within cities and cities are imposed on villages. These patterns are common in regions with high population density and fast growth rates, such as the Pearl Delta of Guangdong Province. The mixed village and city pattern aggravates an already underfunctioning urban agglomeration that results from a relatively high level of immobility in the population because of the hukou system, which gives residents access to certain heavily subsidized local amenities, such as schools. By using soil productivity as the criterion for designating basic farmland, site selection for economic development projects becomes constrained, making business less competitive. This policy is also responsible for the ad hoc land development process and the creation of a chaotic and uncoordinated land development pattern. As a result, existing infrastructure use becomes less efficient and it costs more for local government to provide urban services. Overall, the urban economy is hurt. Furthermore, developers have to pay high land prices, which they eventually pass on to consumers through higher housing prices or commercial rents. Land becomes more expensive because the law requires developers who wish to build on basic farmland to either identify or develop the same amount of farmland elsewhere, or pay someone to do so. The cost of this process will rise exponentially as the amount of land available for farmland is depleted, making housing even less affordable. In Beijing, for instance, land costs alone account for 30–40 percent of total development costs if a project is developed on farmland, but 60–70 percent if the project isn’t developed in existing urban areas. Perhaps one of the worst aspects of the farmland preservation laws is

that they treat farmers unfairly. Land development is far more lucrative than farming, so farmers rigorously pursue real estate projects. In the early 1990s, for example, selling land use rights to developers could generate incomes that were 200–300 times higher than the annual yields from farm production. Farmers and village communes, eager to benefit from booming urban land markets, are lured to develop their farmland. The problem is that farmers whose land is considered basic farmland are penalized by this institutional designation that denies them access to urban land farmland are not similarly constrained. This inequitable treatment makes it difficult for local governments to implement effective land management tools and creates social tensions that complicate the land acquisition process, lead to chaotic and uncoordinated development, and encourage the development of hidden or informal land markets. There are four reasons for the general failure of China’s farmland preservation policy. First, farmland preservation laws fail to give sufficient consideration to regional differences. Even at a provincial level some governments have difficulty maintaining a constant amount of farmland in the face of rapid urbanization. Land resources are extremely scarce in some provincial units, such as Beijing, Shanghai and Zhejiang, where development pressures are strong. The second reason is the requirement that each of the five administrative levels of government (the state, provinces, municipalities, countries and townships) must maintain an arbitrarily determined percentage (80 percent) of basic farmland without the ability to adjust to pressures of demand and market prices. In some regions, demand is so high that officials look for various alternative ways to convert farmland into urban uses. The most common approach is through establishment of industrial parks, economic development zones or high-tech districts, usually on quality farmland areas at the urban fringe. This occurs for two reasons: to attract businesses and to raise land revenues by leasing acquired farmland to developers. There is a striking difference between the prices paid to farmers for their land and the prices for that same land when sold to developers. Third, local officials almost always give economic development projects top priority and are easily tempted to sacrifice farmland or rural development to achieve a rapid rate of economic growth. As a result, farmland preservation efforts are doomed to fail wherever development pressure is present. This is not surprising since the farmland preservation laws fail to employ any price mechanisms or provide any financial incentives for either local governments or individual farmers to protect farmland.

Policy Challenges

In recognition of the importance of food security to China and the pressure of urban development on land supply, the Lincoln Institute is collaborating with the Ministry of Land and Resources on a project called Farmland Preservation in the Era of Rapid Urbanization. The objective of the project is to engage Chinese officials in evaluating this complicated issue and to design and implement farmland preservation plans that recognize regional differences and development pressures, and that introduce price mechanisms and respect for farmers’ rights. First, three fundamental questions need to be addressed: Would a policy to have zero net loss of farmland on a regional basis be better than separate policies in each of the five administrative levels of government, as is currently the case? If so, how are regions to be defined and how can Chinese officials make a region-wide policy work? Is it better to have a policy of zero net loss of farmland productivity or a policy of zero net loss of land used for farming? If the former, how can such a policy on productivity be implemented? How can farmland be preserved within the context of emerging land markets in rural areas and within a new institutional framework in which the rights of farmers are recognized? For those interested in land use policies, few countries in the world offer as many dynamic and challenging issues as China. Engagement and dialogue between Chinese and American scholars, practitioners and public officials on these topics will be crucial to the final outcome.


Brown, Lester R. 1995. Who will feed China?: Wake-up call for a small planet. Washington, DC: Worldwatch Institute. Chengri Ding is associate professor in the Urban Studies and Planning Department at the University of Maryland and director of the Joint China Land Policy and Urban Management Program of the University of Maryland and the Lincoln Institute. Contact:

The fourth problem is the absence of land markets or land rights in rural areas where Chinese governments tend to rely solely on their administrative power to preserve farmland but ignore emerging market forces in determining uses of resources. RESEARCH + TEXTS | 69



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