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ECONOMY-CHINA: Growth or the Good Earth?

Antoaneta Bezlova

BEIJING, Jan 16 2009 (IPS) - As China rushes to implement its four trillion yuan (585 billion US dollars) economic stimulus package, success is seen dependent on the ability of government officials to come up with free land for the hundreds of new infrastructure projects like airports and housing that Beijing hopes would lift growth and keep recession at bay.

But land is a precious commodity in China.

When a leading mainland economist suggested recently that Beijing’s steadfast insistence on keeping a minimum of 120 million hectares of arable land was “a hurdle for China’s further industrialisation and urbanisation” and should be discarded, it created nothing less than a public furore.

Mao Yushi, founder of the independent Unirule Institute of Economics, has overnight become “a public enemy,” said the ‘China Times’ newspaper. His suggestion that China stop pursuing a policy of food self-sufficiency and rely instead on the world grain market for supplies have quickly transformed him into a target for “vehement criticism”.

“Whoever went through the famine during the late 1950s and early 1960s in China knows how important food is,” a netizen going by the name of “sgy123” said. “It is quite dangerous for 1.3 billion people to rely on imported grain.”

Another Internet critic, “Beibeibao,” said: “We would rather have a lower growth speed than make concession on independent grain production policy. If a government fails to shoulder the responsibility in this regard it would let Chinese people down. I fully support the protection of farmland bottom line.”

The vilification of Mao Yushi comes at a painful time for the world’s most populous nation. This year marks the 50th anniversary of the famine that left tens of millions of people dead during the Great Leap Forward – Mao Zedong’s utopian attempt to make communist China leapfrog the industrialised nations of the West.

The anniversary is likely to pass unmarked but the leadership has pulled out all stops to guarantee a minimum of 120 million ha of arable land, which it says is needed to ensure the food security for its 1.3 billion people. The minimum supply of land is essential, they say, if the country wants to secure 95 percent food-sufficiency.

To Beijing’s dismay, the imperative to preserve land is now in sharp conflict with the leadership’s number one priority for 2009 – to preserve growth. The ministry of land and resources estimates that about 80 percent of the stimulus package announced by Beijing in November would require new slots of land.

Fighting to save rapidly shrinking arable land has been one of the government’s main concerns in recent years as urban development and environmental degradation have encroached on China’s scarce supplies. The country’s arable land shrank by more than 40,000 ha in 2007 to 121 million ha, which is only slightly above the mandated bottom line.

But if Chinese leaders dread instability caused by food shortages, they fear no less an economic gloom that could see thousands of unemployed people protesting on the streets.

The global economic slowdown has become a serious test for Beijing in succeeding to keep the country’s economy growing. The ruling Communist Party has linked its legitimacy to providing continuous economic fortunes for its people and a hard landing for the Chinese economy, which has been expanding at double-digit rates since 2003, could imperil its grip on power over the country.

The conflict of interests was apparent at a news briefing organised by the State Council, China’s Cabinet, in December. Lu Xinshe, vice-minister of the ministry of land and resources, spoke about the growing pressure on arable land.

“It is a huge amount to be invested in a very short period of time,” Lu said of the fiscal stimulus package that is to be implemented through to the end of 2010. “With so many projects to be built, it will be a challenge to keep the bottom line of arable land.”

To some economists though, the minimum required arable land serves not the country’s food security issue but the government’s need to keep land grabbing in check. Land grab by local officials, intent on real estate development, has been one of the main sources for civil unrest in a country where 750 million people are still tied to the land.

“The arable land bottom line is meant for social security and not for food security,” argues Zhao Nong, who leads a research team at Unirule.

With the help of funding from the U.S. Ford Foundation, Zhao’s team worked on the controversial report about the connection between China’s grain sufficiency and its arable land, which landed Unirule’s board chairman Mao Yushi into trouble.

The team has been accused of selling out the country’s food security policy. Using U.S. money to produce a report, which promotes China’s purchase of U.S. grain, is tantamount to a betrayal, some have said.

The report discredits claims that 120 million ha of arable land is a pre-requisite for China in keeping hunger at bay. It argues that instead of hording land the country should rely on imports to make up for any shortfalls of grain. China consumes 500 million tonnes of grains every year and so far its annual output has hovered around this figure.

After its publication in late December, the report ignited a wide polemic about China’s historical memory and its fears of famine.

“Chinese people’s deep ingrained fears of hunger are now used as a horror tool by those who oppose the progress of land reform in the country,” says Su Qi, a columnist for the China Investor Journal.