China Calls for more Agrarian Investment

Published on Author mackayj17

Struggling with a slowing economy, China is making a bid to encourage investment in the ailing agrarian sector.

Chinas agricultural sector employs one-third of citizens in the labor market and is responsible for close to 9% of the nations GDP. Unfortunately for the industry, the sector is also responsible for 28% of the nations outstanding bank loans. This discrepancy may be due n part to the continuing lack of productIt is crucial to the nations economic future to keep its agricultural industry afloat.

Chinese farmers spray pesticides on rice crops.

Recently, the sector has been described as unproductive, despite the growing investment that has been put into the industry. This trend of unproductive investment is akin to larger problems China has been facing. The nation has not realized that continued stimulus is ineffective at this point.

Nevertheless, large and small banks have been expanding their loans to agrarian sources with the hopes of increasing output and decreasing the sectors vulnerability.

The agricultural sector may be representative of larger trends in the Chinese economy, but even if it isn’t, problems with agriculture will have many repercussions. Feeding Chinas massive populace is a tremendous feat, and this effort will be made harder by a population that demands larger amounts of food to compliment its growing wealth. A failure in the agricultural sector could have massive repercussions on public health and the Chinese economy as a whole.



6 Responses to China Calls for more Agrarian Investment

  1. Part of the problem with China’s agricultural productivity is the pollution from the factories within China. Since China’s industries have been loosely regulated for so many years, the runoff from these factories and waste disposal has caused a lot of the farmland to become useless. If China wants to improve its agricultural productivity. It must address its environmental concerns or the problem will only get worse.

    • So many issues in China seem to stem from environmental damage caused by industrialization. It will be interesting to see how this effects the long term economic outcomes of the nation. While some steps seem to be being done to try and address this enormous issue, China still seems to be solely focussed on economic growth. I wonder how much thought has been put to the fact that growth will only be slowed by the ever increasing pollution.

  2. China’s decreasing rural population is another problem in its agricultural sector. Even though China’s official farm population holding rural hukou is over 900 million, drastic urbanization in short time and differentiation of the peasantry aggravates food security problem.

    • I feel as though a decreasing rural population is only a short term problem for Chinese Agriculture. Yes, more people are moving to the city, but investment in mechanization should allow for this problem to be circumvented.

      • I agree with this comment. I think the migration of workers to the city could help marginal productivity of labor. If 1/3 of the labor force is only producing 9% of output, migration may be necessary. Increased mechanization will help feed a growing urban population. The United States for instance has only 2% of the labor force in agricultural output.

  3. Interesting comments. “Unproductive” is probably used to mean “low income” rather than low yields (land productivity). It may however be more “bankable” if institutions allow lenders to claim collateral, and where one farm is similar to another so that deciding loan amounts doesn’t require the skill level of urban small business lending. The Agricultural Bank of China is huge, with lots of branches, so it may not in fact be out-of-line to have a large share of lending to the sector. If only the NYTimes provided more data: are debt/income ratios high? how about total lending to total output? That the sector has 28% of bank loans may be a statement about how skewed lending is overall, and not that it’s excessive in agriculture. (I don’t know!)

    As to excess labor, the 1/3 of LF vs 1/10 of Y is certainly indicative! And in line with all we’ve studied this term.