Farmers earn higher shares with new demutualization pilot

CHONGQING -- Chinese farmers are set to earn more money as the country pilots a program to demutualize rural assets, allowing them shares and more say.

In Southwest China's Chongqing, farmers in Dongjiaqiao village are among the first to enjoy the benefits after becoming shareholders of a village warehouse management company.

The leasing business was established three years ago by turning several bankrupted factories into a big warehouse in the village. The pilot demutualization reform along with the establishment of the company has granted farmers the right to receive dividends by detailing each one's share quotas.

Since then, villagers of Dongjiaqiao have received more than 8 million yuan ($1.29 million) from the company revenue. The household with the largest quota has had 40,000 yuan.

According to current Chinese law, urban land is owned by the state and rural land is under collective ownership. Farmers use the land but have no right to sell or develop it.

The rural collective assets include resource assets and non-resource assets. The latter includes all liquid assets and fixed assets owned by all villagers, including village-run enterprises.

But a new round of reform aimed at the vast rural areas seeking to turn farmers' "dead asset" into "live money" is being widely carried out after the third plenary session of the 18th Communist Party of China Central Committee.

The move will further increase farmers' income and reduce the gap between rural and city residents. The current urban-rural income ratio is slightly more than 3:1.

A pilot program plan on asset demutualization is to be unveiled soon, according to a seminar on rural assets demutualization reform held by the Development Research Center of the State Council in December.

The pilot work will be completed by 2017.

The demutualization reform has enabled farmers to receive company profits like shareholders. Prior to the reform, farmers were only nominal owners of the assets which they can neither operate nor gain profits.

Statistics from the Ministry of Agriculture showed that as of 2013, 28,000 villages out of China's 587,000 villages have completed the demutualization reform, with dividends totaling 436.2 billion yuan.

Xia Zuxiang, director of the agriculture committee of Chongqing, said assets income takes up a small portion of a farmer's total income. In Chongqing, farmers' income from assets is less than 3 percent.

The reform will increase farmers' assets income while other incomes could not be sharply raised in a short term, said Xia.

According to the second national land survey completed in 2009, the rural economy of China is growing, with non-resource assets reaching 2.4 trillion yuan. However, as the assets grow, problems also emerge.

Chen Xiaohua, vice minister of China's Agriculture Ministry, said the problems include high risks of loss of assets due to mismanagement, conflicts generated by uneven profit distribution and grass-root corruption due to unsound governance.

In Dayan village of Chongqing, demutualization reform started in June 2013. More than 50 million yuan in collective assets were divided by shares and given to each villager.

"Before, every one knew they owned the asset but could not do anything about it. Now, villagers can directly benefit from the asset, so they feel responsible to keep their mutual assets healthy and profitable," Yuan Ming, the village head said.